neoliberailsm and finance as power in development
TRANSCRIPT
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NEOLIBERALISM
AND FINANCE AS
POWERIN DEVELOPMENT
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So…What was the question again…?
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“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.”
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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.”
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9:00-9.30 9:30-10:00 10:10-10:30
Final
discussion
INTEGRATION DependenceUs- capitalism
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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
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Financialisation
“The increasing dominance of the finance
industry in the sum total of economic activity”
INTEGRATION
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How the system look like?INTEGRATION
http://www.fna.fi/blog/2011/05/07/research-database-additions/
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Who controls the system?INTEGRATION
http://publicintelligence.net/global-network-of-corporate-control/
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INTEGRATION
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Global imbalancesINTEGRATION
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INTEGRATION
http://www.imf.org/extern
al/pubs/ft/fandd/2012/09/
pdf/dervis.pdf
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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
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The american dream?US-CAPITALISM
http://www.youtube.com/watch?v=d-v6JQEijYw
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US-CAPITALISM
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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
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Finantial inclusionUS-CAPITALISM
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CLEVELAND SUB-PRIME LENDINGUS-CAPITALISM
http://news.bbc.co.uk/2/hi/business/7070935.stm
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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
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DEPENDENCY
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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
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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)
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“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
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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
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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
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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.
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Bit and pieces to reflect…
(beyond offering critiques of the global
economic order)
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Thank you! (I’m open to critiques and debate)