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Financial Capital and the Decline of Democracy

Bob Jessop

Lancaster University



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Financial Capital and the Decline of Democracy

Bob Jessop

This paper revisits the argument, advanced by advocates and critics of capitalism

alike, if somewhat hyperbolically, that liberal democracy is the ‘best possible political

shell for capitalism’. This is contestable theoretically, historically and comparatively.

Indeed, the relationship between capitalism and democracy is deeply contradictory

and historically contingent. The connection is further challenged by recent trends in

national politics such as authoritarian populism, authoritarian statism, and ‘post-

democracy’. More doubts are raised by growing gaps between world market

integration, the continued importance of national territorial states, and the forms of

global governance. These are producing an increasing democratic deficit, especially

regarding control over the international, transnational, and supranational economic

and extra-economic aspects of the emergent world market, and are reflected in the

resort to technocratic and other forms of unelected, non-accountable executive

powers linked to international regimes and obscure parallel power networks. These

trends are decades-old but have been strengthened by the expansion of a finance-

dominated accumulation that is tied to new forms of political capitalism. After

reviewing some of these general issues, I turn to financialization as another

debilitating factor, largely overlooked in neo-classical but not libertarian economics,

in the decline of democratic governance.

WHICH CAPITALISM, WHICH DEMOCRACY?

Capitalism is usually defined as a system of commodity production involving private

ownership and control of the means of production plus formally free labour power.

On this basis, mainstream economics models the economy as a universal,

harmonious, and self-equilibrating system. Likewise, for political theorists,

maintaining free markets is an important source of legitimacy in capitalist societies

compared to the despotism in pre-capitalist class societies and the party

dictatorships of state socialism (e.g., Friedman 1962). But this account of itsdemocratic virtues highlights and idealizes one specific account of capitalism:



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rationally organized capitalist production and trade oriented to free markets. This

comprises only one of six modes of orientation to profit that Max Weber identified.

The other five are: (1) traditional commercial capitalism, based on traditional types of

trade or money deals; (2) rational trade and speculation in money and credit

instruments; (3) predatory profit from political activities, including from financing of

wars, revolutions, or party leaders; (4) profits from continuous business activity

based on force or a monopoly granted by political authority; and (5) profit from

unusual transactions with political bodies (Weber 1978: 164-166). An analysis that

looks at these other modes of securing profit might reach different conclusions about

the formal correspondence between capitalism and democracy. Indeed, the more

that capital accumulation rests on politically oriented capitalism (types 3-5), the

harder it is to maintain more than a façade of democracy. I explore this thesis below

for finance-dominated accumulation, which is heavily inflected by forms of political

capitalism (see also Jessop 2013b).

Democracy is also a problematic term. One definition, inspired by Joseph

Schumpeter, treats it as an intermittent, quasi-plebiscitary competition between

circulating political elites for the votes of individual citizens (Schumpeter 1943; cf.

Weber 1994). Defined in this minimalist, elitist manner, democracy survives

nationally and sub-nationally in most advanced capitalist states. But if we turn from

competitive elections to the institutional and socio-cultural conditions necessary to

democratic accountability, then the past and present of effective democratic

participation in policy- and decision-making appear in less favourable light.

Moreover, as the world market gets more integrated and the space of flows

(including finance) grows more important relative to territorially-delimited economic

activities, there are mounting challenges to the territorial (and temporal) sovereigntyof states, whether or not these are democratic in substance or form.

THE BEST POSSIBLE POLITICAL SHELL?

Various theoretical traditions have attempted to establish the mutual implication and

reinforcement of capitalism (defined for this purpose as trade in free markets and

rationally organized capitalist production) and democracy (understood as liberalrepresentative democracy). Despite contrasting political and ideological positions, a



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common theme is that the separation of the economic and political spheres limits the

concentration of power to the mutual benefit of economic and political agents.

Economic power can be used to prevent the abuse of political power; political power

can be used to counteract market failures. Where this separation exists, according to

bourgeois apologists, competitive capitalism can expand in a crisis-free manner

through the smooth operation of market forces and, in addition, dispersed economic

power will help to block the abuse of political power. Indeed, Milton Friedman,

among others, argued that a market economy combined with authoritarian rule (e.g.,

fascism, Nazism, military dictatorship) is preferable to a planned economy under

totalitarian rule (i.e., communism). He reasoned that, while the former contains the

seeds of democratization, the latter always suppresses democratic pressures,

economically and politically (Friedman 1962: 10-11). Or, as the conservative

historian, Niall Ferguson, put it, capitalism and democracy are the ‘double helix’ of

modern societies (2000: 10). Radical political economists dispute that liberal

democracy is the co-guarantor (with competitive capitalism) of individual freedom

and regard it, instead, as the co-guarantor of capitalist rule. Thus the Canadian

ethical socialist, Crawford B. MacPherson, argued:

the more nearly the society approximates Friedman's ideal of a competitive

capitalist market society, where the state establishes and enforces the

individual right of appropriation and the rules of the market but does not

interfere in the operation of the market, the more completely is political power

being used to reinforce economic power (MacPherson 1973: 148-9).

Frankfurt critical theorists, structural Marxists, and some radical political scientists

add that, as long as the state does not engage in production but draws its revenuesfrom the private sector through taxation and/or public debt, it will be indirectly

subordinate to the logic of profit-oriented, market-mediated accumulation and open

to pressures from one or another fraction of capital. Neo-liberal pressures to reduce

direct taxation (see below) and the role of credit-rating agencies in relation to

sovereign debt reinforce these pressures. The vulnerability of radical governments to

a ’strike of capital’ is the material basis to Friedman’s claim that diffuse economic

power restricts and limits totalitarian (or socialist) political rule. This threat increasesthe chances that the national interest will be defined to favour capital.



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Such criticisms aside, capitalism is not always linked to political democracy.

Friedman noted that it can co-exist with authoritarian rule; and radical political

theorists have distinguished between 'normal' (democratic) capitalist states and

'exceptional' political regimes that abolish free elections in favour of executive

authority. Such contingencies are summarized neatly in Stanley Moore’s aphorism

that, 'when exploitation takes the form of exchange, dictatorship tends to take the

form of democracy' (1957: 85, italics added). In short, the relation is not guaranteed.

This indicates a need to explore the historical trajectory of the modern state and its

articulation to capitalist development. Several theorists have proposed that different

stages in capitalist development have different implications for this relation. First,

during the transition to capitalism, state action is needed to create the conditions for

economic exchange among 'equals'. An absolutist state pursuing mercantilist

policies is appropriate. Second, once competitive capitalism has been consolidated,

a liberal state form gives the fullest freedom to individual capitals compatible with

securing the general conditions for accumulation. It combines general laissez-faire

with specific interventions to redress the effects of unfettered competition (e.g.,

factory legislation). Although the liberal state need not be democratic , it is based on

the rule of law and often coupled with parliamentarism. This reinforces the illusion of

equality among citizens to match the illusion of equality between buyers and sellers

of labour-power. Even so, as voters elect large numbers of social democratic and

communist deputies, parliament is less able to arbitrate among competing capitalist

interests and this task is therefore transferred to the executive. Third, as capi tal’s

crisis-tendencies intensify, the state is pressured to intervene to renew accumulation,

often at the cost of subaltern classes. This leads to a strong state and there are evenfewer opportunities for popular participation in policy formation (cf. Holloway and

Picciotto 1977; Mandel 1972; Gerstenberger 2011).

At most, this simplistic three-stage model holds for metropolitan societies that

underwent early industrialization and had an extended period of competitive

capitalism. Britain, Holland, Belgium, and the United States, for example, could have

competitive capitalism, a strong bourgeoisie, and a liberal state. However, asGerschenkron (1962) and others note, banks and the state had bigger roles in



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second-wave industrialization: competitive capitalism was therefore weaker, even

where it existed, and political capitalism had a bigger role. In such cases, the phases

of mercantilism (with or without absolutism) and interventionism tend to merge and

liberal states are absent or ineffective. Examples include Bonapartism and

Bismarckism and Tsarist autocracy. Similar arguments apply to developmental

states (which were often anti-democratic national security states) and their

successors in third-wave industrialization and to many post-socialist ‘transition’

states (notably those that are resource-rich). As developmental states sought to

catch-up with advanced economies through export-led growth, there were strong

incentives for low-waged, labour-repressive primitive accumulation. The experience

of imperialism also indicates the limits to any simple equation of capitalism and

democracy and this is reflected in the legacies of post-colonial states in Africa, Asia

and Latin American states. In short, any study of the relations between capitalism

and political regimes must consider variant forms and stages of capitalism and the

insertion of societies into the world market and the international division of labour.

The commodity fetishism of free markets and the political fetishism of a constitutional

state cannot ensure a stable fit between free markets and liberal democracy.

Something more is required. A crucial material basis for the reproduction of liberal

democracy is the institutional separation between the economic and political in

capitalist societies and its reflection in a clear demarcation between economic and

political class struggle. From capital’s viewpoint, the ideal position is one where

economic class struggle is confined within the limits of the market relation and

political class struggle occurs within those of bourgeois parliamentarism. Thus,

whereas trade union struggles would focus on wages and conditions, political

struggles would seek social reforms by mobilizing public opinion and seekingparliamentary majorities. Trade union power would be confined to industrial disputes

rather than used to support parliamentary action; and state power would be limited to

the 'public' sphere and not used to interfere in private disputes or constrain the rights

of private property, including capital’s rights to manage their enterprises and freely

allocate their capital. Insofar as this institutional separation and its impact on class

struggle are reproduced, subaltern classes find it hard to mobilize their full potential

for collective action, whether defensively or offensively. Moreover, where capitalismrests on equal exchange (trade in free markets and rationally-organized production),



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the bourgeoisie need not control the state directly provided that it maintains the

juridical, monetary, and other extra-economic conditions for accumulation.

Thus the adequacy of the bourgeois democratic republic depends on the overall

economic, political and ideological situation and its implications for the unstable

equilibrium of compromise necessary to the democratic constitution. Thus,

commenting on the French constitution in 1850, Karl Marx noted a ‘comprehensive

contradiction’:

… the classes whose social slavery the constitution is to perpetuate –

proletariat, peasantry, petty bourgeoisie – it puts in possession of political

power through universal suffrage. And from the class whose old social power

it sanctions, the bourgeoisie, it withdraws the political guarantees of this

power. … From the first group it demands that they should not go forward

from political to social emancipation; from the others that they should not go

back from social to political restoration (Marx 1978: 77, italics added).

This comprehensive contradiction means that the form of political regimes and

content of state policies depend on the dynamic of political struggles rather than

immediate economic circumstances. It follows that political analysis must consider

state forms, political regimes, political discourses, and the changing balance of

political forces as well as basic economic relations, economic crises, and the

economic conjuncture.

Any resolution of this contradiction is partial, provisional, and temporary because it

depends on the changing balance of political forces. A key challenge, as AndrewGamble (1973) observes, is to create one or more political parties that can reconcile

the politics of support and politics of power. The former involves the democratic

electoral constraints entailed in a 'one-person-one-vote-one-value' system in which

success depends on securing a majority or large plurality of votes. Conversely, the

politics of power denotes the constraints on the exercise of state power in conditions

where power is not allotted equally to each and every citizen but depends on the

changing economic, political, and ideological conjuncture. Thus the politics ofsupport must be pursued within the constraints imposed by the politics of power.



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Politicians and parties that exceed these constraints will be electorally unpopular

(because their programmes seem sectional, extreme, or unrealistic) or, if elected, will

be forced to make U-turns and/or to embrace the prevailing orthodoxies. In brief,

unless political movements accept the rules of the electoral game and the realities of

political power, they face electoral impotence or, if elected, the need for U-turns.

Natural governing parties are those that win majorities (or pluralities) with electoral

programmes that are ‘politically’ realistic. Different parties with different social bases

may achieve this status at different times. If they exist, liberal democratic politics is

possible. Where these conditions are not met, we find a representational crisis of the

political system and a crisis of hegemony .

These constraints also affect the dominant classes and class fractions. Democracy

offers different fractions the chance to bargain, compromise, and adjust their

interests in ways that promote their long-term interests. Nicos Poulantzas elaborated

some of these mechanisms (1973, 1978). He argued that the institutional matrix of

the state in advanced capitalist democracies facilitates the organization of the

hegemony of the dominant power bloc and the disorganization of subaltern classes.

This dual task is facilitated by the architecture of the state: individual citizenship

fragments and atomizes the members of civil society (the 'isolation effect'); and the

legally sovereign state is expected and empowered to define and promote the

'national interest' and 'public good' on behalf of these citizens (the 'unification effect').

Moreover, since citizenship is not based on class location but on the formal equality

of all members of society, their common interests are expected to cut across class

antagonisms. This encourages aspiring governing parties to articulate and aggregate

the interests of the dominated classes and connect them to those of dominant

classes. In addition, electoral competition and parliamentary politics permits changesin the balance of power without serious threat to the stability of the state system as a

whole. The circulation of power among natural governing parties thereby reinforces

the belief in a neutral state that can reconcile class conflicts.

In addition, where surplus-labour is appropriated through market forces rather than

coercion, capital can offer political concessions (such as welfare state benefits)

without threatening accumulation. In these conditions, universal suffrage, competingparties, the separation of powers, parliamentary government all contribute to the



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flexibility of a political system which means that power can be continually readjusted

to secure social cohesion. And, since the cohesion thereby secured is that of a

class-divided society, this also maintains class domination. Indeed, working class

struggles can sometimes force policies on capital that advance its long-term

interests. Two examples are nineteenth-century factory legislation and the Cold War

class compromise that facilitated a virtuous circle of mass production and mass

consumption during the post-war Atlantic Fordist boom. There are limits to such

policies, of course, seen in the developing fiscal crisis of the state and its

repercussions on legitimacy.

Another important feature of the modern state is the formal separation between

representation and administration as reflected in the partisan neutrality of officials

compared to the partisanship of elected representatives. Bureaucratic domination

separates citizens from control over the means of administration. This holds as much

for economic intervention and welfare administration as for the means of coercion

and repression. It leads to the individuation and potential mutual isolation of citizens

as clients or consumers of distinct, multi-scalar public services. This fragments the

agents and targets of political struggle and transforms ‘the people’ into a series of

client groups competing for state resources. The separation of powers has similar

effects, especially when the administration is protected by official secrecy and state

control over information flows. As neo-liberalism privatizes state services and or

delegates their provision to public-private partnerships, there is even less public

accountability, even if only in an irregular plebiscitary form.

FROM PARLIAMENTARY DEMOCRACY TO AUTHORITARIAN STATISM

During periods of political crisis, the ‘comprehensive contradiction’ of liberal

democracy prompts open struggles between subaltern and dominant classes over

the nature and ends of government. Three recurrent responses to this situation are:

(1) reorganize the system of representation (especially its electoral aspects) to

weaken the prospects of radical, popular-democratic or socialist governments; (2)

promote governments of national unity based on cooperation among the natural

governing parties and the co-option or suspension of other parties; and (3) limit thepowers of parliament and elected officials by reinforcing the independence of key



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administrative apparatuses (e.g., central banks, the security apparatus) and/or

declaring states of economic or political emergency. All three responses have been

seen since the crisis of Atlantic Fordism became clear in the mid-1970s and have

been reinforced during the North Atlantic Financial Crisis (NAFC). Before reviewing

recent events, however, I summarize two earlier accounts of these (and related)

tendencies in metropolitan capitalism and refer to a subsequent account of the rise

of ‘post-democracy’ in the metropolitan heartlands.

State Monopoly Capitalism

Theories of state monopoly capitalism (SMC) emerged during the Great War to

describe the ‘war socialism’ adopted by the belligerent capitalist states. They were

elaborated in response to trends during the Great Depression, the Second World

War, and the rise of Atlantic Fordism and its subsequent crisis. They focus on the

economic policies and overall organization of the state as an apparatus of political

class domination. They highlight ten trends: (1) the political commanding heights are

occupied by persons with family, economic, or ideological ties to monopoly capital;

(2) governing parties become key instruments of ideological control over the

population through monopoly financing of parties, party conferences, and election

campaigns and the centralization and bureaucratization of party organization; (3)

monopolies extend their control over ‘the means of mental production’ (e.g.,

education, advertising, mass media) with a view to limiting and channelling popular

pressures for state intervention; (4) associations, lobbies, and individual firms gain

influence in all fields of domestic and foreign policy, thanks to their direct contacts

with ministries and politicians and the expansion of state-monopoly complexes in

many areas, such as the military-industrial complex, energy supplies, big pharma,infrastructure, and agriculture; and (5) a financial oligarchy tends to dominate here

because it has the central role inside the network of cross-cutting monopoly interests

and/or its organizing role in the key peak organizations.

In addition, the state is reorganized. Thus: (6) parliament loses power to the political

executive and to an expanding array of functionally-oriented ministries, special

tribunals, ‘soft law‘, quasi-state organs, state-sponsored economic institutions, etc.;(7) the police, paramilitary, and military apparatuses are reinforced and, at the same



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time, (8) the state’s own ideological functions are also strengthened; (9) there are

complementary processes of deconcentration und decentralization of power at the

micro-economic and/or local political levels, which helps capital to manage the

smallest sites of valorization and to penetrate all areas of social life; and (10) these

changes are accompanied by massive growth in international state monopoly

apparatuses on the political and economic levels and these lie beyond the control of

national governments.

Although these theories often equate SMC with state planning, this relation does not

always hold. For example, Heinz Jung distinguished a ‘statist’ variant of SMC, based

on extensive state economic intervention and the social-reformist integration of

subordinate classes, and a 'private' variant, which pursued market-oriented

economic management and relied on a strong state with a more repressive

integration of the dominated classes. He argued that this second [eventually neo-

liberal] form was becoming more important, especially in Germany (Jung 1979).

Another scholar, Philippe Herzog, noted that these trends are shaped by the balance

among all classes, fractions, and strata (not just monopolies) and that the search for

policy coherence means that state actions rarely meet directly all the demands of

specific interests but require (uneven) sacrifices on all sides. Indeed, if the state tried

to resolve problems on behalf of just one fraction, it would aggravate them for capital

as a whole and thus for all fractions. Conversely, even if it tried to realize the

collective interests of capital, the state still needs support from some capitals to

execute its policies and may favour these more – thereby disturbing the prevailing

equilibrium of compromise among these fractions and their allies (Herzog 1971).

Authoritarian Statism

In the 1970s, Poulantzas gave a similar account of democratic decline, describing

the ‘new normal’ form of capitalist state as ‘authoritarian statism’. Thus, continuing

the earlier metaphor, this is now ‘the best possible political shell for capital’. Its basic

tendency is ‘intensified state control over every sphere of socio-economic life

combined with radical decline of the institutions of political democracy and withdraconian and multiform curtailment of so-called “formal” liberties’ (1978: 203 –4).



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More specifically, drawing on several of Poulantzas’s analyses, ‘authoritarian

statism’ can be said to have six key features. F irst, the state’s legislative, executive,

and judicial branches are increasingly fused, with real power now concentrated and

centralized in the administration. Second, Parliament becomes a mere electoral

‘registration chamber’ with circumscribed powers and there is a decline in the rule of

law. Third, political parties no longer fulfil their traditional functions in policy-making

(through compromise around a common programme) and in political legitimation

(through electoral competition for a mandate). Instead, fourth, the ‘natural governing

parties’ (as defined by Gamble 1973) now function to legitimate state policy and

transmit the prevailing state ideology to the masses through quasi-plebiscitary

electioneering – as Schumpeter (1943) had already posited – and, in this context,

engage in electoral manipulation based partly on cultivating close ties to the mass

media, which also acquire a key role in legitimation. Conversely, fifth, as monopoly

capital finds it hard to organize its hegemony through parties other than the dominant

mass party (which can comprise an entrenched single party or a centrist tendency

with wings in all ‘natural governing parties’), it also relies on an expanded lobby

system to influence the administration. Sixth, a ‘parallel power network’ cross-cuts

the formal divisions of the state and wields a decisive role behind the scenes on

behalf of monopoly capital in coordinating official, semi-official, and ‘private’ activities

across various policy fields. It follows the evolving strategic line of the dominant

mass party (when it is in power) and plays an obstructive role if a radical party wins

office (Poulantzas 1978: 203-40; for similar arguments, see Armin 2005; Greven

2010; and, on parties in particular, Blyth and Katz 2005).

Poulantzas related the ‘irresistible rise’ of authoritarian statism mainly to the state’s

increasing assumption of economic functions to tame the ‘wilder’ manifestations of

capital’s crisis-tendencies (witness the Great Depression), promote international

competitiveness, and extend the profit-oriented, market-mediated logic of capital

accumulation into ever more spheres of social life (1978: 163-99). In the era of

finance-dominated accumulation, taming the wilder manifestations also means to

‘intervene periodically to underwrite the solvency of banks, to provide extraordinary

liquidity and to guarantee the deposits of the public with banks’ (Lapavitsas 2013a:27-28). This expanding range of activities undermines the rule of law based on



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general, formal, and universal norms enacted by a parliament with a popular

mandate. Instead legal norms are set by the political executive and administration in

the light of particular conjunctures, situations, and interests. Nowadays one might

add that their elaboration is increasingly delegated to non-accountable private

authorities at different scales up to and including the global (for example, Cutler

2009; McKeen-Edwards and Porter 2013). While this summary may imply that

Poulantzas believed that the ‘authoritarian statist’ path runs smoothly, he stressed

that state power continually runs up against limits inherent in its political matrix and

operations (reflected in internal divisions and political resistance) as well as limits

imposed by the contradictory and dilemmatic capital relation. Thus he argued that

this trend involves a paradoxical strengthening-weakening of the state. Muddling

through, crises of crisis-management, and pre-emptive policing of resistance were

other symptoms of the incompressibility of capital’s contradictions and the

intensifying crisis-tendencies of an increasingly integrated world market (Poulantzas

1978: 241-247 and passim; for a detailed exposition and critique, see Jessop 1985).

Post-Democracy

Colin Crouch has recently won acclaim for an analysis that is superficially similar to

those just presented. But he focuses on symptoms at the level of the political scene

and fails to connect trends there to more fundamental shifts in capitalism. He starts

from the vacuum in mass political participation created by the decline of the working

class in advanced capitalist societies. The political class is now linked to society

more or less solely via business lobbyists (Crouch 2004: viii). While elections

continue and can change governments, electoral debate is now a tightly controlled

spectacle, managed by rival teams of professional experts in persuasion andfocusing on a few issues chosen by these teams. The mass of citizens plays a

passive, quiescent, even apathetic part, responding only to the signals given them.

Behind the scenes, however, politics is shaped by interaction between elected

governments and self-serving elites, which overwhelmingly represent business

interests (2004: 4, 19). This trend occurs not only in interventionist welfare states but

also in neo-liberal regimes with limited state spending. Indeed, ‘the more that the

state withdraws from providing for the lives of ordinary people, making them



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apathetic about politics, the more easily can corporate interests use it more or less

unobserved as their private milch-cow’ (Crouch 2004: 19).

Crouch adds that the political party form has changed from a set of concentric circles

tied to its social base towards a complex organization of leaders, activist

professionals, sympathetic experts who work for money, pure professionals (who

may not be supporters), and groups of lobbyists who move between party, lobbying,

and business organizations (2004: 72-73; cf. Wedel 2009). An activist base is no

longer vital to electoral success: electioneering is now funded by the private sector.

So ‘the classic party of the twenty-first century would be … a self-reproducing inner

elite, remote from its mass movement base, but nested squarely within a number of

corporations, which will in turn fund the sub-contracting of opinion-polling, policy-

advice and vote-gathering services in exchange for firms that seek political influence

being well regarded by the party when in government’ (2004: 74).

FINANCE-DOMINATED ACCUMULATION

These three accounts indicate a declining affinity between capitalism and

democracy, although they trace its origins to the interwar period, the mid-1970s, and

the 1990s respectively. This paper now explores this decreasing fit in three ways.

First, it identifies changes in the circuits of capital linked to financialization and the

ties between interest-bearing capital and the state apparatus – ties that become

especially evident during economic crises. Second, it notes that the resulting crisis of

bourgeois political hegemony (whether this is based on claims to democratic

legitimacy or on delivering growth and prosperity for all or most citizens) is

nonetheless combined with a remarkable survival of bourgeois political as well aseconomic domination. It relates this apparent paradox to the further extension of a

‘post-democratic’ authoritarian statism. And, third, in line with Poulantzas’s analysis,

it argues that this is related to a simultaneous strengthening-weakening of state

power that is expressed in the current crisis of crisis-management in relation to the

North Atlantic Financial Crisis, the Eurozone crisis, and the problems of dealing with

public and sovereign debt.



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For a while, some commentators held that the rise of ‘finance-led growth’ following

the crisis of ‘wage-led growth’ linked to Fordism would facilitate economic

democracy. This would not involve some form of workers’ control but the freeing of

citizen-clients to become sovereign-consumers. Fordism involved a virtuous circle of

mass production and mass consumption and a crucial role for the Fordist wage

relation as a driver of rising prosperity in relatively closed national economies, the

financialization of capitalist social relations (including the wage relation) would

enable workers to share in wealth-driven growth based on their patrimony in home

ownership, shares, funded private pensions, and so on (e.g., Aglietta and Rebérioux

2005; see also Boyer 2000). Some believed that this ‘private Keynesianism’ was an

adequate substitute for the Keynesian welfare state. Following the NAFC, however,

advocates of this view are less sanguine. Well before this crisis, however, other

commentators had already suggested the term ‘finance-dominated’ to describe this

post-Fordist regime in order to separate the empirical trend towards the

autonomization of finance from the question of whether it produces growth, greater

volatility, or stagnation (Stockhammer 2011: 3; see also van Treeck 2008).

Financialization is a principle of societal organization as well as a form of economic

organization. Money, credit and debt have existed for three millennia but acquire

new forms and functions with the consolidation of profit-oriented, market-mediated

capitalism based on formally free labour-power. In particular, capitalist credit-money

is one of the basic forms of the capital relation and essential to its continued

reproduction. Among the forms of credit money emerging with capitalism is interest-

bearing capital (to be distinguished from more traditional usury capital) and this, in

turn, can generate increasingly fantastic forms of fictitious capital (Marx 1967;

Carneiro et al., 2012). Where the circuits of interest-bearing capital becameincreasingly autonomous from those of profit-producing capital (which can only occur

in the short- to medium-term before serious crises occur), the impact of fictitious

credit, fictitious capital, and fictitious profits reshaped the wider social formation in

many respects. These fictitious forms are major vectors of the colonization,

commodification, and, eventually, financialization of everyday life. This points beyond

the general significance of capitalist credit-money in the circuits of capital to its

specific forms and effects when interest-bearing capital, as opposed, for example, tosuppliers of trade or production credit, becomes the dominant force in economic,



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political, and social life. This did not result spontaneously from the operation of the

‘invisible hand’ but required a series of deliberate economic, political, and social

interventions mediated through the iron fist of the state (often in a velvet glove) and

invisible handshakes that can be placed under the rubric of neo-liberalization and its

role in accelerating world market integration (Duménil and Lévy 2004; Harvey 2005).

Neo-liberalization varies nationally but everywhere tends to favour exchange- over

use-value. The neo-liberal project treats workers as disposable and substitutable

factors of production, the wage (including the social wage) as a cost of (international)

production, profit-generating capital as value-in-motion rather than substantive

assets, money as hypermobile interest-bearing capital than national fiat money,

nature as a commodity, knowledge as intellectual property, and so on (Jessop 2002).

The neo-liberal form of world market integration enhances capital’s capacity to defer

and/or displace internal contradictions and other problems onto other economic

actors and interests, other spheres of society, and the environment in several ways

(Jessop 2012). Interest-bearing capital gains strongly from this because it controls

the most liquid, abstract, and generalized resource and because it has become the

most integrated fraction of capital. More generally, the disembedding of capital from

the frictions of national power containers and national politics means that the law of

value tends more and more to operate globally by commensurating local conditions

at the same time as it promotes the treadmill search for superprofits. Among other

effects, this treadmill pressured banking capital to supplement the ‘boring banking’

activities of financial intermediation and risk-management with financial speculation

and risk-taking in the search for higher profits (cf. LiPuma and Lee 2004; Haldane

2012; Elsner 2012). Indeed, as more scandals emerge in the financial sector, it isbecoming clear that these superprofits derive in part from predatory and, indeed,

criminal activities that were facilitated by successive measures of deregulation

enacted thanks to the financing of political parties and unusual deals with political

bodies (Smith 2010; Will, Handelman, and Brotherton 2013).

In short, neo-liberalism tends to promote financialization, both as a strategic

objective and as an inevitable outcome. As this process expands and penetratesdeeper into the social and natural world, it transforms the micro-, meso- and macro-



16

dynamics of capitalist economies. First, it alters the calculations and behaviour of

non-financial firms through the rise of shareholder value as a coercive discourse,

technology of governance, and vector of competition. One aspect is the growing

importance for non-financial firms of financial activities (e.g., treasury functions,

financial intermediation, using retained profits for share buybacks and/or acquisition

or expansion of financial subsidiaries) that are not directly tied to their main profit-

producing pursuits. Thus financial revenues became more important relative to

profits of enterprise for these firms (Krippner 2005; Nölke 2009; Lapavitsas 2013a).

Second, it boosts the size and influence of the financial sector. Fee-producing and

risk-taking activities increase relative to banking capital’s more traditional roles in

intermediation and risk management; securitization, leverage and shadow banking

with corresponding liquidity risks and weak prudential controls also expand; and so

does the significance of new forms of financial capital (e.g., hedge funds, private

equity, vulture capital, sovereign wealth funds). Third, everyday life is financialized

(see below). Fourth, as successive crises from the mid-1970s show, financialization

makes the economy more prone to recession and, in severe cases, more liable to

the downward spiral of debt-deflation-default dynamics (Dore 2008; Duménil and

Lévy, 2005; Fine 2010; Lapavitsas 2013a; Rasmus 2010).

Table 1 summarizes some of these themes and also presents some key aspects of

the institutional and spatio-temporal fixes of an ideal-typical finance-dominated

accumulation regime when it is relatively stable. This account is based on a modified

régulation approach perspective that returns to its first-generation studies that took

seriously the contradictions of the capital relation (for details, see Jessop 2013a).

In these terms, the principal (or dominant) structural forms are money and the(social) wage relation; others are subordinated to these forms in potentially

destabilizing ways – as the genesis and repercussions of the NAFC show. The

primary aspect of money (understood as credit money rather than coin or bullion) in

this regime is its role as the most abstract expression of capital and its disembedding

from national economic controls in a space of global flows. Fictitious credit (pseudo-

validated loans that are not advanced for productive investment) and fictitious capital

(capital as property rather than functioning capital) gain a much larger role comparedwith Fordism – with the volumes of securitized loans and of credit advanced for



17

financial trading massively boosted by neo-liberal banking and financial deregulation.

Financial innovation in turn facilitates the increasing acceleration and hyper-mobility

of credit money and its escape from regulation. This contrasts with the more

territorial logic of Atlantic Fordism, in which national economies were relatively

closed, the Bretton Woods international monetary regime was based on a gold-dollar

exchange standard and set limits to currency volatility, and even ‘liberal market

economies’ regulated their financial institutions. The secondary aspect of money

capital (real assets) was secured through the neo-liberal policy boost to post-tax

profits for profit-producing capital, reflecting the importance of ties to political

authorities in finance-dominated regimes and the general dynamic of competitive

fiscal policy in the world market in other regimes. The boost to post-tax profits has

not always been reflected, however, in productive investment owing to pressures

from the logic of shareholder value (Aglietta and Rebérioux 2005).

The primary aspect of the wage is its treatment as a cost of (global) production

rather than as a source of (domestic) demand; this is linked to re-commodification of

social welfare in housing, pensions, higher education, health insurance, and so on.

This leads to growing flexibility of wage labour (especially increasing precarization),

downward pressure on wages and working conditions, and cuts in the residual social

wage. A further result is the financialization of everyday life as the labour force turns

to credit (and usury) to maintain its standard of living and to provide for its daily, life-

course, and intergenerational reproduction. Combined with the increased returns to

profit-producing and interest-bearing capital, this also intensifies income and wealth

inequalities in the economies subject to finance-dominated accumulation, which now

match or exceed their levels in just before the 1929 Crash (Elsner 2012; Saez 2013).

The best possible state form for such a regime, more noted for its absence than

presence, is an Ordo-liberal framework, as envisaged in the original Social Market

Economy paradigm. This would provide a formally adequate institutional and spatio-

temporal fix, including the embedding of neo-liberalism internationally in a new

constitutionalism with credible commitments to corporate social responsibility.

However, the neo-liberal bias towards de-regulation, which widened the space for

financialization, was more often linked to an institutional fix that relied (and still relies)on ‘unusual deals with political authority’, predatory capitalism, and reckless



18

speculation – all of which have fuelled the global financial crisis. As the limits to

‘more market, less state’ emerged, there was growing resort to flanking and

supporting measures to keep the neo-liberal show on the road. This was reflected in

the discourse and policies of the ‘Third Way’, which maintained the course of neo -

liberalization in new circumstances, and is linked to the NAFC (witness its eruption

under ‘New Labour’ in Britain as well as the Bush Administration in the USA).

Table 1: Finance-Dominated Accumulation en Régulat ion ?

Basic

Form Primary

Aspect Secondary

Aspect Institutional

Fixes Spatio-

temporal fixes

Money /

Capital

Fast, hyper-mobilemoney as generalform (+ derivatives)as general form

Valorization ofcapital as fixedasset in globaldivision of labour

De-regulation offinancial markets,state targets pricestability, not jobs

Disembed flows fromnational or regionalstate controls; grabfuture values

(Social)

wage

Private wage plushousehold credit(promote privateKeynesianism)

Cut back onresidual socialwage as (global)cost of production

Numerical + timeflexibility; new creditforms forhouseholds

War for talents +race to bottom formost workers and‘squeezed middle’

State Neo-liberal policieswith Ordo-liberalconstitution

Flanking plus soft +hard disciplinarymeasures to secureneo-liberalism

Free market plusauthoritarian “strongstate”

Intensifies unevendevelopment atmany sites + scalesas market outcome

Global

Regime

Create open spaceof flows for all formsof capital

Dampen unevengrowth, adapt torising economies

WashingtonConsensus regimes

Core-periphery tied toUS power, itsallies and relays

KE

Y

Principal (or dominant) structural form Secondary structural form

Primary aspect of principal form Primary aspect of secondary form

Secondary aspect of principal form Secondary aspect of secondary form

The global influence of financialization was facilitated by the Washington Consensus,

which was heavily promoted by the USA and its allies to roll out liberalization,

deregulation, privatization, and market proxies in any residual state services

(whether infrastructural or welfare). This Consensus also promoted cuts in directtaxes (notably for corporations and financial institutions), aided by a fiscal race to the



19

bottom to attract or retain investment and by greater use of onshore as well as

offshore tax havens) and a shift towards indirect taxes. This was supposed to

increase the scope for market forces to allocate capital globally but, in conjunction

with political capitalism and the logic of shareholder value, it has also re-distributed

income and wealth towards the ‘have-lots’ at the expense not only of the ‘have-nots’

but also of the ‘squeezed middle’.

The crisis of finance-dominated accumulation emerges from the contradictions of the

capital relation as these are modified by this regime and its specific instantiations.

Because continued expansion depends heavily on the pseudo-validation of highly

leveraged speculative and Ponzi debt, this regime contains its own inherent crisis-

generating mechanism rooted in the systemic conflict between interest-bearing and

profit-producing capital. Wolfram Elsner explains this as follows. Financial capital in

this regime has a target rate of return that is several times greater than the historic

norm for profit-producing capital and, worse still, in an effort to achieve this target,

engages in massive leveraging of fictitious credit and capital. In aggregate, the

eventual validation of this massively leveraged capital would demand a total volume

of surplus-value that far exceeds the productive and exploitative capacity of existing

profit-producing capital. Attempts to square this circle depend on three strategies

that are individually and collectively unsustainable. One is to create and manage

bubbles, the main redistribution mechanism in finance-dominated accumulation, and

then bail out (or get bailed out) at the right moment (Elsner 2012: 146-7). This is

impossible without the complicity of central banks and government in the finance-

dominated economies and those subject to their contagion effects. Another is to

invoke a system-threatening ‘financial emergency’ that justifies efforts to reduce

individual and social wages, impose internal devaluation, and privatize publicservices and assets to pay off the public debt incurred in massive bailouts. States at

different sites and scales have key roles here too. The third strategy involves

primitive accumulation (e.g., land-grabbing, capitalizing nature and its services

enclosing the intellectual commons, privatizing accumulated public wealth, colonizing

the residual public sector, and so on). This is also impossible without state

involvement. In short, the most rarefied and leveraged forms of fictitious credit and

capital are now primarily, and systemically rather than merely contingently, problem-makers; and the rest of the economy, society and nature are the problem-takers.



20

Through these and other mechanisms the NAFC reverses many features of the

institutional and spatio-temporal fixes that (could have) provided it with some partial,

provisional, and temporary stability. Fictitious profits and wealth combined with

private Keynesianism did not ensure stable finance-led growth but created volatility

and crisis. Because of these reversals, and without decisive intervention to roll back

the power of financial capital that neo-liberalism has facilitated, the crisis tends to

feed on itself economically, politically, and socially (see Table 2). Contagion in the

Eurozone has additional causes and consequences, rooted in attempts to use

monetary union to reinforce neo-liberalism and promote the euro as a quasi-world

money without establishing the necessary institutional conditions for an effective

currency, banking, fiscal, and transfer union (cf. Lapavitsas 2013b).

Table 2: Finance-Dominated Accumulation in Crisis

Basic

Form Primary Aspect Secondary

Aspect Institutional

Fixes Spatio-temporal

fixes

Money/Capital

Rising antagonismbetween “MainStreet” and “WallStreet” (City, etc.)

Epic recessionbased on debt-default-deflationdynamics (D4)

De-regulationcrisis of TBTFpredatory finance+ contagion effects

Protectionism in coreeconomies, growingresistance to free tradefrom periphery

(Social)wage

Credit crunch putsprivate Keynesian-ism into reverse

Austerityreinforces D4double dip or epicrecession

Growing reservearmy of surplus,precarious labour

Global crisis andinternal devaluation

reproduction crisis

State

Political capitalism

undermines anyOrdo-liberalism

Austerity policies

meet resistance,harsher discipline

Crises in political

markets reinforce“post-democracy”

Cannot halt uneven

development at manysites + scales

GlobalRegime

Unregulated spaceof flows intensifies“triple crisis”

Multilateral, multi-scalar imbalancesand race to bottom

Crisis + rejectionof (post-)WashingtonConsensus

Crisis of US hegemony,BRICS in crisis anddisarray

While financialization initially benefitted many economic agents, the collapse of credit

bubbles and the implosion of financial speculation have reversed this stimulus effect.



21

Whereas growth in this regime depended on acceleration in fictitious credit, the

writing down of bad debt, the repayment of debt, reluctance to contract new debt,

and the hoarding of available capital throw the mechanism of pseudo-validated

demand into reverse. Thus debt deleveraging, especially when it occurs in both the

private and public sectors, creates conditions for a vicious cycle of ‘debt-default-

deflation’ dynamics and an eventual epic recession (Rasmus 2010; Keen 2011).

The unwillingness of interest-bearing capital to sacrifice its short-term economic

interests to protect its long-term political hegemony or, at least, domination activates

the potential antagonism between ‘Wall Street’ and ‘Main Street’ (and their

equivalents elsewhere) in three ways. First, too-big-to-fail financial institutions benefit

from bailouts and from quantitative easing that enables them to rebuild their capital

base at low or no cost and to undertake further speculation. Second, small and

medium enterprises find it harder to access production and trade credit. And, third,

households find it harder to secure personal credit and/or to fund their now privatized

health, pension, higher education, and other life-course and intergenerational

reproduction needs. Most households also lose from the attack on ‘entitlements’,

previously part of the social wage in democratic welfare states, as these are

portrayed even more vocally than before as costs that prevent the rundown of public

and sovereign debt. This reversal of ‘private Keynesianism’ reinforces the debt-

default-deflation dynamics that threaten to shift economies from recession into epic

recession or even another depression. Similar results follow in the Eurozone from

official attempts to create an ‘internal devaluation’ through cuts in the private and

social wage, other production costs, and so on, to compensate for the legal

restrictions on devaluation or exit from the Eurozone. I deal with the some of the

political preconditions and effects of these crisis measures in the next section.

Debt-default-deflation dynamics also strengthen other crisis-tendencies inherent in

neo-liberalism. The global ‘reserve army of labour’ expands, weakening workers’

bargaining power over wages and conditions, and increasing precarious work.

Privatization and austerity in areas needed for a productive rather than parasitic

economy (e.g., infrastructure provision, education, health, and science) are

undermining their capacity to promote growth in the ‘real economy’. A fragile

Washington Consensus is challenged by demands for protectionism in crisis-hit



22

metropolitan economies and opposition to free trade in the periphery (sometimes

linked to proposals for ‘post-neo-liberalism’). Yet transnational elites continue to

present free trade agreements as an essential and purportedly cost-free economic

recovery measure and to veil the extent to which such agreements would actually

entrench the rights of capital as private property against subaltern groups and less

market-friendly states and regimes. The NAFC has also aggravated imbalances in

the global economy and shifted its centre of gravity to the east and south but even

beneficiaries such as the BRICS have suffered contagion from the NAFC in addition

to experiencing their own particular, endogenous crisis-tendencies.

‘From Social to Political Restoration’?

The reversals noted above, the conflicts they provoke, and the resulting political and

economic challenges for crisis-management, are reinforcing the trend toward post-

democratic authoritarian statism. The genesis and survival of the finance-dominated

regime are linked to a predatory and parasitic politically oriented capitalism. Interest-

bearing capital and other capitals with vested interests in the neo-liberal project have

used their political influence to rescue financial institutions that are too big, too

systemically important, or just too well-connected to be allowed to fail. Rather than

allowing market forces to discipline financial institutions through losses and

bankruptcy, states have socialized losses, translating private debt into public and/or

sovereign debt. They have also taken direct responsibility for managing contagion

effects in the always-already monetized ‘real economy, albeit in the pro-cyclical,

counterproductive form of private and public austerity. These measures have been

pursued at national level by ‘natural governing parties’ from the centre-left and

centre-right as well as by more ‘technocratic’ (i.e., bank-friendly, non-accountable)

regimes at the international, European, and some national levels. Indeed, the

Federal Reserve, the Bank of England, and the ‘troika’ in Europe (ECB, EU and IMF)

asymmetrically defend too big to fail institutions, protect tax-avoiding, tax-evading

companies and wealthy elites, and impose the costs of crisis on the general

population (cf. Johnson 2009; Hudson 2011; Elsner 2012). This has involved virtual

coups d’état in Greece and Italy and the more general fuelling of ‘deficit hysteria’ to

justify yet more neo-liberal policy measures in other indebted economies. Part of theideological campaign in this regard is the spurious conflation of necessary but ‘boring



23

banking’ with financial speculation and risk-taking and the claim that shrinking and

regulating the latter activities will undermine the former.

Efforts to renew the finance-dominated, neo-liberal model tell us something about

the ability of those with power not to have to learn from their mistakes as well as

about the broader dynamics of class domination. Indeed, as interest-bearing capital

has finally encountered the constraints of real economic growth, it has upped the

stakes in the pursuit of neo-liberalism. The ‘new normal’ regime involves a

paradoxical strengthening and weakening of state power. Resort to bailouts and

quantitative easing that rely on the state’s role as lender of last resort and its

monopoly of taxation indicate the limited powers of the state to tame the effects of

crisis and, thanks to the influence of financial interests, to introduce reforms that

would present its resurgence. All the fisco-financial measures taken to date (July

2013), which are unprecedented in scale, have failed to resolve the underlying

contradictions and crisis-tendencies of finance-dominated accumulation and there is

a palpable crisis of crisis-management in many states and international agencies.

One sign of this is the growing split between the exit strategies proposed by profit-

producing capital and the policies favoured by those identified with the more

fantastical, irrational forms of interest-bearing capital and their allies. The neo-liberal

project has produced: (1) representational crises as the electorate grows more

detached from stable alignments with natural governing parties; (2) a legitimacy

crisis following from the failure to deliver sustainable finance-led growth and the

costs associated with crisis-management; and (3) a crisis of intellectual and moral

leadership associated with outright deception, official secrecy, populist rhetoric, and

media spin. In short, declaring states of economic and political emergency and

resorting to emergency measures indicate weakness rather than strength.

Furthermore, as austerity policies begin to bite, there is growing, if still fragmented,

resistance and growing anger about the kind of linkages among interest-bearing

capital, politicians, and state managers that Max Weber would have called ‘political

capitalism’. The best-known expressions of this resentment were for a while the

Occupy Movement with its slogan of the 99% the 1% and the Astro -turf ‘Tea Party’

movement in the USA. But there are many other grass-roots manifestations in, for

example, Greece, Spain, and Italy and many commentators have related the ‘Arab



24

Spring’ to the impact of neo-liberal policies and financialization in the Middle East

and North Africa. But these movements mainly operate at a distance from the state,

changing the calculations of economic and political elites, but lacking access to the

real levers of power in the circuits of capital, the inner sanctums of national and

supranational state authorities, and the international agencies that exercise decisive

private authority in the world market.

Overall, this reconfiguration of the state and governance in response to the NAFC,

its contagion effects elsewhere, and the associated but distinct Eurozone Crisis

involves more than a simple continuation of trends that were already being

discussed in the 1920s and 1930s and again in the 1970s and 1980s – well before

the inherent crisis-tendencies of neo-liberalism, financialization, and finance-

dominated accumulation emerged in their heartlands (as opposed to the semi-

periphery and periphery) during the 2000s. Indeed, to flirt with evolutionary

language, the development of authoritarian statism seems to have been a pre-

adaptive change that is even more beneficial in the current crisis of finance-

dominated accumulation. We are still witnessing a step-change in the move to post-

democratic authoritarian statism and this is grounded in the increasingly tight web of

connections between interest-bearing capital and the political class along the lines

indicated in theories of (privatized) state monopoly capitalism. This nexus created

the conditions for financialization. It also enabled the de facto declaration of a state

of economic emergency that justified (1) the use of exceptional powers to rescue

insolvent financial institutions rather than to nationalize them or allow normal

bankruptcy procedures to be implemented and (2) the parallel declaration of a state

of political emergency that justifies increased surveillance, pre-emptive policing, and

paramilitary suppression of dissent. Even if there is a return to ‘financial business as

usual’ and interest-bearing capital has been fully restored socially , political

restoration of democratic rule will not be delivered voluntarily by the financial

oligarchy. This must be wrested from below.

The Challenges of Political Restoration and Social Emancipation

The bourgeois democratic republic is no longer, if ever it was, the best possiblepolitical shell for capitalism. The declining affinity between profit-oriented, market-



25

mediated accumulation and constitutional democratic states is especially marked

where neo-liberal, finance-dominated accumulation has prevailed under the aegis of

interest-bearing capital. Yet the emerging conjuncture is taking a form different from

that envisaged by Marx in his comments on the fundamental contradiction in the

democratic constitution (see above). It is not the privileges of some national Ancien

Régime that is being restored politically as well as socially; instead we are seeing the

political consolidation of a new transnational power bloc organized around the

interests of interest-bearing capital.

This is a fresh illustration in another period of the comprehensive contradiction at the

heart of the democratic constitution and shows the fragile nature of the correlation

between capitalism and democracy. Where this correlation has existed, it depends

on trade in free markets and the rational organization of capitalist production in

conditions where an unstable equilibrium of compromise between capital and labour

allows labour to share in productivity gains through the wage and social wage (a

classic case is Atlantic Fordism). Neoliberalism and finance-dominated accumulation

challenge this relation. For, as Michael Hudson (2011) notes, for neoliberals, ‘a free

market is one free for a tax-favoured rentier class to extract interest, economic rent

and monopoly prices’ (Hudson 2011). This kind of free market, with its heavy

dependence on political lobbying, on unusual deals with political authorities, and on

force and domination to promote accumulation through dispossession, is

incompatible with the stripped-down formal democracy that currently exists.

By way of illustration, Wolfram Elsner suggests:

The EU ‘Economic and Financial Governance (or Government)’ by thePresident of the EU Commission, the ECB president, the heads of IMF and

ESM, the Council of Economic and Finance Ministers, and top bankers, may

easily become the post-democratic prototype and even a pre-dictatorial

governance structure against national sovereignty and democracies (Elsner

2012: 158, italics in original).

The post-democratic, authoritarian state of political emergency that is beingconstructed in this conjuncture will continue as the ‘best possible political shell’ for a



26

predatory, finance-dominated accumulation regime even if, and when, the financial

crisis is resolved. For, as noted above, the survival of this new bloc depends heavily

on Weber’s three forms of political capitalism. The longer it survives, the more

harmful its effects on the ‘real economy’, human flourishing, and the natural

environment. Crises do not engender their own solutions but are objectively

overdetermined moments of subjective indeterminacy. How they are resolved, if at

all, depends on the balance of forces in each case. The manner and form of

resolution determines the forms of appearance of subsequent crises. It remains to

see whether the many fragmented forms of resistance can be linked up horizontally,

vertically, and transversally to provide an effective challenge to this new bloc, its

finance-dominated accumulation regime and its the ‘new normal’ state form by

exploiting their fragilities. This will require connecting economic and political power in

ways that are ‘proscribed’ by the democratic rules of the game but are realized

continually in non-democratic ways by the new transnational financial bloc.

Acknowledgements

This paper derives from an ESRC-funded Professorial Fellowship (RES-051-27-

0303). It benefitted from discussions with Alex Demirović, Alexander Gallas, Mathis

Heinrich, Thomas Sablowski, and Walter Oetsch. The usual disclaimers apply.

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