NEOLIBERALISM

AND FINANCE AS

POWERIN DEVELOPMENT

So…What was the question again…?

“Even despite the financial crisis of 2007-08,

the increasing financial inclusion of

developing countries into the international

financial system has strengthened the

bonds of dependency as well as the

hegemony of US-centred capitalism.”

Even despite the financial crisis of 2007-08,

the increasing financial inclusion of

developing countries into the international

financial system has strengthened the

bonds of dependency as well as the

hegemony of US-centred capitalism.”

9:00-9.30 9:30-10:00 10:10-10:30

Final

discussion

INTEGRATION DependenceUs- capitalism

J.C Trichet (Governor of the ECB (2010)

“When the crisis came, the serious limitations of

existing economic and finantial models inmedately

became apparent.”

“Most people know the story of flight of the butterfly in

Africa leading to a tornado in Latin America, and that's

very much what this is about.”

Olivier Blanchard, Chief Economist, IMF

INTEGRATION

Financialisation

“The increasing dominance of the finance

industry in the sum total of economic activity”

INTEGRATION

How the system look like?INTEGRATION

http://www.fna.fi/blog/2011/05/07/research-database-additions/

Who controls the system?INTEGRATION

http://publicintelligence.net/global-network-of-corporate-control/

INTEGRATION

Global imbalancesINTEGRATION

INTEGRATION

http://www.imf.org/extern

al/pubs/ft/fandd/2012/09/

pdf/dervis.pdf

Should china deregulate finance?

http://www.theinterconnectedworld.com/china.php

In today’s globalized economy, where the policies of

one country can affect many other countries….

China is trying to continue its road to sustainable

growth…

Should China deregulate finance?

Gallagher in the Globalist

INTEGRATION

The american dream?US-CAPITALISM

http://www.youtube.com/watch?v=d-v6JQEijYw

US-CAPITALISM

Finantial form of social exclusion

Social groups in disadvatage

“The more a group is socially excluded the more is

forced to engage in social relation and economic

exchanges under disadvantages terms, relative to

other members of society” (Dymski)

Relation of economic exploitation

“Alteration of term and conditions of the transaction,

in ways that more surplus is extracted from those

with less power” (Dymski)

US-CAPITALISM

Finantial inclusionUS-CAPITALISM

CLEVELAND SUB-PRIME LENDINGUS-CAPITALISM

http://news.bbc.co.uk/2/hi/business/7070935.stm

Open discussion

How best to tackle financial social exclusion?

Financial education? More regulation by the state?

Blame is in the borrowers? Not lending to risky

households? Personal loans?

US-CAPITALISM

DEPENDENCY

Bonds of dependency?

Alliance, association…

Connection, relationship,

linkage…Subordination, control, tutelage

Co-dependence,

interdependence, mutual depen.

Finan., technology, trade, politic

Bonds Dependency

Periphery-Centre, public-

private, North-south,

DEPENDENCE

manifest tendencies to external disequilibrium

in the form of a „trade gap’, alongside internal

disequilibria in the form of inflation and

repressed production and consumption due

to constrained import volumes in domestic

food production”

“Export

dependent

economies

Prebisch (UN, 1950)

“It is not increasing trade or globalisation as such that we

should fear (…) The problem is a process of integration

carried out since at least 1980 under circumstances of

unsustainable finance, in which weath flowed up-ward from

poor countries to rich (…) In the course of these

events, progress toward tolerable levels of inequality and

sustaibable development virtually stopped. Neocolonial

patters of centre-periphery dependence were re-stablished”

(Galbraith, 2000 pp.25)

Centre-peripheryDEPENDENCY

Not “bad policies” or “bad institutions” but…

• (Formal) financial systems of peripheries dominated by

foreign interests, with strong external orientation

• Foreign exchange becomes a specific constraint to

industrialisation and infrastructures (export dependency)

• Poor countries forced to run trade surpluses

DEPENDENCY Structural finantial vulnerabilities

Flows of Money Into and Out of

Low and Middle Income Countries

Source: World Bank Global Development Finance

http://www.visualizing.org/visualizations/global-

money-flows-and-out-low-and-middle-income-

countries

DEPENDENCY

DAVID HARVEY

• Privatisation: generates a means for profit for the capitalist class

• Finantialisation: financial system one of the main centers of

redistributive activity

• Manipulation of crises: creating and manipulating crises, such as

by suddenly raising interest rates

• State redistributions: For example changing the tax code to profit

returns on investment rather than incomes and wages (of the lower

classes).

DEPENDENCY

Centralization of wealth and power by the elites. capital

class is gaining power at the expense of the labour

class

Western countries: Accumulation by dispossesion.

Bit and pieces to reflect…

(beyond offering critiques of the global

economic order)

Thank you! (I’m open to critiques and debate)