A Financialized Monetary Economy of Production: Some Further Reflections

Badalian and Krivorotov (2012) not only acknowledge the strong link between the crisis of 2007 and the 1990s technological paradigm, but they also accept the complementarity between overinvestment in new technologies and increasing financial liquidity that we highlighted in our article "A Financialized Monetary Economy of Production." They argue that a similar trend seems to have also characterized Great Britain between the end of the nineteenth century and the first decade of the twentieth century. Thus, in this paper, we try to deepen the comparison between the regime of accumulation led by Great Britain during the nineteenth century and the finance-led regime of accumulation led by the United States that has characterized contemporary capitalism since the 1990s. We also explain the main differences between the growth patterns during these two periods. Furthermore, we criticize the monetary theory proposed by Badalian and Krivorotov for failing to consider both the store of value function and the credit function of money. This leads to two major misconstructions: the first relating to the interpretation of the financial circuit typical of the international payment system used between 1870 and 1907; the second relating to the definition itself of financialization.