Finance capitalism

From Wikipedia, the free encyclopedia

Finance capitalism or financial capitalism is the subordination of processes of production to the

accumulation of money profits in a financial system.[1]
Financial capitalism is thus a form of capitalism where the intermediation of saving to investment
becomes a dominant function in the economy, with wider implications for the political process and
social evolution:[2] since the late 20th century it has become the predominant force in the global
economy,[3] whether in neoliberal or other form.[4]
Contents
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1 Characteristics
o

1.1 Social implications

2 Historical developments

3 Opponents

4 See also

5 References

6 Further reading

7 External links

Characteristics[edit]
Finance capitalism is characterized by a predominance of the pursuit of profit from the purchase and
sale of, or investment in, currencies and financial products such as bonds,stocks, futures and
other derivatives. It also includes the lending of money at interest; and is seen by Marxist
analysts (from whom the term finance capitalism originally derived) as being exploitative by
supplying income to non-laborers.[5] Academic defenders of the economic concept of capitalism, such
as Eugen von Bhm-Bawerk, see such profits as part of the roundabout process by which it grows
and hedges against inevitable risks.[6]
In financial capitalism, financial intermediaries become large concerns, ranging from banks to
investment firms. Where deposit banks attract savings and lend out money, while investment banks
obtain funds on the interbank market to re-lend for investment purposes, investment firms, by
comparison, act on behalf of other concerns, by selling their equities or securities to investors, for
investment purposes.[7]

Social implications[edit]
The meaning of the term financial capitalism goes beyond the importance of financial intermediation
in the modern capitalist economy. It also encompasses the significant influence of the wealth holders
on the political process and the aims of economic policy.[8]

Thomas Palley has argued that the 21st century predominance of finance capital has led to a
preference for speculation Casino Capitalism over investment for entrepreneurial growth in the
global economy.[9]

Historical developments[edit]
Rudolf Hilferding is credited with first bringing the term finance capitalism into prominence, with his
(1910) study of the links between German trusts, banks, and monopolies beforeWorld War I a
study subsumed by Lenin into his wartime analysis of the imperialist relations of the great world
powers.[10] Lenin concluded of the banks at that time that they were the chief nerve centres of the
whole capitalist system of national economy:[11] for the Comintern, the phrase "dictatorship of finance
capitalism"[12] became a regular one.
In such a traditional Marxist perspective, finance capitalism is seen as a dialectical outgrowth
of industrial capitalism, and part of the process by which the whole capitalist phase of history comes
to an end. In a fashion similar to the views of Thorstein Veblen, finance capitalism is contrasted with
industrial capitalism, where profit is made from the manufacture of goods.
Braudel would later point to two earlier periods when finance capitalism had emerged in human
history with the Genoese in the 16th century and the Dutch in the 17th and 18th centuries
although at those points it was from commercial capitalism that it developed. [13] Giovanni
Arrighi extended Braudel's analysis to suggest that a predominance of finance capitalism is a
recurring, long-term phenomenon, whenever a previous phase of commercial/industrial capitalist
expansion reaches a plateau.[14]
Whereas by mid-century the industrial corporation had displaced the banking system as the prime
economic symbol of success,[15] the late twentieth-century growth of derivatives and of a novel
banking model[16] ushered in a new (and historically fourth) period of finance capitalism. [17]
Fredric Jameson has seen the globalised abstractions of this current phase of financial capitalism as
underpinning the cultural manifestations of postmodernism.[18]

Opponents[edit]
Fascists were vocal in their opposition to finance capitalism. [19]
C. H. Sisson saw the underlying theme of The Cantos of Ezra Pound as the depredations of finance
capital: the monstrous aberration of a world in which reality is distorted, down to a detail never so
comprehensively implicated before, by the pull of a fictitious money.[20]
Gottfried Feder opposed financial capitalism and the concentration of capital by bankers
in Germany.