DeepSummary
The episode starts with Adam Proctor welcoming Michael McCarthy to discuss financialization and its implications for socialist organizing and policies. McCarthy explains what financialization is and how it has transformed various aspects of the economy, including industries, firms, the state, and workers' relationship to finance.
McCarthy delves into the rise of shareholder value maximization as a corporate philosophy and the theories like modern portfolio theory and efficient market hypothesis that underpinned it. He discusses how this reshaped corporate behavior, leading to mergers, layoffs, and a focus on financial activities over productive ones.
McCarthy argues that rather than breaking up banks, socialists need to focus on democratizing and controlling finance itself. This could help overcome the structural power of capital that has undermined past socialist projects. He suggests strategies like democratic control over pension funds and banks to direct investment towards socially beneficial goals.
Key Episodes Takeaways
- Financialization refers to the increasing dominance of the financial sector and financial activities in economic institutions and value creation processes.
- Financialization was enabled by theories like modern portfolio theory and the efficient market hypothesis that promoted shareholder value maximization in corporations.
- Financialization has reshaped the behavior of firms, the state, and workers, integrating them deeper into financial markets and speculation.
- Instead of just breaking up banks, the left should pursue strategies to democratically control and direct finance towards social goals.
- Democratic control over finance could help overcome the structural power of capital that has undermined past socialist projects.
- Strategies like democratic worker control over pension funds and public banking could reshape investment for social benefit.
- Financialization has created new political openings and opportunities for the left to reorganize property rights over financial institutions.
- Moving beyond piecemeal reforms requires strategic clarity about financialization and developing capacities to defeat capital's roadblocks.
Top Episodes Quotes
- “Financialization is an economic paradigm where the conversion of real economic value into financial instruments and their exchange within the financial system comes to dominate economic institutions, activity and value creation through financialization.“ by Michael McCarthy
- “You need to be thinking about how we can really democratize finance in general. And that might sound crazy. It might be like, what is this guy talking about? He's talking about controlling banks. That's never going to happen. Well, if you look at the sort of public sentiment about Wall street, the vast majority of people absolutely loathe it in terms of popularity of an idea. It's not actually that crazy.“ by Michael McCarthy
- “So basically what I'm saying is that I actually think if we're thinking seriously about socialism and how to get there, that controlling finance, democratizing finance is kind of crucial.“ by Michael McCarthy
- “It's why even mainstream political scientists like Charles Lindblom could characterize the market as a prison, right? That it sort of automatically punishes politicians that pursue policies that firms don't like, even oftentimes without the firms, you know, wanting, having the political intention to do that.“ by Michael McCarthy
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Episode Information
Dead Pundits Society
Dead Pundits Society
4/13/18