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Financialization in the Long 1990s: A Study on the Causes and Consequences of Financial Power in 37 Countries

Soener, Matthew C
http://rave.ohiolink.edu/etdc/view?acc_num=osu1528106697072268

Abstract Details

2018, Doctor of Philosophy, Ohio State University, Sociology.
Finance plays a markedly greater role in our lives than in the recent past. This “financialization” process in which more value is accumulated within financial channels has enormous implications. Financialization appropriates more resources and drains money from productive use, it reallocates money from labor to capital, and occasional crises cause serious socio-economic disruption. The power of financial capital is a core feature of contemporary capitalism. For as much attention as financialization receives though we know surprisingly little about it empirically. Most studies focus on the United States, the United Kingdom, and a handful of European states. Our limited geographic scope is compounded by the use of inconsistent and non-comparable measures. There has also been less focus on explaining this transformation comparatively. In this dissertation, I address these issues in an in-depth study of financialization. I do so with a unique firm-level database I have constructed with information on more than 47,000 non-financial and 12,000 financial sector companies in the 37 largest economies. This covers firms in diverse contexts from the global capitalist core, “development states” in East Asia, semi-peripheral economies like Argentina to South Africa, as well as emerging powers like China and India. I assess financialization in these countries from 1991 to 2014 – a period I call the “long 1990s” At the beginning of this period, neoliberal architects optimistically promoted global financial integration and openness. By the end of it, the world was marred from the devastating consequences of financial “exuberance.” In six chapters, I investigate the causes and consequences of financialization in this historic era. Following an introductory chapter, I detail my dataset, propose measures, and stylistically showcase them in Chapter 2. My results show unevenness in financialization measures across time and place and that firms with international operations are more financialized. In Chapter 3, I test what is driving financialization at the national-level. Whereas others have seen financialization as a way to grow when traditional ways no longer work, I find industrial growth rates boost financialization levels. I argue capitalists devote more earnings from productive enterprises to financial channels. Financialization is accordingly not a substitute for industrial growth, but a strategy for accumulation overall. In Chapter 4, I use multi-level models to predict financialization at the firm-level. I find that financialization is connected to international production and stems from social mimicry. Moreover, I find that variation is almost evenly explained at the national and firm-level underscoring the importance of both in the era of globalization. In the final empirical chapter, I test whether financialization is associated with within-country inequality. My results show that, by most measures, it is not. The one exception is financial sector profitability which is a highly important and robust factor for explaining all inequality measures net of other stratifying forces. I then make some conclusions in Chapter 6. This project gives us an unpreceded look at financialization worldwide. I find that financialization is strongly associated with international dynamics like offshore markets and production. Financial capital is highly mobile, and firms take advantage of this to generate financial value. The extent to which economies have become financialized, moreover, rests on diffusion suggesting it is not a “rational” calculation so much as a culturally learned practice. The increasing importance of the financial sector, moreover, has substantial distributional consequences because when financial institutions become profitable, inequality rises. My results also show that financialization is an uneven process. I caution against seeing it as a unitary and totalizing force. The ability to generate financial value is connected to “real” production and natural resource use. Those concerned about the consequences of excessive financial power should bear this in mind. Finance is not some standalone part of the economy that can be calibrated through targeted policies. Rather, financial capital is deeply in enmeshed the web of socio-economic life.
Tim Bartley (Committee Co-Chair)
Vincent Roscigno (Committee Co-Chair)
Rachel Dwyer (Committee Member)
Michael Vuolo (Committee Member)
257 p.
Sociology
Financialization; inequality; political economy; capitalism; firm-level

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Citations

  • Soener, M. C. (2018). Financialization in the Long 1990s: A Study on the Causes and Consequences of Financial Power in 37 Countries [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1528106697072268

    APA Style (7th edition)

  • Soener, Matthew. Financialization in the Long 1990s: A Study on the Causes and Consequences of Financial Power in 37 Countries. 2018. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1528106697072268.

    MLA Style (8th edition)

  • Soener, Matthew. "Financialization in the Long 1990s: A Study on the Causes and Consequences of Financial Power in 37 Countries." Doctoral dissertation, Ohio State University, 2018. http://rave.ohiolink.edu/etdc/view?acc_num=osu1528106697072268

    Chicago Manual of Style (17th edition)

osu1528106697072268
645
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This open access ETD is published by The Ohio State University and OhioLINK.