Distinguishing Financialization from Neoliberalism

This article contends that neoliberalism and financialization, although sharing much in common, are not synonymous developments. Not only do strongly financialized nations display structural, economic differences, they are also directed by alternative economic epistemologies, cultures and practices. The argument is made by examining the financialization of the UK economy since the mid-1970s. This shift was not simply part of a broad transition away from Keynesianism and towards free market fundamentalism. It was also one very much guided by the particular economic paradigm, discursive practices and devices of the City of London as financial elites took up influential positions in the Thatcher government. The discussion and case example highlight five epistemological elements specific to finance: the creation of money in financial markets, the transactional focus of finance, the centrality of financial markets to economic management, the orthodoxy of shareholder value, and the intense microeconomic approach to financial calculation. Such elements, in conjuction with neoliberalism’s reliance upon finance-blind neoclassical economics, lies at the cultural and epistemological distinction between fiancialization and neoliberalism. Identifying such distinctions opens up new possibilities for understanding financialization, elites, and the neoliberal condition that brought about the financial crash of 2007-08, as well as the political and economic crises that have followed.