Essays on the Political Economy of Finance

The dissertation consists of four self-contained essays on the political economy of financial markets and financial institutions. It investigates the long-run transformation of modern finance and its implications for capitalist development, corporate organization, and hegemonic power. The central premise (or, maybe, heresy) of the thesis is that finance is not a neutral, passive veil over the real economy, but a historically contingent set of institutions, practices, and power relations that “are not merely reflexes of processes in terms of goods” (Schumpeter, 1911). Under the broad heading “Essays on the Political Economy of Finance”, this work brings together historical inquiry, history of economic thought, econometric analysis, and a political economy perspective on contemporary capitalism, to study how finance has evolved in its functions, its relationship with real economic activity, and its growing role in shaping corporate governance and global conflicts. The dissertation contributes to several debates. First, it speaks to the literature on financial development and economic growth, suggesting the need for a more nuanced, historically grounded view of the finance–growth nexus. Second, it adds to the growing research on financialization and asset manager capitalism by providing systematic evidence on common ownership and its implications at both the corporate and sectoral levels. And finally, it connects the analysis of finance to questions of imperialism and global conflict, highlighting how a new form of U.S. hegemonic influence is taking shape and the search for financial returns is increasingly intertwined with the dynamics of the military complex. From this manuscript, two points follow. First, finance is the engine of capitalism, it is the source of any of its successes, but also, and above all, of its contradictions and distortions. Although this may seem obvious to some, it remains somewhat surprisingly contested by others, especially by those deeply attached to the fiction that finance merely “clears” markets rather than reshaping the conditions under which production, investment, and the race for wealth unfold. Second, this dissertation seeks to clarify, if only in a small way, that the study of finance arguably belongs less to what Kindleberger (1990) calls “technical economics, heavy with mathematics and econometrics” and more to a “literary, anecdotal, or intuitive economics”: an approach that flirts with sociology and politics (and perhaps even psychology and geography) and is therefore “more comfortable with a social science”. Adopting this more historically and socially grounded approach may also help counter the pedagogical — and ultimately moral — sin that characterize the field of finance, what Fama (2014) presents as “the most successful branch of economics”: and so to “inadvertently teach people how to behave — and not in a good way” (Zingales, 2015).