C.J. Polychroniou — Costas Lapavitsas Discusses the Financialization of Capitalism

The neoliberal capture of the state has laid the ground for the financialization of capitalism, a stage of capitalism that cannot be reversed without developing new methods of public provision in housing, education, health, pensions and the other sources financialization has used to create profit.

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Costas Lapavitsas Discusses the Financialization of Capitalism
C.J. Polychroniou interviews Costas Lapavitsas, Professor of Economics at the School of Oriental and African Studies, University of London.

I find Mirowski's argument that neoliberalism is not the enemy of the state and nor does it genuinely ascribe to the simple opposition "state versus market," very persuasive. Neoliberalism is, rather, about capturing and using the state to achieve pro-market changes across society. The neoliberal capture of the state has laid the ground for the financialization of capitalism....

Finance can extract profits from any money income and stock of money - its profits are not limited to the fresh flows of value produced annually. During the past four decades, it has become expert at making zero-sum profits that involve transfers from one economic agent to another. Financial profits have become an incredible proportion of total profits - particularly in the USA for which we have relevant data. The exploitative outlook of finance in relation to households and individual workers is also evident. This is a characteristic feature of financialization and marks it out as a historical period in the development of capitalism....

The characteristic feature of the new regulation is that it has been shaped by the financial institutions themselves, and its purpose has been to ensure the ability of the financial system to grow and extract profits. It has not contributed in the slightest to avoiding financial bubbles nor to imposing the costs of financial crises onto those responsible for them. On the contrary, contemporary regulation has led to society bearing the brunt of financial disasters, while private individuals associated with finance have reaped the benefits of expansion. Society has little to expect from more regulation of the type we have known for four decades now.

In confronting financialization, it is vital to start with the recognition that it does not represent "progress" in human affairs.

 Financialization does not amount to a socially productive expansion of the forces of production that could potentially benefit society, if it was brought under control through a series of bold measures and interventions. Financialization ought to be reversed. To this purpose, regulation alone is not enough, particularly when one bears in mind that financialization is a historical period of capitalism. Confronting it inevitably raises issues of ownership, but also of broader policy and social relations.