Current Institutional Affiliation
Doctoral Candidate, Brown University

Award Information

International Dissertation Research Fellowship 2015
Institutional Affiliation (at time of award):
Political Science, Brown University
Sustaining Financialization(s): Politics and Profits in the Financial Transformation of Economies

Standing on historian Fernand Braudel's shoulders, the noted sociologist Giovanni Arrighi argued that 'financialization' of hegemonic powers has been the harbinger of structural change in world order throughout capitalism's history. While there is no one definition of financialization, the concept, simply put, refers to a slow transformation of the economy that results in a growing dependence of firms and households on financial sources of income, from simple interest and dividends to returns from more complex products like financial derivatives. Since the 1980s, all industrially advanced economies have financialized but, to significantly varying degrees. These economic transformations, notwithstanding the predictive power of Arrighi's argument, raise pertinent questions. Why have advanced economies sustained financialization at different levels? If, as per mainstream economic theory, an open world economy was meant to deliver economic convergence then what explains the divergence in financialization of economies? My research suggests that economies with strong minority shareholder protections and weak labor market institutions are more likely to undergo higher levels of financialization. Drawing from political science, economics, finance theory, and economic sociology, my dissertation challenges the conception of finance as a dis-embedded sphere of global economic activity. It employs statistical methods and a comparative historical analysis to research the financialization of the German, UK, and US economies since the early 1980s. I argue that with the rise of portfolio investments from the 1980s onwards, a new financial class has emerged whose interests in pecuniary gains while indeed being global are advanced or curtailed by domestic institutions and class politics. This, as I trace, is because high financial returns, contrary to popular claims, come at the cost of labor and not simply by mitigating financial risk.