Jack Copley, an Assistant Professor of International Political Economy at Durham University, delves into the complex landscape of financialization in Britain. He explores how the financial sector's growth stemmed from policymakers' responses to crises, rather than a cohesive ideological plan. Copley discusses the historical context of the 1970s and 1980s, revealing the motivations behind key reforms, and unpacks the intricate state-market dynamics that have shaped the current economic landscape, ultimately highlighting the significant implications for global capitalism.
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Financialization's Dual Role Explained
Financialization explains the rise of finance's influence amid economic slowdown since the 1980s.
It reacts to falling industrial returns and simultaneously dampens investment and growth further.
insights INSIGHT
Markets and States Co-evolve
Markets and states co-constitute each other, not oppose one another.
The state creates markets but is also constrained by the economic laws it helps unleash.
insights INSIGHT
State's Economic-Political Balancing Act
States balance global economic competitiveness with domestic political legitimacy.
They use strategies like palliation and depoliticized discipline to navigate economic crises.
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Jack Copley's "Governing Financialization" delves into the political processes behind Britain's financial liberalization in the 1970s and 80s. The book challenges conventional narratives, arguing that financialization wasn't a result of grand ideological plans or automatic market adjustments. Instead, it highlights the role of short-term crisis management and the balancing act between global competitiveness and domestic stability. Copley's research uses archival evidence to reveal the messy, ad-hoc nature of policy decisions. The book offers a nuanced understanding of the interplay between state actions and market forces, showing how seemingly ideologically driven reforms often stem from pragmatic responses to immediate economic challenges. This work contributes significantly to the understanding of financialization's political dimensions.
One of the most distinctive aspects of global capitalism in the last half century or so has been the increased role of the financial sector in the global economy, especially in the advanced industrial economies of the Global North. The profitability and market capitalization of firms in the financial sector have increased immensely, firms that originated in the real economy have diversified into financial activities, cross-border financial flows have limited the policy autonomy of national governments, and the value of financial assets has driven increasing global inequality. How did the financial sector come to occupy such an important position in the global economy?
My guest today, the political economist Jack Copley, addresses this question by going back to the archives to investigate why the British government implemented key reforms associated with financial liberalization during the 1970s and 1980s. In Governing Financialization: The Tangled Politics of Financial Liberalization in Britain(Oxford UP, 2022), he shows that financialization did not result from some grand ideologically-driven policy agenda, nor did it result from the actions of far-sighted omnipotent state managers automatically adjusting the course of the British economy in the face of increased manufacturing competition. Rather, he argues that financial liberalization in the UK resulted from policymakers attempting to muddle through from one crisis to the next by balancing competing imperatives to enhance the country’s competitive position in the global economy while maintaining social and political order domestically. Short-term efforts to put out economic fires drove financial liberalization, rather than grand ideological designs or automatic adjustment to changing circumstances.
Jack Copley is an assistant professor in international political economy at Durham University in the UK.
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