Cédric Durand - Fictitious Capital: How Finance Is Appropriating Our Future

One of the most remarkable developments in the rich countries since the 1970s has been the accelerated expansion of financial operations. The 20078 crisis and the long recession in which the world economy has been caught up ever since have brutally exposed the exorbitant economic and social cost of such financialisation. Yet nothing suggests that our societies are on a path to freeing themselves from its grip. While there have been some efforts to exert tighter control over finance, they have not fundamentally challenged the relations that this sector has established with other spheres of the economy over recent decades.

Financialisation is no epiphenomenon. It is a process that gets to the very heart of how contemporary capitalism is organised. Indeed, fictitious capital has taken a central place in the general process of capital accumulation. Incarnated in debts, shares, and a diverse array of financial products whose weight in our economies has considerably increased, this fictitious capital represents claims over wealth that is yet to be produced. Its expansion implies a growing pre-emption of future production.

Fictitious capitals rising power results from substantial transformations in the financial sphere itself, as well as changes that have taken place in its relations with the rest of the social world from the production of goods and services to nature, states and wage-labour. If finance develops according to a dynamic of its own, the hypothesis underpinning this book holds that the boom of fictitious capital is also the product of unresolved social and economic contradictions. As Fernand Braudel eloquently puts it, financialisation is a sign of autumn.

The development of high finance in fourteenth-century Florence responded simultaneously to both the new opportunities for profit to Financialisation, deindustrialisation and social polarisation marched in concert - and they signalled decline.

There are plenty of good reasons to think that contemporary financialisation marks a new autumn. First of all, since the 1980s we have seen a continuous rise in indebtedness in the main rich economies. Even though there are major disparities in the level and composition of the various countries debts, the tendency is a clear and general one. A second striking phenomenon is the fact that the growth of the financial sectors share in the economy translates into a rise in financial profits share of overall profits. A third phenomenon and one that is now well documented is the growth of inequalities. Particularly marked in the Anglo-Saxon countries, this change is apparent in all developed countries, with increased inequality of both incomes and assets.