Chapter 1: Introducing Emerging Finance Capitalism
The tipping point comes after a period of foreboding economic and political instability associated with the relaxation of financial regulations. The risky ventures of once profitable banks and corporations are exposed, and this breeds financial uncertainty and eventual crisis. The impact is more tremendous than could have been imagined just a few months beforehand. Only massive, immediate, and sustained state intervention will prevent the collapse of the national financial system and stem potential international contagion. The public costs are staggering and austerity measures unavoidable, but government officials assure everyone that the bank rescue is in all their interests and not that of a few wealthy bankers. As the banks return to profitability, state financial managers dedicate their energies to institutionalizing new, costly, and more powerful mechanisms for managing financial instability within their borders. In retrospect, officials say the crisis was an opportunity to put the country’s financial house in order. For the bulk of the population, the banks had brought themselves to the edge of the abyss, state rescue had unilaterally pulled them back, and this had come at a colossal social expense. It is an era of emerging finance capitalism. Many mainstream scholars, analysts, and experts have decided that the interventions of states and governments at times of financial crisis are an unfortunate but necessary feature of contemporary banking and development. Only the degree and design of such interventions remain a matter of debate within and across research paradigms (Ocampo et al. 2007; Demirgüç-Kunt and Servén 2009;...
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