Chris Dillow: Financialization as symptom

Chris Dillow writes about Financialization as symptom rather than the cause of the GFC.

In this sense as well, financialization is the result of a crisis in the real capitalist economy; the lack of real investment opportunities meant that cheap money flowed into the financial sector instead. As Ravi Jagannathan has said (pdf), the crisis was a symptom.  

Financialization, then, is not a Bad Thing done by Bad People. It is instead an endogenous response to a longstanding crisis of real capitalism.

Emphasis Mine

In otherwords, the falling rate of profit means that the return on investment is insufficent to induce Capitalists to invest. Although there are major projects to be addressed (like responses to climate change, and improving living conditions), none of these are suffieciently profitable to generate investments.

As the income of workers is reduced to subsistence levels, the margin for profit also reduces. And with increasing automation, there is less living labour to extract profit from.

Capitalism is nearing the completion of its historic mission to develop the economy with the benefits of industrialisation, managerial organisation, financial engineering, and automation. It is now time for workers to seize the means of production to direct the ecomony to save human society and improve living conditions for everybody.

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