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Europe’s imagined financial centres II – on collective memory and cultural identity*

*  This is the second part of a shortened and revised version of a paper published as Centres of Finance, Centres of Imagination: On Collective Memory and Cultural Identity in European Financial Market Places, in: GaWC Research Bulletin 92, 20th August 2002. Part I gave a brief overview of the history of financial centres, Part III will be on Financial Agglomeration in Europe as Cultural Phenomenon, and Part IV will provide a list of links and references.


Nowadays, most international financial centres are located in so-called world cities. Those are places which, according to a common definition, meet at least four criteria (Friedman in Knox and Taylor 1995):

-          They are centres through which economically relevant factors such as money, workers, commodities and information flow, with their influence stretching far beyond their boundaries to places and regions worldwide.

-          In forming an international network they organise a space of global accumulation, defined by a set of interdependent regional and national economies which encompasses only a small fraction of the earth’s surface and population but a large share of the world’s total production and consumption.

-          They are large, urbanised regions defined by dense patterns of interaction rather than by political-administrative boundaries and

-          they serve as the commanding nodes of the global system which can be arranged into a hierarchy of spatial articulations according to the economic power they command – at least as far as the top is concerned where New York, London and Tokyo represent the undisputed command and control centres of the global economy.

World cities are considered as powerful centres of economic and cultural authority, as places “able to generate and disseminate discourses and collective beliefs, … to develop, test, and track innovations, and … offer ‘sociable’ settings for the gathering of high-level information (economic, political, cultural) and for establishing coalitions and monitoring implicit contracts.” (Knox in Knox and Taylor 1995)

In contrast to a widespread view, financial institutions located in world cities cannot easily change places. Although being called the footloose industry, for various reasons, once established they are no longer footloose at all. They depend on a vast net of suppliers of so-called producer services. Those include advertising, accounting, management consulting, legal services and many more.

Financial institutions have a vast diversity of separate functions, and geographical dispersal, with the result that banks’ central headquarters are no longer simply centres for administration and control but also for orientation of the firm within its business environment. They not only have to decide about overall policies concerning clients’ business, trading strategies, risk management and the like but also about product development and expansion, mergers and acquisitions, in a multiplicity of situations and countries. In this environment, providing certain highly specialised services in-house is costly and often not possible (Sassen 2001).

Reliance on producer services is one aspect, another is dependence on the built environment. Banks’ requirements are higly specialized and major houses tend to design their own buildings (Eade 1998). For example, financial institutions need large trading floors – in the order of 300,000 square feet  and more – and, depending on a certain technology to handle the huge volume of transactions traded every day, they require adequate space for cables and outlets as well as a pool of technical personnel to operate and repair equipment, including building managers who continuously upgrade the information and telecommunication systems. Furthermore, with the advent of HFT systems a new aspect of proximity entered the picture determined by the ideal of ”zero latency” (Drake 2011).

A third argument against the footloose nature of the financial industry is the ongoing need for personal, face-to-face contacts in financial markets. The core of financial activities can be described as “information, expertise, contacts” (Thrift in Corbridge et al. 1994). In general, all of these require spatial proximity although the advantages vary in their intensity from product to product. For small securities trades, interbank payments or standardised foreign exchange dealing they are probably minuscule. For mergers and acquisitions, the management of investors’ portfolios or the lead management of syndicates they are high.

Besides, there is still another argument for financial agglomeration in the big centres which is identification with a place in its broadest sense. In general, people living and working in world cities such as New York, London and Tokyo are aware of their special status. They may complain about the disadvantages such as air pollution and traffic jams, but they also enjoy the advantages. Some of these advantages are imaginary by nature, for example, the experience of a certain way of life or the feeling to be part of a special culture which differs from those elsewhere.

The financial community has become a wholly distinct class breeding their own rules, norms, rituals and behaviour patterns. Their view is largely determined by the way they see themselves and their industry and by the way they interact. Financial places in this sense are not only places of financial intermediation but interactional proving grounds, centres of representation (of “where the stories are”) as well as centres of discursive authority (Thrift in Corbridge et al. 1994). They are places where individuals are bound together by a common “market culture”, differing from centre to centre, which is not easily given up in exchange for another environment.

How does market culture affect a financial place’s economic success? What kind of social and cultural influences are important in this context? Nigel Thrift listed six main categories of arguments in the literature that may provide an answer to this question:

-          The first is the so-called “new international political economy” of Susan Strange and others with its emphasis on the existence of ‘transnational elites’. Those authors are constructing systems of global economic guidance and money which require more or less constant social interaction depending upon different forms of knowledge accumulation.

-          The second strand of literature is rooted in the work of Karl Polanyi and is called the “new economic sociology”. Its authors stress the social embeddedness of economic processes in structural frameworks considering economic networks and institutions as social constructions of reality which not necessarily result in efficient outcomes but struggle over interests following particular historical trajectories under path dependence.

-          The third category is cultural studies literature which introduces ideas of textuality and discursivity into the discussion about the performance of financial centres. Here, textuality refers to “the expanding world of texts and images and their associated techniques of reading and writing (while) … discursivity refers to the process whereby the interpretation of texts and images by producers and consumers, through talk, and writing, and reading, is wrapped up in narratives”.

-          The fourth strand of literature is on “reflexive modernisation” along the works of Anthony Giddens or Ulrich Beck. They stress the growing tendency towards “reflexive subjectivity” in a modern world depending upon the presence of monitoring-learning systems and the knowledge generated by them in an environment where traditional social structures are in decline and societies become more and more individualised. In this environment people have a greater freedom to shape their biographies because of the rise of media networks that allow them to monitor their place in the world more easily seeing themselves with the eyes of others.

-          The fifth category is called the “new ethnomethodological literature on social interaction in business” which considers “talk” in its broadest sense as crucial in economic relations. In particular situations involving a degree of uncertainty are said to depend on face-to-face interaction which allows communication and negotiation processes, including non-verbal interaction, which are diffcult or impossible over a greater distance.

-          The sixth strand of literature consists of economics itself and of those of its parts which have begun to consider markets in one way or the other as socially and culturally constructed relying upon specific forms of textuality and discursivity. Those include recent examples of the “new institutional economics” of Oliver Williamson and others as well as works on bubbles, fads and herd behaviour in markets (Shiller) or on the rhetoric of economics along the lines of  Deirdre McCloskey.

Although these works and categories increased our understanding of the intrinsic mechanisms of financial markets they offer by far no exhaustive explanation for financial agglomeration and the success of international financial centres. The aim of the following is to draw the attention to another, so far neglected field – a seventh strand of literature – around the work of Maurice Halbwachs on collective memory as an explanation for cultural identity.

Nowadays, outside sociology Maurice Halbwachs’ work in the sociology of knowledge is widely unknown. One reason is that his most important contribution, Les cadres sociaux de la mémoire (The social frameworks of memory), where he developed his idea of collective memory, had not been available in English for many years. (Halbwachs 1992 for the first time provides a translation of major parts of this work. His other decisive text on this subject, La mémoire collective (The Collective Memory), was only discovered after his death and according to experts is in a rather unfinished state. The following relies also heavily on Assmann 2011.)

Halbwachs’ work stands in the tradition of Emile Durkheim in emphasising the social construction of time and the fact that, in addition to historiography and biography, the past is mainly known through symbol and ritualism. Besides, he was strongly influenced by the Annales school in France and by interchanges of ideas with its founders, the historians Marc Bloch and Lucien Febvre, who were his colleagues at the University of Strasbourg where in the 1920s and early 1930s Halbwachs held the first chair in sociology ever in the French academic system (Coser 1992).  The aim of this school was to reestablish intellectual relations between history and other disciplines such as sociology. The relevance of Halbwachs’s work for the subject here becomes evident at a closer look at his main line of reasoning and conclusions .

The central thesis of Halbwachs’ work is that in establishing cultural identity collective memory is laying the foundations for community. Collective memory does not mean that there exists a kind of mystical group mind; it is individuals as group members who remember. But individual memory, as most areas in human experience, is rooted in a social context and structure. “Memory depends on the social environment” (Halbwachs 1992: 37). Without a social frame of reference – les cadres sociaux –  individual memory is not possible:

“One cannot … think about the events of one’s past without discoursing on them. But to discourse upon something means to connect within a single system of ideas our opinions as well as those of our circle. It means to perceive in what happens to us a particular application of facts concerning which social thought reminds us at every moment of the meaning and impact these facts have for it. In this way, the framework of collective memory confines and binds our most intimate remembrances to each other. It is not necessary that the group be familiar with them. It suffices that we cannot consider them except from the outside – that is, by putting ourselves in the position of others – and that in order to retrieve these remembrances we must tread the same path that others would have followed had they been in our position.” (Halbwachs 1992: 53)

The past is a social construction which is shaped by the concerns of the present, that is, the beliefs, interests and attitudes prevailing in society or within a group, and there are as many distinctive collective memories as there are groups and institutions in society. Critics have pointed to the fact that, according to this view, in its ultimate consequences there would be no continuity in history altogether. However, one must see that the past is always a compound of persistence and change, of continuity and newness (Coser 1992: 26). In this framework, individual and group memory are two sides of the same coin. From the point of view of an individual memory is an aggregate resulting from being part of a manifold of group memories. Seen from the view of the group, memory is a matter of distributing a given knowledge that is available inside this group among its members. All remembrances together build an “independent system” whose elements support and determine one  another (Assmann: 37).

In order to become anchored in collective memory, truths have to relate to events, places or persons. On the other hand, to become part of the collective memory, events have to be enriched by a sense of meaning. At the very moment of its entry into memory each personality or historical fact is transposed into a lesson, an idea or a symbol getting meaning and becoming an element of the society’s system of ideas. The interplay of ideas and experiences forms what Halbwachs called “memory images”. Their manifestation is determined by three characteristics, a specific reference to time and place, reference to a group and the process of reconstructivity itself.

Memory images refer to a particular time and place, although this need not be a historic time or a geographic place. Collective memory depends on common points of orientation or landmarks. For example, calendar holidays reflect a collectively experienced time marking either the ecclesiastical year, the farmers’ year, the civil or the military year, depending on the group. Respective anchors for the collective memory can be found in space as well: the house for the family, the village for the rural population, towns for urban crowds, the City for the financial community. Space also includes the material things by which the individual is surrounded, the “entourage matériel” (Assmann). These things are socially determined as well. Their price, their value and their relevance as a status symbol are social facts (an aspect also emphasised by Appadurai 1988).

The second characteristic is group reference. Collective memory is bound to the group. Those sharing it and participating in its construction are definitely part of the group. For example, “social classes are made of people who are distinguished from each other by the kind of consideration that they display toward one another and that others display toward them” (Halbwachs 1992: 179). The group which constitutes a collective memory preserves its past above all under two aspects: distinctiveness and persistence. The image it is constructing of itself stresses the distinct characteristics of insiders and outsiders but plays down differences inside the group. In addition, it is building a consciousness of its identity in time by selecting the remembered facts with regard to continuity and resemblance.

The third characteristic of the manifestations of memory images is reconstructivity, the very fact that the own past can be, and constantly is, reconstructed by the group. There are no pure “facts” of remembrance in the world. The past is only preserved in memory in the form, and to the extent, that a group in its particular epoch, and within its particular frame of reference, is able to recover it. The past is constantly reconstructed according to the changing frameworks of memory in a continuing presence. In this sense, the new itself, that is, the present one group opposes to its past, only represents the past of other groups which enters the consciousness of the first permeating it when both come into contact or build bonds through the mediation of third ones. Halbwachs gives the example of family relations:

“If … each marriage marks the point of departure of a truly new domestic group, even though the two spouses do not forget the traditions and recollections that have permeated them through contact with their kin, they were more profoundly influenced than the latter by all currents that come from the outside. A new household “expands” before it settles down and becomes fully conscious of what singles it out from others. Moreover … the family not only enters more and more frequently into relations with families of friends or of others that it encounters in the world, but it also builds bonds through the mediation of these families with still others and with an entire social milieu in which the families are immersed and in which customs and beliefs arise and are propagated that impose themselves on everybody, referring to nobody in particular.” (Halbwachs 1992: 184)

The literature on collective memory and cultural identity distinguishes between historical or cultural and autobiographical memory. The latter refers to events that were experienced personally. Autobiographical memory is always rooted in other people. It tends to fade with time unless it is periodically reinforced and reconstructed through contact with persons who shared the same experiences.

In contrast, in historical memory events are not directly remembered but only through written records and other means and media. Since historical memory cannot be inherited it has to be kept alive through commemorations and festivities. Here, the past is stored and interpreted by social institutions. Present generations become conscious of themselves by opposing their present to their own constructed past through participation in those commemorative meetings and activities. For example, Bastille Day in France, or Independence Day in the United States, evoke affectively toned memories at least in parts of the people. However, commemorations and festivities are rare events. This raises the question: How does collective memory survive times of routine behaviour and calm?

The answer is that it has to be kept alive by cultural mnemonics. This comprises memory and identity supporting written and non-written means. The non-written supports include rites and myths and all kinds of signs and symbols. Cultural mneomonics is directed at the fix points of the past, the big events and developments, the grand narratives whose people and objects have become symbolic figures and anchors of remembrance. There is always something sacred or religious about the images of cultural memory which is far from the ordinariness of daily life. Communication takes the form of ceremony. Explanation and interpretation is left to specialists. For example, in former times poets were responsible for preserving group memory and group identity. In contrast to the diffuse biographical memory cultural memory needs special introduction and instruction. Competence and group membership have to be proven. Those non-initiated are left out.

From the literature several elements of construction of collective memory and cultural identity can be derived. Those of special interest here are four aspects: myths, rites, symbols and media. Their role for the success or failure of a financial place will be analysed in detail in part III.

In addition, there is a fifth element, to which the attention shall be drawn, which has been neglected in this context so far and which requires further explanation. Let us call this element patterns. Patterns refers to a spatial concept and to a special “logic of space”. It draws the attention to the social functions of buildings, places and cities in general, and to the built environment in financial places in particular.

The idea is that, for example, in addition to serving as bodily protection buildings “operate socially in two ways: they constitute the social organisation of every day life as the spatial configurations of space in which we live and move, and represent social organisation as physical configurations of forms and elements that we see.” (Hillier 1996) It is this concept of “configuration” stressing the importance of relations taking into account other relations and of “how things are put together” that influences collective memory and thereby contributes to constructing cultural identity.

At first sight, there is a spatial hierarchy of buildings, places and cities. However, this hierarchy becomes increasingly fuzzy at a closer look at their functional role. As Hillier puts it: Cities are the largest and most complex artefacts of humankind. In general, their physical and spatial structure is the outcome of long-term small incremental changes whose accumulation over time can be regarded as a quasi-organic process producing complex patterns which deny themselves to any obvious method of analysis.

The incremental changes are the result of social and economic alterations involving feedback and multiplier effects, and interaction between different scales, which in their interplay lead to a phenomenon known as “emergence”, the effect that the way parts are put together to form the whole is more important for the cultural identity connected with a place than any of the parts taken in isolation. One result is that in their social function the hierarchy between buildings, places and cities no longer holds. Places can no longer be considered as local things. “Places do not make cities. It is cities that make places” (Hillier 1996, Space is the Machine: 151).

How do spaces and places affect collective memory? One key factor here is the relation between movement within and through the city and its various parts on all scales on the one hand and the structure of the urban grid on the other. This relation is a reciprocal one and there are multiplier effects on both arising from patterns of land use and building densities which, in turn, are themselves influenced by the space-movement relation responsible for the characteristic structures of cities. Socio-economic forces shape the city in producing collectively defined spaces and patterns which, in turn, determine how the city is conceived. While some of the movements in a city can be explained by certain activities or the presence of some attractors or magnets, others are determined by the structure of the urban grid itself.  There is a kind of  “natural geometry” (Hillier) to what people do in space. To cite an example:

“At the most elementary level, people move in lines, and tend to approximate lines in more complex routes …(compare figure 1a). Then if an individual stops to talk to a group of people, the group will collectively define a space in which all the people the first person can see can see each other (figure 1b), and this is a mathematical definition of convexity in space, except that a mathematician would say points rather than people. The more complex shape of the third figure (compare here: figure 1c) defines all the points in space, and therefore the potential people, that can be seen by any of the people in the convex space who can also see each other. … Such shapes vary as we move about in cities, and therefore define a key aspect of our spatial experience of them.” (Hillier 1996: 114 f.)

Figure 1: Spatial Convexities

How does spatial experience link to a place’s acceptance or “success”? Part of the answer is intelligibility. Since, as was said, people tend to move in lines, an intelligible space structure is one in which the “convex spaces” mentioned are linked by lines which can be intuitively understood giving obvious clues to people to where they can go. Another element is accessability on a larger scale. Relations between different scales, between the local and the global in a city’s structure have to be intelligible and conceivable as well which, in turn, once again depends on the lines and patterns of the urban grid formed by movement (Hillier 1996, Space is the Machine: 160).

It would lead too far to give a detailed description of this very rich concept of configuration here. The question remains why in this analysis space should be attributed such a prominent role.

In the works on collective memory and cultural identity spaces and places are, above all, seen as symbols. Those can be real or imaginary ones. Pierre Nora, for example, speaks of realms of memory – “les lieux de mémoires” or “Gedächtnisorte”. As Assmann puts it (my translation): “Each group aiming at consolidation tends to create and secure places which represent not only arenas of their various interactions but also symbols of their identity and anchors for their remembrances. Memory needs places …” (Jede Gruppe, die sich als solche konsolidieren will, ist bestrebt sich Orte zu schaffen und zu sichern, die nicht nur Schauplätze ihrer Interaktionsformen abgeben, sondern Symbole ihrer Identität und Anhaltspunkte ihrer Erinnerung. Das Gedächtnis braucht Orte …).

However, this is not the way – at least not the only way – space matters in our context. Space consciousness has two different meanings here. In part III will be analysed how places as symbols serve to construct collective memory, but also how spatial patterns, and the traces of the interaction of space and movement in a city, contribute to the formation of cultural identity.

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