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  • Print publication year: 2014
  • Online publication date: April 2014

4 - Globalization and Competition in Financial Services

from Part II - Industrial Policy and the Global Business Revolution

Summary

In a single generation, our financial system has been transformed…into a highly concentrated oligopoly of enormous, diversified, integrated firms. This revolution has gone largely unnoticed.

—Henry Kaufman, The Road to Financial Reformation (2009)

The development of capitalism has arrived at a stage when, although commodity production still ‘reigns’ and continues to be regarded as the basis of economic life, it has in reality been undermined and the bulk of the profits go to the ‘geniuses’ of financial manipulation. At the basis of these manipulations and swindles lies socialised production; but the immense progress of mankind, which achieved socialisation goes to the benefit of…the speculators.

—V. I. Lenin, Imperialism, the Highest Stage of Capitalism (1968 [1917], 24)

Introduction

Of all sectors, banking is the most strategic. This sector is at the centre of the supply and use of money. During the era of modern globalization, the strategic importance of the banking sector increased relentlessly as the global economy became ever more ‘financialized’. In the USA household debt rose from 60 per cent of household income in the 1980s to 120 per cent in 2004. The ratio of global financial assets to global GDP rose from 109 per cent in 1980 to 316 per cent in 2005. By the year 2000, the global stock of household wealth had risen to $125 trillion, around three times global GDP. By early 2007, the volume of outstanding derivatives ($516 trillion) stood at ten times global GDP.

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Re-Balancing China
  • Online ISBN: 9781783081622
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