DOCSLIB.ORG

Rogue Capitalism and the FINANCIALIZATION of TERRITORIES and NATURE

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Rogue Capitalism and the FINANCIALIZATION of TERRITORIES and NATURE Rogue Capitalism AND THE FINANCIALIZATION OF TERRITORIES AND NATURE > 9.600.000.000.000 > 510.000.000 > 1.917 SEPTEMBER 2020 PUBLISHED BY FIAN International, Transnational Institute, Focus on the Global South EDITORS Philip Seufert, Roman Herre, Sofia Monsalve (FIAN International), Shalmali Guttal (Focus on the Global South) This document is the result of a collective reflection and discussion by the members of the Land and Territory Working Group of the International Planning Committee for Food Sovereignty (IPC), as well as befriended organizations. The IPC is an autonomous and self-organized global platform of small-scale food pro- ducers’, indigenous peoples’ and rural workers’ organizations to advance food sovereignty at the global and regional level. The following organizations have contributed to the discussions that informed this paper: La Via Campesina, Housing International Coalition-Housing and Land Rights Network (HIC-HLRN), Réseau des Organisations Paysannes et des Producteurs Agricoles de l'Afrique de l'Ouest (ROPPA), Australian Food Sovereignty Alliance, Friend of the Earth International, ETC Group, Society for International Develop- ment (SID), Kesatuan Nelayan Tradisional Indonesia (KNTI), Northwest Atlantic Marine Alliance, Observatori DESC, Rede Social de Justiça e Direitos Humanos, Centre for Financial Accountability. This publication has been produced with financial support from the European Commission (EC). The contents are the sole responsibility of the publishers and can in no way be taken to reflect the views of the EC. CONTENTS ABOUT THIS PAPER 5 CHAPTER 1 WHAT IS FINANCIALIZATION? IT IS ROGUE CAPITALISM! 8 1.1 WHY DO WE SAY ROGUE CAPITALISM? 9 CHAPTER 2 WHERE DOES ROGUE CAPITALISM COME FROM? 13 2.1 ONCE UPON A TIME, THERE WERE REGULATIONS 14 2.2 FINANCIALIZATION FOR THE NEW MILLENNIA 17 CHAPTER 3 WHAT DOES ROGUE CAPITALISM LOOK LIKE IN OUR TERRITORIES? 19 3.1 LAND AND AGRIBUSINESS 20 3.2 OCEANS 30 3.3 LARGE INFRASTRUCTURE PROJECTS AND TRANSNATIONAL ECONOMIC CORRDORS 35 3.4 HOUSING AND CITIES 40 3.5 WATER 46 3.6 PUTTING A PRICE TAG ON NATURE:THE GREEN ECONOMY 51 CHAPTER 4 HOW DOES ROGUE CAPITALISM GO ABOUT? 56 4.1 ACTORS 57 4.2 PLACES: OFFSHORE FINANCIAL CENTERS,TAX HAVENS, AND SHADOW BANKING HUBS 68 4.3 POLICIES 72 4.4 DISCOURSES AND IMAGINARIES 86 4.5 DIGITAL TECHNOLOGY AND BIG DATA 87 CHAPTER 5 RESISTANCE: NEW CHALLENGES FOR THE FOOD SOVEREIGNTY MOVEMENT 94 5.1 ONGOING STRUGGLES AGAINST ROGUE CAPITALISM 97 5.2 QUESTIONS FOR A CRITICAL REFLECTION 106 REFERENCES 110 ROGUE CAPITALISM AND THE FINANCIALIZATION OF NATURE AND TERRITORIES 3 ABOUT THIS PAPER This discussion paper intends to provide a basis for people’s movements, grassroots activists and other civil society organiza- tions (CSOs) to build/strengthen their knowledge about the pro- cess called “financialization,” and to develop strategies to resist, reverse and prevent it. It has been developed by members of the IPC Land and Territory Working Group, which has defined the financialization of land and nature as a common and critical chal- lenge that its member organizations face. This paper is based on the experiences and analyses of member organizations of the IPC Land and Territory Working Group, and intends to stimulate collective reflection and discussion among all interested organizations about how to oppose the increasing power, influence and control of global finance over our territo- ries. Rather than providing a theoretical reflection or an in-depth analysis of all aspects of financialization, the paper aims to help grassroots organizations to understand its key components/as- pects and its implications for people and communities around the world. The paper sheds light on different ways in which fi- nance capital manifests itself in people’s territories, and the ac- tors, places, institutions and policies, that drive these processes forward. The different chapters and the document itself conclude with a set of questions to guide further reflection and discussion. We believe that it is essential for our struggles for food and peo- ple’s sovereignty to understand these new dynamics and mech- anisms at play. Communities and people around the world are directly affected by financialization. The violent impacts are visi- ble, but we need to understand the underlying drivers in order to be effective in our struggles. Therefore, we hope that this paper can serve as a starting point for an action-oriented reflection that allows us to further develop our political agenda, and to refine our strategies and ways of organizing in order to stop and roll back the privatization and commodification of nature and life. >> ROGUE CAPITALISM AND THE FINANCIALIZATION OF NATURE AND TERRITORIES 4 >> The process of developing this document was completed before the COVID-19 pandemic spread across the world in early 2020. This pandemic has exposed the devastating consequences of contemporary capitalism. Resource grabs and ecosystem de- struction have created the conditions for the emergence of new pathogens. At the same time, the financialization of health sys- tems and other public services has reduced the capacity of soci- eties to respond to the spread of the novel Coronavirus, creating a profound health crisis. All over the world, people and communi- ties who have been dispossessed and marginalized over the last decades have been particularly affected by the pandemic. COVID-19 has also deepened the crisis of capitalism. Lockdowns that have been imposed by a large number of governments, as well as the abrupt halting of many economic activities, have tem- porarily suspended capitalism. Financial markets plunged at the beginning of the pandemic, prompting government interventions to stabilize them. The world is entering a global recession, which will have severe impacts on rural and urban people and commu- nities around the world. In response, governments have put in place rescue packages, raising fears that big business and global finance will again be rescued and bailed out with tax money, as happened during the 2008/09 world financial crisis. While there is a real risk that the crisis will further consolidate the power of big business and global finance, the way in which the pandemic has exposed the flaws of the current system may also be an opportunity to achieve real change. In this sense, this pa- per is also a contribution to a debate on the most strategic entry points for shaping the post-COVID-19 world in a way that places people, communities and their rights at the center. ROGUE CAPITALISM AND THE FINANCIALIZATION OF NATURE AND TERRITORIES 5 LIST OF ACRONYMS AATIF African Agricultural Trade and Investment Fund AIIB Asian Infrastructure and Investment Bank BRI Belt and Road Initiative / One Belt One Road Initiative CEDAW Committee on the Elimination of Discrimination Against Women CESCR Committee on Economic, Social and Cultural Rights CHEC Chinese Harbour Engineering Company CIF Commodity index fund CIFC Colombo International Financial City CSO Civil society organization CSR Corporate social responsibility DFI Development finance institution EBA Enabling the Business of Agriculture ESG Environmental, social and governance FAO Food and Agriculture Organization of the United Nations GCAR Global Campaign for Agrarian Reform GDP Gross domestic product GEF Global Environment Facility GMS Greater Mekong Subregion Economic Cooperation Program HCPF Holistic Conservation Program for Forests in Madagascar ICT Information and communciation technology IFC International Finance Corporation >> ROGUE CAPITALISM AND THE FINANCIALIZATION OF NATURE AND TERRITORIES 6 >> IFI International finance institution IPC International Planning Committee for Food Sovereignty MFI Microfinance institution MPA Marine Protected Area NCREIF National Council of Real Estate Investment Fiduciaries NGO Non-governmental organization ODA Official development assistance OFC Offshore financial center PES Payment for Environmental Services PPP Public-private partnership PRI Principles for Responsible Investment REDD Reducing Emissions through Deforestation and Degradation REIT Real estate investment trust SDG Sustainable Development Goals SEZ Special economic zone SLC Schneider Logemann Company TLFF Tropical Landscapes Finance Facility TNC Transnational corporation UN United Nations UNEP United Nations Environmental Programme USD US Dollar WEF World Economic Forum WRG Water Resources Group WTO World Trade Organization WWF World Wide Fund for Nature ROGUE CAPITALISM AND THE FINANCIALIZATION OF NATURE AND TERRITORIES 7 >> 1 WHAT IS FINANCIALIZATION? IT IS ROGUE CAPITALISM! Rural and urban communities around the globe are facing a dra- matic increase in dispossession and destruction of their lands, rivers, pastures, forests, oceans, and houses; in other words, we face the loss of access to and effective control over our territo- ries, the very foundation of our communities and social fabric. What is the reason for this dramatic increase? It is finance capitalism. IN THIS CHAPTER, WE WILL: Propose a new term to describe the power of global finance: Rogue Capitalism. WHY DO WE SAY 1.1 ROGUE CAPITALISM? According to Wikipedia, finance capitalism “is the subordination of processes of production to the accumulation of money profits in a financial system. […] Since the late 20th century, in a process sometimes called financialization, it has become the predominant force in the global economy, whether in neoliberal or other form.”1 Other definitions describe financialization as the “increasing im-
Load more

Recommended publications
  • Asset Manager Capitalism As a Corporate Governance Regime
    Preprint version of a chapter to be published in Hacker, J. S., Hertel-Fernandez, A., Pierson, P., & Thelen, K. (eds.). American Political Economy: Politics, Markets, and Power. New York: Cambridge University Press, forthcoming. Asset Manager Capitalism as a Corporate Governance Regime Benjamin Braun Max Planck Institute for the Study of Societies [email protected] This version: May 2021. Latest version at https://osf.io/preprints/socarxiv/v6gue. Abstract Who holds power in corporate America? Scholars have invariably answered this question in the language of ownership and control. This paper argues that tackling this question today requires a new language. Whereas the comparative political economy literature has long treated dispersed ownership and weak shareholders as core features of the U.S. political economy, a century-long process of re-concentration has consolidated shareholdings in the hands of a few very large asset management companies. In an historically unprecedented configuration, this emerging asset manager capitalism is dominated by fully diversified shareholders that lack direct economic interest in the performance of individual portfolio companies. The paper compares this new corporate governance regime to its predecessors; reconstructs the history of the growth and consolidation of the asset management sector; and examines the political economy of asset manager capitalism, both at the firm level and at the macroeconomic level. Acknowledgements: Work on this paper began in 2015 and I have since accumulated many debts. Earlier drafts were presented at the Max Planck Institute for the Study of Societies, the Watson Institute at Brown University, the Center for European Studies at Harvard University, and at the Institute for Advanced Study in Princeton.
    [Show full text]
  • Catalogue of the Amphibians of Venezuela: Illustrated and Annotated Species List, Distribution, and Conservation 1,2César L
    Mannophryne vulcano, Male carrying tadpoles. El Ávila (Parque Nacional Guairarepano), Distrito Federal. Photo: Jose Vieira. We want to dedicate this work to some outstanding individuals who encouraged us, directly or indirectly, and are no longer with us. They were colleagues and close friends, and their friendship will remain for years to come. César Molina Rodríguez (1960–2015) Erik Arrieta Márquez (1978–2008) Jose Ayarzagüena Sanz (1952–2011) Saúl Gutiérrez Eljuri (1960–2012) Juan Rivero (1923–2014) Luis Scott (1948–2011) Marco Natera Mumaw (1972–2010) Official journal website: Amphibian & Reptile Conservation amphibian-reptile-conservation.org 13(1) [Special Section]: 1–198 (e180). Catalogue of the amphibians of Venezuela: Illustrated and annotated species list, distribution, and conservation 1,2César L. Barrio-Amorós, 3,4Fernando J. M. Rojas-Runjaic, and 5J. Celsa Señaris 1Fundación AndígenA, Apartado Postal 210, Mérida, VENEZUELA 2Current address: Doc Frog Expeditions, Uvita de Osa, COSTA RICA 3Fundación La Salle de Ciencias Naturales, Museo de Historia Natural La Salle, Apartado Postal 1930, Caracas 1010-A, VENEZUELA 4Current address: Pontifícia Universidade Católica do Río Grande do Sul (PUCRS), Laboratório de Sistemática de Vertebrados, Av. Ipiranga 6681, Porto Alegre, RS 90619–900, BRAZIL 5Instituto Venezolano de Investigaciones Científicas, Altos de Pipe, apartado 20632, Caracas 1020, VENEZUELA Abstract.—Presented is an annotated checklist of the amphibians of Venezuela, current as of December 2018. The last comprehensive list (Barrio-Amorós 2009c) included a total of 333 species, while the current catalogue lists 387 species (370 anurans, 10 caecilians, and seven salamanders), including 28 species not yet described or properly identified. Fifty species and four genera are added to the previous list, 25 species are deleted, and 47 experienced nomenclatural changes.
    [Show full text]
  • Markets Not Capitalism Explores the Gap Between Radically Freed Markets and the Capitalist-Controlled Markets That Prevail Today
    individualist anarchism against bosses, inequality, corporate power, and structural poverty Edited by Gary Chartier & Charles W. Johnson Individualist anarchists believe in mutual exchange, not economic privilege. They believe in freed markets, not capitalism. They defend a distinctive response to the challenges of ending global capitalism and achieving social justice: eliminate the political privileges that prop up capitalists. Massive concentrations of wealth, rigid economic hierarchies, and unsustainable modes of production are not the results of the market form, but of markets deformed and rigged by a network of state-secured controls and privileges to the business class. Markets Not Capitalism explores the gap between radically freed markets and the capitalist-controlled markets that prevail today. It explains how liberating market exchange from state capitalist privilege can abolish structural poverty, help working people take control over the conditions of their labor, and redistribute wealth and social power. Featuring discussions of socialism, capitalism, markets, ownership, labor struggle, grassroots privatization, intellectual property, health care, racism, sexism, and environmental issues, this unique collection brings together classic essays by Cleyre, and such contemporary innovators as Kevin Carson and Roderick Long. It introduces an eye-opening approach to radical social thought, rooted equally in libertarian socialism and market anarchism. “We on the left need a good shake to get us thinking, and these arguments for market anarchism do the job in lively and thoughtful fashion.” – Alexander Cockburn, editor and publisher, Counterpunch “Anarchy is not chaos; nor is it violence. This rich and provocative gathering of essays by anarchists past and present imagines society unburdened by state, markets un-warped by capitalism.
    [Show full text]
  • The Socialization of Investment, from Keynes to Minsky and Beyond
    Working Paper No. 822 The Socialization of Investment, from Keynes to Minsky and Beyond by Riccardo Bellofiore* University of Bergamo December 2014 * [email protected] This paper was prepared for the project “Financing Innovation: An Application of a Keynes-Schumpeter- Minsky Synthesis,” funded in part by the Institute for New Economic Thinking, INET grant no. IN012-00036, administered through the Levy Economics Institute of Bard College. Co-principal investigators: Mariana Mazzucato (Science Policy Research Unit, University of Sussex) and L. Randall Wray (Levy Institute). The author thanks INET and the Levy Institute for support of this research. The Levy Economics Institute Working Paper Collection presents research in progress by Levy Institute scholars and conference participants. The purpose of the series is to disseminate ideas to and elicit comments from academics and professionals. Levy Economics Institute of Bard College, founded in 1986, is a nonprofit, nonpartisan, independently funded research organization devoted to public service. Through scholarship and economic research it generates viable, effective public policy responses to important economic problems that profoundly affect the quality of life in the United States and abroad. Levy Economics Institute P.O. Box 5000 Annandale-on-Hudson, NY 12504-5000 http://www.levyinstitute.org Copyright © Levy Economics Institute 2014 All rights reserved ISSN 1547-366X Abstract An understanding of, and an intervention into, the present capitalist reality requires that we put together the insights of Karl Marx on labor, as well as those of Hyman Minsky on finance. The best way to do this is within a longer-term perspective, looking at the different stages through which capitalism evolves.
    [Show full text]
  • Neo-Liberalism As Financialisation1 Engaging Neo-Liberalism When It
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by SOAS Research Online Neo-liberalism as Financialisation 1 Engaging Neo-liberalism When it first emerged, neo-liberalism seemed to be able to be defined relatively easily and uncontroversially. In the economic arena, the contrast could be made with Keynesianism and emphasis placed on perfectly working markets. A correspondingly distinctive stance could be made over the role of the state as corrupt, rent-seeking and inefficient as opposed to benevolent and progressive. Ideologically, the individual pursuit of self-interest as the means to freedom was offered in contrast to collectivism. And, politically, Reaganism and Thatcherism came to the fore. It is also significant that neo-liberalism should emerge soon after the post-war boom came to an end, together with the collapse of the Bretton Woods system of fixed exchange rates. This is all thirty or more years ago and, whilst neo-liberalism has entered the scholarly if not popular lexicon, it is now debatable whether it is now or, indeed, ever was clearly defined. How does it fair alongside globalisation, the new world order, and the new imperialism, for example, as descriptors of contemporary capitalism. Does each of these refer to a similar understanding but with different terms and emphasis? And how do we situate neo-liberalism in relation to Third Wayism, the social market, and so on, whose politicians, theorists and ideologues would pride themselves as departing from neo- liberalism but who, in their politics and policies, seem at least in part to have been captured by it (and even vice-versa in some instances)? These conundrums in the understanding and nature of neo-liberalism have been highlighted by James Ferguson (2007) who reveals how what would traditionally be termed progressive policies (a basic income grant for example) have been rationalised through neo-liberal discourse.
    [Show full text]
  • Financialization of the Commodities Futures Markets and Its Effects on Prices
    University of Massachusetts Amherst ScholarWorks@UMass Amherst Doctoral Dissertations Dissertations and Theses Summer November 2014 FINANCIALIZATION OF THE COMMODITIES FUTURES MARKETS AND ITS EFFECTS ON PRICES Manisha Pradhananga Follow this and additional works at: https://scholarworks.umass.edu/dissertations_2 Part of the Agricultural and Resource Economics Commons, Econometrics Commons, Finance Commons, and the Macroeconomics Commons Recommended Citation Pradhananga, Manisha, "FINANCIALIZATION OF THE COMMODITIES FUTURES MARKETS AND ITS EFFECTS ON PRICES" (2014). Doctoral Dissertations. 252. https://doi.org/10.7275/q9wq-f397 https://scholarworks.umass.edu/dissertations_2/252 This Open Access Dissertation is brought to you for free and open access by the Dissertations and Theses at ScholarWorks@UMass Amherst. It has been accepted for inclusion in Doctoral Dissertations by an authorized administrator of ScholarWorks@UMass Amherst. For more information, please contact [email protected]. FINANCIALIZATION OF THE COMMODITIES FUTURES MARKETS AND ITS EFFECTS ON PRICES A Dissertation Presented by MANISHA PRADHANANGA Submitted to the Graduate School of the University of Massachusetts Amherst in partial fulfillment of the requirements of DOCTOR OF PHILOSOPHY September 2014 Department of Economics © Copyright by Manisha Pradhananga 2014 All Rights Reserved FINANCIALIZATION OF THE COMMODITIES FUTURES MARKETS AND ITS EFFECTS ON PRICES A Dissertation Presented By MANISHA PRADHANANGA Approved as to style and content by: ____________________________
    [Show full text]
  • Financialization of the United States Economy and the Effect on Small Firms and the Consumer
    Bard College Bard Digital Commons Senior Projects Spring 2017 Bard Undergraduate Senior Projects Spring 2017 Financialization of The United States Economy and the Effect on Small Firms and the Consumer Bradford Christopher Cal Johnson Bard College, [email protected] Follow this and additional works at: https://digitalcommons.bard.edu/senproj_s2017 Part of the Entrepreneurial and Small Business Operations Commons, Finance and Financial Management Commons, and the Labor Relations Commons This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License. Recommended Citation Johnson, Bradford Christopher Cal, "Financialization of The United States Economy and the Effect on Small Firms and the Consumer" (2017). Senior Projects Spring 2017. 185. https://digitalcommons.bard.edu/senproj_s2017/185 This Open Access work is protected by copyright and/or related rights. It has been provided to you by Bard College's Stevenson Library with permission from the rights-holder(s). You are free to use this work in any way that is permitted by the copyright and related rights. For other uses you need to obtain permission from the rights- holder(s) directly, unless additional rights are indicated by a Creative Commons license in the record and/or on the work itself. For more information, please contact [email protected]. Financialization of The United States Economy and the Effect on Small Firms and the Consumer A Senior Project Submitted to The Division of Social Studies Of Bard College by Bradford Johnson 1 Acknowledgements: I would like to thank my senior project adviser Anirrudha Mitra and the entire Economics department for helping with this project.
    [Show full text]
  • Financialization of the Economy
    SO41CH10-Davis ARI 5 August 2015 13:10 Financialization of the Economy Gerald F. Davis and Suntae Kim Ross School of Business, The University of Michigan, Ann Arbor, Michigan 48109-1234; email: [email protected], [email protected] Annu. Rev. Sociol. 2015. 41:203–21 Keywords First published online as a Review in Advance on financial markets, shareholder value, varieties of capitalism April 23, 2015 The Annual Review of Sociology is online at Abstract soc.annualreviews.org Financialization refers to the increasing importance of finance, financial mar- This article’s doi: kets, and financial institutions to the workings of the economy. This arti- 10.1146/annurev-soc-073014-112402 cle reviews evidence on the causes and consequences of financialization in Annu. Rev. Sociol. 2015.41:203-221. Downloaded from www.annualreviews.org Copyright c 2015 by Annual Reviews. the United States and around the world, with particular attention to the All rights reserved spread of financial markets. Researchers have focused on two broad themes Access provided by 2600:8801:9500:6c5:e9a7:a0cf:57f9:ade5 on 05/26/20. For personal use only. at the level of corporations and broader societies. First, an orientation toward shareholder value has led to substantial changes in corporate strategies and structures that have encouraged outsourcing and corporate disaggregation while increasing compensation at the top. Second, financialization has shaped patterns of inequality, culture, and social change in the broader society. Un- derlying these changes is a broad shift in how capital is intermediated, from financial institutions to financial markets, through mechanisms such as se- curitization (turning debts into marketable securities).
    [Show full text]
  • Financialization and the World Economy
    1. Introduction: Financialization and the World Economy Gerald A. Epstein ______________________________________________________________ INTRODUCTION In the last thirty years, the economies of the world have undergone profound transformations. Some of the dimensions of this altered reality are clear: the role of government has diminished while that of markets has increased; economic transactions between countries have substantially risen; domestic and international financial transactions have grown by leaps and bounds (e.g. Baker, Epstein and Pollin, 1998: chapter 1). In short, this changing landscape has been characterized by the rise of neoliberalism, globalization, and financialization. While many books have been written about neoliberalism and globalization, research on the phenomenon of financialization, the subject of this book, is relatively new. In fact, there is not even common agreement about the definition of the term, and even less about its significance. Greta Krippner gives an excellent discussion of the history of the term and the pros and cons of various definitions (Krippner 2004). As she summarizes the discussion, some writers use the term ‘financialization’ to mean the ascendancy of ‘shareholder value’ as a mode of corporate governance; some use it to refer to the growing dominance of capital market financial systems over bank-based financial systems; some follow Hilferding’s lead and use the term ‘financialization’ to refer to the increasing political and economic power of a particular class grouping: the rentier class; for some financialization represents the explosion of financial trading with a myriad of new financial instruments; finally, for Krippner herself, the term refers to a ‘pattern of accumulation in which profit making occurs increasingly through financial channels rather than through trade and commodity production’ (Krippner 2004: 14).
    [Show full text]
  • Financialization, Crisis, and the Development of Capitalism in the Usa
    FINANCIALIZATION, CRISIS, AND THE DEVELOPMENT OF CAPITALISM IN THE USA Kristin Plys Kristin Plys is a PhD candidate in Sociology at Yale University. From 2012–2013, she was the Fox International Fellow at Jawaharlal Nehru University, New Delhi. She has a BA in Cross-National Sociology and International Development from the Johns Hopkins University. Her research interests include political economy, development, labor, comparative and historical sociology, and the Global South. Email: [email protected] Abstract: This article evaluates the contrasting approaches to the relationship among changes in the rate of profit, financialization, and crisis embodied in macrohistorical sociology and international political economy, and situates the financial crisis of 2008 in historical context, with US data from 1929–2008 as the core of the empirical analysis. While this article finds no correlation between either (1) the rate of profit and inflation or (2) cash assets of firms and economic decline, this article does find a correlation between a decline in the rate of profit and the advent of crisis. This article also presents evidence that dovetails with the proposition that crisis is associated with and follows financialization. The findings lend support to the Wallerstein–Arrighi hypothesis that within the context of capitalist hegemonic cycles, a decline in the rate of profit engenders an increase in the cash assets of firms, leading to financialization and, in association with other mechanisms, systemic crisis. Key words: crisis; financialization; political economy; rate of profit; world-historical 1. Introduction Central to the historical development of capitalism is crisis: a moment of change from one way of organizing the economy to another, from one accepted political order to another, and from one set of dominant ideas to another.
    [Show full text]
  • Is Shareholder Capitalism a Defunct Model for Financing Development?
    Is Shareholder Capitalism a Defunct Model for Financing Development? Gerald F. Davis Shareholder capitalism, and the American system of corporate governance that serves as its operating system, has been held out as a model of economic development for emerging markets for the past generation. This paper unpacks the origins of this model within the US and argues that the model has had at best mixed success outside the US. Moreover, the fallout from the two fi nancial bubbles of the early 21st century suggests that shareholder capitalism may not work as advertised even within the US. In the wake of the fi nancial crisis, wise policymakers will draw on a diversity of models rather than hewing to the ‘one best way.’ Keywords: Economic development, fi nancial markets, shareholder capitalism, globalization 1. Introduction Since the end of the Second World War, economists and policymakers in the West have provided a succession of divergent answers to the question of how to spur the economic development of low-income countries. For the past generation, the dominant policy approach could be called the ‘financial market theory of development’ (see, e.g., World Bank 1997). The theory was straightforward: access to capital through local fi nancial markets Review of Market Integration, Vol 2(2&3) (2010): 317–331 SAGE Publications: Los Angeles • London • New Delhi • Singapore • Washington DC DOI: 10.1177/097492921000200306 318 GERALD F. DAVIS would prompt entrepreneurship and economic growth while simultaneously providing a means to guide and discipline business decision making. Creating a local stock exchange would attract global investors (avoiding the need for local savings), bypass ‘cronyist’ systems of capital allocation, and generate a system of corporate governance institutions to enforce market discipline.
    [Show full text]
  • From Managed to Market Capitalism? German Finance in Transition
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by eDoc.VifaPol From Managed to Market Capitalism? German Finance in Transition Susanne Lütz 00/2 Max-Planck-Institut für Gesellschaftsforschung Paulstrasse 3 50676 Köln Germany Telephone 02 21 /2767 -0 Fax 02 21 /2767 -555 MPIfG Discussion Paper 00/2 E-Mail [email protected] ISSN 0944–2073 Home Page http://www.mpi-fg-koeln.mpg.de May 2000 2 MPIfG Discussion Paper 00/2 Abstract Deregulation, technological change, and the integration of markets increase the competitive pressures on forms of national and sectoral governance. The heart of the issue is whether the Continental, consensus-oriented model of capitalism is gravitating toward the Anglo-Saxon, market-oriented model. This essay exam- ines the heuristic value of this convergence thesis, using the German financial sector and its relations to industry and government as a case in point. It will be argued that while institutional restructuring is taking place within Germany that reflects characteristics of Anglo-Saxon capitalism, institutional hurdles, such as federal structures and the veto power of certain societal lobbies, have thus far prevented such a convergence throughout the entire system. Zusammenfassung Deregulierungsprozesse, technologischer Wandel und die Integration von Märkten setzen nationale und sektorale Institutionen der Marktkoordination unter Wettbewerbsdruck. Im Kern geht es hierbei um die Frage, ob sich der kon- tinentale, auf Konsens und Koordination ausgerichtete Kapitalismustyp dem an- gelsächsischen, eher marktorientierten Typ annähert. Der Beitrag untersucht die Reichweite dieser Konvergenzthese am Beispiel des deutschen Finanzsektors, seiner Beziehungen zur Industrie und zum Staat.
    [Show full text]