Casino capitalism with derivatives: fragility and instability in contemporary finance

McKenzie, Rex A. (2011) Casino capitalism with derivatives: fragility and instability in contemporary finance. Review of Radical Political Economics, 43(2), pp. 198-215. ISSN (print) 0486-6134

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Abstract

This is a theoretical article exploring the relationship between financial fragility, derivative trading, and financial crisis. It synthesizes the work of Hyman Minsky (1977, 1985), Jan Toporowski (2001), and Dick Bryan and Michael Rafferty (2006). The decade immediately after 1971 is presented as a key period with key events that shaped a Wall Street revolution that now drives world capitalism. Balance sheet computations of expected profitability emerge as the main driver of a contemporary capitalism that is inherently more competitive than before. Debt, credit, and liquidity, therefore, play crucial parts in a world system where banks and corporations have been joined by new rentier institutions in riskier speculative business activities that now characterize the system. The conclusions are largely Keynesian “. . . when the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

Item Type: Article
Research Area: Economics and econometrics
Faculty, School or Research Centre: Faculty of Arts and Social Sciences (until 2017) > School of Economics, History and Politics (from November 2012)
Depositing User: Rex Mckenzie
Date Deposited: 03 Oct 2016 08:27
Last Modified: 03 Oct 2016 08:27
DOI: https://doi.org/10.1177/0486613410391405
URI: http://eprints.kingston.ac.uk/id/eprint/35013

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