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Financialisation in developing countries is the subject of an expanding literature but its characteristic features and its relationship to developed countries remain unclear. Reviewing the literature, this paper shows that financialisation in developing countries should be distinguished from financial liberalisation and financial globalisation. Furthermore, its character is partly derivative from financialisation in developed countries, as is confirmed by two theoretical approaches, related but different from each other, namely 'subordinate' and 'dependent' financialisation. By further reviewing the empirical literature, the paper also shows that financialisation in developing countries is highly variable and different from that in developed countries regarding the conduct of non-financial enterprises, banks, and households. Moreover, the literature addresses several sources of vulnerability for developing countries relating to financialisation. Finally, there are significant literature gaps, above all, the connection between financialisation and the globalisation of production as well as the role of the state. [ABSTRACT FROM AUTHOR]

The ratio of financial to nonfinancial profits in the U.S. economy has risen greatly during the last four decades, a period often called the financialization of capitalism, but the reasons for the increase are not well understood. This article tackles the issue by developing a model that incorporates the relationships between financial and nonfinancial capitalists that are characteristic of the period of financialization. It is shown that the ratio of financial to nonfinancial profits depends positively on the net interest margin and the noninterest income of banks, but negatively on the general rate of profit, the noninterest expenses of banks, and the ratio of the capital stock to interest-earning assets. Empirical estimation for the United States strongly supports the model and reveals that financial profits have varied mainly with respect to the net interest margin, although non-interest income has also been important. [ABSTRACT FROM AUTHOR]

Costas Lapavitsas (see, Costas Lapavitsas et al., ‘Euro-zone crisis: beggar thyself and thy neighbour’,Journal of Balkan and Near Eastern Studies, v.12, n.4, December 2010), a Professor of Economics at SOAS, University of London, and now elected member of the Greek parliament with left-wing party, Syriza, talks to Sebastian Budgen about Marxism and Keynesianism; the Euro-zone crisis; Greece’s predicaments; and ways out of the economic and political crisis that hit Greece and the continent. We are thankful to Sebastian Budgen and theJacobinmagazine for allowing reproduction of the interview inJBNES. [ABSTRACT FROM PUBLISHER]

The article presents information on the Royal Society of Arts event on "How to Change the Post-Crash Economy." The panelists at the event included Ben Chew, Economics Editor of The Independent; economics professor Costas Lapavitsas; and Paul Mason, Culture and Digital Editor of Channel 4 News. They discussed financialisation of contemporary mature capitalism, and increasing involvement of households in the activities of the financial system.

Financialization is a systemic transformation of capitalism that has occurred during the last four decades. This paper shows that the concept of financialization originates in Marxist theory, though its meaning remains unclear. It then proposes a theory of financialization as rooted in the altered behaviour of the fundamental agents of capitalist accumulation, including non-financial corporations, banks and workers. Finance has reshaped the activities of all three, also resulting in new forms of profit. It follows that opposing financialization is a complex process that involves creating public financial institutions but also re-establishing public provision for workers across a broad range of activities. Financialization cannot be reversed without re-establishing the command of the social and collective over the private and individual for the modern era. [ABSTRACT FROM AUTHOR]

The article examines how the integration of developing counties into the eurozone geopolitical and economic zone has been impacted following the global economic recession of 2008-2009. The author discusses the relationship between European Union (EU) member states such as Germany and peripheral eurozone countries such as Greece, noting the effect European monetary unions and the creation of the European Central Bank have had on financial integration and interdependence in the region. The role of national competitiveness within the EU and the impact of the U.S. mortgage bubble crisis on the German economy are also addressed.

According to mainstream economic theory the contractual relationship between borrower and lender is characterized by asymmetry of information regarding the project to be financed. It is assumed that trust among credit participants is constructed individually as they collect and assess requisite information. In contrast, this paper argues that trust and information among credit participants have compelling social constituents that depend on economic function and social context. More specifically, the paper shows that financial institutions transform trust into a social and objective relationship. The capitalist credit system comprises a set of institutions that construct trust socially by using increasingly general information. Nonetheless, the foundation of credit-related trust is the ability to repay money. Hence the moral content of credit is thin, giving rise to fraud and deception. [ABSTRACT FROM AUTHOR]

Money's emergence in commodity exchange remains an unresolved issue within economic theory. Current general equilibrium models offer an explanation that rests on the economic advantages of a universally accepted means of exchange that is partly established through social custom. These models neither fully explain money's unique ability to buy, nor theorise the customary practices required for money's emergence. They are dominated by Menger's earlier analysis of money's emergence, which pays more attention to the social foundations of money but is still hampered by Austrian individualism. An alternative explanation is given here, drawing on Marx's theory of value but involving a thorough reworking of it. An analytical process is established through which money finally emerges as monopolist of the ability to buy. Particular social custom, whose determinants are consistent with the social underpinnings of commodity exchange, plays a vital role in money's emergence. [ABSTRACT FROM AUTHOR]

In a recent debate in Economy and Society , Ingham criticized Marxist theory of money on the grounds that it relates money to commodities through the labour theory of value, while ignoring credit money. Ingham suggested instead that money is constituted by social relations characteristic of credit, namely relations of ‘promise to pay’. Drawing on Marx, this article shows that, pace Ingham, it is necessary theoretically to relate money to commodities. Money is indeed constituted by social relations, but these are commercial relations among ‘foreign’ commodity owners, not credit relations. The social relations of money are successfully captured by Marx's concept of the universal equivalent, when that is interpreted as monopoly over the ability to buy. In this light, both commodity and credit money are forms of the universal equivalent, but qualitatively different from each other. [ABSTRACT FROM AUTHOR]

This article addresses the issue of how the market and the non-market are to be understood especially by concentrating on the theory of money. For mainstream economics, the market is simply an institution facilitating exchange, money being the key instrument for alleviating the inefficiencies of barter. In contrast, recent work in other social sciences, such as that by Zelizer, distinguishes among markets, and various roles of money, depending on cultural and social content. While being sympathetic to such an approach, we claim that the commodity is a better analytical starting point than the market. Based on Marx's work, we then show what commodities have in common and establish a common essence for money as generalized purchasing power. This is a peculiarly bland essence that allows money to undertake the variety of social roles identified by Zelizer. [ABSTRACT FROM AUTHOR]

The formation of money hoards, which underpins the demand for money, is typically treated by mainstream monetary theory as originating in the motives of the rational individual. In contrast, Marx’s discussion of money hoarding treats hoard formation as a necessary tendency of capitalist production and circulation rather than as a result of the individual’s predilections. Based on Marx’s analysis, this article identifies several structural reasons for money hoard formation in the circuit of capital. It is also shown that Marx’s discussion, despite its insight, suffers from a technical error in analysing the overlapping of production and circulation time in the circuit, and in drawing the implications for hoarding. Finally, it is argued that the broader significance of capitalist money hoarding lies in the foundations it provides for the emergence of the credit system. [ABSTRACT FROM AUTHOR]

This essay argues that appropriate underpinnings for radical analyses of credit and finance are provided by Marx's concept of interest-bearing (or loanable) capital, that is, money capital traded as a commodity and commanding the payment of interest. Related to this notion is Marx's characteristic view that the rate of interest and the rate of profit do not tend to equalization. Nevertheless, there is also considerable ambiguity in Marx's analysis of interest-bearing capital. The first derives the characteristics of interest-bearing capital from the relationship between a capitalist who possesses money and a capitalist who possesses an investment project. The second focuses on the generation of sums of money in the turnover of the total social capital, which are transformed into loanable capital by the credit system.