1. Financialization as a Global Process

Endowed with a powerful industry in all economic sectors that emerged in the wake of European bourgeois revolutions—mainly the industry of capital goods—England was also the main imperialist power in the world, with colonies spread in all continents, and that provided captive market to sell its products, in addition to large amount of resources from collecting taxes from these colonies (Arrighi 1994, 54). It should be reminded, however, that England was, since the end of the eighteenth century, the country with the most pronounced industrial and commercial development, becoming the great “exporter industry” of the world (Mantoux 1979). Regarding the so-called “Imperial Britain,” even Mackinder ([1902] 1969, 343) also showed that “under a condition of universal free trade such a nation would almost inevitably increase its lead, and might ultimately reduce the whole world to economic subjection.”

The great financial decisions made by the bankers from City were based on the necessity—or not—of maintaining the so-called “gold-standard” convertibility of the Pound Sterling (the main currency of international trade in all this period) (Roberts 2000). The so-called “bullionists,” based mostly in the writings of David Ricardo, advocated about the convertibility necessity of English currency into gold, which obliged, therefore, the existence of a reserve of ingots in the Bank of England for each Pound issued (Leyshon and Thrift 1997, 64–66).

Regarding the new rules preconized by Bretton Woods Agreements, it could be said that it was based on three main fundaments: 1. System of fixed exchange rates; 2. Currency convertibility (mainly from 1958); 3. Ostensibly national controls over employment, savings, and interest rates (Corbridge and Thrift 1994, 7).

As in a casino, the world of high finance today offers the players a choice of games. Instead of roulette, blackjack, or poker, there is dealing to be done—the foreign exchange market and all its variations; or in bonds, government securities, or shares. In all these markets, you may place bets on the future by dealing forward and by buying or selling options and all sorts of other recondite financial inventions (Strange [1986] 1997, 1).

As the author states, “It was in this period that international banks started opening deposit accounts denominated in a currency different than that of the country in which the bank was located. Branches of U.S. banks based in London led the trend, running U.S. dollar accounts out of London, not subject to U.S. regulations. Accepting deposits in foreign currencies was followed by lending, and issuance of bonds and other financial instruments. As such the term offshore originally referred to currencies and was related to the development of Eurocurrency markets. Offshore financial markets were Eurocurrency markets, with leading centers in London, Luxembourg, and later Singapore” (Clark et al. 2015, 240).

It was uncommon at that time to use communication by telegraph for speculative purposes—or for agreed price determination between actors. Added to this the proper characteristic of US economy—especially its monetary system—still not totally integrated to the beginning of twentieth century. Those quotation distinctions in the different cities of the country generated an exchange market inside the US economy. The economic agents had to consider the currency cost in the markets that acted—outside their own—when at the moment of performing a commercial transaction in another market (Garbade and Silber 1978, 823). New York and New Orleans were the main exchange markets in the country. The relation between the two cities was extremely dynamic, especially due to the production and exportation circuit of cotton (that exited from the south and was exported to England, especially through the port of New York). (Garbade and Silber, op. cit., 824) The telegraph technology promoted an effective integration of the exchange market in USA. (op. cit., 825).

As a comparative example, the news of the murder of Lincoln in 1865 took 15 days to reach London; in 1891, the earthquake in Nobi (Japan) was known one hour after the event (Malecki and We 2009, 361).

As shown by Ash (2014, 27/28), submarine telegraphy continued into the 1960 and, although some improvements continued to be made in cable design and transmission techniques, the rise of radio technology meant that the industry ground to a halt and then went into decline awaiting a paradigm shift in transmission technology.

One of the main technical innovations was the introduction of coaxial cables in long-distance data transmission, technology that offered more load capacity, more efficiency/reliability, and that operated transistors—instead of vacuum tubes as repeaters (Eichengreen et al. 2016, p. 11/12).

For the authors, “More than a mere passive facilitator of economic activity and a neutral provider of a level playing field, today SWIFT is a global monopoly highly sensitive to geo-political upheavals in the world. At the same time, it is increasingly influential and seemingly prone to act to the benefit of the world’s most powerful financial and political players” (Dörry et al. 2018, 12).

The solution found to reduce aggression risks was the use of “plows” at the moment of installing the cables, as to bury them at coast areas; as sown by Ash (2014, 35) “it is now standard practice to bury cable in water depths up to 1000 m, and sometimes beyond, to protect them against fishing activity.”

Given its increasing importance for international financial flows, since the 1990s, the OECD has initiated a move to identify and demand changes in the permissive laws of offshore centers, including mainly greater requirements for openness and transparency of operations and reduction of preferential treatment provided to foreigners (Dicken 2010, 437). The pressure to regulate the OFCs increased after the September 11, 2001 attacks as part of the US efforts to control global money laundering (Dicken 2010, 438).

The main investigation that systematized and made this data public was coordinated by the International Consortium of Investigative Journalists (ICIJ 2019). The consortium gathered data on some 785,000 offshore entities, which in turn included four investigations: the Panama Papers, the Offshore Leaks, the Bahamas Leaks, and the Paradise Papers.

Data from the International Consortium of Investigative Journalists about Brazil can be found at the following address: https://​offshoreleaks.​icij.​org/​search?​utf8=​%E2%9C%93&​q=​&​c=​BRA&​e=​ (Access on 19.02.2019).

Still about the importance of headquarters, the author shows that they “focuses on long-run policy and strategy, acquires capital, interacts with corporate headquarters of other multinationals, and provides overall control and coordinative functions for a vast flow of goods, money, and information within the firm and with other firms. Each divisional headquarters implements the policies of the corporate headquarters and controls and coordinates the departments, while each of the latter focuses on one intermediary activity such as purchasing, sales, or accounting.” (Meyer 1986, 557).

For the author, South American companies generate together only 2.5% of the sales as sales profits as largest global companies, according to Forbes 2000 (Panreiter 2015, 9).

Although being an interesting work material, the research is clearly preoccupied in identifying the “comparative advantages” of London with the other cities in reference and once is sponsored by the proper City of London—and by the already mentioned Z/Yen Group Limited—has a clear bias and has to be read with great caution. The reports shall be considered only as an approximate measure of international financial centers, once it does not have as main concern to establish a critical and broad vision of the world cities from their financial “weight,” but yet to define the hierarchy of “competitiveness” of the centers involved. It seems to reflect with fidelity only the vision of large “operators” of financial markets about the “advantages” that each financial center offers. Although the “competitiveness” criteria chosen by the Ranking are not precise enough to identify long-term processes—as Cassis (2018) argues—the results show interesting data on the hierarchy of the international division of labor in financial terms.