Media Spotlight: The Violence Of Financial Capitalism

26 July 2010

The current crisis must be on track to be one of the most written about financial events since the Great Depression of the 1930s, so with such a volume of words pouring forth finding a new angle can be tricky.

It was with this in mind that we thought we’d give Italian socio-economist Christian Marazzi’s The Violence of Financial Capitalism a whirl in our review slot this week.

The book starts out in a straightforward enough manner. Marazzi’s premise is that the credit crunch has produced a violent crisis that is destroying wealth, jobs and peoples’ lives.

With the UK mortgage market decimated by the downturn and an untold number of jobs lost as a result I don’t think many readers will disagree with him there.

Marazzi then gives a brief breakdown of the crisis and makes his case for what it is that makes this episode different from previous downturns, before undertaking some some brief analysis and criticism of the stimulus packages put in place by the US government.

Although the book bears a publication date of 2010 such has been the pace of countries’ responses to the crisis that much of the content already seems a bit old hat, although on the basis that it was in fact written in 2009 Marazzi is prescient about the sovereign debt issues now being experienced around the world, especially in the eurozone.

He describes the level of what he calls ’financialisation’ that was seen in the 20th century - the way debt was essentially sold and resold across the globe in new and strange forms again and again - as a parasitic and desperate attempt to recoup on the financial markets that which capital could no longer obtain in the real economy.

The collapse of the securitisation market and demise of UK mortgage lending is a good example. The government may want the market to return to a simpler time of deposit-based lending and sturdy institutions but the consequence of this is essentially a lack of cash - there isn’t enough coming in by way of deposits to lend and satisfy demand.

There are some good passages on the boom in remortgaging, the rise of securitisation and sub-prime, including an explanation of how the
But as Marazzi states, access to a good house is based on mathematical models of risk whereby the social right to housing is secondary to realising a profit.

And on capitalism more generally he argues that financialisation is a process of intrinsic instability, valuing shareholder rather than stakeholder value. The search for profits for the former leads to the use of financial instruments that are unmanageable.

But despite the interesting points he comes up with, many are confusing. Initially, I thought this book was intended for an academic readership but the glossary includes a guide to what the author describes as Anglo-Saxon financialisation phrases including bailout, private equity and LIBOR.

So the reader finishes by feeling that there are some interesting ideas here but a decent translation from the Italian might help in figuring out exactly what Marazzi is going on about.

Book review by Robert Thickett