Speculative capital


the ecosystem of globalization


A research proposal






Jim Davis





Table of Contents



Abstract 1

Introduction 2

Current research 4

Research objective 6

Statement of need 7

Expected significance 7

Methodology 7

Project outcomes 10

References 10





One important theory of globalization argues that globalization represents a new stage or "epochal shift" of world capitalist development. The environmental history concept of "ecological revolution" describes a change in society's relationship to nature that arises with new stages of development of productive forces and productive relations, which results in a new ecosystem (both physical nature and consciousness of nature). This concept provides a tool for testing the theory of globalization as epochal shift: A new stage of economic development should have a corresponding new ecosystem. Financial structures provide an entry point for exploring how economic changes affect the human-nature relationship and the physical environment. This project will combine financial research and news accounts with environmental research and reports to test the hypothesis that three contemporary financial structures -- timber real estate investment trusts, weather derivatives, and carbon financial instruments -- lead to specific ecosystem changes. The environmental impact of these structures will be assessed according to seven categories, including biological productivity, diversity, and ecosystem stability, as well as four dimensions of the human-nature relationship. In addition, the project will establish criteria for what constitutes significant change in each category. If the impacts of the financial structures in question are determined to be significant, the findings will suggest that we are in the midst of an ecological revolution, and that speculative capital, as an aspect of globalization, assists in the construction of the "ecosystem of globalization". Such findings will satisfy a missing criteria for a "new stage" or "epochal shift", and therefore support the theory that globalization represents a new stage of capitalism.





It is difficult to read the steady stream of reports from the United Nations and non-governmental organizations about the global environment without sensing that a profound transformation is taking place within the environment (e.g., United Nations Environment Programme (UNEP), 1999; World Resources Institute, 2005; UNEP, 2006). In the economic, social and cultural realms equally profound changes are taking place, lumped into the broad category of "globalization". How, if at all, are these two powerful currents related? The strength of the connection has important implications -- not just to help us understand the twin (or single?) processes, but also help to chart solutions to the profound challenges posed by environmental problems and globalization.


Within the field of global studies, there has been an ongoing debate what exactly "globalization" is. Liodakis (2005) identifies three main currents. The "conventional" view accepts globalization as new trend, but views it as an optional social and policy choice. The "denialist" view denies that globalization represents anything new -- it is just a continuation of existing historic trends with a new name. In this camp one can include world-systems theory (Jorgenson and Kick, 2003; Robinson, 2004), the Monthly Review editorial board (Sivanandan and Wood, 1997; Henwood, 2001) and recent popular treatments like Frieden (2006). The third view, the "epochal shift" or "global capitalism school" view sees globalization as a new stage of capitalism, combining both the recognition of it as capitalism, as well as something new and different (Davis, 1998; Burbach and Robinson, 1999; Robinson, 2004; Liodakis, 2005).


The "global capitalism school" assumes a periodization of capitalism, which has been the subject of further debate. Periodization is an analytical device for highlighting features of particular stages (Robinson, 2004). Liodakis (2005) argues that "mode of production" should distinguish periods; Robinson uses a similar framework, with both arriving at similar periods: mercantile capitalism (Liodakis omits this stage); industrial or competitive capitalism beginning in perhaps the late 1700s; monopoly capitalism or imperialism beginning in the late 1800s; and global capitalism or globalization beginning in the early 1970s (Robinson, 2004) although it can be argued that the transition begins with the end of World War II, and flowers in the 1970s (Davis, 2005).


The concept of periodization has also played an important role in the discipline of environmental history. Environmental history seeks to understand the dynamic relationship of human beings and the environment over time (Hughes, 2001). The environment has helped shape human history, and human beings have changed the environment. As such, environmental history supercedes many histories, including economics, cultural studies, philosophy, and technology -- it becomes a "culmination of all previous history" (O'Connor, 1998, p. 51). Typically, the periods of environmental history span the entire Homo sapiens era, with broad modes of production (hunting/gathering; manual agricultural; industrial) having corresponding ecosystem changes (Simmons, 1993). At the boundaries of economic systems or modes of production, Merchant (1989) argues that there are "ecological revolutions" that include changes in the human - nature relationship (the understanding of nature, what it is, how it is represented, participation or alienation, etc.) as well as physical ecosystem changes. "Ecosystem", as a functional unit of all organisms interacting with each other and the physical environment in a given area, provides a conceptual tool for exploring these changes (Simmons, 1996), but consciousness and social structures that facilitate the reproduction of social and natural structures should be included in the ecosystem concept as well (Merchant, 1987).


There has also been some discussion of stages, more implicit than explicit, in historical studies of the capitalist era environment. While many histories portray environmental change within the capitalist era as an unpunctuated progression of increased exploitation of natural resources and loss of diversity (McNeill, 2000; Hughes, 2001; Crosby, 2004), some important studies attempt to demarcate specific kinds of changes within the capitalist period (e.g., Cronon, 1983, 1991; Merchant, 1989; Simmons, 1993; Foster, 1999). These latter works can be read in terms of stages of capitalism with corresponding ecosystems. The more clearly distinguished the corresponding technological regimes (where technology mediates the human-nature relationship), the more marked is the ecosystem change, and the more visible the ecological revolution. Since the new technologies (including electronics, computers, bioengineering, etc.) that comprise the foundation of globalization-as-a-stage represent qualitatively forces of production (Davis, 1998; Davis 2000), the ecological revolution of globalization should be visible and identifiable.


Human beings transform the environment in the production and reproduction of their lives -- that is, through their economic life (Foster, 2000). At each stage, the transformation of the ecosystem takes place in specific ways. In the sphere of economic activity, there are a number of entry points for investigating the specifics of the formation of new ecosystems. These include (but are not necessarily limited to) technology, transportation and communication systems, production relations, forms of property, market organization, and financial structures. Although any of these categories could be used, financial structures provide a particularly fruitful starting point. Hilferding described finance capital as the holy ghost of the economy (in Braudel, 1979); it permeates every interaction of the economy.



Current research


Most environmental history has dealt with past periods, or when it has ventured into the present, it has not treated the current period (say, from the 1970s onward) as anything new (e.g., Foster, 1999). There has been little work done in combining "globalization as a new stage" and "ecological revolution".


Partisan approaches to globalization have addressed environmental issues, though not specifically as having a distinct ecosystem. Within the anti-globalization movement, the environment is generally discussed as the culmination of 200 years of industrialization-driven (or 500 years of European-driven) ecosystem degradation (Reinsborough, 2004). This declensionist "Edenic narrative" (Merchant, 1995) ends not with a different ecosystem, but with the end of nature itself (McKibben, 1989). This view is countered by "conventionalist" pro-globalization arguments that globalization is in fact good for the environment, by mobilizing consumer power, multilateral rules and international cooperation to address environmental issues (Frankel, 2003).


The world-systems tradition approaches globalization as part of a long historical process, and so environmental dimensions are issues of scale and intensity, not difference (Jorgenson and Kick, 2003). Other global studies treatments provide a survey of environmental issues coincident with globalization, like population, biodiversity, energy and resource constraints, and political control (Hughes, 2005); or environmental issues as instances of oppression (Grimes and Kentor, 2003; Bachram, 2004), without tying the issues specifically to globalization as a stage. Still other investigations look at global initiatives on the environment as case studies to track the development of global governance (Oosthoek and Gills, 2005; Stevis, 2005), but not as ecosystem change. Another category of investigation, and the source of some debate, has been the question of a "second contradiction of capitalism", the contradiction between capitalism and the environment, where exhaustion of resources and despoliation of the environment threatens the accumulation process (O'Connor, 1997; Burkett, 1999).


As important exceptions, Simmons (1993) tentatively described a "Pacific-global era" of human-environment interaction emerging since the 1960s. In a subsequent environmental history (1996), Simmons describes the metamorphosis of regional "ecosystem peoples", tied economically to regional ecosystems, into a global "biosphere people", with a world economy bound to a world ecosystem.  In a later presentation, Simmons refers to the current period as the "post-industrial phase" (2003). O'Connor (1998) touches on changes to the environment in describing what a "sustainable" environment might look like from a "corporate viewpoint" in what he refers to as "global capitalism today". Dyer-Witheford (1999) lists ways the "high-tech capitalism" reworks the circuit of the "(non-) reproduction of nature." The red-green journal Capital Nature Socialism devoted a recent issue to the "neoliberalization of nature" where "neoliberal capitalism" is used to describe the current period (Heynen and Robbins, 2005). Though not systematic treatments, in these writings one can see a beginning outline of the "ecosystem of globalization".


Capital structures reflect and require particular relationships of individuals to the economy, and through the economy, to the environment (Cronon, 1991). As these structures change, e.g., because of new technology or greater quantities of available capital, what is economically possible changes (Marx, 1981), and hence the interactions between humans and the environment, change as well. Each stage of capitalism has forms of capital that may be non-existent, or are constrained or play a minor role in one stage but play a dominant role in other stages. One such form is speculative capital. Speculative capital is capital involved in the trading of financial instruments (Saber, 1999), but has its roots and rationale in risk management (Bernstein, 1998). The main forms of speculation go back at least to the 17th century (Chancellor, 1999), but speculation only comes to the fore with the creation of global data networks (Davis, 2005). Speculative capital plays an integral (Shiller, 2003; Liodakis, 2005), even dominant role (Davis, 2002) in contemporary capitalism.


While there has been some discussion about the impact of speculative capital flows on the environment, e.g., by destabilizing local economies and thereby interrupting vulnerable environmental programs, speeding up resource extraction to meet financial obligations, and forcing a short time horizon for economic activity that mitigates against long-term environmental stewardship (World Resources Institute, 1999), again, the discussion has not addressed ecosystem change within the context of stages or an ecosystem of globalization.


Research objective


The use of financial structures as an entry point for exploring ecosystem changes in relation to "globalization as a new stage" begs two questions. First, what financial structures are characteristic of globalization? Capitalism is a cumulative and dynamic process, with forms of capital persisting across stages. A new stage should demonstrate new and distinctive forms, forms that could not exist or function in the same way in different periods. Second, financial structures will provide insight into the human-modified ecosystem at a given stage. What effects do the structures or forms have on the environment, or on the human-environment relationship, under globalization?


This project will explore ways in which the dominant form of capital in the stage of globalization, speculative capital, facilitates changes in the ecosystem. The project will test the hypothesis that speculative financial structures, unique to globalization, lead to specific ecosystem changes.



Statement of need


While there are descriptions of how other modes of production have changed the environment, there is little work that looks at [a] globalization as a stage [b] that creates a distinctive ecosystem; [c] in particular the relationship of forms of capital to the formation of the ecosystem under globalization. This project will attempt to fill that gap.


Expected significance


Understanding the interplay of speculative capital and the environment will produce a number of benefits. It will:


-- contribute to a better understanding of how economic structures and flows relate to broader ecosystem structures and flows;


-- contribute to a better understanding of social, economic, and technical formations or regimes and their corresponding ecosystems;


-- if the investigation supports the hypothesis, provide additional evidence in support of the validity of periodization capitalism, and of globalization as a distinct stage ("epochal shift").


Since an understanding of the current stage of a process is critical to formulating a successful political program, this research will contribute to the theoretical development of the broad movement for social change.





This project will look at three contemporary speculative financial structures in terms of their impact on local and global ecosystems. The three financial structures are:


(1) Timber real estate investment trusts (REITs)

(2) Weather derivatives and insurance

(3) Carbon financial instruments


First, this project will survey academic research, government reports, news accounts and marketing materials on these financial structures to determine the required infrastructure and the economic needs and opportunities that drive their creation.


Second, the project will attempt to determine if the structures are specific to globalization. That is, based on needs, opportunities and infrastructure, are these structures possible during other periods of capitalism? If there are historical precedents (e.g., as in the case of insurance), how are they the same, and how are they different? That is, could the structures arise in their current form under other conditions, or are they specific to current conditions? If they cannot arise under other conditions, then they are evidence of something distinctive about capitalism today (which supports the concept of periodization).


Third, in the course of the examination, this project will look at the effects on the environment, if any, in terms of what the financial structures make possible, or make not possible. A subset of Simmons's (1996) ecosystem framework will be used in combination with Merchant's human-nature framework (1989) to assign aspects of ecosystem change into seven categories. Each identified change will be ranked as "significant", "insignificant" or "not applicable" on the local, regional, and global level. The criteria for ranking a change as significant are included for each category below.


Categories for assessing ecosystem impact


Non-human categories (after Simmons, 1996)

(1) Biological productivity: A significant change moves the ecosystem from one type to another, where types are identified as forest; woodland, grassland or savannah; desert; cultivated land; urban; other terrestrial. The rationale is that each of these ecosystem types has a distinct net primary productivity (Simmons, 1996), and a shift from one ecosystem to another indicates a shift in biological productivity.


(2) Population dynamics and diversity: A significant change includes the removal of a keystone species, a key engineer species, or extinction, e.g. associated with unique habitat loss.


(3) Stability: A significant change is indicated by a potential change in (1) or (2).


Human-nature categories (after Merchant, 1989)

(4) Production process, including economic productivity: A significant change in the production process is indicated by a new form of motive power or central technology (e.g., the steam engine, the microchip (Davis, 2000))


(5) Social reproduction process: A significant change in the reproduction process is indicated by new productive relations.


(6) Property forms: A significant change in property forms is indicated in types of ownership or a changed the relationship of the owner to the thing owned. E.g., significant changes include a change from common ownership to private ownership, or single owner to corporate ownership, or tenant owner to absentee owner.


(7) Consciousness (representations of nature, narrative, ways of thinking about nature): A significant change in consciousness is indicated by a change in narrative (e.g., from progressive to declensionist, or declensionist to recovery), or change in valence (a role or character reversal, e.g., from nature as Eden to nature as vengeful), or a change in mode of participation (e.g., from subject-object to partnership) (Merchant, 1995).


For example, one identified impact of timber REITs is an increase in land ownership turnover (Block and Sample, 2001; Hagan, Irland and Whitman, 2005). After examining the impact of turnover, timber REITs might be categorized as:


-- signficant to stability (3) (e.g., rapid turnover has the potential of leading to clear-cutting or parcelization that leads to a change in ecosystem type or habitat loss), property forms (6);

-- insignificant to population dynamics and diversity (2) (i.e., some insignificant change is expected), (7) owners' and local inhabitants' way of thinking about the forest;

-- not applicable to biological productivity (1), economic productivity (4) and social reproduction (5).


In the case of land turnover, the applicable effects might be deemed to be relevant at the local and possibly regional level, but not at the global level.


From this examination, the project will determine if any tentative conclusions can be made about the impact of new financial structures on the environment or the human-nature relationship. If any of the impacts are deemed significant as defined above, then the changes enabled or resulting from the financial structures in question support the case for an "ecological revolution" and for globalization as a new period.


Project outcomes


This project will produce two main outcomes. The first will be a paper summarizing the results that will be that will be submitted for publication. The second outcome will be an outline of research methods, based on this project's findings, to investigate quantitatively the financial structures examined here. This outline can form the basis of further investigation into the relationship of financial structures, globalization and the environment.





Armitage, K. (December, 2005). The United States and the politics of global warming. Globalizations. 2(3) 417-427.


Bachram, H. (December, 2004). Climate fraud and carbon colonialism: The new trade in greenhouse gases. Capitalism nature socialism. 15(4).


Block, N. and Sample, V. A. (2001). "Industrial timberland divestitures and investments: Opportunities and challenges in forestland conservation". Washington: Pinchot Institute for Conservation. Downloaded April 9, 2006 from http://www.pinchot.org/publications/discussion_papers/timber.pdf.


Braudel, F. (1992). The perspective of the world. Berkeley: The University of California Press.


Burbach R. and Robinson, W. (1999). The fin de siecle debate: Globalization as epochal shift. Science and society. Spring, 1999. Downloaded April 12, 2006 from http://www.globalpolicy.org/globaliz/define/findesie.htm


Burkett, P. (1999). Marx and nature: A red and green perspective. New York: St. Martin's Press.


Chancellor, E. (1999). Devil take the hindmost: A history of financial speculation. New York: Plume.


Cronon, W. (1983). Changes in the land: Indians, colonists and the ecology of New England. New York: Hill and Wang.


Cronon, W. (1991). Nature's Metropolis: Chicago and the Great West. New York: W. W. Norton.


Cronon, W. ed. (1995). Uncommon ground: Toward reinventing nature. New York: W.W. Norton.


Crosby, A. W. (2004). Ecological imperialism: The biological expansion of Europe, 900 - 1900 (2nd ed.). Cambridge: Cambridge University Press.


Davis, J. (1998). Rethinking globalization. Race and Class. 40(2-3). London: Institute of Race Relations.


Davis, J. (2000). The end of value. Paper presented at the Marxism 2000 conference, Amherst, MA, September, 20002. Downloaded May 12, 2006 from http://www.gocatgo.com/texts/eov.html


Davis, J. (2002). Speculative capital. Paper presented at the Global Studies Association meeting, Chicago, May, 2002. Downloaded February 26, 2006 from http://www.gocatgo.com/texts/globalization.networks.pdf


Davis, J. (2005). Networks and globalization. Paper presented at the Global Studies Association meeting, Knoxville, TN, May, 2005. Downloaded February 26, 2006 from http://www.gocatgo.com/texts/globalization.networks.pdf


Dyer-Witheford, N. (1999). Cyber-Marx: Cycles and circuits of struggle in high-technology capitalism. Urbana, IL: University of Illinois Press.


Foster, J. B. (1999). The vulnerable planet: A short economic history of the environment. New York: Monthly Review Press.


Foster, J. B. (2000). Marx's ecology: Materialism and nature. New York: Monthly Review Press.


Frankel, J. (2003). The environment and globalization. NBER working paper series working paper 10090. Cambridge, MA: National Bureau of Economic Research. Downloaded May 20, 2006 from http://www.nber.org/papers/w10090.


Frieden, J. (2006). Global capitalism: Its fall and rise in the twentieth century. New York: W. W. Norton.


Grimes, P. and Kentor, J. (2003). Exporting the greenhouse: Foreign capital penetration and C02 emissions, 1980 - 1996. Journal of world systems research. 9(2), 261 - 275.


Hagan, J., Project Leader; Irland L. and Whitman A. (2005). "Changing forestland ownership patterns in the northern forest and implications for biodiversity". National Commission on Science for Sustainable Forestry. Downloaded April 9, 2006 from http://www.ncseonline.org/ewebeditpro/items/O62F7183.pdf


Henwood, D. (April, 2001). The "New Economy" and the speculative bubble: An interview with Doug Henwood. Monthly review. 52(11).


Heynen, N.  and Robbins, P. (March, 2005). The neoliberalization of nature: governance, privatization, enclosure and valuation. Capital nature socialism. 16(1) 5-8.


Hughes, J. D. (2001). An environmental history of the world. London: Routledge.


Hughes, J. D. (December, 2005). Global environmental history: The long view. Globalizations. 2(3) 293-308.


Jorgenson, A. K. and Kick, E. L. (2003). Special issue: Globalization and the environment. Journal of world systems research. 9(2) 195-203.


Liodakis, G. (2005). The new stage of capitalist development and the prospects of globalization. Science & society. 69(3), p341 - 366. July, 2005.


Marx, K. (1981). Capital: A critique of political economy. Vol. III. London: Penguin Books.


McKibben, B. (1989). The end of nature. New York: Random House.


McNeill, J. R. (2000). Something new under the sun: An environmental history of the twentieth-century world. New York: W. W. Norton.


Merchant, C. (1987). The theoretical structure of ecological revolutions. Environmental Review. 11(4) 265-271.


Merchant, C. (1989). Ecological revolutions: nature, gender, and science in New England. Chapel Hill, NC: University of North Carolina Press.


Millennium Ecosystem Assessment (2005). Ecosystems and human well-being: Biodiversity synthesis. Washington, DC: World Resources Institute. Available online at http://www.millenniumassessment.org/proxy/Document.354.aspx.


O'Connor, J. (1998). Natural causes: Essays in ecological Marxism. New York: The Guilford Press.


Oosthoek, J. and Gills, B. K. (December, 2005). Humanity at the crossroads: The globalization of the environmental crisis. Globalizations. 2(3) 283 - 291.


Reinsborough, P. (2004). Global ecology! Global democracy! Now! In Solnit, D. ed. (2004). Globalize liberation: How to uproot the system and build a better world. San Francisco: City Lights.


Robinson, W. I. (2004). A theory of global capitalism. Baltimore: The Johns Hopkins University Press.


Saber, N. (1999). Speculative capital (Vol. I). Harlow: Pearson Education Limited.


Shiller, R. (2003). The new financial order: Risk in the 21st century. Princeton: Princeton University Press.


Simmons, I. G. (1993). Environmental history: A concise introduction. Oxford: Blackwell.


Simmons, I. G. (1996). Changing the face of the earth: Culture, environment, history (2nd ed.). Oxford: Blackwell.


Simmons, I. G. (2003). Society and environment: Thinking about the global scale. Paper presented at World System History and Global Environmental Change conference, September 19 - 22, 2003, Lund University, Sweden. Downloaded April 24, 2006 from http://www.humecol.lu.se/woshglec/papers/simmons.doc


Sivanandan, A. and Wood, E. M. (February, 1997). Capitalism, globalization, and epochal shifts: an exchange. Monthly Review. 48(9).


Stevis, Dimitris (2005). The globalizations of the environment. Globalizations. 2(3), 323 - 333.


United Nations Environment Programme (1999). Global environment outlook 2000 overview. Downloaded May 18, 2006 from http://www.unep.org/geo2000/ov-e/ov-e.pdf


United Nations Environment Programme (2006). GEO yearbook 2006. Downloaded May 18, 2006 from http://www.unep.org/geo/yearbook/yb2006/PDF/Complete_pdf_GYB_2006.pdf


World Resources Institute (1999). The changing global architecture: Environmental threats and opportunities. Roundtable discussion hosted by the WRI Institutions and Governance Program International Financial Flows and the Environment Project. Washington DC: World Resources Institute. Downloaded May 20, 2006 from http://pdf.wri.org/iffe_gfareport.pdf.