The Handbook of Globalisation, Second Edition
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The Handbook of Globalisation, Second Edition

  • Elgar original reference

Edited by Jonathan Michie

With contributions from the leading commentators in the field and an over-arching introduction from the editor, the concerns of this updated and revised Handbook are two-fold. Firstly, to redefine the concept of globalisation and dispel the haze that surrounds it through a systematic and thorough examination of the debate. Secondly, to advance the frontiers of current critical thinking on the role and impact of globalisation, on the winners and losers in the process, and on the implications for society, the economy and governance.
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Chapter 27: Global Inequality and the Global Financial Crisis: The New Transmission Mechanism

Photis Lysandrou

Extract

Photis Lysandrou According to Marx the root cause of crisis always lies in the inequality of wealth engendered by the commoditisation of labour power. If he was right it follows that the globalisation of commodity relations must lead to a crisis on a corresponding global scale unless the growth in inequality is held in check. The fact that it was not checked but allowed to reach epic proportions by the time the global financial crisis broke out is for many people confirmation that Marx was right. This chapter seeks to give weight to this view by explaining the new mechanism through which the effects of exploitation are transmitted into crisis: prevented from finding expression in an excess supply of products in GDP space, these effects have instead found expression in an excess demand for securities in capital market space. Most economists put the major blame for the financial crisis on the banks because it was they who created the toxic securities that caused the financial system to seize up. My interpretation is different. The banks certainly overreached themselves in creating these securities but the principal reason why they did so was to augment the wealth storage capacity of existing securities stocks in order to accommodate the build-up of private wealth. 1 Background The financial crisis that began in the US sub-prime mortgage market and then spread to the banking sector has since mutated into the most severe international economic crisis since the Great Depression of the 1930s. As it has...

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