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Financialization of, not by the State. Exploring Changes in the Management of Public Debt and Assets across Europe

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  • Michael Schwan
  • Christine Trampusch
  • Florian Fastenrath

Abstract

This paper tackles one of the most recent issues in international and comparative political economy: the process of state financialization. Although research on global financial markets has revealed that states play a crucial role in private sector financialization, until recently, much less attention has been paid to state financialization itself. This includes both the measurement of cross-country variation and the question of why this process unfolds unevenly across political economies. We propose a perspective that focuses on two areas, the management of public debt and assets, and the various ways in which states are active in financial markets. Bridging material and cultural concepts in political economy, we differentiate between the reliance on financial markets as governance mechanism and the adoption of a sense-making framework grounded in financial economics and the shareholder-value model. We distill four indicators, trace cross-national and inter-temporal developments in 36 European countries since 1990, and explore how far this variation is associated with domestic and international political economic factors. The paper concludes that state and private sector financialization are mutually reinforcing processes. In addition, future research must pay strong attention to the tensions between finance and democracy as well as the distributive consequences of state financialization.

Suggested Citation

  • Michael Schwan & Christine Trampusch & Florian Fastenrath, 2021. "Financialization of, not by the State. Exploring Changes in the Management of Public Debt and Assets across Europe," Review of International Political Economy, Taylor & Francis Journals, vol. 28(4), pages 820-842, July.
    • Handle: RePEc:taf:rripxx:v:28:y:2021:i:4:p:820-842
    DOI: 10.1080/09692290.2020.1823452
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    Citations

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    Cited by:

    1. Giselle Datz, 2021. "Ties that bind and blur: financialization and the evolution of sovereign debt as private contract," Review of Evolutionary Political Economy, Springer, vol. 2(3), pages 571-587, December.
    2. Hannah Hasenberger, 2024. "What is local government financialisation? Four empirical channels to clarify the roles of local government," Urban Studies, Urban Studies Journal Limited, vol. 61(11), pages 2039-2059, August.
    3. Golka, Philipp, 2024. "Assets and infrastructures," SocArXiv rbqm9, Center for Open Science.
    4. Golka, Philipp, 2023. "Impact investing and the politics of leverage: towards a meso-level perspective on derisking," SocArXiv 9uvzw, Center for Open Science.
    5. Zhenfa Li & Fulong Wu & Fangzhu Zhang, 2023. "State de-financialisation through incorporating local government bonds in the budgetary process in China," Journal of Economic Geography, Oxford University Press, vol. 23(5), pages 1169-1190.
    6. Zhenfa Li & Fulong Wu & Fangzhu Zhang, 2023. "Adaptable state-controlled market actors: Underwriters and investors in the market of local government bonds in China," Environment and Planning A, , vol. 55(8), pages 2088-2107, November.
    7. Xia, Ying & Chen, Muyang, 2023. "The Janus face of stateness: China's development-oriented equity investments in Africa," World Development, Elsevier, vol. 162(C).
    8. Pape, Fabian & Rommerskirchen, Charlotte, 2024. "Co-working in the collateral factory: analyzing the infrastructural entanglements of public debt management, central banking, and primary dealer systems," LSE Research Online Documents on Economics 121407, London School of Economics and Political Science, LSE Library.

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