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2006 | Buch

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Capitalism with Derivatives

A Political Economy of Financial Derivatives, Capital and Class

verfasst von: Dick Bryan, Michael Rafferty

Verlag: Palgrave Macmillan UK

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

What are the links between things as diverse as the prices of pork bellies, interest rates, and corporate stock? They are all being translated into risk and priced through the system of derivative markets. Financial derivatives are now the largest form of financial transaction in the world, and they are transforming in pervasive ways the lived experience of capitalist economies. Financial derivatives are anchoring the global financial system and challenging the conventional understanding of ownership, money and capital. These challenges are examined in this book, providing a significant reinterpretation of contemporary capitalism that will be of interest to both social scientists and conventional finance scholars.

Inhaltsverzeichnis

Frontmatter

Introduction

1. Introduction

Abstract

If we were to select a handful of adjectives to describe the current economic world (or most previous periods, for that matter) ‘volatile’ would be prevalent. Volatility is both a threat and an agent of change, and how volatility is addressed is itself part of that change.

Dick Bryan, Michael Rafferty

Derivatives as Capital

Frontmatter

2. A New Perspective on the Role of Finance

Abstract

Debates about the role of derivatives are only now emerging. Some see them as mathematically elegant tools of risk management; others, as dangerous tools of speculation. These widely divergent interpretations tend to constitute rather discrete and non-interacting analyses, reflecting disparate world-views. In particular, it is hard to find research published in the leading academic finance journals that countenances notions of gambling or engages propositions of social disorder created by ‘hot money’. With notable exceptions,¹ few of the outright critics of the impact of derivatives bother with the mechanics.

Dick Bryan, Michael Rafferty

3. Derivatives and Derivative Markets

Abstract

In this chapter we introduce readers to the nuts and bolts of derivatives. The objective is, however, different from that found in an introductory finance textbook. There are now many good texts on derivatives, explaining how they are priced and strategies for trading them. There is no point in repeating that content. Rather, this chapter seeks to show how derivatives relate to the operation of a capitalist economy and how their impact has changed over time as derivatives have themselves changed and become more pervasive in financial markets.

Dick Bryan, Michael Rafferty

4. From the Joint Stock Company to Financial Derivatives

Abstract

The recent growth of financial derivatives has fundamentally transformed the way finance is transacted and the forms in which corporations manage their risk. But derivatives are more than an innovation in risk management. They are also challenging the way we understand what corporations are and what ownership of capital is.

Dick Bryan, Michael Rafferty

Derivatives and International Finance

Frontmatter

5. Anchoring the Global Financial System

Abstract

Gold once anchored the global financial system and, from the late nineteenth century, the extensive cross-national flow of finance, trade and investment was facilitated by its virtually unassailed role as the global monetary unit. At the end of the twentieth century, there was also a surge in international flows of finance, trade and investment, but without the facilitation of gold, or any other globally recognised single monetary unit. We may identify the role of the US dollar as hegemonic, but it has no formal status, and exchange rates in relation to the US dollar have been anything but stable. So the current era of ‘globalisation’ is occurring, it seems, without a formal, universally recognised monetary anchor. But does that mean it is occurring without any sort of anchor at all?

Dick Bryan, Michael Rafferty

6. New, Global, Capitalist Money

Abstract

Financial derivatives are not usually seen as money. Often, they are not seen at all, but when they are, they are simply classified as financial assets and liabilities, and often as objects of speculation, somehow outside of ‘money’. Presumably this is because money has become synonymous with nation-state money, and derivatives are certainly not that.

Dick Bryan, Michael Rafferty

7. Global Competition

Abstract

It is now commonplace to identify ‘globalisation’ with a growth of competition. International trade generates spatially extensive competition between buyers and sellers. International investment sees corporations shifting to more profitable localities. There is competition between localities to attract investment, and competitive pressure on ‘local’ producers to be cost-competitive. This global mobility of investment and goods then has implications for labour. Some contend a productivity race, creating development and higher wages. Others see a race to the bottom, as low wage countries set the benchmarks to which wages in richer countries must gravitate. Clearly, competition is the central driving force of the global economy, for both capital and labour.

Dick Bryan, Michael Rafferty

Debating Derivatives

Frontmatter

8. Speculation, Derivatives and Capital Controls

Abstract

Those concerned with levels of economic growth, investment, employment, wages and the like frequently look at data on financial markets with bemusement. Why do global financial markets turn over each year about 100 times more than is needed to fund international trade? What goes on in these financial markets, and is it necessary if they are not supporting the ‘real’ activities of production and investment?

Dick Bryan, Michael Rafferty

9. Derivatives and the Development of Capitalist Relations

Abstract

In earlier chapters, we identified the growth of financial derivatives, and especially their generalised use by large corporations for risk management, as an emerging and decisive change in capitalist development. We contended that the growth of financial derivatives in the 1980s is akin to the watershed created by the growth of joint stock companies in the middle-to-late nineteenth century. Derivatives are transforming our understanding of capital and of money and, indirectly thereby, of competition. There are also wider potential implications that warrant consideration. Just as it could be said that the joint stock company gave rise to new capacities for corporations, with now well-recognised social implications, so we here look to possible broader social and economic implications of financial derivatives growth.

Dick Bryan, Michael Rafferty

Backmatter

Titel: Capitalism with Derivatives
verfasst von: Dick Bryan
Michael Rafferty
Verlag: Palgrave Macmillan UK
Electronic ISBN: 978-0-230-50154-6
Print ISBN: 978-1-349-51863-0
DOI: https://doi.org/10.1057/9780230501546