The anthropology of finance has engaged broadly with the social dynamic of financialization, as well as the importance and centrality of financial markets, institutions, values, and practices in the global social economy and everyday life. Financialization as a cause of economic malaise the new york times. It shows positive as well as negative effects of financialization on the. Washington seems not to have awakened to the problems caused by the growing share of the united states economy captured by the financial services sector, an economist writes. Financialization and the world economy edward elgar publishing. Financialization, income distribution, and social justice. Paper prepared for peri conference on financialization of the world economy. Part two focuses on financialization in the context of the us economy, with discussion of the. Given the pervasive influence of finance in our world, coupled with the production of highly specialized. Financialization the increasing importance of financial markets, institutions and motives in the world economy is described and analyzed in this rigorously. Born as a term with a critical connotation towards finance, financialization has been widely employed in social sciences, despite the vagueness often surrounding it. Financialization and the world economy ebook, 2005.
More recently, phillips 2002 argues in wealth and democracy. The contributors, top scholars in their fields, explore the quantitative and qualitative. Financialization of the economy has been developing since the late 19th century and is now at historic levels. Financialization the increasing importance of financial markets, institutions and motives in the world economy is. Hayek would have disapproved, but it has helped the indian economy to navigate relatively unscathed through the deepest crisis in the post. Abstract financialization has become the goto term for scholarship that studies the vastly expanded role of finance in contemporary politics, economy and society. This article by means of the synthesis, interpretation, and assessment of an extensive literature explores the issues that minsky examined in the last decade of his life and considers their relationship to the financialization literature. Financialization has led to greater investments in technology and product development becaue wall street chases short term financial returns over long term goals. Financialization of commodity markets springerlink. In this article we discuss the concept of financialization with a focus on three dimensions. Financialization and the world economy gerald a epstein. In this primer article, we introduce financialization, showing how the term describes a process through which financial actors have gained new power and in which the locus of profit making at least appears to have shifted from the real economy to a financial economy. The boom in the years 20022008 was exceptional on many levels.
I f you want to know what happened to economic equality in this country, one word will explain a lot of it. Financialization may permit real goods, services, and risks to be readily exchangeable for currency, and thus make it easier for. In the third macroeconomic article, pablo bortz and annina kaltenbrunner assess the international financialization of developing and emerging economies dees. That term refers to an increase in the size, scope, and power of the. Financialization, described in the 17 papers collected here as the awareness of increasing importance of financial markets, institutions and motives in the world economy, can be expressed both quantitatively and qualitatively to find its costs and. This paper explains the process of financialization and its relation to. Financialization has been growing importance in macroeconomic perspectives since the financedominated capitalist relations have captured many of the specific positions in an aggregate economy.
Financialization of the economy has been developing since the late 19th century and is now at historic levels more at. However, the empirical literature has substantially ignored the examination of the link between an increasing scale of financialization and the rising. The politics of financialization in the united states. Phases of financialization within the 20th century in the united states. Italian scholar of political economy and sociology giovanni arrighi famously argued that over the course of capitalist history, financialization tends to become a dominant force when the productive economy is in decline, and when the dominant global power or hegemon is in retreat. Financialization and the world economy by gerald a. Since hyman minskys death in 1996, much has been written about financialization. Alvarez 2015 focuses on the relationship between financialization and functional income distribution in the context of french corporations using firmlevel data.
Maximizing shareholder value the united states is the richest economy in the world. Financialization the increasing importance of financial markets, institutions and motives in the world economy is described and analyzed in this rigorously researched volume. Epstein 2005 in his introduction to his edited book financialization and the world economy 2. She also defines financialization as a pattern of accumulation in which profits accrue primarily through financial channels rather than through trade and commodity production. Financialization is a central and shaping feature of the world economy in the current period of liberalization of financial markets and trade. The book begins by presenting basic data on the distributional implications of financialization. Financialization and the economy is of great importance to those who study political economy, macroeconomics and banking. On financialization and its future stefanos ioannou. How shareholder value ideology roosevelt institute. In financialization and the world economy, edited by gerald a. Financialization and the world economy, in epstein, gerald a. I highly recommend financialization and the world economy to scholars in the field. This monograph presents the role of financialization in the modern world.
In one of the few books to take up the subject directly, gerald epsteins, financialization and the world economy epstein, 2005, he offers a loose definition of financialization that will serve as well as any other. Yet neither arrighi nor phillips establishes the existence of financialization. Tabb, queens college, cuny, us we are all acutely aware of the increasing role in economic life of financial markets, institutions and operations and the pursuit of financial rewards, that is financialization. Financialization transforms the functioning of economic systems at both the macro and micro levels.
A new word has emerged in the lexicon of the new economy financialization defined as the growing scale and profitability of the finance sector at the expense of the rest of the economy and. Financialization of the global economy industrial and. Financialization and the world economy offers a series of expert, wellinformed, critical studies of this phenomenon which explore its risks and costs. Through scholarship and economic research it generates viable, effective. Theorizing financialization costas lapavitsas, 2011. Financialization and the economy 1st edition agata. Employing an expanded conceptualization of value added which identifies internal capital, labor and external creditors, government, charities stakeholders with claims on the value generated in production and exchange, we also find that the declining value added produced by financialization was born most strikingly by labor and the state. Financialization and the world economy 5 tic and policy viewpoints, the authors share at least two common convictions. First, excessive financialization depresses economic growth because it. What constitutes the relevant evidence for financialization,and how should this evidence be evaluated. Limits to financialization european journal of sociology.
Financialization and american inequality its no secret by now that the recent spike in american inequality, and the gains rapidly accruing to the wealthy, are driven in large part by financialization. Financialization describes an economic process by which exchange is facilitated through the intermediation of financial instruments. The contributors, top scholars in their fields, explore the quantitative and qualitative dimensions of financialization and tally its costs and benefits for society as a whole. Researchers have focused on two broad themes at the level of. In examining the financialization of the uk economy since the mid1970s, this study discovers a socio economic shift beyond the broad transition from keynesianism towards freemarket fundamentalism. Financialization has turned the global economy into a.
First, financial phenomena have become increasingly important in much of the world economy. Studies of financialization interrogate how an increasingly autonomous realm of global finance has altered the underlying logics of the industrial economy and the inner workings of democratic society. Financialization and the economy is of great importance to those. Financialization is a process whereby financial markets, financial institutions, and financial elites gain greater influence over economic policy and economic outcomes. Financialization of us economy 175 or capital gains. Its principal impacts are to 1 elevate the significance of the financial sector. Wall street and the financialization of the economy.
And, second, that some of the effects of financialization. The impact of destructive product market competition and modern financial markets on nonfinancial corporation performance in the neoliberal era. Yet in the 2000s the united states has been unable to deliver equitable and stable economic growth to its own population. While there is a range of social science research that points to the increasing salience of finance. The process that led the world economy to the global financial crisis, as well as its explosion, was accompanied by an unprecedented increase of prices in the commodity markets. It shows positive as well as negative effects of financialization on the stability of the whole economy, the functioning of different types of markets, activity of enterprises, state institutions and behaviours of households.