||This is the first of three papers presented at the UKZN Centre for Civil Society, about the US financial crisis (3 October), implications for South Africa (24 October), and social resistance there and here (31 October). A version was presented to a conference on the Political Economy of Monetary Policy and Financial Regulation, in honor of Jane D’Arista, at the University of Massachusetts Political Economy Research Institute (PERI), University of Massachusetts, Amherst, 2 May 2008
The global economy’s vast financial sector expansion – in the context of productive sector stagnation tendencies - has increased the leading powerbrokers’ capacity to devalue large parts of the Third World (including major emerging market sites), as well as to write down selected financially volatile and vulnerable markets in the North (e.g. dot.com and real estate bubbles). In contrast to the 1930s, this set of partial write-downs of overaccumulated financial capital has not yet created such generalized panic and crisis contagion as to threaten the entire system’s integrity. Shifting and stalling the necessary devalorization of overaccumulated capital, particularly as it bubbles up via financial sectors into speculative markets, entailed spatial and temporal fixes. In addition, extra-economic coercion has intensified, including gendered and environmental stresses. The result is a world economy that concentrates wealth and poverty in more extreme ways, geographically, and brings markets and the non-market spheres of society and nature together in a manner adverse to the latter. Reform of the system is long overdue, and the post-Keynesian political economist Jane D’Arista’s ideas for revitalized multilateral financial institutions, following Keynes’ International Clearing Union proposal, are worth revisiting. However, the context remains one of top-down inability to reform: severe bias in multilateral financial and development agencies amounting to a neoliberal-neoconservative fusion. Moreover, there is constrained space and political will at national level in most states. These factors compel us to consider – in a future paper - the exercise of social power from below, against the worst depredations of oppression, which are often experienced through the financial circuit of capital.