Financializing political rationality: social impact bonds and everyday financialization in the Australian welfare state

This article explores Australian social impact bonds (SIBs) as a case study of the everyday life of state financialization and considers their implications for the relationship between financialization and neoliberalism. SIBs are experimental contractual arrangements for funding social programs based on their outcomes by selling the risk of failure to private finance. Since being adopted in the UK in 2010, they have spread to over 40 countries. SIBs require public officials and practitioners to engage in financial practices in the pursuit of delivering welfare programs. This article builds on literature on state financialization and the financialization of everyday life by centering these everyday practices. It argues that the everyday practices in SIBs reveal disharmonies between neoliberal rationality and financial rationality. This is demonstrated through a qualitative case study of Australian SIBs, based in document analysis and interviews. The case study highlights five modes of everyday financialization in SIBs: selecting programs to fund, negotiating value, using evidence, training nonprofit organizations in financial thinking, and embedding the logic of finance in payment-by-outcomes contracts. The article contributes to debates on the relationship between financialization and neoliberalism and highlights the value of exploring the everyday practices and governing rationalities involved in state financialization.