AN OVERTURE TO GEOFINANCE

A founder of a consulting firm argues for a new discipline called geofinance to meet the analytical demands of an ever changing world. 

Vander Straeten (Tail Risk Management, 2017) contends that neither geopolitics nor geoeconomics is currently adequate as explanatory paradigms. Given four major trends—the increasing financialization of the world market, globalization, liberalization, and the rising significance of international markets in the wake of deregulation—a wholly new approach is necessary, one that not only captures the ways in which political currents shape the world financial landscape, but also how monetary forces profoundly impact geopolitical affairs. The author begins the book in search of a precise definition of geofinance and auditions several different iterations, but this one comprehensively covers the criteria he seems to be after: “Geofinance traditionally studies the links between financial power and geographic space, and it examines strategic prescriptions based on the relative importance of the balance of power between financial markets and nations as well as, more generally speaking, the balance of power among government-sponsored and private organizations across world history.” Vander Straeten distinguishes geofinance from its existing disciplinary competitors, discusses its methodological approaches, and makes a vigorous argument not only for its value, but also for its indispensability. The author discusses the dynamic causality that characterizes the relation between finance and politics, focusing not only on state actors, but also subnational forces like markets, private companies, international institutions, and even financially influential individuals. Finally, he specifically assesses a series of real-world case studies and issues predictions regarding the world’s geofinancial outlook. Vander Straeten is the founder and head of Value4Risk Geofinancial Risk Consulting and has more than 25 years of risk management experience behind him, an accumulated expertise that shows in his self-assured command of the material. His prose is flawlessly clear despite the often technical nature of the subject. As a result, the book is accessible to a nonscholarly audience, though it’s primarily addressed to an academic one. In addition, the author artfully balances the theoretical and practical aspects of his disciplinary proposal, explaining the intellectual framework of geofinance as well as furnishing concrete examples of its applications. In fact, one of the most striking features of the study is the running critique of the social sciences. Vander Straeten is unsatisfied with the general acceptance of causal determinism, preferring the “indeterminate complexity” that biology and mathematics generally accept. But he’s still wary of mathematics as the underpinning of a comprehensive analytical methodology. (He parenthetically provides an astute account of the limitations of big data.) The author limns an analogy between geofinance and Darwinian evolution in terms of the adaptability, progress, and the competitive striving for power of financial and political actors. But that comparison turns out to be threadbare—he could have just as easily likened his approach to Thucydides’ study of war or Machiavelli’s investigation of principalities. Still, vander Straeten makes an attractive argument for a new theoretical framework that’s both more comprehensive and more common-sensically devoted to the unvarnished exploration of human behavior than most of the social sciences. 

A provocative and timely call for a new approach to understanding international affairs.