Academic journal article Capital & Class

Financialization or Capitalization? Debating Capitalist Power in South Korea in the Context of Neoliberal Globalization

Academic journal article Capital & Class

Financialization or Capitalization? Debating Capitalist Power in South Korea in the Context of Neoliberal Globalization

Article excerpt

Introduction

The economic crisis of 2007-2009 and the slow recoveries, recessions and austerity policies that have followed in its wake have re-ignited interest in the topic of financialization: a term used as a shorthand for the increasing prominence of financial motives and financial actors in the economy, including stock markets, shareholders, institutional investors, financial instruments and macroeconomic policies that benefit financial capital (Epstein 2005; Lee et al. 2009). On one hand, a consensus has emerged that financialization is perhaps one of the most powerful processes shaping the global economic landscape: one that can be witnessed through the enormous expansion of financial assets and financial activity, the profitability of financial sector, the rising importance of financial profits for non-financial corporations and so on. On the other hand, there continues to lack a common understanding or clear conceptual definition about what constitutes the nature of financialization and what it says about contemporary power relations in capitalist society (Lapavitsas 2011; Van der Zwan 2014: 101). Definitions of financialization and interpretations of its sociopolitical implications are as diverse as political-economic schools, ranging from orthodox Marxists and the Monopoly Capital School to the Regulation School, Post-Keynesians, Science and Technology Studies and many other heterodox and synthetic approaches. This pluralism has stimulated a range of empirical studies of finance and its effects at a variety of different scales: from the everyday scale of the body up to the global. Nevertheless, as we discuss in this essay concerning debates surrounding financialization in South Korea, there remains a tendency in much of the literature to posit financialization in terms of the ascendency of the financial over the real economy (Epstein 2005; cf. Stockhammer 2008, 2010): a view that presumes a functional separation between finance and industry that can be problematic for the wider study of capitalist social relations, much less political strategies that seek to address power and inequality. Furthermore, such a view of financialization risks turning the process from an explanandum into an explanans--an external cause rather than something that itself needs to be explained--as happened with studies of globalization in the late 1990s and 2000s (Rosenberg 2002; Van der Zwan 2014).

Instead of presuming the autonomy of the financial sector over the rest of the economy, recent work by geographers and other critical social scientists has called for greater attention to the globally variegated and place-specific structural and political-economic dynamics of financial processes (Buckley & Hanieh, 2014; Peck & Theodore 2007; Seo 2013). This work has focused on how financial processes interact with existing institutional, urban and class relations involved in configuring capitalist accumulation in diverse contexts instead of embracing simplified, parsimonious models of financial hegemony. This article seeks to complement this wider effort and shares its sentiment that financialization should be regarded as an uneven geographical process. Furthermore, as we argue below, when approached from the perspective of places outside of the financial centres of the North Atlantic, the limitations of certain idealized understandings of financialization--particularly those premised on the functional separation of financial from industrial capital--to describe economic processes, such as those we discuss in the context of South Korea, become clear. While, certainly, many of the abovementioned phenomena associated with financialization are observed--such as increases in asset prices and an increasing proliferation of derivatives and other financial instruments (Kang 2013)--it becomes much more difficult to posit a straightforward ascendancy of 'financial economy' over 'real economy' in the form posited by many Keynesian theories of a 'rentier' class that is structurally distinct from 'productive' capital. …

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