The financialization of mass wealth, banking crises and politics over the long run

Abstract

The co-evolution of democratic politics and mass, financialized wealth has destabilized highly integrated financial systems and the socio-political underpinnings of neoliberal policy norms at domestic and global levels. Over the long run, it has increased the political pressure on governments to undertake bailouts during major banking crises and, by raising voters’ attentiveness to wealth losses and distributional inequities, has sharply raised the bar for government performance. The result has been more costly bailouts, greater political instability and the sustained politicization of wealth cleavages in crisis aftermaths. We underline the crucial importance and modernity of this phenomenon by showing how the high concentration of wealth in pre-1914 Britain and America among elites was associated with limited crisis interventions and surprisingly tranquil political aftermaths. By contrast, the 2007–2009 crises in both countries epitomise the political dilemmas facing elected governments in a new world of mass financialized wealth and the impact on political polarization and democratic politics. We show that these dilemmas were embryonic in the interwar period and highlight how the evolutionary forces shaping policy and political outcomes reveal the importance of time, context and the effects of long cycles in the world economy and global politics.

Coronavirus, domestic labour and care: Gendered roles locked down

“…Crises crystallize long-standing issues and make them more obvious (Chwieroth and Walter, 2019). The Covid-19 pandemic threw a spotlight on gender relations, and the division of employment, domestic labour and care.…”

Valuation of no-negative-equity guarantees with a lower reflecting barrier

“…Rising financialisation, and in particular the rising financial wealth of the middle class, may have changed the politics of financial crises to favour intervention in asset markets (Chwieroth & Walter, 2019a, 2019b, 2019c. Many voters now have some awareness of the market value of their pension assets, which was not the case a generation ago, when most pensions were defined benefit.…”

From me to us: Strengthening our Financial Capabilities

“…Aspects of financialisation range from changes to the global economy (Chwieroth & Walter, 2019); to the changing nature of the housing market and the relationship which it has to the economy (Aalbers, 2016); through to more general transfer of debt onto the individual (Bryan & Rafferty, 2018). The precise mechanisms through which financialisation has occurred and through which it translates into a risk re-allocation from the state to the individual are complex.…”