Academic journal article World Review of Political Economy

Malignant Growth: A Review of Financialisation in Crisis, Edited by Costas Lapavitsas, and the Restructuring of Capitalism in Our Time, by William K. Tabb

Academic journal article World Review of Political Economy

Malignant Growth: A Review of Financialisation in Crisis, Edited by Costas Lapavitsas, and the Restructuring of Capitalism in Our Time, by William K. Tabb

Article excerpt

MALIGNANT GROWTH: A REVIEW OF FINANCIALISATION IN CRISIS, EDITED BY COSTAS LAPAVITSAS, AND THE RESTRUCTURING OF CAPITALISM IN OUR TIME, BY WILLIAM K. TABB

Financialisation in Crisis, edited by Costas Lapavitsas, Leiden and Boston, Brill, 2012, xvi + 258 pp. + index, US$136.00 (cloth), ISBN 978-9-004-20107-1

The Restructuring of Capitalism in Our Time, by William K. Tabb, New York, Columbia University Press, 2012, viii + 313 pp. + index, US$40.00 (cloth), ISBN 918-0-231-15842-8

Bearing in mind that more than 40 percent of US corporate profits come from a financial sector whose profits have been bloated by leveraged carry trading, the scope for trouble is considerable. We have a system overloaded with debt in the household and public sectors and stretched by financial imbalances. Yet many in the markets are saying, as with technology in 1999, that this time it is different. Encouraged by the relentless optimism of the great helmsman at the Federal Reserve they are convinced we shall all muddle through.

I agree that finance is more sophisticated than ever before, as Alan Greenspan, chairman of the Federal Reserve, often reminds us, but I am pretty sure that the principles on which the financial system operates remain broadly intact. Whether it happens in August is anyone's guess, but something nasty is certainly around the corner. (Plender 2004)

It is a measure of our overly financial times that people can recall the day Lehman collapsed as a previous generation remembers the moment when an American president was assassinated in Dallas. (Das 2013)

The literature of financialization is vast and expanding exponentially. The term itself is of relatively recent vintage and seems to have emerged at some point during the mid-1990s. Kevin Phillips' Boiling Point (1993) appears to have featured the first use of the term, and a year later his Arrogant Capital (1994) railed against the capture of the US political process by the financial sector and the consequential doom that this spelled for the US, with a chapter devoted specifically to financialization (Phillips 1993, 1994). At around the same time, Giovanni Arrighi employed the term in his discussion of historical phases of hegemony (Arrighi 1994). Two years later, Business Week economics editor Michael Mandel1 effectively combined the observations of Phillips with those of sociologists Ulrich Beck (1992) and Anthony Giddens (1991) when he wrote,

We are seeing the financialization of the American economy . . . The combination of high uncertainty and unrestricted competition is reducing the difference between the real economy of factories and offices on the one hand, and the financial markets on the other. The rules governing Wall Street now apply to the entire economy.

The implication: In the high-risk society, workers, businesses, and countries must start thinking like investors in the financial markets, where the only way to consistently achieve success is to accept risk. (Mandel 1996, 8)2

Since then, there has been an ever-increasing number of publications purporting to handle financialization, whether primarily from a business perspective (Luttwak 1999) or, more broadly, as a cultural phenomenon (Martin 2002). A predominant theme of all these, as suggested especially by Luttwak, is a universalized "speed-up," as financialization "insinuates an orientation toward accounting and risk management into all domains of life" (Martin 2002, 43). Costas Lapavitsas similarly identifies its pervasive cultural ramifications, as financialization "has allowed the ethics, morality and mindset of finance to penetrate social and individual life" (2012, 17). Indeed he goes so far as to say that financialization stands "for increasing autonomy of the financial sector" (50).3

Financialisation in Crisis (Lapavitsas 2012) is among the many products of the Research on Money and Finance (RMF), an international network of researchers whose collaborative efforts have generated a substantial amount of output in a relatively short time. …

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