The Jewel in the Crown

Abstract

Since the beginning of the 1980s, the financial sectors of most (actually, all) advanced countries have grown at a much faster pace than other sectors of the economy to grab an ever increasing share of GDP and total corporate profit. Indeed, the financial sector has become a world of its own, an entity that exists for its own sake, not for the purpose of supporting real economic activity (the production of goods and services that we need or want). It has become an end—not the means to achieve the end of lubricating economic activity by providing credit, liquidity and means of payment. The financial sector as a whole has become much larger than can be justified on the basis of its basic function of supporting real economic activity, perhaps too big for the good of the economy—or “too big for its boots”, as The Economist (2009f) puts it. And it has become the jewel in the crown of the economy. This is why some scholars use the term “financialization of the economy” (Metais, 2009).