The Fall and Rise of American Finance: from J.P. Morgan to Blackrock

The Fall and Rise of American Finance explores how financialization intensified competitive discipline, maximized efficiency, profits, and labor exploitation, with the support of an increasingly authoritarian state.

Format: Paperback / softback
Length: 272 pages
Publication date: 13 February 2024
Publisher: Verso Books

The Fall and Rise of American Finance delves into the intricate dynamics that shaped the evolution of American financial power, spanning from the disintegration of the sprawling empire of robber baron J.P. Morgan to the ascendancy of finance giant BlackRock. Contrary to the prevailing narratives propagated by figures such as Hillary Clinton and Bernie Sanders, Maher and Aquanno argue that financialization did not lead to the hollowing out of the real economy or the retreat of the state. Instead, it served as a catalyst for intensifying competitive discipline, aimed at optimizing efficiency, profits, and the exploitation of labor, with the backing of an increasingly authoritarian state.

The disintegration of J.P. Morgan's empire marked a significant turning point in the history of American finance. Once a dominant force, Morgan's empire crumbled under the weight of his own financial mismanagement and the economic downturn of the 1920s. This collapse led to a redistribution of financial power, with smaller institutions gaining prominence and a shift towards a more decentralized financial system.

However, the rise of BlackRock was not merely a result of the disintegration of Morgan's empire. It was also a reflection of the broader trends in financialization that had been underway since the 1970s. With the advent of new technologies and financial instruments, the financial sector had become increasingly complex and interconnected, creating new opportunities for profit and growth.

One of the key aspects of financialization was the increasing influence of private capital over public institutions. As the government's role in regulating the financial sector diminished, private investors and financial institutions gained greater control over the economy. This led to the emergence of new financial products and services, such as derivatives and high-frequency trading, that were designed to maximize profits for their owners.

At the same time, financialization also contributed to the growing power of the state. As the financial sector became more complex and interconnected, it became increasingly difficult for governments to regulate and monitor it effectively. This led to the emergence of an increasingly authoritarian state, which was willing to use its power to protect the interests of financial institutions and the wealthy elite.

One of the most notable examples of this was the response to the financial crisis of 2008. When the housing market collapsed, causing a global economic meltdown, governments around the world were quick to intervene. However, rather than addressing the root causes of the crisis, such as excessive borrowing and risky investments, governments focused on bailing out financial institutions and providing stimulus packages to boost the economy.

This approach, while temporarily stabilizing the economy, ultimately led to a further concentration of wealth and power in the hands of a small elite. It also contributed to the growing inequality in society, as the benefits of economic growth were not shared equally among all members of society.

Despite these challenges, financialization has also brought about some positive changes. It has led to the development of new financial products and services that have improved the efficiency of the financial system and made it easier for individuals and businesses to access capital. It has also contributed to the growth of new industries, such as fintech and renewable energy, that have created new jobs and driven economic growth.

However, it is important to recognize that financialization has not been without its risks. As the financial sector becomes more complex and interconnected, it becomes increasingly vulnerable to shocks and crises, such as the one that occurred in 2008. This highlights the need for robust regulations and oversight to ensure that the financial system is stable and resilient.

In conclusion, the Fall and Rise of American Finance provides a comprehensive analysis of the complex dynamics that have shaped the evolution of American financial power. From the disintegration of J.P. Morgan's empire to the rise of BlackRock, it explores the ways in which financialization has intensified competitive discipline, optimized efficiency, profits, and the exploitation of labor, with the support of an increasingly authoritarian state. While financialization has brought about some positive changes, it is important to be aware of its risks and to work towards a more equitable and sustainable financial system that benefits all members of society.

Weight: 306g
Dimension: 152 x 233 x 19 (mm)
ISBN-13: 9781839765261