Abstract

The financialization hypothesis (FH) is a popular leitmotiv which argues that the financial system conquers the commanding heights of the capitalist economy. It maintains that finance gained independence from productive-capital and began to dominate it. The FH bases this argument on several empirical claims concerning the size and the strategic role of financial entities. This article offers a critique of crucial analytical and empirical claims of the FH. It argues that the FH overrates the importance of novel financial instruments, misunderstands their function and, thus, fails to situate the role of finance in the capitalist system. Especially, it erroneously divorces finance from and superimposes it on productive-capital. Moreover, this article argues that crucial empirical claims of the FH do not stand up to scrutiny.

From: World Review of Political Economy 2023 14 (2)

Editor: Wang Yi