The Financialized State

Authored by: Dick Bryan , David Harvie , Mike Rafferty , Bruno Tinel

The Routledge Handbook of Critical Finance Studies

Print publication date:  September  2020
Online publication date:  September  2020

Print ISBN: 9781138079816
eBook ISBN: 9781315114255
Adobe ISBN:

10.4324/9781315114255-17

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Abstract

In this chapter, we explore states’ strategic use of financial ways of thinking in policy formation, resulting in the “financialization” of many aspects of state policy. Specifically, we argue that, following Randy Martin’s formulation, a “social logic of the derivative” is being incorporated into the design of state intervention. Paying particular attention to leverage and liquidity we develop three key propositions, namely, that this derivative logic is changing, and even erasing, earlier distinctions between: (i) the state and financial markets; (ii) those state activities—namely, monetary and fiscal policy—once thought to be formally discrete; and (iii) finance and community or social policy. We illustrate our argument with examples of specific policies and initiatives—such as Quantitative Easing, bank liquidity guarantees, and the social impact bond—drawn primarily from the United States and the United Kingdom.

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