SCHOLARLY ARTICLES

Lucas Prata Feres, Alex Wilhans Antonio Palludeto, Hugo Miguel Oliveira Rodrigues Dias | Finance and labor discipline

Since the last quarter of the 20th century, an extensive series of political, social and economic shifts has been shaping a new configuration of capitalism. Despite national and regional variations, this configuration exhibits fundamental components that are observable as stylized facts across most advanced Western capitalist economies. As a result, a comprehensive understanding of contemporary capitalism requires a thorough examination of prevailing tendencies and tensions embedded in the recent trajectories of these economies. These trajectories, while necessitating contextual analysis within historical frameworks, effectively mirror the global-level development of capital (Streeck, 2014). Notably, manifestations of these dynamics can be observed in financialization and its concurrent transformations in the realm of labor.

The historical starting point of the reflection proposed here is rooted in the culmination of the post-World War II accumulation regime and the concomitant repositioning of the United States on the global stage. This transformation was characterized by the dissolution of the Bretton Woods agreements of 1944 during the 1970s. The “revival” of USA hegemony, amidst rivalry from Western Europe and Japan, led to the widespread adoption of liberalization policies, particularly in finance. Consequently, these policies culminated in the establishment of an international financial circuit, wherein financial institutions and major global corporations assumed central roles (Belluzzo & Tavares, 1980).

The effort to re-regulate financial, social and labor domains in pursuit of increased flexibility received support from neoliberal intellectual circles, including some aligned with the American radical conservative movement. As Rodgers (2011, p. 76) shows, new ideas and metaphors redefined the common sense of American public life: “To imagine the market now was to imagine a socially detached array of economic actors, free to choose and optimize, unconstrained by power or inequalities, governed not by their common deliberative action but only by the impersonal laws of the market”.

In this context, supporting a system of flexible exchange rates, liberalizing domestic policies and enhancing international capital mobility became prevalent. Helleiner (1994) underscores that this process was fostered by “competitive pressures” led by the United States and England. This impetus fueled the expansion of Euromarkets and offshore financial markets.
The implementation of liberalization policies was aligned with a parallel trend of expanding financial innovations, elevating global financial markets to primary arenas for determining the allocation of capitalist wealth. National financial systems underwent a transformation into a global network of financial institutions operating beyond the traditional segmented banking activities. This shift was propelled by the expansion of securitization, the emergence of global “money markets,” and the rising of institutional investors, shaping contemporary capitalist finance. In this context, financialization emerges.

From a political economy standpoint, financialization constitutes the defining wealth pattern of contemporary capitalism, wherein a substantial and expanding share of capitalist wealth assumes the form of financial assets (Braga, Oliveira, Wolf, Palludeto, & Deos, 2017). This pattern shapes the management and realization of capitalist wealth, guiding the spending and borrowing decisions of crucial economic actors and conditioning economic dynamics. More precisely, with the expansion of wealth in financial form, the decisions of economic actors are increasingly guided by the prices of financial assets. In global financial markets, the continuous assessment of prospective profitability, as manifested in financial assets prices, defines the financial benchmark that governs the behavior of financial and nonfinancial corporations, impacting the working class as well.

Therefore, this study aims to examine recent shifts in the realm of labor, which manifest as discernible tendencies in the context of financialization. To achieve this, the following section examines financialization through the lens of political economy and investigates its implications for corporate management. The second section explores the disciplinary role exerted by finance on workers, elucidating its three-fold dimensions: the intensification of labor processes, the dissemination of short term, insecure employment contracts and workers’ indebtedness. Finally, the third section demonstrates that this role represents a form of subordination of labor to finance, resulting in heightened labor exploitation. The concluding section provides a summary of the article's main findings.

Full article: https://www.emerald.com/insight/content/doi/10.1108/ECON-11-2023-0194/full/html#sec001