Debunking the system: The rigging of the geofinancial power network

This article demonstrates how key Marxist theories and concepts have influenced my thinking and theoretical framework on financialization. Several key contributions from Marxist theory (the accumulation of capital and class struggle; the law of value and capitalist money; uneven development and imperialism; and financialization and global finance capitalism) provide the theoretical framework for what I call the geofinancial power network, a transnational sociotechnical system. The network is then historically and geographically situated in within the context U.S. post-World War II international hegemony and its military-industrial-complex that gave life to the ideas of ‘systems theory’ and sociotechnical systems, and its efforts to control transnational finance and the mechanisms of power (institutions, technologies etc.) that enabled global finance capitalism to emerge as a system of power. This theoretical framework has been useful for helping me understanding not only how financialization enables capitalism to reproduce itself unevenly across space, but also how it subsequently reorganizes economic spaces institutionally and technically into a hierarchical global system and single division of labor.

Investing in Fictions: Faith, Abstraction and Materiality in Paul Murray’s The Mark and the Void

One of the central contentions of this essay is that Paul Murray's novel, The Mark and the Void, addresses questions of faith, fictionality, literary form and the relationship between abstract finance and material sociality. The novel engages with and exposes the arcane vernaculars of finance capitalism, while at the same time registering the inalienable materiality of their effects in terms of impoverishment, displacement and terminal indebtedness. As we shall detail, for Murray, the purpose of ‘finance fiction’ is neither to confirm nor further mythologize the transcendental fictionality of high finance. In crafting such a literary critique of Celtic Tiger Ireland, Murray invokes an increasingly common trope – the zombie. In doing so, The Mark and The Void partakes of a figuration that acknowledges ‘the deadliness of financialized debt and credit crisis’. In a sense, enlisting the metonymic figure of the zombie speaks to the undead nature of indebtedness, and it is an apt figuration of the past that continues to haunt in the present and into the future. As the narrative suggests, debt is the financial burden that refuses to die, and the literary zombie represents communities of Celtic Tiger debtors metonymically.

Rent-seeking and asset-price inflation: a total-returns profile of economic polarization in America

This paper reconstructs the National Income and Product Accounts to add asset-price (‘capital’) gains to national income to derive a measure of total returns. It also treats rent-extraction as a charge against national income and GDP, not as a contribution to national output. Segregating the Finance, Insurance, and Real Estate sector from the rest of the private sector shows that most growth in wealth and income derives from rentier activities – from the dynamic of finance capitalism more than that of industrial capitalism.

The French and the German financial crisis

This chapter analyses how French and German banks were affected by the crisis and how the crisis unfolded in both countries. It compares the governments’ responses and reconstructs how the crisis was diagnosed. The chapter shows that surprisingly different dynamics developed in both countries, despite an initially rather similar situation. Whereas the financial crisis became a veritable crisis of bank intermediation in the way it was widely perceived in France, in Germany it was primarily considered as a crisis of Anglo-Saxon finance capitalism and the failure of individual banks’ business models that had drifted away from traditional bank lending. While the French concluded that alternatives to bank intermediation should be developed, the Germans focused on strengthening classic bank intermediation. The chapter traces the dynamics that brought about the differing reform agendas and spells out the coalitions that supported corresponding political reforms.

Ethical and Political-Economic Dimensions and Potential Reforms of the Hybrid Leveraged, High Frequency, Artificial Intelligence Trading Model

The average annual profits before fees of the $10 billion plus Renaissance Technologies’ hybrid Medallion “Leveraged, High Frequency, Artificial Intelligence (LHFAI)” trading hedge fund between 1988 and 2019 were about 66 percent. Total trading profits during this period were over $100 billion. The fund has never had a losing year. The fund is not open to the general public. First, distinctions among, in more or less historical order, the traditional market-maker trading model, the hedge fund trading model, the artificial intelligence trading model, and the hybrid LHFAI trading model are discussed. Second, the micro components of the LHFAI trading model are explained in the context of Renaissance Technologies’ Medallion Fund. Third, key positive contributions of the model with respect to profitability, low annual volatility, market liquidity, and intellectual property development; negative ethical issues concerning exclusive access, tax fairness, financial transparency, shared responsibility for losses and systemic risk, and short vs. long-term capital allocation are discussed. Potential reforms that retain the positives, reduce the negatives, and that could positively transform the model are discussed. Fourth, potential impacts that the potential reforms might have on the macro LHFAI form of finance capitalism and the larger finance capitalism political-economic system are considered. Fifth, conclusions are offered and discussed.

Finance Capitalism and Democracy: The Case of the Financial Transactions Tax

This chapter analyses the pros and cons of financial transaction taxes (FTT) as mechanisms to mitigate financial instability and the proposal of the European Commission to implement an FTT in the EU in September 2011 until its suspension, as well as the prospects for it to be adopted in the future.

Introduction

This book is the result of the first 3 years of the comparative and multidisciplinary Jean Monnet Network, “Crisis-Equity-Democracy for Europe and Latin America”, of senior academics and policy advisors from four European and three Latin American countries, including experts on the European Union and Latin American regionalism. The rationale of the project and the common link is that both Europe and Latin America can learn from their respective experiences on “crisis”, its management and the distributive and democratic implications at national and regional level. The main purposes of the joint research can be summarised as to (1) locate in the current global financial system as one of the very major causes of the financial and debt crises in the EU and Latin America; (2) demonstrate the impact of the paradigm change on global and EU economic governance; (3) analyse key systemic aspects of the global crisis, i.e. climate change, macro-financial instability and the weakening of democracy and their inter-connections; (4) map and evaluate how both regions and individual countries within both regions have tried to manage these crises; (5) discuss the economic, political and social effects of these crises on both regions and individual countries; (6) finally, to make policy suggestions on how to transition from finance capitalism to a more sustainable real capitalism, on how both regions can better manage/govern/respond to such systemic pressures and on how they can increase their cooperation.

Populist politics and democracy in the UK: implications for community development

This chapter outlines how British populist politics, and in particular right-wing populist politics, has had significant implications for communities, for the theory and practice of community development, and for those presently involved in the activity in the United Kingdom, where it has suffered substantial financial cutbacks. The outcome of the austerity measures that has led to the contemporary presence of populism in the UK has been a mounting dissatisfaction and a general lack of trust in politics amongst millions in the country. This, together with a hangover from the 'parliamentary expenses scandal' that involved members from both Houses of Parliament, has created a marked degree of scepticism about the workings of the British electoral system. Further, there has been a growing lack of confidence in the system of neoliberal globalised finance capitalism that has left countless communities poorer and economically less secure. People's anger and frustration with these actions have been harnessed by the political right, which during the 2016 Referendum debate focused on the impact of immigration on communities. The chapter then notes the unique elements of community development and reflects on the role it can play in these challenging times. It argues that community development now requires greater funding and recognition while reconceptualising itself in a more radical manner.