Financialization in the center and in the periphery

Capitalism � In the center � In China � In Brazil

Capitalism in the center � Liberal capitalism (19 th century) � Fordist and Technobureaucratic

Capitalism in fast growing China 1. 2. Colonial capitalism (19 th century - 1949)

Capitalism in Brazil Oligarchic mercantile and dependent capitalism (19 th century – 1930) 2.

Financialization and neoliberalism since the 1980 s �A transitional and regressive form of capitalism.

Neoliberalism and financialization developed in the center of capitalism as a consequence of a.

Globalization � Ii is a common title for the stage of capitalism since the

Neoliberalism (historical definition) � Whereas liberalism was a middle class ideology that emerges in

Financialization (or finance-led capitalism) is a regressive form of capitalism where finance gains autonomy

Political coalition (behind neoliberalism and financialization) � Whereas in technobureaucratic capitalism the dominant class

The 2008 Financial Crisis � Was consequence of the intrinsic instability of capitalism �

The gravity of the crisis was proportional to the degree of 1. 2. 3.

Comparing Deregulation Leverage Financial Liberalizatio n Commercial opening EUA High Average China Small or

A new capitalism? � Capitalism will continue to be global and increasingly technobureaucratic or

More socially oriented capitalism? � Whereas the pressure of middle income countries and of

Which capitalism in Brazil? �Remains financialized? �Or will change to �National, �New-developmentalist capitalism �-combining

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Financialization in the center and in the periphery of capitalism Luiz Carlos Bresser-Pereira Unicamp, October 1, 2009

Capitalism � In the center � In China � In Brazil

Capitalism in the center � Liberal capitalism (19 th century) � Fordist and Technobureaucratic capitalism (20 th century up to middle 1970 s) - Golden years of capitalism (1945 -75) � Globalization or knowledge capitalism (1975 - …) - Financialized or neoliberal capitalism (1975 -2008) – a regressive period

Capitalism in fast growing China 1. 2. Colonial capitalism (19 th century - 1949) National capitalism (1949 -today) a. statist industrial and national revolution (1949 -1980) b. export led and new developmentalist capitalism (1980 -today)

Capitalism in Brazil Oligarchic mercantile and dependent capitalism (19 th century – 1930) 2. National-developmentalist (state-led) capitalism (1930 -1980) - import substitution (1930 -1960) - export-led (1964 -1980) 3. Financialized and dependent capitalism (1991 -today) 1.

Financialization and neoliberalism since the 1980 s �A transitional and regressive form of capitalism. � Capitalist center: full � Brazil: partial but high � China: small

Neoliberalism and financialization developed in the center of capitalism as a consequence of a. the fall of the rates of growth and profit in the 1970 s b. The challenge represented by the NICs c. and of globalization that was beginning at the time

Globalization � Ii is a common title for the stage of capitalism since the mid 1970 s � It is consequence of the fall of transport costs and of communication costs � It implies commercial opening, world productive integration, cultural globalization, and, possibly but not necessarily, financial liberalization

Neoliberalism (historical definition) � Whereas liberalism was a middle class ideology that emerges in the 18 th century against a military and land-owning oligarchy and an absolute state, � Neoliberalism is a reactionary ideology of the rich that emerge in the last quarter of the 20 th century against the workers and the poor and against a social or welfare state.

Financialization (or finance-led capitalism) is a regressive form of capitalism where finance gains autonomy from production: 1. Financial operations are deregulated or minimally regulated 2. Value of financial assets and financial flows increase radically 3. Commercial banks loose business to financial investors and over the counter markets 4. Financial wealth increases much faster than production or real wealth 5. Financial instability increases, growth rates fall, income concentrates in the 2% richest

Political coalition (behind neoliberalism and financialization) � Whereas in technobureaucratic capitalism the dominant class coalition included capitalists, high professional executives and the working class � The new neoliberal coalition was limited to - capitalist-rentiers - unhappy with low interests and dividends - and financists (high financial executives and traders) – able to develop financial innovations

The 2008 Financial Crisis � Was consequence of the intrinsic instability of capitalism � But a crisis as profound could have been avoided, given theories and institutions developed after the 1930 Great Depression � It was not because the political coalition promoted deliberate deregulation and refused to regulate new practices (innovations)

The gravity of the crisis was proportional to the degree of 1. 2. 3. 4. Of Of leverage deregulation financial liberalization commercial liberalization

Comparing Deregulation Leverage Financial Liberalizatio n Commercial opening EUA High Average China Small or none Small (? ) Small High Brazil Small Medium Small

A new capitalism? � Capitalism will continue to be global and increasingly technobureaucratic or knowledge capitalism � but � Less open commercially � Much less opened financially � More regulated � Less leveraged

More socially oriented capitalism? � Whereas the pressure of middle income countries and of immigration on wages of workers in rich countries, I don’t believe that this will happen. � The profits and interests that they get from developing countries is not sufficient to compensate their competition.

Which capitalism in Brazil? �Remains financialized? �Or will change to �National, �New-developmentalist capitalism �-combining export-led and domestic-oriented industrialization?