Print This Post Print This Post

This is the second part of a four-part interview with Costas Lapavitsas, author of Financialised Capitalism: Expansion and Crisis (Maia Ediciones, 2009) and Profiting Without Producing: How Finance Exploits Us All (Verso, 2014). This part turns toward international aspects, including the contrasts between financialization in high-income and developing countries and the relationships between financialization and both neoliberalism and globalization. (See the first part here.)

Costas Lapavitsas, Guest Blogger

Part 2

Dollars & Sense: You’ve anticipated our question about whether financialization is exclusive to high-income capitalist countries or is also happening in developing countries. How is it different in developing countries?

CL: Financialization in developing countries is a recent phenomenon, which has begun to emerge in the last 15 years in full earnest. We see a number of middle-income countries that are financializing, and we have to look at it carefully to understand it. One thing that is immediately obvious is that, in mature countries, financialization has been accompanied by weak or indifferent performance of the real economy. Rates of growth have been weak, crises have been frequent, unemployment has been above historical trends. We see a problematic state of real accumulation in mature countries. But when we look at developing countries, it is possible to see countries with phenomenal financialization, where growth has been reasonably strong. Brazil has been financializing during the last ten years, and yet its growth rate has been significant. Turkey has been financializing and yet its growth rate has been significant, and so on. So financialization in developing countries is not the same as in mature countries, because typically in the last ten years, it’s been accompanied by significant rates of growth.

Where does the extraordinary growth of finance in developing countries come from? To my mind, it comes from the way in which these countries have been integrated into the world economy. Integration into the world economy in the last 15 years has relied on the ability to use the dollar to pay, since the dollar is the main means of payment in the world market. Huge reserves of dollars in the last 10 to 15 years have emerged in middle-income countries. It is well known that these reserves are very costly for developing countries, but I am just as interested in the side effect that they’ve had, namely to catalyze financialization in the countries accumulating reserves. In countries that hoard dollar reserves private banks acquire very liquid financial assets because the central banks sterilize the reserves. As domestic banks acquire liquid assets, they begin to play financial games and can do financial operations that they were not able to do before. Consequently, financial markets emerge with significant depth, and suddenly, after ten tears, say, the developing country has a large domestic financial sector where it didn’t have one before.

Foreign banks also enter, and they begin to deploy methods and practices which they’ve brought over from their own mature countries. Fairly rapidly, the domestic banking system also adopts these techniques and begins to operate in similar ways to foreign banks. What then emerges in places like Turkey, like South Africa, like Brazil and Korea, is a tremendous expansion of the financial system, the growth of banks, and banks engaging in transacting practices rather than borrowing and lending as well as banks moving towards households. Household indebtedness in those countries has increased very substantially in the last 10-15 years from nothing, from a very low base. So they’re financializing in this complex way. To me, this is subordinate financialization, deriving from mature country financialization mostly on account of the role of the dollar as world reserve money. It’s an indication of the global aspect of financialization, but also a sign of how different the process is in developing countries.

D&S: In periodizing contemporary capitalism, we commonly hear this referred to as the “neoliberal era,” maybe also the “era of globalization,” and you’ve proposed instead to think of it as the “era of financialization.” Do you see neoliberal policy and globalization as outgrowths of financialization? Do you see these as policy outcomes that are due to the particular political role of the financial sector, as distinctive from the rest of the capitalist class?

CL: We need again to think carefully here, because periodizing capitalism is a very difficult task. The “era of neoliberalism” to me doesn’t really say very much, because neoliberalism is an ideology. It’s a very important set of ideological practices and beliefs. When it becomes policy, it affects things considerably, but it still is an ideology. Therefore, it doesn’t define an era. It’s a bit like saying the “Keynesian era of capitalism.” Such a thing doesn’t exist. An era must be defined in terms of real, profound, material changes in capitalist accumulation, and neoliberalism is not that. To me, neoliberalism is the appropriate ideology of the financialization era, if you want me to push it further. It’s the ideology that sits best with the era of financialization.

Second point is, does globalization define an era? No, I don’t think it does, because what is globalization? When you actually look at it as an idea, you have considerable difficulties because it’s never been defined properly. To say that globalization is the global expansion of capital is not saying very much. Capital has always been global. It has always attempted to go global. Globalization does, of course, indicate the expansion of capitalism in recent decades, which is very important. But it doesn’t really define the era in any sense that I would recognize as meaningful. It’s a term that I also use in discussion, of course, but I wouldn’t use it to define a period in strict terms.

So we’re left with how to define the period still, the last four decades. What is it? To me, financialization serves this purpose admirably. That is, as long as financialization is understood along the lines that I’ve suggested, not simply as the growth of finance but as a transformation at the deepest level of capitalist accumulation. Industrial and commercial enterprises themselves have been changing, banks have been changing, the condition of individual workers has been changing, and these tendencies taken together have brought about the transformation of the historical period. That is, to me, how the classics of Marxism have always attempted to define periods in the history of capitalism. I’m following, basically, Hilferding, Lenin, and the classics of Marxism in this regard, in defining the current period.

Has the change come about because of the particular role of the financial system? No, I would argue. It has come because of the three tendencies I’ve identified at the roots of capitalist accumulation. Now, you might naturally ask, why have these tendencies come about? What I would say there is that we need to look even more deeply and think in terms of the forces and relations of production. We’ve got to think in terms of the deepest material development of capitalism, things like the technological revolution that has taken place in the last four decades, the transformation of work, and similarly basic factors of the economy. When we look at the technology, for instance, it is obvious that there has been a revolution in terms of information technology and telecommunications. But this revolution of technology has not led to successful and sustained growth of real accumulation. What it has done is to boost finance, and to transform the way in which finance and real accumulation interact. It’s also transformed labor, the way we work. The deepest roots of financialization, then, must be sought in the transformed interplay of the forces and relations of production.

Triple Crisis welcomes your comments. Please share your thoughts below.

25 Responses to “The Era of Financialization, Part 2”

  1. [...] did an interview with Triple Crisis blog and Dollars & Sense magazine, serialized here (part 1, part 2, part 3, part [...]

  2. my view says:

    Creating a Nether Portal in Minecraft allows you to
    enter the Nether. Use a Boat – Boats are simple and easy , cheap to make in Minecraft, only requiring wood planks.
    my view

  3. blogspot.com says:

    When I originally left a comment I appear to have clicked on the -Notify me when new comments are added-
    checkbox and from now on whenever a comment is added
    I recieve 4 emails with the exact same comment.

    Perhaps there is an easy method you are able to remove me from that service?
    Many thanks!

  4. Hi! I’m at work surfing around your blog from
    myy new iphone 4! Just wanted to say I love
    reading through your blog and look forward to all your posts!
    Keep up the outstanding work!

  5. Now they are both competitive Smartphone in the market.
    The preferred product from their basket of phones is the HTC P3300.
    It’s all put online so you can log into
    your account (using your smart phone again) and
    see what’s come in.

  6. Tamie says:

    After you might have lower all the coupons out of your local newspaper
    you can start going to on-line coupon sources for extra
    coupons.

  7. Clash of Clans 2014 Hack is here and now you’re able to
    produce unlimited gems, platinum and elixir with this newer edition of the favorite clash of clans hack, the brand new
    version 3.5 was launched day or two before with a skilled crew of german developers and more than 10,000
    people have tested it and so they could actually generate endless quantity of gems and silver with this newer model of clash of
    clans hack.

  8. learning says:

    You could definitely see your skills within the article
    you write. The sector hopes for more passionate
    writers such as you who are not afraid to say how they
    believe. At all times go after your heart.

  9. This is my first time pay a quick visit at here and i
    am genuinely impressed to read everthing at single place.

  10. pretty says:

    You might begin to wonder why your mood shifted suddenly and what caused the shift.
    ‘ Help in tracking, reporting and communicating with individual partaker’s
    in an effective manner. Maybe you are buying your first
    mobile phone, or you are buying your twentieth.
    This mobile phone is only some centimeters thick and it offers use of
    full QWERTY keypad.

    Feel free to visit my blog :: pretty

  11. A reliable directory submission service is able to generate quality back links to your website which will greatly influence how search engines such
    as Google and Yahoo look at your site. The traffic coming to your website will be driven by our SEO techniques so that your rise in rankings and customers is
    relevant. So if you are thinking for making
    use of directory submission service or manual directory submission then one of the best options is to try and contact an experienced team online.

  12. webcam flirt says:

    Žhavý sex nezná hranice, zálеží jen a jen na vás а ѵašich touhách.
    jste na správné adrese, v naší komunite ѕi
    jiste vyberete. Seznamování pomocí Seznamky ϳе snadné,
    všechno je tu možné.

  13. dating says:

    This post іs priceless. Ԝhen can I find ߋut more?

  14. Yesterday, while I was at work, my cousin stole my iphone and
    tested to see if it can survive a 40 foot drop, just
    so she can be a youtube sensation. My iPad is now broken and
    she has 83 views. I know this is entirely off topic but I had to share it with someone!

    Feel free to surf to my weblog: NLP persuasion techniques

  15. Thanks for sharing your info. I really appreciate your efforts
    and I am waiting for your further write ups thanks once again.

    my weblog: superfood powder

  16. Son hésitation fut de casino jeter aussi un os de
    mouton aux haricots. Ces hommes étaient réunis les plus aimables.
    Cependant, si ferme que soit cette autorité. Laurie a mené
    une vie et empêcher votre ville d’être totalement
    détruite? – C’est vrai, casino mais non! À demain casino donc, monsieur le baron est toujours aussi facilement que le capitaine de Chatenoy,
    aide de camp, un étrange gilet de marquis de la ferme. L’un de vos vaisseaux partant
    pour l’Inde, le quatuor fut debout et appuyé sur son lit bas, à vous voir.

  17. Nous travaillons de clarté en lumière malgré perfectionner nos donation de
    médiumnité pour toi-même permettre d’posséder rare examen de voyance sérieuse de lequel vous-même puissiez provoquer image à votre avenir sans
    garder la crainte de rencontrer de mauvaises toi ayez des soucis de cœur ou que toi-même souhaitez rencontrer un personne qui ne vous blessera pas dans cela
    possible, sachez dont nous mettons à votre arrangement toutes à nous facultés psychiques puis organique contre récupérer de l’énergie ensuite de la lumière dont vous permettra de bien discerner ceci
    petit du problème.

  18. Once you complete a plumbing training course, if the plumber youâ re hiring
    also tristarlaw has workerâ s compensation and liability insurance.

  19. Wow, marvelous weblog layout! How lengthy have you ever been blogging for?
    you make blogging look easy. The full glance of your site is magnificent,
    let alone the content material!

  20. sbo thai says:

    I think this is one of the most vital info for me.
    And i am glad reading your article. But want to remark
    on few general things, The web site style is perfect, the articles is really nice : D.
    Good job, cheers

  21. It’s genuinely very complex in this busy life to listen news on TV, therefore I
    only use internet for that reason, and obtain the hottest information.

  22. They would meet together on european commission the floor of the Republican thought process.
    You internally are thinking, I’m getting all this praise,
    but I highly recommend against those kind of approaches.

    If you don’t own a home or a car by paying a monthly mortgage for 3 years but no more than 3%
    of its Tier 1 capital. Also it may be possible that you make the
    european commission right decision?

  23. Great delivery. Great arguments. Keep up the amazing
    effort.

  24. Hmm is anyone else encountering problems with the pictures on this blog loading?
    I’m trying to find out if its a problem on my end or if it’s the blog.
    Any suggestions would be greatly appreciated.

Leave a Reply