Annals of the University of Oradea: Economic Science (Jul 2023)
STATE, NEOLIBERALISM AND FINANCIALIZATION
Abstract
As liberalism took roots during the 18-th and 19-th centuries, and as United States closed to such an overwhelming position which has made it a political actor with outmost importance at global level especially after the 1-st World War, there was another activity which accompanied this evolution, which is connected to financial activities and their speculative character; one important effect of these actions was the Great Depression in 1929-1939, which threw waves of shocks in America, and all over the world with unforeseen consequences. After the experiences brought upon by the Second World War, doubled by fresh memories of Great Depression, Keynesianism and its system torsed around Bretton Woods negotiations imagined a greater role for the state in relation with the market, especially the international financial market. As this gave birth to what can be seen as the Golden Age of capitalism, it is important to mark the role of state versus market during this period. But as the British Empire was closing to its end, London found a way to reinvent itself, as heir of the dying empire. In order to hold a central position in world affairs, it has looked at money, and the power they could provide: to save its system, London help inventing Eurodollar, circumventing the key-aspects of Bretton Woods and what it stood for. Slowly but surely, the market – especially the financial market – has gained more central position in face of state, and with it, the financialization of the economy. Between 1956 and 1980 there were identifiable clashes in state-market nexus, the most important being triggered by the oil shock in the 70’s; but as world entered the 80’s, it became clear that the market would gain the upper hand. The Reagen-Teacher understanding was the visible point of the picture regarding the shift of importance from state to market. The 90’s will only bring new and fresh markets ready to embrace globalization, sustained by the revolution in communications, which was already in full development. And now we see a minimal state put in a marginal position by the forces of economic globalization and the philosophy of free-market, while the market is seen as a “know and fix everything”; its invisible hand can overcome any temporary disequilibrium. A recurrent question needs to be addressed: where is the state, with its main attributes, in order to protect the people from selfish market forces?
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