Question

discuss the development and evolution of financialisation in terms if macroeconomic factors, debt instability and risk.

Answer 1

The transition from banks to financial markets in financial intermediation, and the incorporation of financial market theory into areas and environments where it was previously absent, not only led to adverse developmental effects, but also modified the 'rules of the game' and encouraged the rent-seeking activities of a self-serving global elite. Establishment (financial) economics has helped to depoliticize and legitimize this financialised system of social control (financial) markets are the only valid, consistently welfare-enhancing basis for stable social order and economic development.

Ours is, without a doubt, the age of finance in the global capitalist system with the hegemony with financial agents, institutions, markets, and motifs. The rise of finance to dominance was facilitated by the confluence of a supportive ideology ('neoliberalism'), by historical circumstances, by the invention of sophisticated mathematical methods for the valuation of financial assets (specifically the Black-Scholes options pricing model), and by the revolution in information technology, which reduced financial engineering costs, by facilitating global finance round-the-clock

Conglomerate corporate bodies, which used to provide long-term jobs and stable retirement benefits, were broken up under financial market pressure and replaced by disaggregated global supply chain systems operated on the basis of 'shareholder value maximization' concepts, with the result that real decision-making authority is no longer to be found in corporate boards today. As a result, accumulation real capital creation that raises overall economic output slowed down as income owners, seeking the highest returns, reallocated their assets to more competitive financial markets

Under pressure from foreign financial institutions and their own governments, countries around the world have introduced financial-friendly policies that include reducing cross-border capital controls, encouraging liquid domestic stock markets, lowering taxes on income and capital gains, and making their central banks independent of political oversight.