Tuesday, November 20, 2012

From Capitalism to Financialism

So that's what they mean by financialization:

From a fascinating report by Bain and Co. Some numbers:
We discovered that the relationship between the financial economy and the underlying real economy has reached a decisive turning point. The rate of growth of world output of goods and services has seen an extended slowdown over recent decades, while the volume of global financial assets has expanded at a rapid pace. By 2010, global capital had swollen to some $600 trillion, tripling over the past two decades. Today, total financial assets are nearly 10 times the value of the global output of all goods and services. 
...Moreover, as financial markets in China, India and other emerging economies continue to develop their own financial sectors, total global capital will expand by half again, to an estimated $900 trillion by 2020 (measured in prevailing 2010 prices and exchange rates). 
More on financialization here.


  1. Maybe we're focused on the wrong aspect of the problem.

    So let's try and look at it in a different way, for interest.

    On the one hand, you have the problem of "how do best we increase the overall wealth of the country" (in as many terms of wealth as we can encompass including GDP etc.).

    On the other hand, we have the problem of "how do we distribute this wealth in the fairest manner".

    Now, the default answer to both the above problems is, create more jobs - these jobs both provide the means to create increased wealth, and distribute it fairly.

    But we have to ask ourselves at this point in time, are the default answers working so well for us anymore?

    Take a hypothetical scenario - imagine that the current generation of ~50-80 year olds had devoted all their work-life energies to creating a long lasting automated and robotised productive infrastructure that was capable of producing all we need and more, but with little need for human operators.

    One of the consequences of this automatic infrastructure would be very few jobs, since all would be handled by automata.

    Then, the question would become, how the hell do we distribute the wealth and goods created by this fantastic industrial infrastructure?

    Let's also focus minds more carefully on the 'problem' of unemploynment.

    What is the problem in unemployment? Is it in not having a job?

    Or is it in being unable to access the same level of resources as the rest of one's community? And the sense of loss of social standing and personal worth? And of having no outlet for one's productive energies?

    I'm sure the above will raise hackles. But I am convinced this crisis and consequent ones in the near future, will force us to think well out of the box.

    1. Apologies - I submitted the above to the wrong post. It should be in 'The Job Gap' below.


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