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Chapter 11

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Carleton University
SOCI 2702
Charles Gibney

Power and Everyday LifeChapter 11Financial Fitness The Political and Cultural Economy of FinanceIntroduction A Global Financial CrisisThe Political Economy of Financialization Enduring as an interdisciplinary program of study through its classical and Marxian version political economy takes as a fundamental premise that the domain of the economic does not follow natural laws but is shaped by competitive struggles of groups whose class power or state authority largely derives from their economic positionThe tradition of political economy carries forward Marxs method of social analysis which emphasizes historical contingency and asks how current structures emerged from specific social relations in the pastEconomic formations such as currencies and markets are not to be taken as timeless or universal Political economy is concerned with the longterm history of and prospects for social change and especially the potential of emancipation from unjust and exploitative social relations under capitalismFrom a political economy perspective the financialization of the economy is just such a structural trend that must be understood historically and systematically Marx observed that typically the process of capitalist accumulation occurs when capitalwhich is all forms of wealth that are used to create new valueis invested in the production and sale of commoditiesOpportunities may arise for capital to expand through financial investment independently of commodity production and exchangeTo the extent that those conditions for money to breed money become available financial activity will overtake productive enterprise as the dominant form of capital accumulationUnder some conditions more wealth will be created through financial machinations than through investment in the production of material goods and servicesAs this happens the economy will have entered a phase of financialization thstThe first task of a political economic analysis of late 20 and early 21 century financialization is to bring this phenomenon into view as a coordinated change in the structure of the economy and not something inherent in capitalismBeyond evidence of the volume and growth of financial activity financialization is evident when compared with the productive economyEvery day the dollar value traded in global currency markets alone is equivalent to the combined annual gross domestic product market value of goods and services of every domestic economy in the worldFinancialization pervades domestic as well as global marketsHistorical Perspectives of Financialization
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