The dissertation traces the bond between risk and profit from its classical origin to its culmination in contemporary finance. Specifically, it dwells on the interwar period during which securities exchanges were redefined as markets for risk, subject to their own logic of supply and demand. Combining intellectual and institutional history, I show how financial markets emerge in this period as the ultimate means for transferring risks from the risk-averse masses to a handful of risk-takers, significantly skewing the distribution of the rewards of economic production. The pricing of risk, as a technical problem for economists as well as regulators, thus reveals a fundamental political problem that challenges widely held beliefs about the liberal subject, democratic rule, and distributive justice. As I argue in this dissertation, the presence of uncertainty reverses liberal commitments to equal dignity and opportunity, justifying new social asymmetries in the name of greater security.
Uncertainty is a problem for justice when actions and outcomes are misaligned, and when this misalignment is broadly anticipated by the members of a political community. The dissertation offers an original interpretation of the tradition of political economy as a series of market solutions to this specific problem, which utilize a language of risk and reward. Adam Smith’s master of industry, Frank Knight’s entrepreneur, and J. R. Hicks’ speculator were the new social protagonists introduced to personally carry the uncertainties of capitalist production and exchange. Each presupposes, and profits from, the general need of the many for a regular, guaranteed return for their efforts.
Divided into three parts, the dissertation discusses the meaning and limitations of these market solutions and the obstacles they pose for an effective politics of risk. In the first part, I show how profit displaced private property and the proprietary citizen as the governing ideals of liberal political economies, substituting hierarchy and difference for self-governance and autonomy. The second part focuses on the market as a system of risk reallocation. Much like insurance, financial markets work by way of classification and exclusion. Lacking the means to account for their broader social consequences, they remain suspect as political solutions. In addition, the history of financial regulation reveals that practitioners, lawmakers, and the public all rely on a shared set of market ideals, even as they oppose each other. The result has often been the paradoxical reproduction of theoretical inequalities through law. In conclusion, the third and final part of the dissertation foregrounds an alternative approach to risk developed by sociologists in the 1980s, who discussed the politicization of danger and progress by a new type of social movement. If markets and insurers offer ways to reallocate risks among a given population, social movements use risk attribution strategically and symbolically in order to transform the language of personal responsibility into one of structural inequality. In particular, the experiences of the environmental justice movement help reframe the problem of uncertainty and justice as one of distribution, rather than allocation, paving the way for a participatory politics of risk.
