Our research network strives to combine fine-grained money and finance analysis with social theory and larger questions of political economy. Here’s where we think we are, where we want to go, and how we hope to get there.
Where are we?
While open to different theoretical approaches when it comes to explaining and understanding the evolution and the consequences of money, our common empirical starting points are that (a) money plays a central role in making private property tradable and hoardable (b) money is a credit-debt relation (the financial liabilities – primarily but not exclusively: deposits – of a set of privileged actors, – primarily but not exclusively: banks – that circulate as other actors’ means of payment), and (c) that the ‘moneyness’ of these relations is the product of an essentially hybrid, public-private partnership. This view is consistent with theoretical diversity within the network – Marxist, Neo-Chartalist, Minskyan or other approaches are all welcome. We take this common ground as the starting point for the ‘big’ questions formulated below. They follow from the intuition that this basic setup of the monetary system is more problematic today than it used to be, serving the interests not of society as a whole but of the owners and the producers of financial capital. We seek a better understanding of the role money and finance play in the cyclical emergence of over-exploitation and extreme inequality under finance capitalism. The following attempt to formulate a research agenda is based on and motivated by this intuition.
Where do we want to go?
To assess the role of capitalist money for the global political economy and to gauge its role for the resilience or lack of fundamental change in crisis-prone capitalism, the network will explore how money works as a global systemic relation, how and which actors work with, for and against it, which hierarchies this entails and what the implications for inequality are. Capitalism imposes a systemic need to compete and to accumulate and invest money in order to make more money – which is how money turns into capital. It follows that money and the actors producing and working with it are crucial for both the stability and the instability of the global political economy.
We ask two main questions throughout our endeavor:
- What are the specific historical developments that have rendered the hybrid monetary system less productive, more exploitative, and thus less legitimate?
- Why has this latest incarnation of finance capitalism proven so resilient even in the face of deep and recurring crises?
We believe that there is real value in a contribution to the literature that investigates these questions in its various dimensions, while maintaining a collective focus on the big picture of the politics of money and contemporary finance capitalism are intertwined. Such a project would seek to identify and to understand the institutional changes, power shifts, etc. that have transformed capitalist money and finance from a public good into a private good for the few and – potentially – a public bad.
How do we get there?
Here’s a list of six sub-questions that we think the big questions divides into, and which will structure both the workshops and the edited volume.
- The starting point: Money, financialization and finance capitalism: The nature of the changes triggered by recent forms of financialization is contested. The expansionary nature of capitalist money, the de-coupling and re-coupling of the financial and the real sphere have been recurrent. What is more, the relationship between capital and labor, and between capital and the state has sometimes been more cooperative and at times conflictive. Is there anything new in current practices of fiat money creation, asset and liability management and the entrenched position of rentiers? Or are we just witnessing another form of capitalist crisis, tied to the contradictions enshrined in the labor-capital relation, money, capital and the international division of labor?
- Practices: banking, accounting, technology: The evolution of financial markets has shown that theory and technology – the two being often inseparable – have fundamentally transformed modern finance. However, the task of integrating these theoretical and technological developments into the analysis of modern money is still ahead of us. What role did pricing and risk management models and technologies play in the evolution of the shadow banking system? How has the evolution of accounting impacted the capacity of different actors to acquire and control assets? Can a case be made that financial technology has ‘disrupted’ the social contract (if there ever was one) underpinning the finance franchise of the pre-digital era?
- The changing ecology of the financial system I: The actors and the system. The ecology of the financial system is constantly in flux. While banks have always been central to capitalist money, their activities have changed, as manifest in the growth, for instance, of Special Purpose Vehicles or derivative trading. Along the capital investment chain, we have seen the proliferation of asset managers (mutual, hedge, private equity, venture capital, and exchange-traded funds), investment advisors, and proxy voting firms. Corporate cash pools and sovereign wealth funds have altered the investor landscape, while households have increasingly been drawn into the finance capitalism both as investors and as debtors. How do these changes impact the politics of money and finance?
- The changing ecology of the financial system II: Global financial integration and dependency: To say that the global monetary system is a hierarchical system is to point to the relations of power, dependency, and violence that are the flipside of monetary and financial relations between creditors and debtors. In dealing with global money, what opportunities and risks confront governments and countries in the Global South? Has global financial integration eroded the domestic institutional arrangements that underpinned global money relations under the post-war Bretton Woods system? (How) did the evolution of global value chains increase the pressure of firms in non-core economies to borrow in foreign currencies, and thus their dependency on foreign lenders?
- Governance, regulation and the law: What were the key institutional changes that unleashed the finance franchise, turning credit into fuel for financial rather than real economic expansion? How can we connect developments such as the end of US dollar gold convertibility, the repeal of Glass-Steagall, or the taming of inflation and the global diffusion of central bank independence? The law, including legal loopholes and their exploitation for profit, are essential to making money. What role do regulatory arbitrage, law firms and law enforcement play in keeping that business profitable?
- Inequality: In a sense, inequality is the bottom line for the entire project. But inequality is not just a consequence of the developments mentioned under themes 1 to 5, but also a causal force for (further) financialization. Greater concentration of wealth means more demand for financial assets on one end of the spectrum, and greater demand for credit on the other. Does the degree of inequality alter the cost-benefit analysis for a financial system based on private credit money? Might a more prominent role for the state as in public banking be the next step to counter these developments?