Financialization and Global Imbalances

Abstract

The concept of “financialization” has informed recent analyses of the contemporary dynamics of monopoly capitalism. In the wake of the global financial crisis in 2007-08, the strategic role of finance and its capacity to destabilize the real economy and push it to the brink of economic depression has rekindled debates over the historical causes and institutional forms which have characterized this phase of capitalist evolution. In other words, to what extent have the neoliberal policies pursued by most OECD countries over the past 30 years contributed to the emergence of this finance-led regime of accumulation? More specifically, what are the implications of the extraordinary build-up of private debt, which has financed private consumption and fuelled successive asset price and stock market euphoric bubbles over this period? At the same time, the problem of growing global imbalances between the surplus countries/regions and the deficit countries/regions has emerged as a major source of financial instability. It will be proposed that the breakdown of the mechanisms, which have supported the dynamics of financialization, have set the stage for the current global capitalist crisis. JEL codes: B5, B14, B16, B23