Edited By Michael A. Peters, João M. Paraskeva and Tina Besley
Chapter Five: Financial Governmentality: Wealth-Effect as a Practice of Social Control (Stefano Lucarelli and Emanuele Leonardi)
c h a p t e r f i v e Financial Governmentality Wealth-Effect as a Practice of Social Control stefano lucarelli and emanuele leonardi i n t r o d u c t i o n In the last few years the term financialization has entered the realm of everyday language. Above all, it is used to evoke the semantic field of financial specula- tion, which undoubtedly constitutes a reoccurring risk in free market economic systems. Although this is far from being untrue, the crucial element to be inves- tigated in the context of the financial vertical motion on which contemporary capitalism appears to be grounded is—according to us—the political dimension of financialization. Some post-Keynesian scholars1 have argued that the main aspect of the pro- cess of financialization is to be located in the influence gained by financial markets, institutions, and elites both on decision-making regarding economic policies and on real variables concerning productive activities. On the one hand, such an influ- ence takes the shape of an increase of households’ rate of indebtedness. On the other hand, it leads to an increase of corporations’ debt/equity ratio, since financial markets tend to prefer that corporations use debt to finance their activities owing to the higher rates of return on equity that leverage allows. Moreover, that same influence contributes to wage stagnation. This is an important analytical perspec- tive that should be deepened by reflecting on the links among financial conven- tions, subjective behaviors, and economic policies. 92...
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