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Cited by 29Housing, Finance, and NeoliberalismGlobal trade, sustainability, and social impactPolitical Economy and Marxism

Commodity traders in a storm: Financialization, corporate power and ecological crisis

Open access
Baines, Joseph, Hager, Sandy Brian·2022·Review of International Political Economy
DOI 10.1080/09692290.2021.1872039
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Abstract

Commodity trading firms occupy a central position in global supply chains and their activities have been associated with financial instability, social upheaval and manifold forms of ecological devastation. This paper examines these companies in the context of debates regarding corporate financialization. We find that since the 2003–2011 commodity boom, trading firms have become less financialized in terms of the source of their profits as they have shifted away from financial activities. However, they have become more financialized in terms of the destination of profits, with dividend and share repurchase commitments reaching new heights after 2015. In view of this finding, we inquire into whether trading firms’ growing commitment to shareholder payouts will encourage them to continue to prioritize short-term returns, or whether instead these firms’ linkages to financial markets will lend clout to financial activists concerned by the long-term environmental and social consequences of their operations. Ultimately, we find several sources of commodity trader resilience which insulate them from shareholder resolutions and divestment campaigns aimed at curbing ecological destruction and human rights abuses in their supply chains. We accordingly suggest that pressures from activist investors must be complemented with more wide-ranging efforts to defend living systems across the planet.

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Crossref · 10.1080/09692290.2021.1872039

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  • Large financial institutions gained capacity to store large quantities of physical products, which affected prices, production processes, and ultimately the overall economy.

    “Large financial institutions gained capacity to store large quantities of physical products, which affected prices, production processes, and ultimately the overall economy”

    From Food Financialization: Impact of Derivatives and Index Funds on Agri-Food Market Volatility (2024) · cites this paper as Baines and Hager 2022

    Section 4 (p. 24) says JPMorgan had large-scale metal warehousing facilities, supporting the limited point that a financial institution held physical commodity storage assets. It does not say that large financial institutions generally gained this capacity or that storing products affected prices, production processes, or the overall economy; it instead describes JPMorgan selling those operations to Mercuria. (LLM, conf=0.84)

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Cites

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Research works printed but not linked: 12

  1. Ammann, D. (2009). The king of oil: The secret lives of Marc Rich . St. Martin's Press.
  2. Froud, J., Johal, S., Leaver, A., & Williams, K. (2006). Financialization and strategy: Narrative and numbers . Routledge.
  3. Gibbon, P. (2014). Trading Houses During and Since the Great Commodity Boom: Financialization, Productivization or ...? DIIS Working Paper , 2014(12): 134. https://www.diis.dk/files/media/publications/publikationer\_2014/wp2014-12.pdf
  4. Helleiner, E. (2018). Positioning for Stronger Limits? In: E. Helleiner, S. Pagliari & I. Spagna, eds. Governing the world's biggest market: The politics of derivatives regulation after the 2008 crisis . Oxford: Oxford University Press, 199-225.
  5. Jenkins, H. (2018). History of the funds. Ghost in the Machine, ADM Investor Service International. 2018(4), 14-15. https://www.admisi.com/market-information/the-ghost-inthe-machine/
  6. Morgan, D. (1979). Merchants of grain: The power and profits of the five giant companies at the center of the world's food supply . Viking Press.
  7. Omarova, S.T. (2013). The merchants of Wall Street: Banking, commerce, and commodities . Minnesota Law Review , 98, 265-355.
  8. Oxfam. (2012b). Oxfam reaction to Glencore director saying the US drought is good for business. https://www.oxfam.org.uk/media-centre/press-releases/2012/08/oxfam-reactionto-glencore-comment-that-us-drought-is-good-for-business
  9. Pagliari, S. (2018). The second half: interest group conflicts and coalitions in the implementation of the Dodd-Frank Act derivatives rules. In: E. Helleiner, S. Pagliari & I. Spagna, eds. Governing the world's biggest market: The politics of derivatives regulation after the 2008 crisis . Oxford: Oxford University Press, 137-167.
  10. Pagliari, S., & Young, K.L. (2014). Leveraged interests: Financial industry power and the role of private sector coalitions. Review of International Political Economy , 21(3), 575-610.
  11. Sporre, G., Clifford, R., & De Buyer, G. 2011. The value in volatility: Initiating with a buy. Deutsche Bank Global Market Research . pp.1-130.
  12. Trafigura (2013) Puma energy becomes largest independent in Australia. Press release. https://www.trafigura.com/press-releases/puma-energy-becomes-largest-independent-inaustralia

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Authors
Baines, J., & Hager, S. B.
Affiliations
  • King's College London (GB)
  • University of London (GB)
Corresponding author
Hager, Sandy Brian
ORCID
Venue
Review of International Political Economy
Publisher
Informa UK Limited
Published
2021-01-25
Volume
29
Issue
4
Pages
1053-1084
ISSN
  • 0969-2290 (ISSN-L)
  • 1466-4526
DOI
10.1080/09692290.2021.1872039
OpenAlex
W3119913709
Cited by
29
References
48
Citations by year
2026: 4 · 2025: 6 · 2024: 7 · 2023: 7 · 2022: 5
FWCI
3.94
Type
journal article
Language
en
Open access
Licence
cc-by-nc-nd
Locations
  • Review of International Political Economy (publishedVersion)
  • City Research Online (City University London) (acceptedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • EconStor Open Access Articles and Book Chapters (submittedVersion)
  • Econstor (Econstor) (submittedVersion, cc-by-nc-nd)
  • YorkSpace (York University) (submittedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Finance › Housing, Finance, and Neoliberalism
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Global trade, sustainability, and social impact
  • Social Sciences › Sociology and Political Science › Political Economy and Marxism
Keywords
financialization, corporate power, environmental crisis, shareholder payouts, dividend policy, share repurchases, activist investors, supply chain governance, human rights violations, ecological destruction, business resilience

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