Table of Contents

The Great Financial Meltdown

The Great Financial Meltdown

Systemic, Conjunctural or Policy Created?

New Directions in Modern Economics series

Edited by Turan Subasat

The Great Financial Meltdown reviews, advocates and critiques the systemic, conjunctural and policy-based explanations for the 2008 crisis. The book expertly examines these explanations to assess their analytical and empirical validity. Comprehensive yet accessible chapters, written by a collection of prominent authors, cover a wide range of political economy approaches to the crisis, from Marxian through to Post Keynesian and other heterodox schools.

Chapter 13: The crisis of finance and the crisis of accumulation: it was not a ‘Lehman Brothers moment’

Jan Toporowski

Subjects: economics and finance, financial economics and regulation, radical and feminist economics


This chapter presents a critique of the political economy of the financial crisis that broke out in 2008. It argues that the key structural change which preceded the crisis was not financialization, but the transformation of the organizational form of capitalism, from single ownership or partnership capitalism in the first half of the nineteenth century, to the joint stock company. With that came the rise of finance capital with privileged access to the capital market, a new type of corporate finance, and a new kind of financial crisis. Financialization recognizes the growth of financial intermediation, but not the new corporate finance or capital market-based financial crisis. The chapter argues that the crisis that broke out in 2008 was not due to financialization but because large corporations had overborrowed to finance capital market operation (mergers and acquisitions). Unable to refinance those borrowings, corporations reduced their fixed capital investment, reducing cash flow in the economy and precipitating the resulting problems with private and public sector debts.

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