Finance: Servant or Deceiver? Financialisation at the Crossroad, Prof. Paul H. Dembinski, Palgrave Macmillan, 2009, 179 pages.
The work of the Observatoire de la Finance over the past ten years has shown that the continuing spread of financial logic through society is the result of a converging set of factors: the development of technology and, more generally, of wealth-creating capacity, a growing dread of risk and the unforeseen as living standards increase, finance’s theoretically based claim to guarantee the West a peaceful future, the challenges and aspirations of countries in the South with regard to economic and social development, and so on.
In the course of the Observatoire’s research it has become clear that the psychological, philosophical and moral dimensions of finance are as important to a proper understanding of it as are its economic, technical and institutional aspects. It is these avenues that the Observatoire has explored over the past decade.
The result today is an epistemologically coherent conceptual framework that has been used to help draw up a systemic diagnosis. The diagnosis, which is the subject of this book, reveals that behind the conspicuous expansion of finance a systemic transformation, referred to here as ‘financialization’, is in fact taking place.
Summary
INTRODUCTION
Background
Good timing
Theoretical background
How financialization is changing society
Structure of the report
PART I: THE FINANCIAL ICEBERG
Chapter 1.1 THE HISTORICAL DEVELOPMENT OF FINANCE
The euphoric years
Money: from servant to master
ICT euphoria
The break-up of money
Chapter 1.2 PLAYERS AND INSTITUTIONS
Markets as trust-building mechanisms
Mega-players
Custodians of the market temple
Public deficits and how they are financed
Chapter 1.3 THE FINANCIAL WORLD VIEW
The efficiency ethos
Risk and return: a neat paradigm
Risk – fear of risk – a risk-free future
From interest to greed: unbridled passion
PART II: A NEW PATTERN
Chapter 2.1 FINANCIAL RELATIONSHIPS AND FINANCIAL TRANSACTIONS
Financial relationships
From financial relationships to financial transactions
Financial transactions
Chapter 2.2 THE SPREAD OF TRANSACTIONS
The institutional process
Financial markets as sounding boards
Finance as intermediary
Relationships and transactions: statistical orders of magnitude
Finance and the rest of the economy
Chapter 2.3 VERY LARGE CORPORATIONS: THE VEHICLES OF FINANCIALIZATION
Very Large Corporations (VLCs)
A global marketing economy
Enterprises’ value: new forms of capital
Shareholder value: the mantra of the new foremen
ROE rules
Procedures as a vehicle for efficiency
Chapter 2.4 FINANCIALIZATION OF THE ECONOMIC FABRIC
VLCs’ subcontractors
SMEs: private equity on the prowl
Chapter 2.5 TYING CUSTOMERS TO BUSINESSES
Planned obsolescence
‘Personalized’ customer relations
Dissolving products into services
The alienation of the anaesthetized consumer
Chapter 2.6 OTHER ASPECTS OF FINANCIALIZATION
The age of anticipation: banks and their customers
Humanity in the grip of financialization
Finance: a metaphysical response
Chapter 2.7 IMPLICATIONS OF THE NEW PATTERN
PART III : FINANCE – WHAT KIND OF SOCIETY DO WE WANT?
Chapter 3.1 LIMITS INHERENT IN THE PROCESS ITSELF
The spectre of sterility
Complexity
Concentration of economic power
Chapter 3.2 LIMITS INHERENT IN HUMAN NATURE
Transactions: beyond conflicts of interest
Ethical alienation
A sense of helplessness
Chapter 3.3 WHAT IS TO BE DONE?
Challenge financial ethics
Encourage long-term relationships
Change the system of remuneration
Revisit financial process