Financialization and Economic Development

Title

Financialization and Economic Development: A Debate on the Social Efficiency of Modern Finance

 Author

Storm, S.T.H. (TU Delft Economics of Technology and Innovation)

Date

2018

 Abstract

The shift in financial intermediation from banks to financial markets, and the introduction of financial market logic into areas and domains where it was previously absent, have not just led to negative developmental impacts, but also changed the 'rules of the game' and facilitated rent-seeking practices of a self-serving global elite. Establishment (financial) economics has helped to depoliticize and legitimize this financialized mode of social regulation by invoking Hayek's epistemological claim that (financial) markets are the only legitimate, reliably welfare-enhancing foundation for a stable social order and economic progress. This article forms the Introduction to a set of 10 articles which assess the logic and consequences of 'financialization' across a range of geographic, economic and social scales, and confront Hayek's grotesque claim - deep down, at the level of 'ideas', but also by providing 'knock-out evidence' on the social inefficiency of a capitalism 'without compulsions' for finance. The authors in the Debate challenge the 'ruling ideas' and expose how establishment economics has been hiding its reactionary political agenda behind the pretence of scientific neutrality. The financial emperor wears no clothes.


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 DOI

https://doi.org/10.1111/dech.12385

 ISSN

0012-155X

 Source

Development and Change, 49 (2), 302-329

 Part of collection

Institutional Repository

 Document type

journal article

 Rights

© 2018 S.T.H. Storm
Files
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