Global finance/local crisis: the role of financial deregulation in the geographical restructuring of

330 Pages·2015·18.65 MB·English

by  Neil Argent

I
. r'1,1
t
1¡
GLOBAL FINA¡ICEILOCAL CRISIS
Tm Ror,n or Fnv.l¡tcrAL Dnnpcu¡,.tuoN IN rm GnocRApErcAL
RnsrnucruRrNc or Ausrn¡,r.lx F¡,nn,mrc AI\D F,mu cnpurr: Tm c¿.sn
or Ke¡vclRoo Isr,,lxo
by Neil Argent
BA Hons
The University of Adelaide
A Thesis submitted for the degree of
Doctor of Philosophy
at The University of Adelaide
June 1997
tt
TABLE OF CONTENTS
Page
Title Page
I
Table of Contents
ü
List of Tables vi
List ofFigures
vll
Abstract
)o
Deolaration
)(lr
Aoknowledgements
)qu
CIIAPTER ONE: INTRODUCTION I
l.l
Introduction I
1.2 Research Aims and Objectives and Author's Motives J
1.3 Thesis Outline
6
1.4 Conclusion I
PART ONE
CHAPTER TWO: GLOBALISATION, REGI]LATION
AND TTIE RI,RAL: TOWARDS A TIIEORETICAL
A}IALYSIS OF CONTEMPORARY RI.'RAL AI.ID
AGRICI ]LTTJRAL CITANGE
9
2.1 Introduction
9
2.2 Scalng Change: The Rural in the Global and the
Global in the Rural? l0
2.3 Rural and Agrarian Restruoturing: Evohing Scales
and Dimensions of Change t4
2.3.1 Introduction
t4
2.3.2Peasant, Proletariat and the Fin de Siécle:
l9th and 20th Century Perqpectives l5
2.3.3 Structure and Contingency, Stability and Crisis:
Regulationist Approaches to Agrarian Change 26
2.3.4 T\e Political Eoonomy of Farm Credit 38
2.3.5T\e Man on the Land and the Invisible Farmer:
psmini st Critiques of the politioal Eoonomy of Agrioultrue 42
2.3.6T\e Cubist State: Towards a Non-Esse,lrtialist
Account ofthe Capitalist State 45
2.4 Conclusion
49
CHAPTER THREE: THE AGRICTJLTIJRE.FINA}ICE
RELATION: A REALIST APPROACH
52
3.1 Introduction
52
3.2 Critical Realism: A Philosophical and
Theoretical Exploration
52
3.2.1To Be Is Not To Be Perceived:
A Realist Philosophy for the Social Soiences 52
3.2.2T\e Critical Realist Mode of Conceptualisation 62
3. 3 The Agriculture-Finance Relation 66
3.4 Conclusion
72
ltl
CI{APTER FOUR: AUSTRALIA'S PI-ACE IN GLOBAL
SPACE: THE POLHCAL ECONOMY OFAUSTRALIATI
AGRICI,'LTTJRE A}.ID RIJRAL SOCIETY AFTER 1945 73
4.1 Introduction
73
4.2 Coloual Sooialism: Exploring the Roots ofthe
Political Economy of Australian Agricultrue 73
4.3 ANation Rebuilds and Proqpers: 1945 - 1972 77
4.41972 to 1983 88
4.5 1983 to the Present 94
4.6 Conclusion 99
CIIAPTER FTVE: "TIGIIT MONEY, LOOSE
REGI.'I-ATIONS AI.ID A WARM PI-ACE TO COIJNT
THE PROFITS',: THE DEREGULATION OF TTTE
AUSTRALIAN FINAI..ICIAL SYSTEM l0l
5.1 Introduction l0l
5.2 Involution and Revolution: The Liberation of
Intemational Finance and the Australian Eoonomy 101
5.3 The Rise and Fall of Organised Finance: The
Deregulation of the Australian Financial System 106
5.4 Agriculnral Finance in Pre- and De-Regulated
Environme,lrts ll5
5.5 Conclusion
122
CITAPTER SD(: CIIANGING PLACES AND SCALES:
AGRICULTI]RAL AI.ID RI.JRAL RESTRUCTURING IN
NEW ZEALAI.ID t28
6.I Introduction t28
6.2T\e "Processed Grass" Economy Goes Global 130
6.3 Analysing tle New ZealandFarm and Rural Crisis 139
ó.3.I Changng the Rules ofthe Game 139
ó.3.2 Responding to/Resisting the New Rules t4t
6.3.3 State Reqponses to Farm Financial Stress 147
6.3.4 Rural Commr¡nities Under the New Regime t49
6.4 Conclusion 153
PART TWO
CHAPTER SEVEN: TI{E AUSTRAI-ASIAN
AGRICULTURE.FINANCE RELATION -
Al.I AI.IALYTICAL FRAMEWORK t57
7.1 Introduction
157
7. 2 Reconceptualising the Agriculnue-Finance Relation 158
7.2.1Intoduction
158
7 .2.2 T\e Highly Regulated Australasian Agriculture-Finance Relation 160
7 .2.3 197 3- I 9 83 : The Regulated Australasian Agriculture-Finance
Relation in Flux 167
7.2.4 1983-The Present: The Globalised Australian Agriculture-
Finance Relation
7.2.5 T\e Globalised Agriculture-Finance Relation in New Zealand t7s
7. 3 Conclusion: Glob al-National-Regional-Lo cal: A Hyp othetical
Argument Concerning 1þs Tmpact of Financial Deregulation
w
on FarmFamiliss and R¡ral Communities
180
PART THREE
CIIAPTER EIGHT: I(AÌIGAROO ISLAIID -
AREGIONAL GEOGRAPHY
183
8.1 Introduction
183
8.2 The Physical Geography ofKangaroo Island
184
8.3 Uncertain Beginnings: A Cultural and Economic
Geography ofKangaroo Island to 1900
188
8.3.1 Discovery and Unofficial Settleme,lrt prior to lg3ó 188
8.3.2 The Rise and Fall ofthe South Australian Coryany:
1836-1838
t92
8.3.3 Island Settlement to 1900
193
8.4 The "Opelring-Up" ofKangaroo Island: Settlement,
Agricultual and Economic Developme,lrt: 1900 - The hesent 198
8.5 Conclusion 2t5
CHAPTER NINE: 'OTHER pEOpLE S MONEy:
SOUTTI AUSTRALIAN FARM FINAI.ICING IN A
DEREGULATED EI.I\TIROM\,IENT 2t8
9.1 Introduction 2t8
9.2 T\e Globalised South Australian Agriculture-Finance
Relation: A Broad Outline
218
9.3 Linking the Globa[ the Regional and the Local:
South Australian Financial Institutions in the Global
Economy
234
9.3.1 The Emergence, Rise and Fall of the State Bank
of South Australia
234
9.3.21\e Rise and Fall ofthe State Bank: The Demise
of a Global Strategy
238
9.3.3 Business and Regulatory Infrastructure Changes 243
9.3.4 Lending Policies
246
9.3.5 Financial Products and Marketing Strategies 249
9.3.6 Public Farm Financing in the Wake ofFinancial
Deregulation: The Commonwealth Development B ank
(CDB) and the Rural Finance and Development Division
(RJ.&DD)
252
9.4 Conclusion
255
CI{APTER TEN: TFIE LOCAL AGRICITLTIJRE-
FINANCE RELATION: INTERPRETING TIIE
POST-DEREGI.]LATION DECISION.IVIAKING
EI.IVIRONI\4ENT
258
10.1 Introduction 258
10.2 The Higbly-Regutated and Globalised Local
Agriculture-Finance Relations, Kangaroo Island 258
10.3 Anatomy of a Rural Boom and Stump 266
10.3.1 The Boom 266
10.3.2 Moving Towards the Vortex: The Developme,lrt
of a Debt Crisis 270
I0.4 The Globalised Local Agriculture-Finance Relation:
v
A Banke/s Perqpective 277
10.5 Island Debt - A Brief Outline 280
10.6 Conclusion 283
CHAPTER ELEVEN: TTIE LOCAL AGRICIJLTT,,RE.
FINA}ICE REIATION AI.ID THE FARM FA]\4ILYI
BA}IKER INTERFACE: INTERPRETING AI.ID
RESOLVING TTIE ISI-AI.ID'S DEBT CRISIS 286
1l.l
Introduotion 286
11.2 Family, Far4 Firm: Exploring the Globalised Looal
Agriculnue-FinanceRelation Through Lived Erperience 286
ll.2.l
The Kangaroo Island 1994 Farm Family Saryle 286
lI.2.2Island Farm Families Interpret the Crisis 305
I1.3 Getting It Baok: Resotving/Contesting the Island's
Debt Crisis 316
I1.3.1 Island Farm Debt: A Brief Outline and
Recapitulation 316
.Work-Out':
1I.3.2 The Farm Debt and Reoovery
and Mediation 319
I1.3.3 Around the Kitchen Table: The Farm Family/Banker
Interface 328
I1.4 Conclusion 338
CITAPTER TWELVE: THE COMMI.]N]TY STRIKES
BACK: FARMING WOMEN, MEN AI.ID COMMIJNTTY
INSTITUTIONS CONTESTINGNEGOTIATING/
MANAGING CHANGE 339
12.l Introduction 339
I2.2Fatm Survival Strategies: Conoeptual and
Empirical Perqp ectives 339
12.3 Tearing at the Fabric: Rural Action and the
Island's Debt Crisis 368
l2.4Heanng, Helping, Holding: Island Institutions and
Organisations Resisting Cultural and Economic Change 376
12.4.1The Role of the Churches 376
12.5 Conclusion 385
CHAPTER THIRTEEN: CONCLUSION 389
Bibliography 400
vi
LIST OT'TABLES
Page
Table 2.1 Phases of regulation and accumulation in the 20th
Century
32
Table 2.ZFoodRegimes - Princþal Tendencies and
Hstorical Features
34
Table 2.3 conceptual Dimensions of tle Internationalisation
of Capital
38
Table 3.1 Intensive and Extensive Research Methodologies:
A Summary 5l
Table 6.1 New ZealmdAgriculnual Policy Çþanges,
1984-85
139
Table 6.2 Assistance to PastoralAgrioulnre ($NZ millisn),
1980-1990
139
Table 6.3 Sheep and Beef Farm Income Expenditure,
1982183 to l990l9l
(nomin¿l $NZ) t43
Table 6.4 Debt-to-Equity Ratios for Sheep/Beef and
Dairy Farms
143
Table 6.5 Nominal Interest Rates for Major New Zealand
Financial Institutions, 1980 - 1986 (o/o) 149
Table 7.1 The 20th Century New Zealand Agricultrue.
Finance Relation t76
Table 7.2 Credttor Tactics and Farm Responses 184
Table 8.1 Soil-Environments of Kangaroo Island 194
Table 9.1 Average Prices of Selected South Australian
Brc¡daols Fam Co;cnodities, ',g32 - 1994 ($ ¡¡¡,,,i,,¿¡l) 228
Table 9. 2 Australian Post-Financial Deregulation Economic
Trends Affecting B an k Decision-Making, 19 84- lg g I 244
Table 9.3 Total Exposures for Major Australian Banks
and the State Bank and Total Non-Accrual Exposures for
the State Bank, June-July, l99l (o/o) 246
Table 9.4 State Bank Loan Portfolio and proportion of
Non-Performing Loans, December 31,1990 (o/o) 246
Table l0.l Prominent Kangaroo Island Pastoralists, 1938 264
Table 10.2 Kangaroo Island Farm Property Listings and
Sales, 1987 - 1989 272
l.l
Table I Kangaroo Island 1994 Farm Family Sample:
PropertyPurchases (ha) 1985 - 1992 298
Table 11.2 Ordinal Scale of Degree of Subsurytion of
Farm Production Relations 306
Table 12.l Family Farm Survival Strategies: A Schema 342
vll
LIST OF FIGT]RES
Page
Figrue 2.1. Whatmore, et al.'s Subsrmption T¡pology
Matrfu Showing the Position of 'Ideal Tlpes' 24
Figure 3.1 Three Models ofthe Society/Person Relationship 57
Figure 3.2T\e Transformational Model of SocialActivity 57
Figure 3.3 The Struchues of Causal Explanation 65
Figure 3.4 The Agriculture-Finance Relation 68
Figrre 4.1 Australian Farm Emplo¡ment 84
Figure 6.1 Locations and Populations ofNew Zealand r29
Figure 6.2 Chmges in Livestock Farm Investment and
Production, 1982-1989 145
Figure 6.3 New ZealandPost Ofrce Rationalisations,
1983-1990 t52
Figrue 7.I The Highly Regulated Australasian Agricultue-
Finance Relation 1952-1983 161
Fignre 7 .2 T\e Globalised Australian Agriculture-Finance
Relation I 983-The Present 173
Figure 8.1 Kangaroo Island 186
Figrue 8.2196l Cadastral Map ofKangaroo Island 187
Figure 8.3 Soil Map of Kangaroo Island 190
Figure 8.4 Kangaroo Island, Total Population, 1838 - l99l 195
Figure 8.5 Kangaroo Island, Sheep Numbers, 1860 -
1992 ('000s) 203
Figrue 8.ó Kangaroo Island, Total Wool Chp, 1925 - 1992
('000 greasy kgs) 203
Figure 8.7 1956 Map ofthe Kangaroo Island War Servioe
Land Settlement Scheme 204
Figure 8.8 Sheep Numbers by Hundred, Kangaroo Island,
t945 - t975
207
Figure 8.9 Kangaroo Island Farm Holdings and Average
Size: 1945 - l99ll92 213
Figure 8.10 Average South Australian Greasy Wool Prices
(ê/kg,1990 values) 213
Figure 9.1 Fixed Loan Facilities, All Lenders, Selected
Industries, South Australia, 1985-1994 ($mill., $1990) 220
Figure 9.2 Revolving Credit Facilities, All Lenders,
Selected Industries, South Australia, 1985 - 1994
($mill., $1990) 220
Figure 9.3 Bank Lending as a Proportion ofAll Fixed
Lending, Selected Industries, South Australia,
-
1985 1994 (o/o) 222
Figure 9.4 Aggtegate Cash Operating Surplus and Gross
Indebtedness of South Australian Farms, l97ll72 -
t9e2le3 ($leeo) 222
Figrue 9.5 Terms of Trade for Austratan Agricultrue,
1952153 - t994195 (1987-88:100) 224
Figure 9.6 Profit Margins for All South Australian Farm
Industries, 1977178 - 1992193 (%) 225
vltl
Figure 9.7 Profit Margins for South Australian Farm
Industries: Sheep, 1977/75 - 1992193 (o/o) 225
Figure 9.8 Profit Margins for South Australian Farm
Industries: Sheep/Beef Cattle, 1977/78 - l9g2lg3 (%)
226
Figrre 9.9 hofit Margins for South Australian Farm
Industries: Beef Cattle, 1977178 - l992lg3 (o/o) 226
Figure 9.10 Profit Margins for South Australian Farm
Industries: Sheep/Cereal Grain, 1977l7B - lgg}lgj (%) 227
Figure 9.1I hofit Margins for South Australian Farm
Industries: Cereal Grain/Oilseeds,1977/7t - lg92/g3 (%) 227
Figrue 9.12 Interest Rate Trends (l98l-1993) 228
Figrue 9.13 Interest Coverage Ratios for All South
Australian Farm Businesses,lgTl/72 - l992lg3
228
Figure 9.14 Ratio of Business Tumover to Debt for All
South Australian Farm Industies, 1977/78 - lgg}lg3 230
Figure 9.15 Aggregate Equity Levels for South Australian
Farms, 1974175 - 1992/93 (o/o') 232
Figure 9.16 Debt to Asset Ratios for South Australian
Farms, 1974/75 - 1992193 (o/o) 232
Figure l0.l State Benk of South Australia Fixed Le,nding,
Kingscote Branch,lg5 t/52 - t973/74 ($1990 and No.
of Borrowers)
263
Figure 10.2 South Australian Average Greasy Wool prices,
1973/74 - 1993/94 (lke, t990 values)
267
Figure 10.3 Annual Rural Property Sales (No. and
Average Value), Kingscote D.C., 1984 -lgg4 (1990 dollars) 267
Figure 10.4 Farm Debt and Farm Size of Kangaroo Island
Farmers Being Counselled by Kangaroo Island Rural
Counsellor, Sept. 30, l99l ($ nomin¿l) ¡1=72 281
Figure 10.5 Farm Equity and Farm Size of Kangaroo
Island Farmers Being Counselled by Kangaroo Island
Rural Counsellor, Sept. 30, 1991, n:72 281
Figure 10.6 Sources ofDebt for Kangaroo Island Rural
Counselling Service Clients, 30 Jr¡ne 1992,1993 and
le95 (No. of Clients (%))
282
l.l
Figure I Kangaroo Island 1994 Farm Family Saryle:
Household Size
288
Figure ll.2 Kangaroo Island 1994 FarmFamily Sample:
Male Household Head In-migration" 1950,1988 290
Figure 11.3 Kangaroo Island lgg4FatmFamily Sample:
Farm Organisational Structure
292
Figure I1.4 Kangaroo Island 1994 Farm Family Sample:
Farm Size (Ha)
292
Figure ll.5 Kangaroo Island 1994 FarmFamily Sample:
Gross and Net Farm Income and Gross Indebtedness,
le84l85 - teezte3 ($1ee0)
294
Figrue I1.6 Kangaroo Island 1994 Farm Family Sample:
Farm Size Change, 1984 - l99a (Ha) 294
Figure I1.7 Kangaroo Island 1994 Farm Family Sample:
Interest Coverage Ratio, l984lS5 - 1992193 298
D(
Figrue I1.8 Kangaroo Island 1994 Farm Family Saryle:
Average Equity (%) and Debt to Asset Ratio, 1984/85 -
t992/93 298
Figure I1.9 Cook and Ronan's (1994) Farm Business Position
and Adjustment Framework 300
Figure 11.10 Kangaroo Island 1994 Farm Family Sanryle:
Farm Equity and Household Head Age: a) 1984185;
b) 1988/89;c) le92l93
301
ll.ll
Figure Whatmore, et al.'s (1987a,1987b)
Subsurytion Matrbç showing position of ideal tSpes' 304
ll.l2
Figure Kangaroo Island 1994 Farm Family Sample:
Relative Degrees of Subzumption: a) l9S4/85;
b) 1988/89; c) ree2l93 304
Figure I l.13 Farm Sample No. 2: Clive and Pamela Myers:
Farm Financial Performance, 1988/89 - 1992193 307
Figrre I l.14 Farm Sample No. 3: Garry and Anne Nash:
Farm Financial Performance, 1988/89 - 1992/93 307
Figure I l.15 Farm Saryle No. l0: Keith and Rhonda
Priestley: Farm Financial Performance, 1984/85 - 1992193 309
Figure I1.16 Farm Samlle No. 40: Andrew and Carol Pike:
Farm Financial Performance, 1984185 - l9g2/93 309
ll.l7
Figure Farm Sample No. 44: Greg and Sonja White:
Farm Financial Performance, 1984/85 - l99àlg3 313
Figure I l.l8 Farm Sample No. 59: Mark and Virginia paull:
Farm Financial Performance, 1984/85 - 1992/93 313
Figure I l.l9 Kangaroo Island 1994 Family Farm Sample:
Aggregate Farm Debt by Financial Institution,lgg4/95 -
reezle3 ($leeo) 3t7
Figure 12.1 Kangaroo Island 1994 Farm Family Saryle:
Annual Average Horus Worked On-Farm per Weeþ
1984/85 - t992193 343
Figure lZ.2(Qngaroo Island 1994 FarmFamily Saryle:
Average Annual Paid Farm Labour Usage, 1984/85 -
1992193 348
Figure 12.3 Íkngtroo Island 1994 Farm Family Sample:
Average Fertiliser Expendinre and Gross Farm Income,
t984185 - te92te3 (S1990)
348
Figure 12.4 Island Seaway Superphoqphate Cargo Volumes,
Adelaide to Kingscote, 1988 - 1993 (cubic metres) 351
Figure 12.5[{angaroo Island 1994 Farm Family gamrle:
Average Key Farm Input Expenditure and Gross Farm
Income, 1984/85 - 1992193 ($1990) 351
Figure l2.6l{angaroo Island 1994 FarmFamily Sample:
Average Farm Debt by Financial Institution, 1984185 -
tee2le3 ($leeo) 356
Figrrre I2.7 lkngaroo Island 1994 Farm Family Sample:
Total Household OÊFarm Income, 1984185 and 1992193
($leeo)
356
Figure 12.8 Kangaroo Island 1994FatmFamily Sample:
Male OËFarm Income, 1984185 - 1992193 ($1990) 360
x
Iig*. l2.glktgaroo Island 1994 FarmFamily Saryle:
Female OËFarm Inoome, 1984/85 - 1992/93 ($1990) 360
Figrue 12.10 The Globalised Local Agriculture-Finanoe
Relation in Crisis
387