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Cited by 139Housing, Finance, and NeoliberalismPolitical Economy and MarxismGlobal Financial Regulation and Crises

Financialization and Economic Development: A Debate on the Social Efficiency of Modern Finance

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Storm, Servaas·2018·Development and Change
DOI 10.1111/dech.12385
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Abstract

The shift in financial intermediation from banks to financial markets, and the introduction of financial market logic into areas and domains where it was previously absent, have not just led to negative developmental impacts, but also changed the ‘rules of the game’ and facilitated rent‐seeking practices of a self‐serving global elite. Establishment (financial) economics has helped to depoliticize and legitimize this financialized mode of social regulation by invoking Hayek's epistemological claim that (financial)markets are the only legitimate, reliably welfare‐enhancing foundation for a stable social order and economic progress. This article forms the Introduction to a set of 10 articles which assess the logic and consequences of ‘financialization’ across a range of geographic, economic and social scales, and confront Hayek's grotesque claim — deep down, at the level of ‘ideas’, but also by providing ‘knock‐out evidence’ on the social inefficiency of a capitalism ‘without compulsions’ for finance. The authors in the Debate challenge the ‘ruling ideas’ and expose how establishment economics has been hiding its reactionary political agenda behind the pretence of scientific neutrality. The financial emperor wears no clothes.

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Authors
Storm, S.
Corresponding author
Storm, Servaas
Venue
Development and Change
Publisher
Wiley
Published
2018-01-24
Volume
49
Issue
2
Pages
302-329
ISSN
  • 0012-155X (ISSN-L)
  • 1467-7660
DOI
10.1111/dech.12385
OpenAlex
W2789041257
Cited by
139
References
1
Citations by year
2026: 6 · 2025: 9 · 2024: 7 · 2023: 16 · 2022: 16 · 2021: 43 · 2020: 28 · 2019: 12 · 2018: 2
FWCI
28.11
Type
journal article
Language
en
Open access
Licence
Locations
  • Development and Change (publishedVersion, cc-by)
  • Data Archiving and Networked Services (DANS) (submittedVersion, cc-by)
  • Research Repository (Delft University of Technology) (submittedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Finance › Housing, Finance, and Neoliberalism
  • Social Sciences › Sociology and Political Science › Political Economy and Marxism
  • Social Sciences › Economics, Econometrics and Finance › Finance › Global Financial Regulation and Crises
Keywords
financialization, Friedrich Hayek, financial intermediation, financial markets, rent-seeking, global elites, depoliticization, social regulation, political economy of finance

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