GaWC Research Bulletin 84

This Research Bulletin has been published in Environment and Planning D: Society and Space, 26 (2), (2008), 264-279.

doi:10.1068/d410t

Please refer to the published version when quoting the paper.

(Z)

Spaces of Practice in Advanced Business Services: Re-thinking London-Frankfurt Relations

K. Pain*

Abstract

This paper explores the relevance of Pierre Bourdieu’s 1980 spatial theorisation in Le Sens Pratique (The Logic of Practice, 1990) for understanding inter-city relations in contemporary globalisation – specifically, interdependencies between Castells’ (1996) ‘space of flows’ and ‘places’ in advanced business services. Bourdieu’s relational concepts are reviewed with reference to evidence from in-depth interviews with business actors in London and Frankfurt at the time of European Economic Monetary Union. The intention is to deepen understanding of emergent relations between the cities and, in so doing, to contribute to the re-interpretation of Bourdieu’s input to geographical thinking.

Introduction

The aim of this paper is to examine the margin between economic and spatial thinking in urban studies with specific reference to relations between leading UK and German financial centres London and Frankfurt in globalisation.

Since the year 2000, a series of interrelated studies by global cities researchers at Loughborough University has examined the impacts of knowledge-based advanced producer (finance and business) services on contemporary European cities. Studies have included relations between London and Frankfurt in European Monetary Union (EMU) (2000-01), business clustering in the City of London (2001-02) and changing relations within and between eight major North West European ‘global-city regions’ (2003-06).¹ But alongside the many insights reported in a growing collection of research publications,² interpretation of the multiplicity and complexity of spatial relations between cities presents an ongoing challenge with important implications for policy. This challenge has been the impetus to the thinking outlined in the present paper.

This paper is a brief experimental exploration into the potential value of a specific plane of spatial thinking set out in 1980 by social theorist Pierre Bourdieu, as an aid to deeper understanding of inter-city relations in globalisation. The intention is to contribute to ongoing ontological and theoretical debate in spatial research by revisiting detailed empirical evidence on London-Frankfurt relations using a specific spatial lens - key concepts from Bourdieu’s social theory of ‘practice’, (Le Sens Pratique), translated into English in The Logic of Practice (1990).

Context of the London-Frankfurt Study

The premise for the 2000-01 London-Frankfurt study was that the introduction of the Euro and the decision to locate the European Central Bank (ECB) in Frankfurt, with London outside EMU, would lead to a change in relations between these leading UK and German financial centres (Beaverstock et al, 2001a). The international financial press reported events at the time as though a major international conflict was taking place, with an intense battle between the cities. But interviews with senior business decision-makers in leading global financial and business service firms in each city immediately revealed a very different unwar-like narrative. Contrary to media representations, the Euro and ECB location were seen as irrelevant to London-Frankfurt relations. The research therefore became an exploration, not of a politically triggered re-balancing between the cities as expected, but of an altogether more complex interrelationship.

The theoretical framework for the study reflects Castells’ (1996) theorisation of cities as a ‘process’ in which networks of advanced service firms - first identified by Sassen (1991; 1994) as key agents in globalisation - are generators of ‘global city’ inter-linkages (Taylor et al, 2002). Sassen has emphasised the role of global cities as centres of spatial concentration associated with the global dispersal and integration of economic activity. Simultaneous internationalisation and centralisation of multinational company (MNC) command and control functions has been mirrored by their supporting financial and specialised business services, making selected global cities, including London and Frankfurt, key focii for knowledge, power and wealth in the world economy. Importantly, Sassen has seen the historical legacy of development as privileging some cities over others as sites of concentration, leading to the “place-boundedness of significant components of the global information economy” (Sassen, 1995; 1999 p7). According to this perspective, place is therefore prioritised in the production and reproduction of global cities. In spite of the transformation in information and communication technologies (ICTs), Sassen has suggested that, “even the most advanced information industries have a production process that is partly place-bound” (Sassen, 2000 p1).

In contrast, Castells has focused attention on the relationships between cities made possible by advanced telecommunications. For Castells, “advanced services … are at the core of all economic processes … all can be reduced to knowledge generation and information flows” (Castells, 1996 p409). Under conditions of globalisation, the business districts of cities are “information-based, value-production complexes”, “localities do not disappear, but become integrated in regional networks that link up their most dynamic sectors” (p412). Thus “the global city is not a place, but a process … by which centres of production and consumption of advanced services … are connected in a global network” (p417). A crucial distinction between Sassen’s and Castells’ theorisations has therefore been Castells’ emphasis on global cities, not as places of concentration but characterised by “the structural domination of the space of flows” (p429). Building on these perspectives, the study has conceptualised global cities as focii of connectivity within a space of interaction – in other words, while cities have a material form, they are increasingly defined by flows.

Parallel quantitative research (Taylor et al, 2002) has attempted to measure London-Frankfurt inter-city linkages using internet data on the location, size and command and control functions of offices in multi-city advanced service networks - banking/finance, accountancy, insurance, legal, management consulting and advertising services. The premise has been that the presence of multiple service networks in global cities, constructs ‘connectivity’ and informational linkages between them in a ‘global city network’. Significantly, analysis based on 2000 data revealed London to have the highest, and Frankfurt the sixth highest, global network connectivity for the above six service sectors overall, whereas for banking and finance alone, London had the highest and Frankfurt the third highest global connectivity. This suggests that the cities are especially strongly linked through their roles as international financial centres.

However such comparisons can only be representative of actual inter-city linkages. They are based on assumptions about relationships between office sizes/functions present in each city and the volume of informational flows generated by these.³ The reality of complex inter-city relations in advanced knowledge-based services requires other means of investigation. In spite of known limitations associated with interview studies (Crang, 2002; 2003), qualitative evidence has been shown essential to tap into unique knowledge about how business activity links cities (Pain and Hall, 2007). 74 in-depth, face-to-face interviews were conducted in London and Frankfurt with the directors, senior partners and chairmen of major international service firms, Government, regulatory and institutional agencies in the year 2000 with follow up telephone interviews in 2001; additional interviews have been conducted in later research in both cities.⁴ Castells (2004) has emphasised the importance of the role of such network actors in creating links between cities; the key overarching findings are reviewed here.

Findings on London-Frankfurt Spaces of Interaction

A Global-Local Dynamic

The key dynamic shaping London-Frankfurt relations identified is an interaction between contradictory market drivers that lead advanced service firms to constantly adjust their business strategy. An overarching global-local tension inherent in economic globalisation, is the need for local markets depth with global reach. Localisation and integration of cultural diversity are reported to be essential to interpret corporate narratives in local contexts, not only in industries such as advertising, but in banking and finance. However this driver is counterbalanced by a need to reduce costs and centralise command and control functions in the few global locations where creative, specialised labour and skills are available. This basic spatial tension underpins the dynamic between geographies of knowledge specialisation-diversification, organisational consolidation-disaggregation and management centralisation-decentralisation. In the face of increasingly intense market competition within Europe and globally, networks must be flexible and agile to implement rapid, multi-layered adjustments to their market strategies and organisational structure. The outcome is a constant flux between concentration and dispersion tendencies in city-based activity, apparently confirming Sassen’s thesis of contradictory dynamics leading to concentration in global cities. The key finding is that business actors see these dynamics as advantaging business both in London and in Frankfurt in spite of the introduction of EMU and London’s non-inclusion in this. Although the findings appear to lend support to Sassen’s view of the increasing importance of global cities as ‘place,’ they also support Castells’ (1996) assertion that contemporary economic processes can be reduced to knowledge generation and information flows.

A Space of Distanciated Relations

With the transformation of information and communication technologies, location appears increasingly irrelevant in the most digitised service sectors – banking/finance - even though these are also reported to be the core ‘anchor’ industries in London and Frankfurt city-based clustering. The perspective of a German bank’s representative in London illustrates this spatial ambivalence and a fluidity that lends credence to Castells’ notion of the structural dominance of the space of flows.

Frankfurt and London. What does it mean? Does it really matter? … how big is our office in Frankfurt and London - I’ve no idea ... It’s as big as that today and it’s smaller or larger [tomorrow] … the team in Frankfurt and the team here are one – one profit and loss account – and one head.

You only maintain that [one profit and loss account] as long as both operations are profitable and if the profitability, or the level of business in one location, isn’t sufficient any more then you usually find the concentration process in one or the other centre.

But perspectives also portray London-Frankfurt relations as produced within a space of distanciated relations and flows that is global as described by a US banker interviewed in London.

If you run a global risk shift, as we do, where essentially risk is moved around the world. Virtually, it’s one book and then responsibility is passed through the time zones and you have the choice as to whether you run shifts through the night in one place or whether you actually physically have the time zone management in the locations, which is what we do.

Through Globally Constituted Localities

At the same time, increasing specialisation, complexity and risk, are said to increase concentration in “super-hubs” suggesting a mutuality of spatial relations, flow and concentration processes, associated with trans-city business network practices. According to the financial services industry, “... hubs or super-hubs have become more important - the hubs are getting more powerful because, as they consolidate their critical mass, you more or less have to go to them”. High-complexity/high-value activity is reported by firms in both cities to be concentrated in London, which is regarded as the international wholesale production centre for the entire European region. In the case of a German bank operating a virtual office between London and Frankfurt, “other than for classical, national element clients … you’ve got to sit here [London]”. Milieux for innovation are seen by business actors as materially situated. Skills, knowledge and power are reported as attracted to, and co-present in, “just a few special places” where high-value knowledge transfer and innovation take place. And this is reflected in the architecture of North West Europe’s Broadband infrastructure where dense concentration of IT terminals in the City of London and other European business capitals creates strong connectivity to global service networks, illustrating the ongoing significance of place in the production and reproduction of flow (Hall and Pain, 2006). Synonymous with integration of locality in regional networks hypothesised by Castells, locality also appears to be a key part of the architecture for knowledge production.

Sassen and Castells’ different representations of the role of global cities, suggest a dichotomy between the city as a manifestation of flows and as an active phenomenon in the production of flows. But interview evidence indicates that, through practice, flow and place are mutually constituted. Articulating this relationship requires a different theoretical narrative that allows for the reciprocity of contemporary spatial relations, hence the specific interest in the relativist work of Pierre Bourdieu in this paper.

Bourdieu - Some Key Concepts

Despite the cultural and spatial turn in Human Geography, a positivist preoccupation with scientific method and spatial pattern still predominates in certain fields of empirical research (Massey et al, 1999; Crang and Thrift, 2000). Ongoing territorially (place) focused work in applied spatial analysis (within geography and related disciplines) remains highly influential in EU and UK policy; for example scientific research and modelling in the EU European Spatial Planning Observation Network (ESPON) which has been informed by Krugman’s (1991) ‘new economic geography’ (see Pain, 2007a, b). While poststructuralism has promised a reconceptualisation of space, in Massey’s view (2005), the language of spatialisation remains “unaltered from the earliest structuralism” (p42). Dualisms and binaries are embedded in the legacy of theoretical discourse making rigid structuralist and rationalist ways of thinking hard to overcome. Wittgenstein’s simple recognition of “the relativity of all” belies the difficulty of appreciating the mutual constitutedness of spatial relations in globalisation (Curry, 2000; Cochrane and Pain, 2000). Yet Bourdieu attempts to do just this in his theory of practice, based on his research into ritual traditions in Algeria dating from 1962. His challenging theoretical exposition of a logic of practice, is interpreted here with the help of Painter’s (2000) guide to the author.

Bourdieu presents a sophisticated critique of structuralism, economic rationalism and an objectivist-subjectivist dualism - a “move beyond [an] outline of a network of relations of opposition” (Bourdieu, 1990 p8) - which offers the prospect of enriching understanding of spatial reciprocity. Specific references to ‘geographical space’ are limited and, as Painter (2000) notes, these tend to be cast in terms of a traditional spatial narrative. But it is suggested here that the value of Bourdieu’s thinking for contemporary spatial understanding comes from his insights into the production of social space through everyday human practice.

Bourdieu argues for a theory of practice that goes beyond a pure economic model of rational action which “cannot be regarded as an anthropological description of practice” (p63). His conceptualisations challenge structuralist and economic rationalist approaches in social analysis, opening up ways of recognising specificity that resides between objective and socially derived representations. Bourdieu claims that, “by reducing this economy to its ‘objective’ reality, economism annihilates the specificity located precisely in the socially maintained discrepancy between the ‘objective’ reality and the social representation of production and exchange” (p113).

The concepts practice and the habitus underpin Bourdieu’s relativist interpretation of social relations towards the end of the twentieth century. He proposes that to “escape from the realism of the structure … without falling back into subjectivism … one has to return to practice”. This is “the site of the dialectic of the opus operatum and the modus operandi; of the objectified products and the incorporated products of historical practice; of structures and habitus” (p52). This suggests that practice cannot be understood simply as a contemporary rational activity but must instead be recognised as conditioned and produced through time-space. The habitus represents a present that is constituted by successive pasts making contemporary practice the product of a past legacy of socially constructed histories. This representation of the historically produced nature of present actions draws attention to their relative independence from immediate rational-economic determinants and thus demonstrates the complementarities between objective and subjective practice. Conditioning institutional, as well as individual influences on practice are “continuously pulling them … imposing the revisions and transformations that reactivation entails.” (p57). The habitus is explained as,

… embodied history, internalized as a second nature and so forgotten as history – is the active presence of the whole past of which it is the product. As such, it is what gives practices their relative autonomy with respect to external determinations of the immediate present. (p56)

… the solution to the paradoxes of objective meaning without subjective intention. It is the source of these strings of ‘moves’ which are objectively organized as strategies without being the product of a genuine strategic intention. (p62)

Viewed in this relativist context, the concept of capital is potentially particularly helpful in understanding London-Frankfurt relations as illustrated by Thrift and Leyshon’s earlier (1992) use of Bourdieu to analyse the role of high-paid labour in the production of City of London cultural capital (pp282-311). For Bourdieu, capital is a relational phenomenon that is operationalised through fields that are also relational. Fields represent the way in which the social world is organised, for example into economic and political fields, and are also sites of strategy and social conflict.

Significantly, the concept of the field signifies the simultaneity of place and process and allows capital to be understood as neither embedded in place, nor virtual in flow, but instead represented in both. Different forms of capital, economic, social, cultural and symbolic are understood as mutually commutable and interdependent relational configurations. ‘Economic capital’ refers loosely to wealth accumulation (pp131-3); ‘social capital’ to advantageous social network relations (pp108-10); ‘cultural capital’ to knowledge and skills attained through education systems (pp124-5); and ‘symbolic capital’ (pp108-10, 112-21) to the representation, “misrecognised and thus recognised” (p122), of other forms of ‘material’ capital as “legitimate” (p130; p118). Distributional geographies of such capital within fields reflect the relational nature of spaces of power which can take a variety of forms, cultural and symbolic for example, as well as economic and political power.

It is suggested here that Bourdieu’s theorisation opens up the possibility of exploring global city network relations as a complex socio-spatial process that is simultaneously process and form, socially and historically constituted and constructed, augmenting recent social, cultural and institutional perspectives in human geography.⁵

London and Frankfurt – Spaces of Practice

Interweaving inter-city networks of knowledge, culture, power and governance have been identified in the research as active constituents in London-Frankfurt business relations (Beaverstock et al, 2001). Bourdieu’s relational perspective, perhaps uniquely, allows these to be understood as interdependent socio-spatial fields constructed across time-space through practice. The perspectives of the senior business actors whose practices help shape spatial relations between the cities are considered here with reference to Bourdieu’s theorisation and spatial concepts. Banking/financial services interviews are used because these are the most digitised services studied, hence their interactions are most likely to be decreasingly ‘place-bounded’, yet they are indicated in quantitative analysis as strong linking mechanisms between the cities, highlighting the spatial paradox of network geographies found to characterise London-Frankfurt relations in globalisation.

Interviews with senior business actors in both cities representing a wide range of wholesale banking and finance services,⁶ are drawn on as evidence of the way in which everyday business practices are spatialised through trans-city networks. Extracts from in-depth interview transcripts from 2000-02 are incorporated in the narrative as illustration of actant perspectives and interactions, long recognised in social theory (for example, Goffman, 1967; Latour, 2005) as, in their own right, constituting important structural elements in spatial relations. They represent qualitative evidence of the cities and their relations as experienced, and as socially constructed through human interaction.

Knowledge Networks

Knowledge, which is the primary input and product in business services, for Bourdieu constitutes cultural capital when cultural competence is “inserted into the objective relations set up between the system of economic production and the system producing the producers … (p124). According to Bourdieu, such capital cannot “function as capital except in relation to an economic field” (p124).

The interview evidence on business practice reveals knowledge as increasingly mobile across space. It is said to be made available anywhere in the world “through the network”, reconciling demands for specialisation and global reach. It is “out of the network that ideas are being generated”, emphasising the virtualisation of significant areas of informational exchange and the increasing fluidity of knowledge geographies. But in high-complexity, high-value knowledge-based financial services, specialised intellectual capital essential for innovation, resides in human capital that is both locationally situated and highly mobile. As Amin and Cohendet have argued, “practices of knowing in any single site can no longer be described in terms of a ‘local’ versus ‘global’ distinction”. Virtual and material spatial circuits allow interaction to be “manifest in a variety of spatial expressions of ‘being there’, local and global” (2005 pp465-486). Thus interaction between (what appear to be varied and ‘sticky’) local and global geographies of embodied and tacit knowledge (Gertler, 2001; 2003; 2004; Faulconbridge, 2004) becomes increasingly important. As described by a US banker working in London.

Its about connecting the dots, connecting all those different people who can provide the very best advice and the very best service – that requires them to talk to each other, to see each other and that means equity fixing, investment banking, private wealth management, commodities, foreign exchange, private equity. All need to know what they are all doing somewhere …

Human relationships, which are constitutive of service business, continue to require intensive ‘hi-touch’ alongside ‘hi-tech’ interaction. The associated spatial flexibilities required by networks seem to have important implications for distributional geographies of activity and employment, as illustrated by interviews with French headquartered banks interviewed in Frankfurt and in London:

We were present all over Germany until 18 months ago … but we don’t have an operative presence any more in Düsseldorf, in Frankfurt, Munich, Hamburg etc … the offices in these cities are not branches any more, just discrete locations … London is where the business is being done. (Frankfurt)

More and more we come to the conclusion that we put them in one place ... if we have five here [Germany] and the best are in London, we said, let’s do it from London … there’s a lot more pressure to move to the critical mass. (London)

We have a presence in Frankfurt to reflect the current role of Frankfurt in the equity markets. We’re able to adjust our presence but we certainly haven’t put thousands of people into Frankfurt… our options are open with regard to Frankfurt at the moment but the concentration of investment presently is elsewhere. (London)

Banks use specific brand names to engage with local markets in continental Europe, giving an impression of local embeddedness while, in reality, activity shifts. But a knowledge-based, functional specialisation overlays such flows, with high-value/high-complexity global functions and human capital focused on London increasingly counterbalanced by regionalisation of activity to Frankfurt.

The Europe block is such a big area and it has so much business that necessarily those international firms that have concentrated the production of financial services in London, rather than having them in all centres, would need to deploy these resources in France or Spain or Germany or Italy … You can’t just sit here and expect everyone to come here or call you … increasingly you have to put your resources onto to the ground because you want to be close to the customer. (German banker, London)

Specialised skills are not taught through formal education but must be learned “on the job” supporting fluid geographies of cultural competence and capital. Even in niche industries such as the calculation of indices, the need for “a particular skills set” and “a particular educational background” requires “a nucleus of skills …” At the same time, intellectual capital is produced through networks and the flows within and between them as “people take their network with them”. Flows of human capital to London result in counter-flows of intellectual capital to Frankfurt as illustrated by a German bank which is “offering London as a training camp for our group to encourage people from our domestic base to come here (London) and work”. A US headquartered accountancy firm interviewed in London is, “sending people from here (London) to develop properly the skills of people on the ground so they can service the client there … we are migrating skills to other European countries, particularly Frankfurt”.

Contemporary practice is thus associated with the increasing global constitution of both proximate and distanciated knowledge transfer. Conceptualised as a feature of spatial fields, this interpenetration of activity frames can be imagined as simultaneously present in place, and in flow. The consequence for London and Frankfurt is a spatial relationship in which flows of intellectual and human capital within networks that are economic entities (firms) can be interpreted, not as a competition between cities as ‘place’, but as an essentially complementary spatial articulation. For business network actants in London and Frankfurt, inter-city relations are synergistic and this has implications for territorially-framed urban policy.

Cultural Networks

London’s cosmopolitan image and diversity - seen as a feature of cultural networks but also a form of social capital - is seen as critical for creativity, skills and innovation in knowledge production by non-UK headquartered firms, thus feeding into knowledge (cultural) and economic capital. This is the product of a long history of internationalisation of space, taken for granted, but playing an active part in the construction and reconstruction of contemporary practice - a product of the habitus. Seen from the perspective of a City of London financial institution.

Basically, most of the big financial institutions in London are now looking globally for the people who are right for them. Particularly Europe and North America, also Australia, New Zealand and the Far East. There aren’t enough people with the right skill level to satisfy all their needs. You’ve got a large influx of people coming from South Africa, coming from Australia as well, who tend to be young, highly qualified and, again, they tend to be mostly attracted to London, I would say 90%.

As Leyshon and Thrift (1996) have argued, (the City of) London’s established dominance as an international financial centre in Europe does not relate simply to an agglomeration of firms but has a reproductive influence on the evolving business culture of the city. A representative of an international exchange interviewed in London, for which trading is now entirely virtual, makes the point that past practice continues to construct the present even when material considerations should logically be irrelevant.

You’ve got to go back to history often to find out why we do things. If you look at why the Royal Exchange grew up and where the coffee shops were originally – it grew out from the centre – now there are other reasons for that. Those reasons you can analyse and look for parallels today.

The habitus that generates and is regenerated by service business practice is multi-dimensional. For one US banker, “London … has a tremendous image – the vibrancy, the education culture, the skills base … this is meritocratic, this is all the things we should be engaged with.” Diversity, which is an outcome, is an essential component of network capital also, as illustrated in the case of the London-based European HQ in another US bank.

The diversity programme is oriented toward the development of people who aren’t Americans and trying to get them into the mainstream of our company … because really banking’s about relationships … 45 per cent of people in the trading room are non-British citizens … you want multiple ethnicities from all over Europe, Africa and the Middle East. We want some Latin Americans, we want people from all over the world to work here because we think the future’s going to be less defined … a bigger EU or melting pot, thinking and just behaviour.

Diversity can be seen as directly commutable to economic capital through business networks. Frankfurt-based firms see this as an advantage of their relationship with London. A senior consultant’s perspective emphasises the significance of the cities’ relative cultural assets in defining inter-city relationships.

The attractiveness of London as a city is just higher than Frankfurt’s, that’s an important factor in a business that depends on its employees. There are just so many more options in London because of the size of the city, culturally etc - people are more international.

‘Soft’ factors and spatial symbolism, where people want to live, “the place to be”, “almost fashion”, play a key role in constructing such diversity, contributing to the habitus and helping explain the ongoing importance of global cities for firms. As Castells (1996) has acknowledged, people continue to live their lives in places. Symbolic capital attaches to specific places where past practice helps to construct contemporary spatial relations and creative environments that are key inputs and assets in service production. Such symbolism has persuasive power in the production and reproduction of inter-city social and business relations. A senior futures exchange interviewed in London, describes a European exchange as having “a very high respect for London because it’s still considered to be the primary financial centre and perception is reality and we hold a very high mantle. They are here, brass plate up to the big organisations …. ”. Equally, a banker based in Frankfurt sees the location of the European Central Bank (in Frankfurt) as less to do with its function than its symbolic power.

The ECB has its seat here, but you don’t feel much of it. If you want to judge the ECB you can do this just as well from London, New York or Paris. We are here in Frankfurt but we don’t get any signals from the ECB. It’s mainly a gain in prestige.

And, for other German banks, symbolism is intertwined with geographies of social and cultural space.

Our know-how in securities and corporate finance business is no longer in Frankfurt, but mainly in London. This is related to the availability of people … London is more international … the really international flair of the bank comes from London … If I had the choice between London and Frankfurt – everything being equal – then I would also go to London because of its cosmopolitanism.

A lot has been shifted to London... human capital, resources, especially young people are available in London in a much higher quantity, a much higher flexibility and it is incredibly difficult to relocate the really intelligent people, those who create new products, those who change things … Intelligent people who create something new are concentrated in a few special places. These are places that are multi-cultural, where all kinds of different cultures can feel at home … because it’s an open, liberal society. That is all true for London but less for Frankfurt – we still don’t have such a creative milieu.

In spite of the high-volume of virtual interactions, high-value trans-city knowledge transfer and production continue to take place through face-to-face interactions in the dense, globally constituted City of London where close proximity (made possible by locality) is critical for knowledge production.⁷ Specific location in relation to creative and financial milieux, where intense city mixing and interaction take place, has a critical effect on innovation and knowledge transfer illustrating the interpenetration of symbolic space and human knowledge-based interaction.⁸ As Goffman (1967 p13) recognised forty years ago, the setting for interaction matters. Locality is active in the production of dynamic distanciated business network space. Informal as well as formal spaces for interaction are important. According to representatives from the advertising industry, the banking environment of the Canary Wharf financial services cluster “isn’t the ideal environment for an advertising agency” … “you don’t want to sit with bankers when you’re a copywriter out in the evening after work”.

Personal motivations and economic practices are shown to be intertwined in the construction of London-Frankfurt geographies. For US and German HQ’d banks interviewed in London, what may appear to be objectively organised strategies are in reality the outcomes of an optimisation of social practice which in itself is interdependent with economic outcomes.

If a German works here and is paid and taxed here, initially he will stay on the German pensions system. We pay better here than in Germany, we pay in market and performance. You come here and there’s more revenue opportunities therefore you’ll get more compensation and we stick them on our own private pension plan … we don’t hear too much about the German pension plan any more, that drifts away. (US banker, London)

You find that we’re only human, a lot of decisions are being taken on the basis of ‘does it benefit me or not?’ If it doesn’t benefit you personally, then you would probably be against it …These decisions are very emotionally handled at the end of the day and maybe even selfishly. (German banker, London)

Different forms of capital – cultural (intellectual/human), social, symbolic and economic - can therefore be seen as mutually commutable across time-space in London-Frankfurt global city spatial relations. Importantly, Bourdieu’s theorisation allows for an essential reciprocity that seems integral to the process of network space. Transference of capital takes place through fields that shape business network practices which, in turn, shape the distribution of different forms of capital within and between these fields. The habitus not only attracts capital flows within networks but is reconstructed through network practice.

Power Networks

To what extent do such distributional geographies of capital impact on London-Frankfurt power relations through contemporary business practice? At first sight, an uneven geography of command and control functions seems to define London-Frankfurt relations. Decision making, influence and power in business, are widely regarded as concentrated in London by interviewees in both cities:

We realise that we can get interesting business in London, some of it related to Germany, which we wouldn’t be able to get in Germany. And that’s very interesting, where these business flows are, the decision centre for many things is London. (German accountant, Frankfurt)

Our headquarters are in New York but not all decisions are taken in New York. One of our colleagues who was on the board in New York will be responsible for business in Europe and for investment banking world-wide and he will be based in London. So key decisions will be taken outside of New York. (US banker, Frankfurt)

Traditional forms of social capital, which Castells (1996) refers to as a “common cultural code” (p214), are built and maintained through trust relations that are a feature of proximity. The City of London is frequently described as “a community” or a “village” by non-UK firms, its symbolic capital acts as “a magnet” for global flows. This symbolic power can be understood as a feature of ‘the City’ as ‘place’ yet London is globally constructed and constituted, institutionally and socially (through diversity, and trust) through networks. Transnational high-skilled business elite labour flows comprise cultural and social capital that is both fluid and situated:

I’ve been here thirty years, I know quite a few people in the business so, I wouldn’t say I’m part of the old boys network, but I know people and if you want something, then you call somebody. (German banker, London)

All the members that we know in New York have very strong UK/London relationships with the big investment banks, or themselves have their own offices here – it’s historic – so whenever they come to Britain to visit their own offices they would like to come into London to visit the people that they talk to. They don’t talk to maybe more than four to five people – maybe ten people in our organisation at a very senior level. (European financial services, London)

Often people network through memberships of industry groups and I believe that London should continue to be the locus of the major societies and industry groups – I don’t think they’re appropriate to try and shift outside of the City and to me that seems a natural meeting place. (European financial services, London)

Many foreign firms operate at a loss in London yet a ‘City’ location is regarded as essential to compete in international markets.

It’s the eye-to-eye contact, the continuous contact, the social meetings or whatever which makes London so bubbly … Lots of our deals, or the contacts my people downstairs make, five days a week. We have customers in here for lunch … these are banks and corporates. You couldn’t do that if you were sitting in Manchester because nobody would come to you … (German banker, London)

We’re here for two reasons – one is that we have an ambition to be an international bank and you can’t be an international bank unless you have something in London. The other is that the exposure to London markets and London personnel and the ways of doing things in London is something we want to gain experience of and communicate through the rest of the French Group. It’s partly because the markets are here but it’s more because of the credibility of London as an international banking place to do business. We have central banks as clients … and they would not regard us as credible if we weren’t in London. It certainly does cost us an awful lot more to be here than in Paris … to employ everybody … the floor space we’re sitting on … regulation … legal fees … it costs us twice as much in London. (French banker, London)

A perspective of power as place-bound has resonance with Sassen’s (1999) conceptualisation of global city relations. But all the evidence indicates that functional specialisation between the cities is regarded as enhancing the power of both, suggesting a view of power, not as power over (Allen, 1999 pp199-200; 2003; Cochrane and Pain, 2000), but as generated through distanciated networks to mutual benefit. The combination of ‘infrastructures’ that allow knowledge production, innovation and global trading to take place in London, leads senior business actors to explain London in terms of a place of concentration. But the key infrastructures referred to actually relate to flows that produce London’s localised world-wide connectivity - transnational labour, suppliers, skills, cultures, talents. Thus what is really being described is London’s role as a nexus in global business networks. This helps to explain how Frankfurt is perceived as being articulated into international networks through London while, at the same time, Frankfurt is regarded as articulating global networks ‘located’ in London, into the expanding European market. The important point about Bourdieu’s relativist theorisation of practice is that the spatial concepts he introduces make it possible to understand capital and power as neither embedded in place nor virtual as in flow, but represented in both.

Governance Networks

Key questions are raised for the governance of network space. London’s openness to flows of foreign investment is regarded by business actors in both cities as making London a “level playing field” for international business. In Frankfurt, flows are seen as restricted by a lack of ‘institutional thickness’ compared to London where governance networks are more focused on one place. But over-burdensome EU and national (territorialist) regulation is identified by UK and foreign firms alike as a potentially serious threat to the international flows that constitute London. This is illustrated by the complaint of a French banker in London that there are “whole areas where we now would refuse to act for people … unless it’s a really large amount of money, it’s not going to be justified by the time we’ve got through the paperwork”. And flows are seen as vulnerable to a space of governance above and beyond national and European territorial boundaries. The “elaborate transnational structure” of business, social, cultural, knowledge and capital associations recognised by Amin and Cohendet as characterising increasingly variegated space-economy relationships (2004; 2005 pp465 - 486), is giving rise to highly complex geo-political spatialities involving both cities. Recent research by Hall and Pain (2006) including many more European business cities, reveals an intertwining of complementary scales of spatial interaction through business network practice involving London and Frankfurt. Deeper theoretical exploration of such ‘scale-binary’ relationships is needed (Herod and Wright, 2002; Pain, 2007a; c).⁹

The distinction between firms and markets is increasingly blurred as roles of providers and suppliers, employers and employees, consumers and owners merge. And spatial relations are increasingly governed by default by private shareholders. Predicted mass European share ownership associated with pension provision and demographic change, is reconstructing geographies of public-private governance relations. Senior business actors see shareholder power as overtaking that of the global city ‘business elite’ of corporate and professional senior officers, suggesting an increasing diffusion of power within, between and beyond global cities (Allen, 1999; 2003). A US banker predicts that “the shareholder value argument is what’s going to change Europe … corporate restructuring in Europe, the push is going to come from shareholders as well as the market in general”. This emergent pan-European, global field of power threatens to transcend and obscure previous, more defined social divisions and spaces for conflict, supporting Allen’s (1999) thesis that formal politics based on territorial and functional lines, lacks relevance in the context of unpoliticised governance through networks (p216).

Conclusion - The Governance of Network Space

In his seminal (1996) thesis, Castells claims that the detachment of formal governance from the informational society demonstrates the structural dominance of the space of flows, which alters “the meaning and dynamic of places” and in which experience “by being related to places, becomes abstracted from power …” (pp457-458). For Castells the dilemma is how to create a relevant politics of space faced with the apparent “structural schizophrenia” between “two spatial logics” - networked flows and places of formal governance (2000 p458). As Massey et al (1999) have proposed, there is a need to acknowledge the specificities of places and the process of their construction in order to move away from a local (place) – global (space) binary (1999 p284). In her radical (2005) spatial theorisation in For Space, Massey speaks of ‘place’ as now negatively associated with static territorial constructs whereas ‘space’ is imagined, “open, multiple and relational” (p50). Place as locality, remains prominent in Massey’s spatial thinking but requires re-conceptualisation as an active, politicised relational space.

Sassen’s recent work, (2006a, b) also reconsiders the relevance of place, depicting the ‘local’ as an environment ‘with global span’, whereby localities are not only located in concrete ‘places’ but on digital networks, also spanning the globe. Castells (2004) has similarly described the present spatial dynamic as one in which “cities do not disappear in the virtual networks” but are “transformed by the interface between electronic communication and physical interaction, by the combination of networks and places” (p85). The space of places “organizes experience and activity around the confines of locality” (p85) whereas the space of flows is “the organizational material of social practices of time sharing made by flows” (pp472-473). It is the need for a combining capacity in spatial conceptualisation and understanding, indicated as important by both Castells and Sassen recent writings, that Bourdieu’s theorisation would seem to specifically address. Perhaps uniquely, Bourdieu’s relational concepts appear to make possible an engagement with Thrift’s (1996) early call to theorise cities as process, incorporating both interaction and flow, without de-materialising the substance and embeddedness of place. This would seem essential to address Massey’s plea for the politicisation of space, but not as the ‘a-spatial’ device that has come to be associated with spatial analysis (2005 p17).

Reflections on the Practice of Space

As explained at the outset of this paper, the intention has been to explore the potential value of Bourdieu’s theory of practice to inform ongoing research and debate in urban studies. Re-thinking London-Frankfurt relations using Bourdieu’s conceptual vocabulary draws attention to the process of space by which advanced knowledge-based business exploits and operationalises capital and habitus across the intersecting relational fields that constitute global financial centres. This interpretation of inter-city relations suggests a need to refocus policy attention away from the dominant territorialist political narrative of city economic competition and a “conscious pursuit of the accumulation of symbolic capital” (Bourdieu, 1990 p16), and towards a deeper understanding of the socio-spatial construction, constitution and interdependencies of cities.

ACKNOWLEDGEMENTS

This paper incorporates extracts from original interviews conducted by Dr Michael Hoyler in Frankfurt and by Dr Kathryn Pain in London between 2000 and 2002. Empirical research conducted at Loughborough University with Professors Peter Taylor, Jon Beaverstock, Gary Cook and Naresh Pandit (University of Manchester) (2000-02) and Professor Sir Peter Hall (Institute of Community Studies/The Young Foundation, London and the POLYNET Partners) (2003-2006), has provided the essential source for this theoretical exploration. Finally, my past work with colleagues in Geography and Social Sciences at the Open University, particularly Professors John Allen, Allan Cochrane, Doreen Massey and Steve Pile, has given me the encouragement to re-think London-Frankfurt relations spatially in this paper.

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NOTES

* Kathy Pain, Department of Geography, Loughborough University, Loughborough LE11 3TU, UK, K.Pain@lboro.ac.uk

1. Anglo-German Foundation for the Study of Industrial Society: ‘Comparing London and Frankfurt as World Cities: A Relational Study of Contemporary Urban Change, 2000-01; Economic and Social Research Council/Corporation of London: ‘The City of London and Research into Business Clusters’, 2001-02 - http://www.lboro.ac.uk/gawc. European Commission INTERREG IIIB North-West Europe: ‘POLYNET: Sustainable Management of European Polycentric Mega-City Regions’, 2003-06 - www.youngfoundation.org.uk.

2. London-Frankfurt: Beaverstock et al, 2001 a; b; 2003; 2005; 2006; Hoyler and Pain, 2001/City of London: Taylor et al, 2003; Cook et al, 2007/NW Europe: Hall and Pain, 2006; Pain, 2006; 2007a; Pain and Hall, 2007.

3. Subsequent research has found that the quality of informational exchanges is distinct from and more important than volume in defining inter-city relations, the most important exchanges being through face-to-face contact. However, this finding does not demote the quantitative results because high-value intra- and inter-firm exchanges are shown to predominate between locations of key global service functions (Pain and Hall, 2007).

4. 2001-02 (Taylor et al, 2003) and 2003-06 (Hall and Pain, 2006) studies have undertaken 52 additional interviews in London (40 firms; 12 institutions) and 24 in Frankfurt (21 firms; 3 institutions).

5. For example, Pryke, 1991; Amin and Thrift,1992; 1994; Thrift and Leyshon 1992; 1994; Pryke and Lee, 1995; Markusen, 1996; Allen, 2000; Storper, 1995; Boschma and Frenken, 2005.

6. The identities of firms and actors interviewed have been anonymised to preserve confidentiality; generic terms bank, banker etc. are used.

7. For a detailed account of global business clustering dynamics in London see Taylor et al, 2003. This and later research (Hall and Pain, 2006) explores the policy implications of the ongoing need for face-face-contact and close proximity in advanced knowledge-based services.

8. See Boden 1990, 1994, 1997 and Boden and Molotch, 1994, on the importance of conversation in symbolic human interaction. The relationship between co-location of financial and creative milieu and global network connectivity in cities is discussed by Pain, 2005.

9. More than 600 interviews were analysed in the 2003-06 NW Europe study, providing vital contextual evidence on London-Frankfurt service network relations referred to in this paper (Hall and Pain, 2006).

Edited and posted on the web on 14^th May 2002; updated 4^th July 2005; last update 28^th November 2008

Note: This Research Bulletin has been published in Environment and Planning D: Society and Space, 26 (2), (2008), 264-279