What kind of financial markets do we need?

As tax day approached, St. Francis College Economics Professors launched their first Economics Week with three days of guest speakers and student research. Randall Wray explains some basic principles of Modern Monetary Theory.

Professor Jennifer Clapp explains the dynamics of financialization of land and agricultural commodities in Subsaharan Africa. She points to the historical roots of accelerated land speculation and their connection to financial institutions, both generating and reinforcing the process of financialization of African land. Besides talking about roots and dynamics of speculation with land on financial markets, she puts the perspective of scholarly investigation onto the investor's side in discussing guidelines of responsible investment and regulation in the front instead of focussing on the receiving countries.

Wie beeinflusst die Zentralbank Vermögenswerte? Wo fließt Zentralbankgeld hin und warum kann es nicht direkt in Finanz- oder Immobilienmärkte fließen?

Since the 1980s, the financial sector and its role have increased significantly. This development is often referred to as financialization. Authors working in the heterodox tradition have raised the question whether the changing role of finance manifests a new era in the history of capitalism. The present article first provides some general discussion on the term financialization and presents some stylized facts which highlight the rise of finance. Then, it proceeds by briefly reviewing the main arguments in the Marxian framework that proposedly lead to crisis. Next, two schools of thought in the Marxian tradition are reviewed which consider financialization as the latest stage of capitalism. They highlight the contradictions imposed by financialization that disrupt the growth process and also stress the fragilities imposed by the new growth regime. The two approaches introduced here are the Social Structure of Accumulation Theory and Monthly Review School. The subsequent part proceeds with the Post-Keynesian theory, first introducing potential destabilizing factors before discussing financialization and the finance-led growth regime. The last section provides a comparative summary. While the basic narrative in all approaches considered here is quite similar, major differences stem from the relationship between neoliberalism and financialization and, moreover, from the question of whether financialization can be considered cause or effect.