The birth of vulture capitalism: Zaire and the business of the spatial fix

Keywords: debt, sovereign debt, bonds, loans, financialization, finance, uneven development, fictitious capital, Marx, political economy, imperialism
Abstract Type: Virtual Paper Abstract

Abstract

By 2020, low-and-middle-income countries’ debt reached US$ 2.2 trillion as governments grappled with the fiscal shocks associated with COVID-19. The growth of sovereign debt levels occurs amidst a changing creditor landscape. Over the last 50 years, private financial entities have replaced official lenders such as the World Bank and the International Monetary Fund as the primary source of credit. Mainstream economists agree that the marketization of sovereign debt instruments provides countries with resources for development. However, the ascendance of sovereign debt markets and their associated challenges are substantially more complicated. Accordingly, this paper explores how the business of emerging market debt relates to the rise of financial capitalism and ongoing histories of uneven development typically framed through imperialism. Developing the concept of vulture capitalism, I argue that a series of social, economic, and political relations combine with processes of capital circulation and geographic practices to maintain uneven development through sovereign debt markets. To investigate this area, I follow capital as it is lent to nations before tracing its path through global capital markets. This paper follows a syndicated bank loan issued to Zaire in 1973 at the dawn of the modern period, where the lending departments of commercial banks extended their international presence. Following this credit instrument provides a partial historical geography of sovereign debt, including the financial market actors connected to their management, critical moments in the growth of debt trading infrastructure, and the various socio-technical practices, regulations, ideas, and discourses related to the growing business of sovereign debt.