Fictions of Financialization: Rethinking Speculation, Exploitation and Twenty-First-Century Capitalism

by Nick Bernards

‘Incisive, politically engaged, and theoretically sophisticated … A must-read for anyone concerned with the prospects of a liveable and sustainable future for all on this planet’ Ilias Alami, author of Money Power and Financial Capital in Emerging Markets

‘A comprehensive critique of the financialization discourse, offering vital insights’ Jack Copley, author of Governing Financialization

For decades, many people on the left have decried the finance sector as the main culprit for the toxic effects of capitalism. Only by confronting finance, so the story goes, can there be any hope for a more sustainable economy.

Nick Bernards makes the case against the dominance of this story. Arguing that the concept of financialization is ill-understood, Bernards shows how we risk glossing over the true nature of capitalism when focusing on the mythical powers of finance. 

Rather than indulging in the harmful fantasy that confronting the financial elite will fix the economy, Bernards provides an alternative approach. Starting from the premise that risk and speculation are core to the operation of all capital and not just the hallmark of a perverted financial sector, this Marxist reading of the interconnection between capitalism’s uneven exploitation of labour and nature and financial capital lays the groundwork for a much-needed view of the real powers of finance.

Nick Bernards is Associate Professor of Global Sustainable Development at the University of Warwick. He is the author of A Critical History of Poverty Finance and The Global Governance of Precarity.

Genres: Economics, Nonfiction

272 pages, Paperback

Published October 20, 2024

Reviews

[Brecht Rogissart · Rating 4 out of 5]

An interesting read for people invested in financialisation debates. An informative glance over the debates and his critical comments from the "value as process" (David Harvey) point of view, criticising both post-keynesians as well as Marxists such as Lapavitsas (rightly so!). Rightly debunks some of the main mistakes people make when they talk about the contemporary power of finance vis-a-vis production, nature, and the state. However, if you're not already invested in the debates, I will have to dissapoint you: it's not a good introductory text.

[David Sogge · Rating 4 out of 5]

Is big finance and the ‘financial turn’ the chief structural tendency at work in today’s capitalism? This book argues against that supposition, for it leads to barking up the wrong tree. Academics and opinion-formers posing finance as the mainspring of the economy and ‘power bloc’ in political life may be leading us astray. Financialization doesn’t usefully serve as an explanation; rather, it's the thing to be explained. And that for a host of reasons: its legacies, its waxing and waning over centuries, its over-magnified status in the optics of data, and the weakness of evidence that it operates independently of labour-reliant processes. In current framings and debates, financialization narratives can be fictitious

Proposals for 'de-financialization' or democratized finance sound attractive but point the way toward political cul-de-sacs. Yet financial exploitation is, well, exploitative. The author's conclusion (with a citation from Marx) shows some ambivalence:

The central point must be that ‘primary’ exploitation through labour and ‘secondary’ exploitation through debt, rent, and the like are inextricably interlinked. Whether one or the other is felt more directly or acutely at any given time is dependent on a whole host of conjunctural factors, mediated through complex layers of social difference, and subject to a heavy dose of contingency. But in the final analysis, working classes, broadly understood, are almost always ‘exploit[ed] in two directions at once’.

Beyond its discussions of concepts, the book features illuminating accounts of finance-based accumulation in specific times and places. Case in point: colonial lending for settler land grabs in Africa, which played out in ruin for some white settlers and resistance by displaced Africans. There comes a discussion of ‘underproduction’, restorative or preventative 'backfilling' measures whereby resources are poured into "‘unproductive’ uses in order to maintain the externalized conditions of production, rather than the self-expansion of capital". Writ large, this is detectable today in shifts of climate policy talk from mitigation to adaptation.

For these and other reasons, this conceptually rich book merits wide attention.

[xiaobao · Rating 5 out of 5]

1 Popular narratives of Financialization simplify problems as technological. Historically viewing, the expansion of finance is a continuation of capitalism exploitation shifted toward mute ways like debt and gig work.

2 No need to say “real” vs “virtual”. The process based totally on production profits concentration while production risk globalization.

3 Liberalization due to states’ incapability in mobilizing capital enough to solve social disrupts. Capital too-accumulation together with survive demands low-production, like climate crisis, could never be dealt under capitalism.

4 Biggest challenge now is the lack of a labour class self-awareness, to refuse privatization and commodification of survive needs.