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Arabica Robusta

Costas Lapavitsas Discusses the Financialization of Capitalism - 0 views

  • The remarkable thing about finance, however, is that it is not simply inefficient but also exploitative in ways that industrial capital cannot be. It is a primordial capitalist activity that long predates the establishment of industrial capitalism and has retained its ancient predatory outlook. 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. 
  • Instead, financial profits accrue due to the beneficiary's function in relation to the financial system and often take the form of income from work, rather that payment for ownership of capital. Bonuses are the most egregious - but far from the only - form of such remuneration. There is an aspect of "rent" to such returns, but they derive in good part from function relative to the financial system rather than simply the ownership of money capital. 
  • It is far from accidental that the main concern of the US state in 2008-09 was to restore financial profits, which it did successfully. The ability of the state to control the issuing of legal tender and to mobilize tax revenues has been placed at the disposal of this group. Moreover, modern rentiers, precisely because they are not related to the classical ones, can make enormous profits even when the rate of interest is driven to zero by the central bank. This appears to be one of the great paradoxes of financialization, but the paradox disappears when financial profit is conceived in the way I am suggesting. 
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  • 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.
  • But it is clear that for such regulation to be effective, there must also be intervention in the sphere of international money to control exchange rates. If interest and exchange rates were controlled, a body blow would be delivered to financial markets, particularly derivatives markets. It is apparent, however, that this kind of intervention would be impossible without also expanding public ownership in the economy, including among financial institutions.
Arabica Robusta

Pambazuka - The chickens are coming home to roost (U.S. rating downgrade) - 0 views

  • While notable, what this analysis by Paul Craig Roberts fails to recognise is the rapid integration between finance capital and the military, as manifest by the fact that companies that profit greatly from militarisation, such as Boeing has an established financial arm called Boeing Capital Corporation.
Arabica Robusta

Pambazuka - Speaking truth to power: Africa and development - 0 views

  • He has headed the South Centre which is responsible for devising policies for the South by the South.
  • In essence, in political-economic terms, kleptocratic capitalism is a system of economic production and exchange based on fictitious wealth without going through production of real wealth and political governance controlled by “looters and daytime robbers”.
  • there are occasional reports from UN agencies that cannot hide the truth. In a recent paper-- “Governing development in Africa - the role of the state in economic transformation”, 22 March 2011-- the UN ECA argues that despite high growth rates in Africa there has been no improvement in employment and welfare of ordinary people.
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  • Do you think that Green Capitalism is a satisfactory response from the status quo to address the challenges of climate change, peak oil and resource scarcity in Africa? YASH TANDON: I am afraid not. It does not solve the problem of the control of Africa`s resources – including oil, minerals, land, water and forestry – by global corporations.
  • I doubt that China and India are driven by the motive of “helping Africa to develop”. They are in Africa because they need Africa`s resources, and openings for investing their capital. Nobody from outside is going to develop Africa. That is Africa`s responsibility. Therefore African governments must negotiate trade and investment terms with India, China -- and others -- with knowledge, skill and shrewdness.
  • the SC seeks to provide a policy platform for the countries of the South to coordinate their negotiating positions on issues ranging from trade agreements to intellectual property, climate change, human rights, health and human security.
  • Nonetheless, there are policies that the present government has put in place that are sensible – for example, on putting limitations on capital account and ownership of banks – but Ethiopia is still too dependent on aid from outside. This constrains its ability to shape its own development path.
  • Development comes from a deep understanding of the situation Africa finds itself in contemporary times. Development is always self-development. It cannot come from outside. Pain and sacrifice are necessary ingredients of development, both for individuals and for nations. The “soft bed” of foreign aid is the road not to development but to slavery.
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