Light Reading: "Profiting without Production: How Finance Exploits Us All"
After I explain wages, I must (as Okanagen pointed out) explain rent; indeed, unlike industrial times, rent may be more important to the political economy than profit. So I got a very dense neo-Marxist tome, by Costas Lapavitsas: Profiting without Production: How Finance Exploits Us All. Nobody better than the Marxists for following the flow of capital in specific places and times; and I'm hoping that a proper data structure using intersectionality, and a binocular vision with the other lens being slavery (human rental; human sale) will prevent me from being reductionist. Here is a great heavy slab of prose, but read it and see how true to life it rings:
Three underlying tendencies characterize financialization.... First, although monopolization remains a charactertistic feature of mature contemporary economies in terms of both trade and foreign direct investments, monopoly capitals have become "financialized." Large multinational corporations are typically able to finance the bulk of their investment without relying heavily on banks, and mostly by drawing on retained profits. Insofar as they require external finance they are able to obtain significant volumes in open financial markets, relatively indpendently of banks. Even the wage bill of large non-financial corporations is frequently financed through the issuing of commercial paper in open markets. Successive waves of takeovers, furthermore, have led to corporations becoming heavily involved in bond and equity trading in stock markets, thus developing skills in independent financial operations and trading.
Seems clear enough so far. I mean, conventional wisdom, almost, right? We think of GM before the bailouts, where the only profitable arm was GM Finance.
Second, banks have restructured themselves, partly reflecting the altered conduct of non-financial enterprises. Specifically banks have moved toward mediating in open markets to earn fees, commmissions, and profits from trading; they have also turned toward individuals (and households in general) to obtain profits from lending but also from handling savings and financial assets. The transformation of banks has been in line with the enormous growth of open financial markets in recent decades, further fostered by state legislation. Banking capital has benefited from successive waves of mergers and acquistions among non-financial enterprises; from channeling personal savings to stock markets at the behest of the state; and from lifting controls on interest rates and capital flows that has encouraged growth of financial markets.
Again, not so very different from what you see at Bloomberg or the FT, except perhaps for the concentration and clarity. The next paragraph is less conventional, more contempory, and more interesting:
Third, perhaps the most striking aspect of the recent period has been the financialization of the personal revenue of workers and households across social classes. This phenomenon refers both to increasing debt (for mortgages, general consumption, education, health) and to expanded holdings of financial assets (for pensions, insurance, money market funds). Household financialization is associated with rising income inequality but also with the retreat of public provision across a wide range of services, including housing, pensions, education, health, transport, and so on. In this context, the consumption of workers and others has become increasingly privatized and mediated by the financial system.
No surprises, but the vigor and clarity is nice to see.
Banks and other financial institutions have facilitated household consumption but also the channelling of household savings to financial markets, thus extracting financial profits.
The neo-liberal program in a sentence. And why? Because markets.
I'm looking forward to this one, although unfortunately Lapavitsas doesn't use the dense documentary method of Empire of Necessity or Spectres of the Atlantic, so to me it seems quite dry.