Financialization and Ireland - Some Observations

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presentation to UCD geography postgrads, Feb 2014

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Financialization and Ireland - Some Observations

  1. 1. Financialization and the Irish State: some observations Dr. Conor McCabe UCD School of Social Justice 11 February 2014
  2. 2. [Lehman collapse, 15 September 2008 - headlines 16 Sep 2008]
  3. 3. Over the last quarter of a century something fundamental seems to have changed in the way in which capitalism works. The tendency since 1970 has been towards greater geographical mobility of capital.
  4. 4. Rather than being a modest helper to the capital accumulation process, [finance] gradually turned into a driving force. Speculative finance became a kind of secondary engine for growth given the weakness in the primary engine, productive investment.
  5. 5. Rather than being a modest helper to the capital accumulation process, [finance] gradually turned into a driving force. Speculative finance became a kind of secondary engine for growth given the weakness in the primary engine, productive investment. The result was an acceleration of the process of debt build-up – going beyond mere speculative orgies that historically came at the peak of business cycles, becoming instead a permanent, institutionalized feature of the economy.
  6. 6. Rather than being a modest helper to the capital accumulation process, [finance] gradually turned into a driving force. Speculative finance became a kind of secondary engine for growth given the weakness in the primary engine, productive investment. The result was an acceleration of the process of debt build-up – going beyond mere speculative orgies that historically came at the peak of business cycles, becoming instead a permanent, institutionalized feature of the economy. The search by capital for profitable outlets for its surplus despite the stagnation of investment opportunities within production, coupled with the belief that asset prices as a whole went only one way – up – generated a secular financial explosion. (p.18)
  7. 7. 1970s – The Monetarist revolution 1980s – war on labour 1990s – Credit as a substitute for wage increases 2000s – Credit solution for wage stagnation fails Present day – open conflict over monetary policy once again
  8. 8. Financialization refers to the increasing importance of financial markets, financial motives, financial institutions and financial elites in the operation of the economy and its governing institutions, both at the national and international levels. Gerald Epstein (2002) Financialization, Rentier Interests, and Central Bank Policy’
  9. 9. Work as a realm of class conflict Inflation as a realm of class conflict
  10. 10. “In the case of the United States, financialization during the 1990s led to a closer alignment of large industrial and financial firms in the U.S., leading to a greater emphasis by Alan Greenspan and the U.S. Federal Reserve in financial asset appreciation as a goal of monetary policy.” Gerald Epstein (2002) „Financialization, Rentier Interests, and Central Bank Policy „
  11. 11. “Part of the reason people get less giddy about the Dow than they did five years ago is that they have learnt a bit about inequality. what looks like a recovery, a rally or an increase in consumer confidence may just be the effect of elites passing money among themselves.“ Christopher Caldwell, FT 9 March 2013
  12. 12.
  13. 13. One company – 200 employees One employee– 200 companies

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