Politics, power and contemporary financialization

Politics, power and contemporary financialisation Manolis Kalaitzake University College Dublin Working Paper: July 2014 Abstract Within the social sciences, the concept of financialisation has come to refer to a diverse range of transformations which have taken place within the global economy over the last three decades. As such, it is a phenomena which is intrinsically tied up with both the concepts of globalisation and neoliberalism, although the exact relationship between these o epts is highly o tested See Kotz . Si ilar to the ter glo alisatio , it has ee resistant to any strict agreement of definition among researchers, but nevertheless, a rapid proliferation of studies over the last few decades have deployed the term in analyses of shared observations, indicating the very real necessity felt by scholars to develop new theoretical ground which accounts for distinctive changes within the global financial industry and its relation to the world economy (Engelen 2008: 112). The purpose of this paper is to situate the contemporary political power of finance within these broader historical developments related to processes of financialisation. In so doing, the chapter charts the growing centrality of financial activity within the global economy and unpacks several of the implications this holds for the political power of finance. The paper is divided in two parts. First, I begin by reviewing a selective portion of the financialisation literature which outlines some key strands of thinking and highlights the historic specificity of contemporary financialisation by contrasting it with the financial expansion that occurred in the late 19th/early 20th century. In this regard, I closely link the contemporary development of financialisation with shifting socio-economic power o figuratio s that ega to take shape as a result of the 97 s stagflation crisis. In the second part of the paper, I extend the discussion to individual processes of financialisation and examine how each of these relates to the growing capacity for political influence by the financial industry. While the focus of the analysis is very much centred on the evolution of the global financial system in advanced economies generally, most of the developments under review emerged primarily from the US financial system - unsurprisingly, given that ou try s e trifugal e o o i role a d its leadi g develop e t of a li eralised fi a ial industry.