It’s lazy, I know, to make my readers do the work but here are three things you should be read and watched together:
Robert Peston on the revival of financial trading, in currencies and various forms of derivatives. Once again, he suggests, a small number of people are getting very rich by pursuing activities which are of dubious value to the wider ‘real’ economy.
LSE Director Howard Davies on the failure of attempts at international reform of banking and financial trading.
David Harvey’s RSA Animate, arguing that the growing power of finance in capitalism is not an accident or a coincidence, nor is it simply a reflection of human frailty, it is an inevitable development of capitalism.
Two years ago there was much talk of regulating financial transactions and rebalancing the economy towards manufacturing. There is very little of that talk now. Arguably for good reasons, the Coalition Government is sceptical of the role of Government in supporting industry, and anyway there’s no money.
So, in a very short space of time, after the most dangerous and far reaching crises in the history of global capitalism, this country and others, like America, are going back. Back to being highly dependent on a finance sector many of whose instruments are good at making some people rich, but which mortgage the future and carry major risks of contagion, and which seem to have little or no effect on the wider economy or the livelihoods of those outside finance (apart perhaps from people who sell fine wines and yachts).
For an economic layman like me, it is difficult to avoid the conclusion that capitalism has become dominated by finance because its underlying logic dictates so. I am sure there is a way of achieving a more balanced and fair economy without abolishing capitalism but at the moment it doesn’t look like anyone knows what it is. Fortunately, my ignorance may be dispelled this evening with our fascinating event this evening with the development economics expert, Ha-Joon Chang, chaired by Larry Elliott.