Beyond financialisation: thelongue duréeof finance and production in the Global South

Abstract

One of the central premises of the literature on financialisation is that we have been living in a new era of capitalism, characterised by a historical shift in the finance-production nexus. Finance has expanded to a disproportionate economic size and, more importantly, has divorced from productive economic pursuits. In this paper, we explore these claims of ‘expansion’ and ‘divorce’ based on a longue durée analysis of the link between finance and production in Senegal and Ghana. As such, we de-centre the dominant approach to financialisation. Seen from the South, we argue that although there has been expansion of financial motives and practices the ‘divorce’ between the financial and the productive economy cannot be considered a new empirical phenomenon having occurred during the last decades and even less an epochal shift of the capitalist system. The tendency for finance to neglect the needs of the domestic productive sector has been the structural operation of finance in many parts of the Global South over the last 150 years. Therefore, one cannot put forward a theory of the evolution of finance under capitalism without taking these crucial historical insights into account.

Towards an institutional “landscape” view of modern money creation mechanisms and some reflections on their ecological significance

“…Bell ( 2000 ) and Wray ( 2014 ) have argued that the same privilege exists within the USA, but little is known about the legal rules governing the inner workings of treasuries, parliaments, and consolidated funds (or equivalents) in other countries. For example, what ability do former colonial states such as those in the Communauté Financière Africaine (CFA) franc zone in Central and West Africa have to drive progressive climate programmes considering that they already face severe restrictions on their monetary sovereignty (Koddenbrock et al 2022 )? The establishment of a typology of different institutional arrangements across nations could therefore be a useful first step.…”

Local Currency Bond Markets in Africa: Resilience and Subordination

“…Banks have historically focused on short‐term lending to a few prime borrowers including large corporations and the state (Brownbridge and Harvey, 1998). Especially colonies that were set up as trading economies, such as Ghana or Uganda, developed banking systems in which banks were designed primarily to settle the accounts of the colonial economy, given their extractive nature (Koddenbrock et al., 2022; Mkandawire, 1999). However, countries with different colonial histories, for example, settler territories such as South Africa and Kenya, are more likely to have developed deeper financial sectors relative to trading economies, given that the banking systems were also meant to serve the colonial settler population (Bernards, 2020).…”

States, Money and the Persistence of Colonial Financial Hierarchies in British West Africa

“…12 In short, efforts at colonial reform in Ghana and elsewhere raised significant dilemmas around the mobilization of capital for development projects. Colonial monetary and financial systems inhibited public and private investment in colonized territories (see Koddenbrock et al, 2022), exacerbating the tensions already implicit in circulations of world money and in the entanglements of monetary circulations and state building. But efforts to alter imperial financial systems entailed confronting a globally uneven distribution of capital, and threatened nearly or newly independent territories with a real prospect of the complete withdrawal of financial capital.…”

“…Koddenbrock et al. (2022) rightly highlight this extraverted character of colonial finance in arguing that the seeming ‘divorce’ between financial and productive activity is in fact a durable feature of (post)colonial financial systems rather than an effect of any contemporary process of ‘financialization’ per se. The ultimate result of these continuities has been a persistent and widespread difficulty mobilizing resources for development.…”

“…These systems often mobilize very little domestic investment -if they do, it is to a narrow range of firms and relatively affluent urban residents -and are particularly vulnerable to frequent crises (see Abotebuno Akolgo, 2022;Bernards, 2021Bernards, , 2022Kvangraven et al, 2021). Koddenbrock et al (2022) rightly highlight this extraverted character of colonial finance in arguing that the seeming 'divorce' between financial and productive activity is in fact a durable feature of (post)colonial financial systems rather than an effect of any contemporary process of 'financialization' per se. The ultimate result of these continuities has been a persistent and widespread difficulty mobilizing resources for development.…”