Financial Expropriation Research Articles

Rentiers and distributive conflict in Brazil (2000–2019)

Abstract The paper examines the determinants of rentier income in contemporary financialised capitalist economies by analysing the case of Brazil. It argues that different drivers of rentier income may have comparable potential to channel a substantial share of aggregate income to asset owners. The paper estimates an expanded functional income distribution for Brazil for the period between 2000 and 2019, which distinguishes between rentier income, wages, profits of enterprise and government income. In the last two decades, the share of rentier income in Brazilian GDP has fluctuated around an approximately stable trend even though its composition has changed profoundly. The estimation presented allows for an analysis of the role played by financial expropriation (i.e. interest payments out of wage income) in this expanded functional income distribution, which points to alternative results concerning the recent trajectory of the wage share of income and of the distributive conflict.

Land-Development-Right Pricing Based on Spatial Characteristics in Urban Local Function Regeneration

The transfer of urban development goals from two-dimensional land to three-dimensional space leads to the dilemmas of the functional adjustment of partial space in the building, such as an unclear property right system, vague land financial expropriation method, uncertain economic value, etc. This study aims to understand land-development-right pricing based on spatial characteristics in spatial function regeneration. Especially, we deal with the following questions: (1) How do we identify the spatial development rights and their pricing? (2) How do we develop an effective method to evaluate the value of local spatial-oriented development rights? Answering these questions helps to establish a sustainable land finance mode, which enables the public and private sectors to share the rising value of the urban functional adjustment. Thus, employing mixed methods, the study analyzes the characteristics of property rights and the economic value of spatial-development rights. We find the following: (1) The main institutional obstacle restricting local regeneration is the inconsistency between the local spatial ownership and use right of land. (2) The technical shortcomings of land finance result from the lack of an evaluation method of the spatial characteristics. Our study motivates the transition of urban economics from a two-dimensional surface to three-dimensional spaces. Meanwhile, for countries with similar land property rights and leasing systems to China, the study also provides a useful reference to deal with the property right and land finance issues in the renewal of local spatial functions.

Nature as a Mode of Accumulation

From September to November 2021, overlapping with the 2021 UN Climate Change Conference negotiations in Glasgow, three major interrelated developments occurred in global finance. Taken together, these changes mark a turning point in the financial expropriation of the earth and the culmination of a theoretical shift in the dominant economic paradigm aimed at the unlimited accumulation of total capital, which is now seen as including "natural capital."

Financial markets and the working class in the USA: an empirical investigation of financial stress

AbstractThis paper investigates the relationship between financial stress and the working class in the USA. Employing a financial stress index created from the Survey of Consumer Finances, I show that working class households are nearly twice as likely to be financially stressed than wealthier non-working class households from 1992 to 2016. A possible explanation of this result could be that the financial expropriation of personal income among the working class has the effect of increasing that group’s financial stress relative to wealthier classes. Working class households in the USA have struggled to afford means of subsistence in lieu of lacklustre wage growth and a tattered safety net. Financial expropriation of these households has operated in tandem with this precarity, increasing financial stress in a time of financialised capitalism.

Profitability trends in the era of financialization: Notes on the U.S. economy

This article considers the evolution of financialization in the U.S. economy by examining the profitability and the volume of profits of the financial sector relative to general profitability and total profits in the economy. It is shown that financial profitability rose strongly from the early 1980s to the early 2000s. Similarly, the volume of financial profits reached extraordinary levels in the early 2000s. These phenomena occurred while interest rates and the net interest margin of banks were on a downward trend and, broadly speaking, reflect financial expropriation in the U.S. economy. The great crisis of 2007–2009 has acted as a threshold point beyond which both the profitability and the volume of profits of the financial sector have not recovered to previous levels. It is possible, but not certain, that a rebalancing of the productive and the financial sectors is under way in the financialized U.S. economy.

Borrowed identities: Class(ification), inequality and the role of credit-debt in class making and struggle

Class analysis has re-emerged as a pertinent area of enquiry. This development is linked to a growing body of work dubbed cultural class analysis, that utilises Bourdieu’s class scheme to develop rich understandings of how culture and lifestyle interacts with economic and social relations in Britain, generating inequalities and hierarchies. Yet cultural class analyses do not properly account for the way individuals resist their relative class positions, nor the role of unsecured credit in facilitating consumption. This article contributes to this area by examining how unsecured credit and problem debt influences consumption and class position amongst individuals with modest incomes. Drawing on 21 interviews with individuals managing problem debt, this article details how class inequality emerges through affective states that include anxiety and feelings of deficit. It also shows how these experiences motivate participants to rely on unsecured credit to consume cultural goods and engage in activities in a struggle against their class position, with the intention of enhancing how they are perceived and classified by others. The findings indicate that cultural class analyses may have overlooked the symbolic importance of mundane consumption and goods in social differentiation. This article further details how these processes entangle individuals into complex liens of debt – which lead to over-indebtedness, default, dispossession and financial expropriation – illustrating how investigations of credit-debt can better inform understandings of class inequality, exploitation and struggle.

The politics of creditor–debtor relations and mortgage payment strikes: The case of the Uruguayan Federation of Mutual-Aid Housing Cooperatives

Mortgage debt and concomitant forms of financial expropriation continue their largely uncontested expansion across the social terrain. The atomisation of debtors and commodity fetishism are two key factors that underpin this process. The collective and partially de-commodified character of mutual-aid housing cooperatives in Uruguay and their conflict-ridden mortgage debt relations provide a contrasting, reverse mirror image. This paper analyses how in the case of a collective debtor, the spatial fixity and temporal uncertainties that result from the establishment of mortgage debt relations can work against the creditor. Housing cooperatives make up a geography of spaces that are opaque to the creditor, in the sense that mortgage debtors cannot be individually identified and pursued. Once homes are constructed and inhabited, the creditor’s debt claims can be collectively challenged. In the context of the most recent mortgage payment strike (2001–2011) carried out by the Uruguayan Federation of Mutual-Aid Housing Cooperatives, what is presumed a voluntary contract between equal parties is revealed as a power struggle between owners and non-owners of capital. This atypical case provides an opportunity to empirically attest to the political nature of creditor–debtor relations, often rendered socially invisible due to the extreme power imbalance between counterparties.

The Profits of Financialization

The financialization of capitalism has been marked by the sustained rise of financial profits. In the United States, financial profits as a proportion of total profits rose enormously from the early 1980s to the early 2000s, collapsed during 2007–09, and subsequently recovered, but without reaching previous heights. During this period, the trend of the average rate of profit has been largely flat. The relative rise of financial profits in spite of stagnant average profitability represents a theoretical and empirical conundrum. We will argue that the answer should be sought partly in financial expropriation, but also in public interest rates kept at extraordinarily low levels. In this light, the rise of financial profits represents a vast public subsidy to the financial system characteristic of financialization.Click here to purchase a PDF version of this article at the Monthly Review website.

“History had taken such a large piece out of my life” — Neuroscientist refugees from Hamburg during National Socialism

ABSTRACTApproximately 9,000 physicians were uprooted for so-called “racial” or “political” reasons by the Nazi regime and 6,000 fled Germany. These refugees are often seen as survivors who contributed to a “brain drain” from Germany. About 432 doctors (all specialties, private and academic) were dismissed from the major German city of Hamburg. Of these, 16 were Hamburg University faculty members dismissed from their government-supported positions for “racial” reasons, and, of these, five were neuroscientists. In a critical analysis, not comprehensively done previously, we will demonstrate that the brain drain did not equal a “brain gain.” The annihilation of these five neuroscientists’ careers under different but similar auspices, their shameful harassment and incarceration, financial expropriation by Nazi ransom techniques, forced migration, and roadblocks once reaching destination countries stalled and set back any hopes of research and quickly continuing once-promising careers. A major continuing challenge is finding ways to repair an open wound and obvious vacuum in the German neuroscience community created by the largely collective persecution of colleagues 80 years ago.

"Principal-Principal Problems and Social Governance: Korean Firms, Chaebols and ‘Social Tunneling’"

We extend the emerging literature on ‘environmental’ - or more broadly ‘social’ - governance by analyzing principal-principal governance issues in the context of Corporate Social Performance. Analyzing Korean family controlled stand-alone businesses and Chaebol type business groups, we derive the logic of ‘social tunneling’ in analogy to the established concept of ‘tunneling’ that describes the financial expropriation of minority owners by controlling shareholders. We argue that controlling family owners’ mix of economic and non-economic goals leads to higher social performance, which comes against the interests of other shareholders pursuing primarily financial goals. Yet, increases in regular governance mechanisms such as board monitoring that balance priorities among shareholder groups lead again to lower social performance. These results illustrate that corporate governance mechanisms first and foremost serve the interests of the principals, including securing a balance between divergent interests of ...

Sweezyian Financial Instability Hypothesis—Monopoly Capital, Inflation, Financialization, Inequality and Endless Stagnation

From the standpoint of monopoly capital theory, this paper argues that oligopolistic capitalism is internally unstable. The instability manifests from the historical evolution of finance within oligopolistic capitalism. The historical rise of oligopolistic capitalism has given rise to price fluctuations; (non-financial) firms have increasingly relied on financial firms to guarantee prices. At the level of the individual firm, this increase in future markets has reduced risk and tended to increase production. However, at the macro-economic level the increase in financial speculation has generated greater instability and inequality. This paper theorizes this macro-economic instability and inequality, along with the increase in the rate of exploitation by means of “financial expropriation.”

Diferentes teorias marxistas de crise e diferentes interpretações da crise atual

Este artigo apresenta criticamente diferentes interpretações da crise atual. Orientaram a seleção das várias contribuições a representatividade das teorias marxistas clássicas de crise e a importância das novas abordagens correspondentes aos novos fenômenos em desenvolvimento no capitalismo atual. O exame crítico dessas contribuições revela uma linha divisória entre aqueles que concebem a crise como tendo sido causada pelo afluxo dos lucros da produção para as finanças (Husson e Foster /Magdoff) e aqueles para os quais o aumento do crédito de consumo foi resultado de uma reestruturação dos fluxos de crédito das empresas, cada vez mais autônomas no mercado de dinheiro, às famílias assalariadas, cada vez mais dependentes do financiamento bancário. Essa linha divisória reflete a importância que o primeiro grupo adjudica à diminuição do ritmo de crescimento vis-à-vis os teóricos da School of Oriental and African Studies. A análise revela também que a atrofia da economia política leva a um abandono precoce da teoria bancária e financeira de Marx em favor dos instrumentos teóricos pós-keynesianos imediatamente disponíveis para o uso.

Editorial Introduction to the Symposium on the Global Financial Crisis

AbstractThe current global economic crisis is historically unprecedented in that it began when poor groups in the United States defaulted on their mortgage-payments and spread fear of 'toxic debt' through an internationalised financial system, bringing the banking system close to collapse and highlighting the very individualised nature of contemporary financial relations. The symposium explores contemporary finance and banking practices in the context of Marxist political economy seeking to develop the notion of financialisation and arguing that banks' increasing reliance on individual households as a source of profits amounts to a form of financial expropriation or additional profit generated in the sphere of circulation.

Racial Exclusion and the Political Economy of the Subprime Crisis

AbstractThis paper develops a political economic explanation of the 2007–9 US subprime crisis which focuses on one of its central causes: the transformation of racial exclusion in US mortgage-markets. Until the early 1990s, racial minorities were systematically excluded from mortgage-finance due to bank-redlining and discrimination. But, then, racial exclusion in credit-markets was transformed: racial minorities were increasingly given access to housing-credit under terms far more adverse than were offered to non-minority borrowers. This paper shows that the emergence of the subprime loan is linked, in turn, to the strategic transformation of banking in the 1980s, and to the unique global circumstances of the US macro-economy. Thus, subprime lending emerged from a combination of the long US history of racial exclusion in credit-markets, the crisis of US banking, and the position of the US within the global economy. From the viewpoint of the capitalist accumulation-process, these loans increased the depth of the financial expropriation of the working class by financial capital. The crisis in subprime lending then emerged when subprime loans with exploitative terms became more widespread and were made increasingly on an under-collateralised basis – that is, when housing-loans became not just extortionary but speculative.

Financialised Capitalism: Crisis and Financial Expropriation

AbstractThe current crisis is one outcome of the financialisation of contemporary capitalism. It arose in the USA because of the enormous expansion of mortgage-lending, including to the poorest layers of the working class. It became general because of the trading of debt by financial institutions. These phenomena are integral to financialisation. During the last three decades, large enterprises have turned to open markets to obtain finance, forcing banks to seek alternative sources of profit. One avenue has been provision of financial services to individual workers. This trend has been facilitated by the retreat of public provision from housing, pensions, education, and so on. A further avenue has been to adopt investment-banking practices in open financial markets. The extraction of financial profits directly out of personal income constitutes financial expropriation. Combined with investment-banking, it has catalysed the current gigantic crisis. More broadly, financialisation has sustained the emergence of new layers of rentiers, defined primarily through their relation to the financial system rather than ownership of loanable capital. Finally, financialisation has posed important questions regarding finance-capital and imperialism.