A Program for Critical Studies of Finance: Revisiting Arrighi’s Theory of Financialization

Conrad Jacober, Johns Hopkins University

The study of finance capital and financialization has long been central to critical political economy, with Rudolf Hilferding’s Finance Capital (1910) and Vladimir Lenin’s Imperialism (1917) serving as touchstones of the critical study of finance capital. Both understood the rise of finance capital as a twentieth-century phenomenon; however, as Giovanni Arrighi argues, “Braudel has demonstrated, ‘finance capitalism’, or what we now call financialization, ‘was no newborn child of the 1900s.’” Rather, “this financialization of capital has been a recurrent feature of historical capitalism since the sixteenth century.” Just as in debates over the origins of capitalism, so too are these varying periodizations of the origins of financialization core to how financialization is conceptualized. Is financialization a phenomenon that begins in the 1970s, the early 1900s, or the 16th century? And how does our periodization of financialization alter our understanding of the phenomenon itself? These questions grasp at fundamental issues of how we conceptualize continuity and change in capitalism: financialization can be understood variously as cyclical, evolutionary, or transformational. In this paper, I argue that Arrighi’s theory of capitalist development is instructive for understanding two issues in critical studies of finance: first, the coexistence of cyclical, evolutionary, and transformational elements in financialization; and second, the role of both systemic and contingent forces in the origins of financialization. By applying an Arrighian framework to analyze the present regime of financialization, this paper seeks to reframe the debates surrounding the nature and novelty of contemporary financialization. I review the prevailing theories of the origins of financialization, with special attention paid to Arrighi’s own theory of financialization, its drawbacks, and how we can use Arrighi’s theory of capitalist development to reframe our understanding of the present phase of financialization and its possible futures.

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 Presented in Session 70. Theory and Method for Critical Studies II