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Financialization and Vested Interests: Self-Regulation vs. Financial Stability as a Public Good

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  • Faruk Ülgen

Abstract

I propose an institutionalist analysis of financialization through the lens of Thorstein Veblen, built on some peculiar characteristics of money and related financial instruments in a market-based capitalist economy. Following the case of the overcapitalization of farmlands, studied by Veblen (1919), I argue that modern capitalism is a financialized society dominated by vested interests that rely on financial liberalization-led speculative overcapitalization, often leading to a perverse accumulation process and resulting in systemic catastrophes. Consequently, one of the major constituent institutions of liberal finance, market-dependent selfregulation, proves unable to deal with society-level issues like financial stability. This latter issue must be handled at a systemic level, as a public good. Therefore, specific public regulation and action mechanisms must be designed to maintain society (and dominant vested-interests) within some viability limits to ensure a smooth functioning of the economy.

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  • Faruk Ülgen, 2017. "Financialization and Vested Interests: Self-Regulation vs. Financial Stability as a Public Good," Journal of Economic Issues, Taylor & Francis Journals, vol. 51(2), pages 332-340, April.
    • Handle: RePEc:mes:jeciss:v:51:y:2017:i:2:p:332-340
    DOI: 10.1080/00213624.2017.1320512
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    Cited by:

    1. Hanying Qi, 2019. "A New Literature Review on Financialization," Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, vol. 7(2), pages 40-50.

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