Financialization

Financialization is a concept used as a descpritor of a transformation in economy and society, where the financial sector and financial markets occupy a dominant or quasi-dominant position in countries such as the USA. It describes the emergence of finance-led economic systems and was introduced to the dictionary during the 2007-2009 crisis as a concept explainin such changes as those that happened during these crisis.

The history of the concept financialization is relatively short, thus there are more than one definitions of it. Another one is for example the one that financialization is a description of processes and effects of the growing power of financial values and technologies on corporations, individuals and households. [1]

Financialization is shortly definied as transformations. It is a concept used to designate diverse phenomena, including the globalization of financial markets, the rise of financial investments and incomes from the investments as well as the rise of the shareholder value movement and related changes in corporate governance theories. [2]


 * Earlier definitions of Financialization**

Financialization can also be seen as a profoundly spatial phenomenon describing the search for a financialized spatial-temporal fix for the crisis tendencies of Anglo-American capitalism. Financialization is hereby a highly malleable concept made up of plethoras of consested narratives. Blacburn (2006) definies financialization shortly as the growing and systematic power of finance and financial engineering while Epstein (2005) means that financialization is the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of domestic and international economies. [1]

Another earlier definition of financialization is the one by Stockhammer (2004): "financialization will be defined as the engagement of non-financialbusinesses in financial markets". [2]


 * Financialization today**

Financialization has nowadays evolved into a concept similar to globalization. Hereby financialization can be seen as a widely used term without any clear agreed-upon definition. There are hereby various definitions used for this concept and the concept can therefor also be understood very different. [2]

The current definition of financialization used in newspapers, where the concept has become fashionable in the last years, generally describes a similar broadness as the one of globalizaiton. In New York Times it is for example definied as the "The process of money movement, securities management, corporatereorganization, securitization of assets, derivatives trading and other forms offinancial packaging are steadily replacing the act of making, growing, andtransporting things (“The Cycles of Financial Scandal,” July 17, 2002)." [2]


 * Financialization and CSR**

The global financial crisis can also be seen as a test of Corporate Social Responsibility theories. [3]

The result of financialization can be seen as a conversion of the financial sector and one of today's principal sources of profit. Still it can also be seen as a force of global instability, a manifest of overinvestments and financial engineering as egregiously illustrated by "tax havens" that consists of a third of the wealth of high net-worth individuals and other forms of money hiding, laundering and extreme speculations. These all lead to overcapacity in one way or another, concentration and implosion. These basic capitalist cycles are much more enduring and predictable than the information, digital, ICT and other revolutions that bedazzle those who should know better. [4]


 * References**

[1] French, Shaun; Leyshon, Andrew; Wainwright, Thomas. Progress in Human Geography35.6 (Dec 2011): Financializing space, spacing financialization. 798-819.

[2] Diss.Orhangazi, Ozgur. University of Massachusetts Amherst, ProQuest, UMI Dissertations Publishing, (2006) :Financialization of the United States economy and its effects on capital accumulation: A theoretical and empirical investigation

[3] Kemper, Alison; Martin, Roger LPress the Escape key to close. European Management Review, suppl. Special Issue: Re-thinking the Firm in a Post-crisis World7.4 (Winter 2010): After the fall: The global financial crisis as a test of corporate social responsibility theories. 229-239.

[4] Boyd-Barrett, OliverPress the Escape key to close. Journalism and Mass Communication Quarterly88.2 (Summer 2011): Journalism in Crisis: Corporate Media and Financialization. 449-450.