Volume 1, Number 1 (2008)

Madness and Civilization: Global Financial Capitalism and the Antipoverty Discourse

Richard Peet

Clark University

The late twentieth century saw the emergence of a new kind of society. A capitalism dominated by huge corporations producing commodities and services was replaced by a capitalism dominated by huge corporations controlling access to investment  capital.  In  the  new  “global  finance capitalism”:  finance  is  the  leading  fraction  of capital;   governments   and   global   governance institutions  are  integral  parts  of  the  financial apparatus, rescuing finance and even merging with it at times of crisis; financial capitalism normally operates  on  a  global  scale;  and  thus  finance capitalism  takes  the  total  form  of  a  political-economic-ethical-cultural and spatial system. The term  “finance  capital”  was  coined  originally  by the Austrian Marxist Rudolf Hilferding (1981). He meant  by  the  term  an  increasing  concentration and  centralization  of  capital,  in  the  institutional form  of  corporations,  cartels,  trusts  and  banks, that organized the export of surplus capital from the  industrial  countries,  especially  Britain,  in search  of  higher  rates  of  profit  elsewhere.  More recently,  David  Harvey  (2005)  argued  that,  in capitalist  enterprises,  ownership  (share  holders) and  management  (CEOs)  have  fused  together, as upper management is paid with stock options. Increasing  the  price  of  the  stock  becomes  the objective   of   operating   the   corporation.   And productive  corporations,  diversifying  into  credit, insurance and real estate, becoming increasingly financial  in  orientation.  This  is  connected  to  a burst  of  activity  in  an  increasingly  unregulated, and  rapidly  globalizing,  financial  sector  in  “the financialization of everything”, meaning the control by finance of all other areas of the global economy. Nation states, individually (as with the US), and  collectively  (as  with  the  G7/8),  have  to  support financial  institutions,  and  the  integrity  of  the financial order, for that is what keeps economies going  (witness  the  massive  intervention  of  the central  banks  in  the  financial  crisis  of  2007-8). Within this re-arranged capitalist system, Harvey finds  the  power  of  shareholders  declining,  while that of CEOs, key members of corporate boards, and financiers increases. The tremendous economic power of this new entrepreneurial-financial class enables  vast  influence  over  the  political  process (Harvey 2005: 31-8).


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