| This thesis analyzes the geographic context and spatial implications of the invention of financial derivatives, originally known as financial futures, beginning in 1972. The thesis argues that the historical geographic location of these markets in Chicago, Illinois was a key determinant of their structure, and helps to explain the speculative economic spaces that contemporary derivatives produce. The analysis follows the first fifteen years of financial futures trading which culminates in the October, 1987 stock market crash, which was the first significant financial derivative market failure and crisis. It argues that financial derivatives, at least during this formative period, were deeply embedded in the agricultural futures industry of Chicago. In particular, the governance structures that allowed these markets to operate were inherited directly from those that governed the agricultural futures markets. The territorial and relational location of these markets, far from the New York financial center of the U.S., allowed the Chicagoans to construct the first financial derivatives markets according to the rules of agricultural speculation, not those of securities trading, which had been significantly reformed in the 1930s. Hence my crucial argument is that financial futures are better understood as futures, than as finance. This distinction helps explain how futures markets engendered a revolution in finance in the 1980s and 1990s---because they were originally constructed outside the boundaries of the financial field. The empirical analysis focuses on the Chicago-based actors and institutions that constructed these markets and their struggles to frame derivatives as economically and politically legitimate. The chapters variously engage theoretical debates over the ability of the state and society to regulate finance, the nature of economic and financial embeddedness, the geographic implications of speculation and market liquidity, and the nature of financial prices, speculation, and knowledge. Ultimately the thesis appeals for a deeper and more theoretically sophisticated engagement with derivatives by human/economic geographers and other critical social scientists. |
