V Annual cycle Young Social Scientists
2009-2010

December 16th, 2009, 17:30, CES Seminar Room
 
Nuno Teles (SOAS - School of Oriental and African Studies, University of London - UK)

Workers and Finance: the political economy of finacial expropriation

Abstract: The last two years were tainted by the worst economic world crisis since the Great Depression of the 1930’s. As this one, the roots of the present crisis situate themselves in the financial sphere. Nonetheless the epicentre of the crisis was located not in stock market bubble, but rather in the United States high-risk mortgage market, normally targeted to underprivileged workers.

This paper will demonstrate how the understating of the financial crisis implies acknowledging the financing process of the world economy favoured by the liberalization, privatization and deregulation processes of financial markets promoted during the last thirty years in the main world economies. This concept, forged by the more heterodox currents of the economic theory, implies the growing hegemony of the financial sphere as what pertains to the rest of the economy, be it regarding its relative weight, be it regarding the manner by which it commands all spheres of economic life.  

The exponential growth followed by the collapse of the so called American “subprime” market made evident how the hegemonic power of financial markets translated into a new relationship between these and the workers. The wage stagnation of the last decades, jointly with the decline in public provision, forced the latter to resort to the financial system as means of access to essential goods. The workers thus involved themselves with the financial system not only as borrowers (eg. housing), but also as asset holders (eg. pension funds). This relation configures an enormous transformation of the financial system’s role in economy and reveals a deep asymmetry of power, translated in transferences of growing incomes, be it through interest rates, be it through the myriad of fees and commissions, well reflected in the banking system’s profits. The present financial crisis will, thus, be presented as a result of the unsustainability of financial expropriation suffered by the workers.

Finally, this paper shall argument that the financing of economy and the process that sustain it is not exclusive to countries of the capitalist centre, but a global phenomenon. South Africa will serve as to demonstrate the scope of these transformations in the context of a middle income country. This country, in which financial exclusion is still dominant, witnessed during the post-apartheid period a model of expansion of private provision of housing that, nonetheless subsided by the State, is based on the expansion of financial markets and securitization of housing loans.

Biographic note: Holds a degree in Economics at the Higher Institute for Economy and Management – Technical University of Lisbon (ISEG-UTL), Master in International Economics and Regulation at the University Paris XIII, doctoral degree at the School of Oriental and African Studies (SOAS), University of London. Research assistant at CISEP – Centre for Studies in Portuguese Economics at ISEG (2005), and at  DINAMIA/ISCTE – Centre for Studies on Social-Economic Change (2005-2008). Co-author of the blog "Ladrões de Bicicletas".