Tony Norfield has a PhD in Economics from SOAS, University of London. He has published articles in several books and journals on the financial system and the world economy today. His book, The City: London and the Global Power of Finance, was published by Verso in April 2016 . He blogs at economicsofimperialism.blogspot.com
The financial system accentuates all the absurdities of capitalism, but it does this in a way that can make finance appear to be separate from the capitalist economy, rather than an inevitable outgrowth from it. Almost every observer of capitalism makes a distinction between the ‘real’ and the ‘financial’ economy. Even those who would claim to be anti-capitalist often advocate policies to save the capitalist economy from the vagaries of disruptive financial markets.
A division between a ‘real’ and a ‘financial’ economy can seem to make sense, especially given the extravagant rewards of financiers who seem to perform no function other than to boost their own incomes and wealth. A closer look at how the capitalist economy works, though, throws a very different light on what is happening. We need to recognise that the global economy is dominated by a small number of countries and their corporations – and that the financial system is a means by which they maintain their privileged status in the world.More