Richard Peet on Austerity and Finance Capitalism

This text discusses how the integration of austerity measures is a finance capitalist tool to further discipline reluctant classes and regions to participate in the capitalist structure and therefore can be seen as an act of class warfare.  It brings up the power dynamics that have historically been at play between the state, political parties and the global economy, finance and capital.  This economic power that imposes certain behaviours for relative survival, trickles down into every component of society.  It impacts the political process and inter-dynamics on a global scale.

Finance Capitalism: A term coined by Hilferding in the early 20^th century.  It is the occurrence of an “increasing concentration and centralization of capital in large corporations, cartels, trusts and banks; together with a change in the geography of the capitalist economy towards export of capital from the industrial countries, in search of higher rates of profit elsewhere.”

Finance capital is defined as a new stage of capitalism where the attempt to financialize every sector and area of society and search for new spheres of investments begins to arise.  This is very pertinent and relevant to the stage in which our current society is at, especially with the present increase of attempting to financialise forms of labour, such as social reproduction. For Peet, finance capitalism with not be present permanently but “will be countered by social forces representing different views on how to run society – some sane, some crazy.” Social Policies as well as societal ideological shifts prove to be a way of mitigating and averting the inequality and other negative effects of capitalism.

Thinking critically about capitalism is a necessary component to thinking critically about the happenings and progresses of our current society, on both a global and grassroots level. However, there is an occurrence of demonizing and demonstrating bias towards the current system within modern day, left wing, economic theorists.  This bias is one that acknowledges the financial disparity and inequality within our society, however seems to blame it solely on the definition, that capitalism, is about “making profit for an elite class of rich people”.  This definition potentially poses issues, when attempting to fix, alter or create a new, different financial, political system.  Capitalism at its roots does depend on forms of exploitation in order to create profits, however, historical this has increased global levels of production, integration, technological advances etc.  It pushes several ethical boundaries within our current society and has now been transformed into a system in which social democracy becomes vulnerable to oppression.  However, this occurrence needs to be addressed perhaps through a perspective, that we, as a society and global culture, have now evolved past the limitations of a capitalist structure.  Demonizing an elite for causing these global harms and making inferences upon their ideals, ethics and behaviours is not productive and will not necessarily incite permanent change.  A creation of a new formula in which the social economy obtains support for a “saner, steadier economy and a better-quality society” and profits are valued less or reallocated is needed.  Austerity is indeed a societal punishment, however just blaming this occurrence on the “crimes of the wealthy” and not going to the overriding root is just a Band-Aid, not a solution.

_________________________________________________________________________

Peet, Richard. “Inequality, crisis and austerity in finance capitalism.”  Cambridge Journal of Regions, Economy and Society (2011) 4. Pg. 383-399.  Web.