Finance capitalism
Encyclopedia
Finance capitalism is a term in Marxian political economics defined as the subordination of processes of production
to the accumulation of money
profits in a financial system
. It is characterized by the pursuit of profit from the purchase and sale of, or investment
in, currencies
and financial products such as bond
s, stock
s, futures
and other derivatives
. It also includes the lending of money at interest
. Finance capitalism is seen by Marxists as being exploitative by supplying income to non-laborers.
Finance capitalism is seen by traditional Marxists as a dialectical outgrowth of industrial capitalism, and part of the process by which the whole capitalist phase of history comes to an end. In the tradition of Thorstein Veblen
, it is contrasted with industrial capitalism, where profit is made from the manufacture of goods.
Fascists were vocal in their opposition to finance capitalism. Academic defenders of the economic concept of capitalism
, such as Eugen von Böhm-Bawerk
, see profits as part of the roundabout
process by which it grows and hedge
s against inevitable risks.
Production, costs, and pricing
The following outline is provided as an overview of and topical guide to industrial organization:Industrial organization – describes the behavior of firms in the marketplace with regard to production, pricing, employment and other decisions...
to the accumulation of money
Money
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...
profits in a financial system
Financial system
In finance, the financial system is the system that allows the transfer of money between savers and borrowers. A financial system can operate on a global, regional or firm specific level...
. It is characterized by the pursuit of profit from the purchase and sale of, or investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
in, currencies
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
and financial products such as bond
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
s, stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
s, futures
Futures contract
In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...
and other derivatives
Derivative (finance)
A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...
. It also includes the lending of money at interest
Usury
Usury Originally, when the charging of interest was still banned by Christian churches, usury simply meant the charging of interest at any rate . In countries where the charging of interest became acceptable, the term came to be used for interest above the rate allowed by law...
. Finance capitalism is seen by Marxists as being exploitative by supplying income to non-laborers.
Finance capitalism is seen by traditional Marxists as a dialectical outgrowth of industrial capitalism, and part of the process by which the whole capitalist phase of history comes to an end. In the tradition of Thorstein Veblen
Thorstein Veblen
Thorstein Bunde Veblen, born Torsten Bunde Veblen was an American economist and sociologist, and a leader of the so-called institutional economics movement...
, it is contrasted with industrial capitalism, where profit is made from the manufacture of goods.
Fascists were vocal in their opposition to finance capitalism. Academic defenders of the economic concept of capitalism
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
, such as Eugen von Böhm-Bawerk
Eugen von Böhm-Bawerk
Eugen Ritter von Böhm-Bawerk was an Austrian economist who made important contributions to the development of the Austrian School of economics.-Biography:...
, see profits as part of the roundabout
Roundaboutness
Roundaboutness, or roundabout methods of production, is the process whereby capital goods are produced first and then, with the help of the capital goods, the desired consumer goods are produced....
process by which it grows and hedge
Hedge (finance)
A hedge is an investment position intended to offset potential losses that may be incurred by a companion investment.A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, many types of...
s against inevitable risks.
See also
- Causes of World War ICauses of World War IThe causes of World War I, which began in central Europe in July 1914, included many intertwined factors, such as the conflicts and hostility of the four decades leading up to the war. Militarism, alliances, imperialism, and nationalism played major roles in the conflict as well...
- CorporatismCorporatismCorporatism, also known as corporativism, is a system of economic, political, or social organization that involves association of the people of society into corporate groups, such as agricultural, business, ethnic, labor, military, patronage, or scientific affiliations, on the basis of common...
- Economics of fascismEconomics of fascismThe economics of fascism refers to the economic policies implemented by fascist governments.Nevertheless, some scholars and analysts argue that there is an identifiable economic system in fascism that is distinct from those advocated by other ideologies, comprising essential characteristics that...
- Financial capitalismFinancial capitalismFinancial capitalism is a form of capitalism where the intermediation of savings to investment becomes a dominant function in the economy, with implications for the political process and social evolution...
- FinancializationFinancializationFinancialization is a term sometimes used in discussions of financial capitalism which developed over several decades leading up to the 2007-2010 financial crisis, and in which financial leverage tended to override capital and financial markets tended to dominate over the traditional industrial...
- Joint Stock Companies Act 1844Joint Stock Companies Act 1844The Joint Stock Companies Act 1844 was an Act of the Parliament of the United Kingdom that expanded access to the incorporation of joint-stock companies....
- Limited Liability Act 1855Limited Liability Act 1855The Limited Liability Act 1855 was an Act of the Parliament of the United Kingdom that first allowed limited liability for corporations that could be established by the general public in the UK.-Overview:...
- New ImperialismNew ImperialismNew Imperialism refers to the colonial expansion adopted by Europe's powers and, later, Japan and the United States, during the 19th and early 20th centuries; expansion took place from the French conquest of Algeria until World War I: approximately 1830 to 1914...