Financialization and local statecraft: Specifying actors,elevating politics

Introduction

In Financialization and Local Statecraft, Andy Pike outlines in forensic detail the shifting landscape of local government engagements with financialization in England since 2010. One of Pike’s major beefs with existing literature on financialization at this scale is that it “lack[s] spatial and temporal specificity” (p. 41) in explaining local statecraft and its relations with financialization. Pike remedies this solidly for local governments in England, achieving the goal he sets for “identify[ing] . . . actors and their roles, rationales, resources, capacities, and relations.” Through a national-scale analysis, Pike is able to answer the question of what is missing from analyses of singular or extreme cases of local state financialization: a differentiated landscape that defies binary categorizations of “financialized” or not. Drawing on what he outlines as a conjunctural, relational, and comparative methodology, Pike documents the national extent of local state entanglements with finance – explaining how local actors have responded to the particular UK context of fiscal constraints and centralized oversight that has emerged since 2010. In doing so he creates a rich empirical trove of data that he uses to make theoretical interventions in existing understandings of the relationship between local governments and finance – and also, at points, to raise political questions about these relationships.

In lieu of outlining each of Pike’s chapters, I have organized this review essay to first comment on how Pike connects his theoretical intervention to a methodology focused on empirical specification. I then cover several thematics in the book that stand out to me as significant contributions (risk, solutions, and politics). Finally, I expand on three areas (distribution, public knowledge production, and the politics of public finance) where Pike points to the stakes of his argument and how I can see these further engaging with literatures and normative concerns in financial and economic geography.

Specifying the extent of financialization in local statecraft: A methodology

As noted above, in refusing to take for granted that local states are being financialized – or financializing themselves – Pike sets out to specify the actors and relationships involved in how local governments have engaged with fiscal constraints and centralized regulation since 2010. He does this both through creating a typology of local government structures and with an exhaustive accounting of the ways local governments have worked to fill funding gaps via commercialization and new links to financial markets. While his account does not emphasize political coalitions and local state motivations beyond those directly imposed by national government and fiscal constraints, this choice is understandable given Pike’s aim of questioning some of the overarching and, in his view, over-reaching explanations that financialization is working on municipal governments and local statecraft or affecting them from outside the public sector. To challenge accounts that Pike feels overly emphasize finance and financialization as driving statecraft responses, he creates a national-scale dataset of both financial and qualitative data, the latter which comprises interviews with a myriad of actors involved in local statecraft’s connections to finance. With this empirical scope of the local governments at the scale of England, Pike highlights the existence of many less-extreme cases: not every local government has a major appetite for risk, nor faces such dire needs for outside financing that it engages in the sort of “vanguard” risky financial innovation that has been criticized in the academy and politics alike. To document this variegated landscape, Pike looks both “inside and outside Town Hall,” emphasizing what I found to be a very useful definition of local state financialization as a process that brings increasing engagement with commercial finance to the management and funding of local government. In investigating and comparing the tactics used by different types of local government across different geographies, Pike documents what he calls “differentiation” in the extent of financialization. Through this approach, he is able to demonstrate that it is not “financialization everywhere,” as some theorists of local-state financialization more focused on case studies have implied.

In particular, I want to call attention to the third chapter of the book, “Funding and financing local government in England,” and how its “landscape view” contributes to work in financial geography. While Pike does not cite this work, his approach jives with a growing number of financial and economic geographers who are “following the money” (Hughes-McLure, 2022), with the goal of mapping and modeling flows of money to account for redistributions of resources and benefits/losses. To assess the extent of financialization, in this chapter and the next, Pike investigates where the money comes from, the systems of accounting and accountability used to keep track of it, and how the money is governed overall. This allows him to essentially map power relations alongside flows of money and show how centralized rule-making surrounding local governments in England affects flows of local funding, offering an explanation of how and why different local actors search for external sources of revenue and finance. One thing I think Pike might take from the “follow the money” method is to do more showing than telling: while the text usefully uses footnotes to document his sources, including more direct quotes and legitimations from government reports and his interviews with local actors would enliven the account. Figures visualizing different financial strategies pursued by government types are quite effective later on in the book, but visualizations of financial flows and more direct quotes from his 50+ interview participants would be very welcome. Such use of data would add an additional stylistic focus on actors and their relationships – with which Pike is very concerned with specifying – to the text.

Thematics: Risk, solutions, politics

Some of the most interesting empirical details in the book are found in the fourth chapter, which covers the specificities of local government financial risk calculations. The specter of risk, Pike reports (38), looms large in local government finance post-2010: paradoxically, given fiscal and regulatory constraints, “not embracing financial innovation would actually constitute an irresponsible handling of taxpayer money” (Deruytter and Möller, 2020: 406). In another paradox, he finds that increased financialization to deal with funding risk tends to rachet up the financial risk, seemingly “necessitating” further financial innovation (p. 215). There are fundamental questions here around the politics of risk: what do local statecrafters do, what services or spending are sacrificed, and what costs are redistributed, in the name of “financial prudence” and risk avoidance. Here, as in other parts of the book, Pike nuances the story of financialization by explaining how new calculations of risk assessment are foisted onto local governments by national-scale structures of regulation and downloaded fiscal constraints – not necessarily by commercial finance “invading” the public sector.

Public restructuring has also opened the door for a “ballooning” in the organization of the local state – again, Pike analyzes this shift in relation to the lingering legacies of austerity when he outlines the ways that outside consultants proffering new forms of expertise and solutions (Chapter 5) provide “legal cover” (another form of derisking) that is in some cases enshrined via central government regulations (p. 124). The “seemingly technical” (p. 128) processes of auditing and accounting, now done by outside consultants, are part of a more general expansion of third-party intermediaries entering the governance of local municipalities. Pike does not take an overtly normative position on this trend but again offers empirical evidence in response to critics (p. 123) who do. For Pike, auditors are “assessors of” not necessarily “advisors for” financialization – again he rightly insists on specificity about which sectors and internal or external pressures are actually driving the contracting-out of accountability. This raises implicit questions, however, around who these solutions consultants serve (Bok, 2021) – and whether public priorities are truly at the core.

A poignant quote from one of Pike’s interlocutors, a sector journalist, begins to speak to some of these politics: “The rationale was ‘were taking all this money away from you, but we’re giving you more freedoms to be able to raise more revenue yourselves’.” Quotes like these highlight the politics at the root of Pike’s work – both questions of whether local counselor really are “at the casino” making profligate financial deals at the expense of public resources (p. 5), but also the question of what he calls a “deferred politics” of financialization (pp. 224–225) that may not be immediately apparent in local budgets.

Stakes: Distribution, public knowledge production, and the politics of finance

An important though sometimes latent throughline of Pike’s analysis is the material stakes of restructuring local fiscal geographies. An “uneven geography of local circumstances” is the terrain on which differential levels of local government financial innovations unfold (or not). As Pike says in his conclusion, the fiscal pressures on local states “to raise local tax rates, increase charges and fees for local services, reduce or remove exemptions, and rationalize and withdraw services, all have direct and material impacts and implications for people in their local area” (p. 225). Pike’s detailed analysis of tax base differentiation is organized mainly around administrative geographies and political parties dominating local councils. Yet a discussion of spatial effects could go much further, to consider population demographics and uneven distribution of public resources that well precede the 2010 inflection point of austerity. The inherited patchwork geography of socioeconomic advantage and deprivation – which characterizes England just like any other country – is relatively understated in the text. Bringing the demographic and socioeconomic landscape into the analysis in future work could highlight the material stakes of Pike’s analysis even more strongly.

Additionally, I am curious about the social geographies of “in” and “out of area” local government investments in property – with what other processes are these investments associated? Do they tend to concentrate in particular neighborhood geographies? State-led gentrification is well-researched by geographers in cities across the globe, but when local governments’ investment imperative is revenue generation rather than public provisioning, what does this look like and are there patterns to where it occurs (Su and Lim, 2025)?

This brings us to the potential of Pike’s work to contribute to public knowledge surrounding local government finance and its contemporary changes, including, as Pike recognizes, the importance of facilitating accountability and scrutiny that are increasingly obscured by the “greater use of exemptions and ‘commercial confidentiality’ by local political leaderships and officers in reporting in England.” The book is already well-presented for consumption by political leaders and bureaucrats, given its concise definitions and outlining of the processes and implications of fiscal restructuring and financial innovation across local governments in England. I wonder how Pike might further “make public” (Ouma, 2024) this formerly arcane knowledge for the benefit of other publics and social movements outside of counselors and officers – who might make use this data and the ability to compare it across jurisdictions to challenge new forms of financial innovation they deem detrimental to social equality but also more basic norms of local public finance and administration.

The politics of public finance is, I think, of fundamental concern here – which Pike notes in his conclusion with reference to Schumpeter (“public finance is politics hidden in accounting columns”) and with the comment that budgets are statements of values. There is much potential here to link Pike’s empirical specific with critical work on public budgeting and budget mapping (e.g. Barrett and Safransky, 2024) – where do spending priorities come from, what is taken for granted versus seen as negotiable, and how are resources redistributed between and for local tax bases and neighborhoods? As Pike and coauthors have noted (Ward et al., 2024), these questions are increasingly politicized, leaving statecraft as an “unavoidable concept” for theoretical analysis of spatialized financial relationships. Meanwhile, the politics of public finance and its relationship to private and commercial finance are an important terrain for explorations of distributional inequalities (August et al., 2022), to which Pike’s data could do much to contribute.