From Exit to Control: The Structural Power Of Finance Under Asset Manager Capitalism

When: 13 Sep 2021, 14:15-15:30
Where: Zoom
Speaker: Benjamin Braun

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Meeting ID: 940 4321 0548
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Political economists have theorized the structural power of finance as a function of the scarcity of financial capital, which empowers its owners and intermediaries to (threaten) exit. This theory has trouble explaining the non-death of the rentier. How can the structural power of finance persist when financial capital is abundant and lacks a credible exit option? In order to pave the way for a theory of structural power under conditions of financial capital abundance, this paper begins by outlining the longue durée view of financialization as a cyclical phenomenon driven by macroeconomic forces. What makes asset manager capitalism unique compared to earlier episodes of finance capital dominance is the pooling of financial capital on a scale that allows asset managers to combine control and diversification. Emerging in various asset classes, this combination is at its most advanced in the corporate economy. Whereas the finance capitalism of the early 20th century was characterized by credit-debt relationships between banks and corporations, today investment funds’ equity holdings dominate; and whereas the shareholder capitalism of the late 20th century was characterized by impatient investors wielding the threat of exit, the structural power of asset managers is based on their large and illiquid, yet fully diversified shareholdings. Taking financial capital abundance seriously opens up promising new avenues for research on the political economy of finance in general, and on the latter’s structural power in particular.