The Big Three's Impact on Capitalism

"The Fall and Rise of American Finance: From J.P. Morgan to Blackrock" explores the dynamic history of American finance, tracing its transformation from the era of J.P. Morgan's empire to the modern dominance of BlackRock. The authors argue that financialization, contrary to popular belief, has reinforced capitalism rather than undermined it.

Key Milestones and Themes:

1. Historical Shifts:

- The book begins with the disintegration of J.P. Morgan’s financial empire, setting the stage for the transformation of American finance. It covers the "Golden Age" of post-World War II industrial hegemony and the subsequent rise of financial capital in the neoliberal era.

2. Neoliberal Era and Financialization:

- The authors discuss how neoliberal policies led to the resurgence of financial power, emphasizing the critical role of deregulation and market-based finance in reshaping the economic landscape. This period saw the financialization of non-financial corporations and the reorganization of the economy around major asset management firms like BlackRock.

3. The 2008 Financial Crisis:

- A pivotal focus is on the 2008 financial crisis, which led to significant state interventions and the reconstitution of the financial system around major financial institutions. The crisis underscored the close integration of state power with financial capital.

4. Role of the State:

- The book challenges the notion that financialization leads to the hollowing out of the real economy or the retreat of the state. Instead, it argues that financialization has intensified competitive discipline and profit maximization, supported by an increasingly authoritarian state.

5. Future of Financial Capitalism:

- The authors explore potential future scenarios for financial capitalism, discussing the possibilities and challenges of democratizing finance. They emphasize that meaningful reform within the existing capitalist framework remains a significant challenge.

"The Fall and Rise of American Finance" provides a critical analysis of the evolution of American finance, highlighting the intricate relationship between financial crises, state interventions, and the rise of major financial institutions. The book argues that financialization has not weakened capitalism but has instead reinforced it by maximizing efficiency and profits, supported by state power.

The authors conclude that financialization has enhanced the competitive discipline on industrial firms, allowing financial institutions to play a direct role in controlling industrial capital and restructuring corporations. They emphasize that the problems of finance are inherently the problems of capitalism, and any challenge to contemporary global capitalism must come from an organized and mobilized working class.

The book argues that financialization has strengthened capitalism by enhancing competitiveness and state power, rather than weakening it. It challenges the idea of allying with industrial capital against finance, highlighting that finance and industry are deeply interconnected. The book underscores that financialization is not a sign of capitalism's decline but a tool to resolve crises and boost profits. It concludes by advocating for democratic control of finance to serve social and ecological needs.

1. Financialization Is Not New:

Financialization has historical roots, evolving over centuries as an integral part of capitalism. It’s a continuous process where finance adapts to and shapes economic structures.

2. Finance and Industry Are Not Separate:

The interests of finance and industry are deeply intertwined. The restructuring of firms has blurred the lines between industrial managers and financiers, making financialization essential for industrial production.

3. Financialization Does Not Signify the Decline of Capitalism:

Financialization has not weakened capitalism; it has enhanced it by resolving crises, boosting profits, and integrating global labor forces into the capitalist system.

4. Financialization Is Not Monopolization:

Financialization does not lead to monopolization but increases capital mobility, fostering competition. It allows firms to allocate capital flexibly across sectors, enhancing efficiency and profitability.

5. The State Never “Retreated”:

Contrary to popular belief, the state has not retreated during neoliberalism. Instead, it has become more integrated with finance, adapting to support financial capital through new forms of economic governance.

6. Finance Capital Is Distinct From Neoliberalism:

Finance capital, marked by asset management companies’ dominance, is a distinct phase from neoliberalism. The new finance capital involves different forms of corporate governance, state power, and class dynamics, beyond just market promotion policies.

"The Fall and Rise of American Finance" provides a comprehensive analysis of the shifts in American financial power over more than a century. By examining the roles of financial crises, state interventions, and the rise of major financial institutions, the book offers a critical perspective on the evolution of capitalism in the United States. Maher and Aquanno challenge the notion that financialization weakens the real economy, arguing instead that it has reinforced capitalist efficiency and profit maximization with the support of state power. The book concludes by reflecting on the future of finance and the possibilities for meaningful reform, though it remains cautious about the prospects for democratizing finance within the current system.