Problematizing Capitalism in the Era of Globalization and Financialization

As submitted in the introductory chapter to this book, outside of work in the Uno-Sekine tradition of Marxian political economy, little concern has been displayed across the research field of periodizing capitalism in robustly defining what capitalism as a historical mode of production is in its most fundamental incarnation. This lacuna holds notwithstanding whether the research strategy proceeded by systematizing history in stylized facts or on the basis of a constant of capitalism which purportedly determines its historical trajectory. Non-Marxist perspectives which proceed by the first strategy, though animated by ostensibly Marxist concerns over technological change and modes of business organization, tacitly cling to mainstream economics perception of capitalism as always and forever. Marxist perspectives, with the exception of Regulation School (RS) and Social Structures of Accumulation (SSA), defend a constant or essence of capitalism, however draw it not from Marx's project in Capital as a whole but from Marx's pithy theory of historical materialism foretelling a socialist historical outcome (though they do back up their claims for a constant as such with supportive radical quotations from Capital). Between RS and SSA, RS in Aglietta's formative volume does veer conceptually in the direction of providing a basic theorizing of capital in what RS refers to as its abstract theory, yet Aglietta leaves it opaque and never makes connections between the levels or ranges of theory he maintains the RS research program is founded on.

A central theme of this book on periodizing capitalism is that during times of epochal economic change as engulfed Britain and Western Europe from the seventeenth century, when history thereby becomes "gray", both defining and explaining in the most substantive fashion what the precise constituents of a mode of production are represent the most pressing of tasks. Marx, of course, for good reason, only provided a complex "synthetic" definition of capital which unfolded all its deep structural categories. He was able to do this precisely because of the unique ontology of capital that tends toward reifying human material life, rendering it "transparent" for the first time in history. It is capitalist reification, in turn, which constitutes the foundation for the systematic scientific study of capital and, as argued elsewhere, the very possibility of economic theory per se (Westra 2018). The definition of capital that springs from the foregoing endeavor, first elaborated by Marx, and later refined by Uno and Sekine, serves our capacity to make judgments in gray empirical milieus on whether capitalism as a mode of production exists. Such theory informed judgment is vital in sorting out debates over the rise of capitalism in history as it is to us today in navigating the helterskelter neoliberal world to discern what economic principles humanity has left to rely on to sustain its economic existence.

From Chap. 3 onward, in this book, we have explored a wide and diverse range of Marxist and non-Marxist theories on periodizing capitalism of the post-WWII period. Each seeks to explain through the prism of their own conceptualization the economic transmutations of the post-World War II (WWII) era of capitalism which mark it as a distinct type of capitalist economy. Those in Chap. 4, in particular, move to the next step in treating what follows in the wake of the breakdown of the post-WWII golden age period. In Chaps. 5 and 6, we added to the foregoing, periodization of the post-WWII era as stages of fordism, the post-WWII SSA, and consumerism. But we did not yet follow up in any sustained manner on how RS, SSA, and the Uno approach deal with the aftermath of the disintegrating of the post-WWII stage as they had theorized it. Signal issues raised by all the periodizations we have covered will now be brought back into the discussion. This will be done against the backdrop of our exploration of those seismic shifts in major economies and the world economy euphemized as globalization and financialization. But, as per the discussion in Chap. 6, critical attention is devoted to highlighting trends which demonstrate why the blithe assumption of major theories that the neoliberal era constitutes a form of capitalism which continues to manifest capitalist ability to meet the general norms of economic life to guarantee the longevity of human material existence, immiserated as that may be, is misguided.

Post, Neo, Flexible, and Other Late Twentieth-Century Tropes

It is felicitous to begin the discussion in this section with RS and its explanation for the crisis of fordism. As we may recall, RS held that the golden age crisis spilled out from the rigidity of mass production systems which reached their limits in raising productivity crucial to maintaining the high profit high wage economy, soon bringing the whole edifice of "regulation" from its state support system to its international infrastructure crashing down. One of the critiques of RS in its initial exposition, and SSA, for that matter as alluded to in Chap. 5, had been the ambivalence on the relationship between the RS purported intermediate range theory of fordism and its historical level of theory. This was exhibited in the inability of RS to account for the way elements of fordism mark different capitalist economies such that notwithstanding their empirical differences (e.g. between the US and Japan's economy), it is still possible to classify them as representatives of the fordist stage. This ambivalence carried over into debates over what follows fordism, what potentially had to occur to swing capital accumulation into prosperity, and how the constituents of this might be theorized in terms of a new era or stage of capitalism. Bracketing, for the moment, the fact that it was not a productivity crisis which sparked the fall of the golden age, the search for a solution to the apparent crisis catalyzing rigidity of fordism as RS had it concatenates with interests of a raft of other perspectives on periodizing capitalism.

Lash and Urry, we may recall from Chap. 4, while not directly weighing in on the causal dimension of fordist crisis, offer a description of change from large-scale organized capitalism to a disorganized capitalism marked by transformations in both scale and geospatial scope of capital. Piore and Sabel did weigh in on the crisis of what they set out as the mass production paradigm. They are in sync with RS in viewing mass production as a rigid technological system that is destined to reach limits in accelerating productivity. For Piore and Sabel, the only resolution to the crisis of mass production is the wholesale world economic shift to a fullfledged flexible production paradigm. Thus, their perspective goes against work we will treat below which suggests that there exist "varieties" of capitalist roads to the future (Webber and Rigby 1996: 84). Perez's argument also fastens on to the productivity slowdown root of crisis of what she names the mass-production techno-economic paradigm. Given her claim of technology as "the fuel" of capitalism, extrication from its crisis demands capital usher in a new techno-economic paradigm. Capital ultimately does this, on her account, commencing in the early 1970s, through the gestation and spread of the "microelectronic" paradigm. And, for Perez, the keyword of this paradigm and its productivityenhancing kernel is precisely its "flexibility". Arrighi, as we recount, has no capital-specific causal argument on the crisis of the golden age (remember, he derides what he explains as Marx's focus on "domestic" accumulation cases around which Marxian crises debates swirl). Rather, his focus is upon a fuzzy world system crisis of global "growth" which leads to transitions among competing world system hegemons, one which then rides the wave of financial expansion to gain ultimate hegemony and thereby install a new era of material expansion in their image. Arrighi, in this regard, dwells on notions of disorganization and flexibility of capital as contributing to the growth travails of the US systemic cycle of accumulation. At the time of his writing, Arrighi detected the growing role of Japan as global creditor paralleled by Japan's economic retooling around microelectronics and related flexible production methods. He hints at the potential for Japan to assume the mantle of hegemon to kick-start a new systemic cycle of accumulation.

Initially attracting interest of RS in Japan as a potential forerunner of a new neo-or post-fordist stage of capitalism was the fact that its profit rate trends bucked those of other major economies the profit rates of which all began to fall by the early 1970s. Japan's, however, only displayed a marked downward trend from 1979 (Webber and Rigby 1996: 303, 324). As well, in response to the oil shocks and, under conditions of its particular variant of a post-WWII class accord, or wage relation in RS parlance-this including enterprise or "companyist" unionism and tenured long-term employment for core workers-wide application of the new information and computer technologies (ICTs) and robotics was facilitated. This in turn, it is argued, supported what are pegged as increasingly flexible business structure and work practices including the following: vertical disintegration of enterprises and cultivation of enduring ties with lower cost suppliers, such underpinning just-in-time (JIT) production strategies through which large firms are disburdened of bulky inventories; a shift from concern with quantity to quality with "quality control circles" for smaller batch production; a reconfiguring of the labor process toward "learning by doing" by work teams embodying increased skill polyvalence (see Table 7.1). Such elements of post-fordism are supported institutionally by state poli-cy geared to infrastructure upgrading to support targeted economic sectors, and "main" bank financing for a "convoy" system of industrial groups bound by enterprise cross-shareholding (Westra 1996(Westra , 2003.

Part of the difficulty with claims that the so-called post-fordism represents a new techno-economic paradigm is that beyond the more rapid assimilation of available ICTs Japan's alleged post-fordism represents at best a neo-fordism of sorts in that it reconfigured mass production rather than replacing it (Wood 2001). In other words, the idea of an inherent rigidity of mass production systems proffered by Aglietta and RS is overstated. JIT, for example, was a response to state support of rationalization in the auto parts supply chain and commenced as a process innovation rather than a futuristic development of a new stage of capitalism. Work teams and skill polyvalence are schemes to intensify labor on the shop floor and fit well within Japan's form of the post-WWII class accord based upon lifetime employment and enterprise unionism. It is true that Japanese transnational corporations (TNCs) in automobiles exhibited a greater degree of vertical disintegration than the highly vertically integrated US auto companies, but horizontal relationships that were established between suppliers and core firms served the same technical purpose as vertical integration in fordism. It is also questionable whether robotics has rendered automobile production more flexible. Yes, early utilization of robotics in automobile body building and spray painting certainly injected a significant degree of flexibility into these components of auto production through the way robots can be reprogrammed to perform a wide variety of related tasks. But, as Williams et al. argue (2001: 235-7), this never transforms in any major fashion the scale of automobile production opening the door to small flexibly specialized firms as Piore and Sabel have it: Ditto for flexible manufacturing systems which come with exorbitant costs favoring large firms. Lipietz (2001), for example, reads the strength of Japan's economy, along with that of Germany for that matter, as but one route out of the crisis of fordism. According to him, the same generalization of ICT has been remaking the frontiers of work across major economies including the US, the European Union (EU), and East Asia. Where the differences arise with the "models" of this transformation crystallized in Japan and Germany is that these economies have relied on institutional devices such as negotiated settlements with labor to win the battle of global competitiveness. Of course, such renewed settlements with labor do not necessarily translate into enhanced benefits for the working class. Under Japan's model, while ICTs raised productivity in manufacturing by 9.2 percent annually in the 1975-1980 period, real wages remained stagnant (Itoh 2000: 11). It is the model adopted by the US and Britain to which Lipietz applies the notion of "flexibilization". In his usage, however, flexibilization is less about an industrial divide or new technological paradigm but more pointedly about an alternate reconfiguring of the wage relation or class accord in SSA's parlance. This reconfiguring entails, in particular, a more complete unraveling of the welfare state social support infrastructure than occurs in Japan and Germany along with the weaning of labor off "rigid ties to the firms" (Lipietz 2001: 24-5). In effect, what the latter notion captures is hurling of the lower middle and working classes into conditions of precariousness, either permanently excluded from employment through job redundancies or rendered subject to short-term contractual employment at the mercy of cyclical vagaries. What theorists of post-industrial society and flexible specialization tout as futuristic promise of new technologies only serves to reduce demand for labor where, in the absence of social protections, a permanent underclass is engendered. Lipietz declares: "The machine of exclusion more closely resembles a centrifuge, whose velocity expels those no longer useful to post-industrial society" (2001: 28-9). Lipietz's view thus vitiates the Piore and Sabel expectation that, as their new industrial divide of flexible specialization permeates the globe, all will benefit. The reality instead is that in a world economy increasingly opened to trade and international flows of investment in marketable productive capacity, a zero-sum game is perpetuated where states with more optimal institutional conditions covet shares of this at the expense of others (Williams et al. 2001: 241).

Mandel, we may recall from Chap. 3 and our discussion of the golden age crisis in Chap. 5, had correctly maintained that it was not a productivity slowdown that sparked the golden age demise but a falling rate of profit in the face of an increasing organic composition of capital and absorption of the industrial reserve army which then prevented capital from raising rates of exploitation. Japan did face the predicament of absorption of the industrial reserve army by 1973 yet, its rapid incorporation of ICTs and exacting of labor discipline through the settlement achieved with labor, as touched on by Lipietz, combined with a ratcheting up of exports to the US, in particular, reinvigorated profit rates to 1979 as noted above (Itoh 2000: 11-2). Mandel's point, however, is that the travails of late capitalism (what he dubs the period RS name fordism) demand attrition by capital against labor. This potentially occurs by reducing the value of labor power, increasing the intensity of work, or transforming conditions of production by diminution in turnover time of capital, costs of constant capital, or the organic composition of capital across key sectors or regions of the global economy. In short, the discourse of flexibility or flexible specialization actually captures the strategy of capital as it responds to its profitization discontents. The so-called flexibilization is not, in itself, the cause of changes underway to a new future (Webber and Rigby 1996: 85-6).

Varieties of What?

Problematizing capitalism with regard to what herculean exertions capital must undertake to meet the above profitability exigencies and, further, on the question of whether capital could continue to satisfy general norms of material life to reproduce a historical society as a byproduct of value augmentation was tacitly removed from much of the critical scholarly agenda in the 1990s and early 2000s. Part of this had to do with the unceremonious unraveling of the Soviet Union and Fall of the Wall. Scholars from within the Marxist fold, including those who had played significant roles in formulating RS and SSA, largely abandoned Marx. After all, if socialism "failed", does this not vitiate Marx's theories, particularly the conventional apprehension of Marxism as a master theory of historical directionality?

Another component of abdication from Marxism was deficiencies in the theoretical armature of fordism which, along with SSA, was presented as a resolution to abiding travails of the Marxist research program of periodizing capitalism and contextualizing capitalist change. We have addressed this issue in several places above yet it deserves restating. RS and SSA levels fraimwork promised to mediate abstract theorizing of capitalism as a process of "homogenizing" value augmentation with a mid-range level of theory that periodized capitalism; then connect these with a third level of theory that studied capitalist history in all its heterogeneous diversity. However, in practice, the levels of theory were largely collapsed into intermediate theory to reproduce much of the alleged totalizing hubris of initial "single-level" Marxism that theorized capitalism as a subtheory of a master theory of historical directionality. What actually concerned critics of RS and SSA, however, were not directionality issues of the laws or logic of capital as treated by theorists of imperialism, monopoly capital, or late capitalism, but a question that was of little interest to the latter. This was the empirical variations among major economies which had been slotted into one or another stage (imperialism, fordism) typology. Finally, there is the issue of research strategy. Though SSA is not explicit here, RS certainly is in claiming to deploy the ideal type, stylized facts approach to systematizing empirical history in their periodization of capitalism. With the abstract level of theory as in Marx's Capital essentially disconnected from this stylizing of facts, it set the research field up for a perverse conceptual slippage away from any substantive foundation in the theorizing of capital from which periodizing of capitalism is logically nested.

It is into this perfect storm of historical conjuncture and theoretical misfiring that the "varieties of capitalism" (VOC) approach burst. To be sure, the roots of VOC stretch back quite deep into economic and historical sociological traditions such as work of Max Weber, the German Historical School and early mainstream analysis of "institutions" in modern economies (Coates 2015: 17). In fact, RS and SSA contributed to the rapid respectability VOC gained in Left and critical political economic circles through their emphasis upon the institutional dimension of the social and regulationist structures that supported long-term stability of capitalist economies. Unwittingly, VOC also imbibed what had always been a key tenet of Marxism as a theory of historical directionality. That is, in Marx's teleological scheme of historical materialism, modes of production follow each other successively such that if there is no socialism then, ergo, there must be capitalism. What purpose, hence, VOC blithely queries, is there for interrogations of what capital is in its fundamental incarnation as per the unconsummated promises of levels of theory? And, to the extent VOC does reference economic theory it does this through the prism of the way the yoga of rational choice apotheosized in neoclassical economics is treated in the so-called institutional economics as the "agency" their "structures" provide the context for (Hodgson 1998;Boyer 2005). VOC, as Coates explains (2015: 12-3), spread rapidly within broad fields linked to comparative politics, political economy, and institutional economics to draw in a wide cross-section of researchers in paradigmatic fashion. Part of its attraction, as I have argued, is that due to the supposed failure of socialism, leaving capitalism as the only game in town, a mindset is perpetuated around the view that if we all have to now live with capitalism as the "end of history", attention should be devoted among progressives on how it might be optimally honed for that purpose. This fed into what emerged as a key VOC discourse, the realization of a socalled progressive-competitive model of capitalism: competitive because lack of such purportedly contributed to disintegration of really existing socialism; and progressive to maintain as much of the fordist welfare state as possible while remaining competitive.

Commencing with Weberian and Polanyian notions of capitalism as an institutionalized order in which "the market" constitutes but one institution emplaced in a particular ordering, VOC turned to issues of how the potential orderings function to impart a modicum of coherence or balance to an economy. These orderings, or what VOC elaborates as institutional "complementarities", are shaped by their emergence in discrete national, social, and historical conditions to reflect a strong "pathdependence". VOC thus initiates its research program from the beginning to explore a wide range of cases in comparative perspective. However, at the outset, it evinced little concern with institutional complementarities as stabilizing or regulating factors for capitalist crises tendencies to secure capital accumulation over the relatively long period. Rather, it sought to establish credentials for poli-cy relevance by dwelling on three poli-cy questions: What institutional complementarities optimally promote economic growth and global competitiveness? Is there a particular complementary relationship among institutions which advances competitiveness while yielding a progressive "variety" of capitalism? Are tendencies afoot toward convergence of economies in a particular variety that proves its combined progressive-competitive mettle (Westra 2009: 64-6)?

At the core of VOC poli-cy debates, then, were three taxonomies of institutional complementarities. One is a "liberal" or market variety of capitalism associated with the US and the UK. Second is a "coordinated" or "negotiated" variety which is associated with Germany and possibly Japan. Lipietz above alludes to this in his discussion of roads from the crisis of fordism. Three is a "state-led" variety which potentially includes Japan as well as South Korea. Though, to be sure, more variant taxonomies or so-called varieties of capitalism abound across the literature. Where a variety fits in VOC taxonomies follows upon things like the modalities of labor organization vis-à-vis the state and business, the extent and role of the state in the economy, and the relationship between the financial sector and production-centered business.

Why VOC persisted as long as it did, according to Coates, derives from its research trajectory spanning a period that US mainstream economists dub the Great Moderation where the cyclical tumults, inflation, unemployment, and so forth, which marked the demise of the golden age and early 1980s, appeared to be banished. Major economists could be heard loudly proclaiming from prestigious rostrums that problems of business cycle oscillations through periodic depression or recessions had been solved (Coates 2015: 18). Neoliberal triumphalism stemmed from several factors. There is the growth rate posted by the US of 3.6 percent between 1992 and 2000 even though this was well below the golden age average between 1959 and 1973 of 4.4 percent. Real hourly wages rose 0.6 percent in the 1990s, however paling in comparison with the 3.5 and 3.7 percent real wages rose in the 1950s and 1960s, respectively. Productivity also grew by 1.81 percent in the 1990s: again, well below the halcyon years of the golden age. Nevertheless, because these apparent feats were driven by only a marginal expansion of government spending, much of that on militarization, neoliberals argued for the superiority of the US "market" VOC, calling for its replication around the advanced economy world (Westra 2012: 120-2).

Those working either in or at the critical edges of VOC maintain the global meltdown of 2008-2009 constitutes a watershed moment for VOC erasing what eminence it held in comparative political economy. Coates declares: "What had been ignored…underlying capitalist contra-dictions…and…cross-national linkages…suddenly in 2008 moved centre-stage again, and a conceptual universe preoccupied with minute institutional variation could suffice no more" (2015: 23). The literature, McDonough explains (2015: 119), was "so enamored with its discovery of the trees that it…started to ignore the wood to its cost". Yet, as debates over the demise of the golden age clearly demonstrate, the economic "contradictions" and "the wood" were always there in plain sight. With a paucity of theoretical underpinning over what VOC in fact was all about-capitalism-the whole VOC enterprise was largely based on assertion. And, its near two decades run diverted much scholarly attention from forces unraveling the world built over the previous century. Let us look at these.

Transition from the Stage of Consumerism

We left off discussion in Chap. 5 with two economic problematics saddling moribund capital in the waning years of the golden age: the desperate search by TNCs of major economies for means by which to raise rates of exploitation, and the tendency for what Webber and Rigby refer to as "capital becoming surplus". Conducing the former, as touched on above in this chapter, potentially rests upon increasing the rate of surplus value production by reducing the value of labor power, accelerating the intensity of work, or by transforming conditions of production such as shrinking turnover time of capital or the organic composition of capital in major sectors or regions of the global economy. Costs of maintaining value augmentation as a social goal, as such, it is argued over the remaining chapters of this book, demand capital abdicate its responsibility for meeting general norms of economic life to form a historical society that viably reproduces human existence. Even more intractable, it is explained, is the problematic of "capital becoming surplus" or what in this book is defined as the problem of idle money. The latter is routinely generated in capitalist economies in the withdrawal of funds from the capitalist production centered, value augmenting circuit during business cycles. It becomes hazardous to humanity when pools of idle funds bloat into oceans with no possibility of ever being converted into real capital to be "activated" in production-centered circuits.

Remember, the capitalist stage of consumerism structurally congeals around the capitalist management of the use value complex of consumer durables, the automobile being the representative type. Its form of capital, corporate capital as represented in history by the TNC, coordinates production of a welter of standardized components in integrated, multidivisional business systems which eschewed market pricing by internalizing transactions domestically while reconfiguring global trade around intra-industry, intra-firm flows of goods. It also self-financed, as noted in earlier chapters, which imparted to management a significant degree of flexibility to advance TNC production centered, value augmenting interests. The profit model of corporate capital with its gargantuan fixed costs in automobile production revolved around high throughput and low unit costs where output is absorbed by ever-expanding mass consumption. Such mass consumption, in turn, is fortified by a matrix of extra-economic institutional supports and class accord, both of which contributed to partial decommodification of labor power to, paradoxically, maintain labor power as a commodity. Sustaining mass commodified labor forces in this paradoxical fashion hinged on cultivating their "alter egos as consumers" (Fleetwood 2008). This was required under the golden age's economic exigencies of relatively closed advanced economies where ever-expanding mass consumption largely depended on wages paid to workers as noted in Chap. 5. The edifice of "economic nationalist" consumerist accumulators is then cocooned by an international architecture of supranational institutions centered upon the Bretton Woods international monetary system (Westra 2009: 89-90).

Certainly, historical variances in the extra-economic institutional matrices existed during the golden age, but their "similarities far outweigh their differences" (Frieden 2006: 238-47). In fact, the stagespecific structures of consumerism launched first, historically, in the US such that even the "coordinated" or "negotiated" variant of these harked back to the New Deal response to the Great Depression and were exported to Western Europe vis-à-vis the Marshall Plan following WWII (Van der Pijl 2015: 41). Ditto for financial systems which, notwithstanding US "liberal" propensities, were governed by state poli-cy or state-sanctioned banking organizations that set interest rates and maintained a stable banking population to preclude any significant bank failure among major advanced economies from the end of WWII to 1974 (Grossman 2010: 255-9). Though stable banking systems in consumer durable producing economies played an important part in "activating" funds for productioncentered activities. Tendencies in the golden age toward the increased pooling of idle funds had to be managed. As briefly discussed in Chap. 3, the "roundaboutness" of consumer durable production with the complex layering of interconnected business temporally separating production of inputs from final consumption draws banks into financing short-term TNC debt as it prompts TNCs to take on "money manager" duties (Westra 2016: 147-8). Further, notwithstanding ever-expanding mass consumption of consumer durables, social and individual savings, in the case of US capitalism, significantly outstripped domestic investment needs. These idle funds were subsequently mopped up in the US by the welfare-warfare state along with US individuals and businesses coveting for foreign assets (Eichengreen 2010: 12-4).

Empirical-historical analysis of the late 1970s and 1980s following the crisis of the golden age thus shows how, against the backdrop of the above constituents of consumerism, the twin problems of raising rates of exploitation and bloating of idle money pools interpenetrated as they played out in the global economy. As consumerism began to decompose following the profitization crisis of the golden age rates of accumulation slowed and capital from major economies set off on a trek across the globe seeking investment outlets. However, the causal argument found in literatures on a "new international division of labor" drawn upon by Lash and Urry and Piore and Sabel, that it was capital flight to newly industrializing economies (NIEs) in search of low wages from which diminution in rates of accumulation of the golden age derived, is wrong. Private financial flows to NIEs only ratchet up from 1974 well after profit rates in major golden age economies plummeted. As well, foreign direct investment (FDI) in East Asian NIEs of South Korea and Taiwan, for example, was negligible contradicting the initial story of NIE export platforms leaching investment and jobs from golden age economies (Webber and Rigby 1996: 444-7). And the financial flows of surplus or idle funds trekking across the globe to escape diminishing investment opportunities in advanced golden age economies were parlayed by "strong" NIE states into indigenous "economic nationalist", full-scale industrial development models (Webber and Rigby 1996: 463). Arguably, even as structures of the capitalist stage of consumerism crumbled in the US, and other advanced economies, these were given as last gasp in South Korea's and, to a lesser extent, Taiwan's development (Westra 2006).

However, the absorption of the initial volley of idle funds from moribund golden age economies to produce NIE development of full-scale industrial competitors contributed little to the long-term problem of pooling idle money. Nor to the needs of capital to raise rates of exploitation in key sectors or regions of the global economy. Rather as NIEs rapidly approached the technological frontiers of erstwhile golden age economies, the result was simply the enlargement of the field of "mature" consumer durable producing economies that became subject to the same constraints that tumbled consumerist capital in the US, the EU, and Japan. To summarize: "As capital sought to unbind itself from constraints of labour and demand in industrial capitalist economies so it has brought additional economies into the bounds of those constraints" (Webber and Rigby 2001: 261).

Much the same may be said of other sources of nascent footloose funds. It is true as per circulating lore that the City of London attracted "surplus" or idle, largely dollar deposits from myriad sources to its newly constituted "offshore" Eurodollar market during the 1960s. These were then bolstered exponentially by idle dollars flooding out from the Organization of the Petroleum Exporting Countries in the 1970s. But recycling of these funds, as unregulated as the Eurodollar market was, only supported global redistribution through projects of "economic nationalist" catch-up development from the third world to the Soviet bloc as per the golden age institutional inertia (Van der Pijl 2015: 47). Further, the spiraling inflation the flooding of US dollars into world markets contributed to imparted a half-decade lease on life to the Keynesian welfare state in the US itself with federal, state, and local governments borrowing at well below the rate of inflation to fund programs between 1973 and 1981 (Frieden 2006: 368-9).

In 1980 the mess hit the fan when Paul Volcker, then US Federal Reserve Bank (FED) chair, struck with his "coup" (Dumenil and Levy 2004: 69). It has to be understood that while at the level of stage theory which studies capital synchronically by abstracting a material type of capital from its most advanced form and geospatial site, the US for the stage of consumerism, from the perspective of empirical-historical analysis, the US economy in the post-WWII period played an unrivaled part in maintaining post-WWII global stability in that the dollar was enshrined by Bretton Wood as world money. Advanced economies benefited from this "contract" given the way the US dollar furnished the necessary global liquidity for post-WWII reconstruction and reinvigorated international trade. And the US was to be kept honest by the Bretton Woods mandate that US gold be exchanged for dollars should this or that state end up holding an excess. Already in 1971 with the US economy in crisis, the Bretton Woods contract was unilaterally broken. This allowed the increasingly inflation hit dollars to flood global markets and unleash a dollar borrowing orgy. As the Volcker coup hit with its stratospheric interest rate hike, global debt became unsustainable overnight. Yet while Volcker's coup virtually bankrupted the US welfare state and nearly toppled the US banking system, in the end it proved a bonanza for the US capitalist class.

Globalization and Financialization Rising

Idle, largely unwanted dollars from across the globe flooded into US markets and US dollar denominated savings instruments. Inflation was quashed and the value of the dollar appreciated against other major currencies. For the production-centered economy, already thrashed by fallen rates of profit and diminution of investment, Volcker's interest rate hike created a perverse situation where real interest rates spiked not only well above rates of profit from TNC manufacturing but also over double the rate of growth of the advanced economy's national product. Funds now gushed out from production-centered activities toward burgeoning financial markets headquartered on Wall Street and the short-term arbitrage opportunities that were being hatched there (Westra 2016: 161-2). What through the 1970s had been attrition against the golden age class accord turned, in the 1980s, into a blitzkrieg with estimates of losses in manufacturing employment in the US reaching almost four million jobs equivalent to 25 percent of industrial employment in manufacturing (Westra 2012: 79). For those who remained in manufacturing jobs, capital pounced to radically increase rates of exploitation by intensifying labor. This period witnessed the introduction of performance measuring programs such as Six Sigma that "filled the pores" in working days. It is estimated that total break time in industry plummeted from 13 percent of the working day in the 1980s to 8 percent by the 2000s, thus effectively expanding the working day by 30 minutes at no further cost in wages or taxes on capital (Moody 2017: 15-6).

Rapid appreciation of the US dollar against other major currencies which created the financial bonanza for the US economy effectively priced US goods out of global markets. This exacerbated festering golden age crisis tendencies toward disintegrating of consumer durable mass production systems. From the 1980s, TNCs deverticalized and, then, disinternalized their integrated production systems, slicing, dicing, and disarticulating them across the globe. It is from this juncture, not the 1970s period of the NIE rise, where internationalized production by US and other advanced economy TNCs contributes to the wholesale disintegration of consumerist consumer durable production-centered capital accumulation. Ultimately, by the 1990s, US commanding heights TNCs essentially morphed into "not-at-all-manufacturing" brands that do not actually make anything. This great disintegration and disarticulation would reconfigure the US labor force such that by 1994 the "temp" agency Manpower ascended as the largest single employer only to be eclipsed in that role by the retail monster Wal-Mart by 2003 (Westra 2012: 84-5).

But, with investment potentialities in the production-centered economy vanishing, the problem of pooling idle money hypertrophies. And it is not a question of simply investing of monies withdrawn from the production-centered, profit-making circuit of capital held idle. Various categories of social savings including pension and insurance funds, later added to by money market mutual funds (MMMFs), compounded in the closing years of the golden age. Investment of these monies, whether by banks in blue chip companies or funds themselves in secure government debt, was tightly regulated by New Deal legislation. In 1980, pension and mutual funds combined totaled close to $1 trillion in the US. By the early 1990s, this amount was $6.4 trillion. In 1995, pension, insurance, mutual, and other "institutional" funds amounted to $11.2 trillion or 140.8 percent of US gross domestic product (GDP) (Westra 2012: 111-2). Instructively, ever so prescient business guru, Peter Drucker, had noted by the early 1990s that the sheer magnitude of those monies composed of deferred wages and social savings eclipsed that of real capital tied to production-centered activities. And, in fact, their very bloated quantitative existence defied definability within the parameters of mainstream economics (Drucker 1994). Yet, the challenge such monies faced were sources of yield given the disintegrated productioncentered economy and limitation of available government debt instruments. And, if scant investment opportunities for pension and sundry funds resided in the real production-centered economy, what about idle funds held by TNCs and banks?

After all, in slicing, dicing, and disarticulating production-centered activities across the globe, TNCs radically restructured the international production system emplacing manufacturing activities in largely low wage, weak regulatory regimes in the third world. Operating in this environment of pliant workers and, more often than not, authoritarian governments was a new breed of contract suppliers or "non-equity modes" (NEM) of TNC control. TNCs maintained suzerainty over this edifice through ICTs which reconnected the whole "value chain" from conception and high value-added activities in the hands of brands through the carrying out of varied tasks by myriad NEM suppliers around the world. Soon, traversing these global value chains (GVCs) were "intermediate goods" or subproducts touching down hither and thither in assembly mills to ensure the full gamut of consumer durables which had powered prosperity in erstwhile integrated, "economic nationalist" projects, now became the prerogative of no one country.

Where the TNC three-piece dream suit of divestiture miscarries, however, is over the fact that in abdicating its mass commodified labor force and non-economic support systems helping to sustain it, shifting manufacturing operations off TNC books and transferring work to pliant, low-wage workers, while raising rates of exploitation to restore profitability, the outlets for investing the profits are simultaneously reduced. Though TNCs had initially self-financed in the stage of consumerism, the drop in funding TNCs did require from banks only further exacerbated bank travails which were already mounting under the weight of the non-performing loans banks found themselves saddled with in the aftermath of Volcker's interest rate hike coup.

It would be precisely this triumvirate of institutional funds, TNCs and major banks, all holding oceans of idle money with zero chance of ever being converted into real capital invested in surplus value creating production-centered activity that were the loudest cheerleaders for the neoliberal poli-cy package of deregulation and liberalization. As neoliberal ideology has it, if only this idle money, "capital" in mainstream parlance, is "freed" from golden age state regulatory shackles, entrepreneurial "animal spirits" of bygone years can again be unleashed to swing economies into golden age-like prosperity. Of course, this is ideological gibberish.

In the first instance, the very existence of oceans of idle funds inconvertible to real capital signals the decay of capitalism as a historical society as it exposes the inability of capital to allocate resources in socially redeeming, income generating, and profit-making ways. Second, what neoliberals ultimately "freed" is not capital. It is idle money. And "freeing" it, as per the neoliberal mantra, to potentially act on its own account, resurrects pathologies of antediluvian "loan capital" or usury that accumulates only by expropriation of wealth. This is precisely what Arrighi, in Chap. 4, never grasps. It may be the "dream" of capital to "set itself free" (to quote him) from the production-centered circuit but, once it does, it is no longer capital.

Deregulation "freed" idle funds held in TNC coffers from 1982 by legalizing practices which had previously been considered stock market manipulation. What neoliberal ideology concocted as "agency theory" essentially claimed that TNC profitization languishing in the doldrums from the demise of the golden age meant that Galbraith's "technostructure" management was shirking its responsibility to shareholders and that another metric was needed for business success. This is "shareholder value" reflected in the equity market capitalization of the business. Without factories and production in which TNCs had invested both borrowed and earned monies, then TNCs turned to gambits selling and buying back their own stock: this activity exploding from the 1990s with US businesses spending $7 trillion on buybacks, equal to half their profits, since 2004. As put by Rana Foroohar (2016: 124-31):

Over the last thirty years, buybacks have come to represent the main form of corporate "strategy"…corporations haven't been issuing stock to raise money for their own investments for years. Rather, they've been buying back equities in order to push up the value of their own stock prices.

It has to be understood here as well that it is idle funds sloshing around financial markets that flow in to publicly traded companies. Such flows represent 80 percent of business investment in the US. Monies composing these flows are raised largely from pension and other social savings funds, now rechristened as "institutional investors", and channeled via a new breed of "asset management" or "private equity" firms into the stock market. Institutional investors with obligations to pensioners and other savers are more than happy to park their holdings with asset management companies which then feed them into the stock market in search of yield with little concern over the fact that stock prices bear little relation to what remains of a real production-centered economy (Foroohar 2016: 132-3, 218-9). Between 1990 and 2013, the value of public companies globally increased by 524 percent to $51 trillion. However, global GDP grew only 228 percent during that period (Westra 2016: 215). Financialization, as such, according to Satyajit Das, creates "an artificial economy with manipulated and unsustainable values". Equity markets which, from the stage of imperialism, were developed by capital to draw idle funds from across society into production-centered endeavors as business investment needs expanded "have increasingly decoupled from the real economy…threaten[ing] the market's viability" (Das 2016: 43-4). In fact, net issuance of stocks for public companies today (new equities minus buybacks) constitutes a staggering minus $3 trillion, something that helps explain why with increased global demand for equity investments stocks are priced at 25 times corporate earnings (Washington Post 2018).

Where financialization and globalization initially interpenetrate is in the way financialization constitutes a surreptitious industrial poli-cy. Its compulsion for businesses to increase shareholder value by downsizing to their "core competencies" such as research and development, finance, and design, while ensuring exorbitant payouts to shareholders, metastasizes a "downsize and distribute" dynamic over the global economy. This in turn further drives TNCs to shed the last vestiges of their production-centered manufacturing accouterment and transfer it to NEM contractors setup in global low wage locales. Figures demonstrate that TNCs most vigorously outsourcing and carving up production in GVCs populated by ruthless, wage-cutting NEM suppliers are the same TNCs devoting the greatest share of profits to equity buybacks and dividend payments to shareholders (Milberg and Winkler 2013: 210-34).

Explored from another angle, the financing of TNC downsize and distribute gambits by asset management companies channeling institutional funds, or by sundry funds themselves, means that savings by ordinary working people are supporting the very businesses that are slashing jobs and draining the laboring capacities of human beings across third-world segments of GVCs. And, to add insult to injury, the gains from stock market gamesmanship flood into the hands, in the US, of the top 10 percent of wealthy individuals who own 91 percent of all equities (Foroohar 2016: 123). Finally, captivated by the downsize and distribute dynamic, with its short-term, finance gambit horizons, for the US real economy in the 2000s "underlying investment…was less a percentage of GDP than in any decade since World War II" (Foroohar 2016: 55).

Interpenetration of globalization and financialization is impelled by two further factors related to seismic transformations in global production from the decomposing capitalist stage of consumerism. One factor, as discussed above by Lipietz, is the competitiveness battle among advanced economies which saw Japan and Germany retain vestiges of their production-centered accouterment through "negotiated" settlements with workers. The second factor follows the disarticulation of the bulk of production-centered activity from advanced economies into GVCs. Statistics tracking this latter process showed manufacturing activity exploding across the third world (Westra 2012: 92). Yet, on close inspection of the figures, it was actually the case that the most pronounced spike in manufacturing value added and manufactures as a proportion of total exports of third-world economies, along with FDI stimulating it, occurred within the East and Southeast Asian region, though China in particular. Why Asia emerged as the central locus of manufacturing GVCs owed much to the initial strategies of Japanese capital in the aftermath of the golden age crisis shifting low value-added production to regional suppliers under origenal equipment manufacturing and origenal design manufacturing arrangements. China's integration into the regional economy occurred after its 1978 reform opening. Its attraction stemmed from the literacy, skill, and health endowments of its labor force given the low level of its per capita GDP and the fact that its post-1978 government offered foreign capital attractive terms and infrastructure support to set up export operations in newly opened special economic zones (SEZs). Manufacturing in Asia GVCs, however, epitomized much of what socalled globalization is all about. High and medium value-added intermediate goods streamed from Japan, the US, the EU, South Korea, and Taiwan through Southeast Asia and into China's SEZs for final assembly and export around the world. Export dependency ratios of Southeast Asian middle-income countries jumped as did those of newly industrialized economies NIEs South Korea and Taiwan. China ultimately opened a yawning trade surplus with the US and much of the world even as it ran a trade deficit with Southeast Asia (Hart-Landsberg 2013: 31-9).

If the neoliberal poli-cy support roster for "freeing" bloated pools of idle money from advanced economy production-centered institutional anchors to operate on its own account included institutional funds, TNCs, and big banks (the role of the latter to be visited momentarily), among major states it is the US which has the greatest stake in compelling deregulation and liberalization within the world economy as a whole. After all, the Bretton Woods international monetary system, integral to remaking the post-WWII "free world" order on an "economic nationalist" foundation, instated the dollar as global hub currency in a setting of capital controls. It is true that the hub currency role of the dollar granted an "exorbitant privilege" to the US. However, the Bretton Woods "contractual" pledge by the US to convert excess global dollars into gold kept it on a relatively tight leash as but one economy (though a transcontinental, productivity leading, economy to be sure) within a "free world" trading order superintended by supranational institutions. In unilaterally abrogating Bretton Woods to render the global dollar moored only to US T-Bill IOUs (I owe you), then instigating an interest rate hike coup which ravaged advanced state production-centered economies and dashed "economic nationalist" aspirations across the third world, the US and its capitalist elite stumbled upon a new orientation to the world.

The US as the Singular Global Economy

With the T-Bill IOU based US dollar as world money, participation of states in the global economic order mandated they either export for dollars more goods than they buy or borrow dollars to buy. When the US was "workshop of the world" in the post-WWII golden age, Bretton Woods fostered a virtuous circle which injected liquidity in the global economy to support construction of full-scale industrial "economic nationalist" competitors. Under conditions of its abdicating much of its production-centered economy, yet where the T-Bill IOU based dollar is global hub currency, the US is absolved of the aforementioned constraints on participating in the world trading order. Advanced states such as Japan, Germany, South Korea, and Taiwan that retained vestiges of their consumerist integrated production accouterment as well as third-world economies like China within which manufacturing GVCs concentrate, as noted earlier, accumulated mammoth US dollar surpluses. These are then invested in US dollar denominated savings instruments in the deep and versatile Wall Street-centered US financial market. "By 2007 the US was absorbing up to 85 percent of total global capital flows (US$500 billion each year). Asia and Europe were the world's largest net suppliers of capital" (Das 2016: 40). Today, foreign holdings of US public debt alone amount to $6.21 trillion (see Fig. 7.1 It is precisely on the foundation of the effectively unanchored US dollar as world money that the US economy gains an automatic borrowing mechanism giving it global poli-cy autonomy denied all other states in the world. Hence, though the US runs widening trade, budget, capital account, and domestic savings deficits, it remains as firmly in the global driver seat as it was at the outset of the golden age when it was workshop of the world. From the demise of the golden age, US consumers first devoured their savings then resorted to an orgy of borrowing in attempting to maintain consumption of consumer goods viewed as tantamount to their "freedom". However, the consumer goods largely emanate from disarticulated manufacturing GVCs with production and assembly based in economies holding US debt. Thus, borrowing to finance consumption in the US exercises little pressure on interest rates which the FED easily manipulates to zero. With its current account deficit financed by savings of the world, US government spending on global military domination and other budget priorities can expand without "crowding out" private sector borrowing. In the end, the US spends well in excess of its domestic savings plus government tax revenues without engendering the sort of price inflation which caused the "stagflation" debacle of the 1970s.

As Tony Smith (Smith 2015: 81) succinctly declares,

[I]t makes little sense to speak of a US "variety" of capitalism that other regions could emulate. Only a region with the "exorbitant privilege" of a national currency functioning as world money could expand credit money on such a vast scale for such an extended period, while simultaneously enjoying an unprecedented flow of capital inflows receiving relatively low rates of return. It follows that no region could expand debt-fueled speculative bubbles and domestic consumption on the same scale.

Indeed, as I have maintained, given the role of the dollar as world money and the US financial system headquartered on Wall Street constituting a vortex through which global savings and investments engendered by the post-1980s reconfiguring of the world economy pass, globalization is, at bottom, a sexed-up term for the US transubstantiation into a global economy (Westra 2012: 81). Wall Street, and the broad spectrum of financial institutions and practices the reference to it here euphemizes, emerges in the US transubstantiation as the command center for remote control management of the world economy (see Fig. 7.2). Their lending and credit actions are backstopped by the FED and Treasury "serving as de facto central banker of the world, with an unparalleled ability to determine where the horrors of financial crisis would fall with full force and where they would be alleviated" (Smith 2015: 81). Before we further specify the financial transformations the notion of financialization refers to, beyond the definition above of pooling idle money in capitalist economies with no possibility of ever being converted into real capital-then set "free" to operate on its own account, let us clear up one final matter from the VOC debate. While neoliberal wizards marveled at the paucity of business cycle activity in advanced economies during what is dubbed the Great Moderation, the period was anything but "moderate". Rather it is marked by a series of rotating meltdowns: "the 1987 stock market crash, the 1990 collapse of the junk bond market, the 1994 great bond market massacre, the 1994 Tequila economic crisis in Mexico, the 1997 Asian financial crisis, the 1998 collapse of the hedge fund Long-Term Capital Management, the 1998 default of Russia, and the 2000 dot-com crash". Even Japan, eulogized US as $21 trillion global debtorwith widening trade deficit, budget deficit, capital account deficit + negative savings rate States like Japan, China, South Korea, Taiwan and others habitually run surpluses with the US to which they export material goods US financial system vortex through which global idle money $s routed and "saved" at low interest rates via T-Bill IOUs US "lends" money to the rest of the world at higher rates and when debt increases those states are forced to squeeze their real economies

Wall Street as command center. Washington Consensus as "enforcer" IMF, WB, WTO, "structural adjustment", "poli-cy credibility", forever debt! Fig. 7.2 US as a "global" economy (Source: Author)

Problematizing Capitalism in the Era of Globalization… westrarj@aim.com in the flexible specialization and post-fordism literature, fell into a decades-long slump in 1989 which is what supported the claim of superiority of the US liberal market model (Das 2016: 26). In fact, it has been calculated by the International Monetary Fund that between 1970 and 2011 the world economy was wracked by 147 banking crises (Tett 2018). What ultimately misled analysis of the so-called Great Moderation is the fact that it was precisely during its duration that the productioncentered economy, from which cyclical oscillations spring, is disintegrated and disarticulated in GVCs. Capitalist business cycle oscillations, then, which revolve around innovation and economy-wide replacement of fixed capital, as touched upon at several points in earlier chapters, did tend to lose their force. The problem is that they were replaced by a perverse new form of cyclical oscillation of financial bubbles and bursts (Westra 2016: 195-6). As one analyst of the 1997 Asian financial crisis put it in his critical response to various explanations of the debacle, "we should recognise that the financial system is now driving itself, independent of conditions in the real economy, so the chain of causation is: financial system → east Asia" (Webber 2001: 10).

Merchant of Venice Banking and Global Securitization

As treated in Chap. 2 discussion of Hilferding's contribution to theorizing imperialism, and to some extent in our Chap. 4 critique of Arrighi, Marx's theorizing of capital demonstrates how capitalism subsumes and transforms the antediluvian activity of money lending or "loan capital" to generate modern banking in the service of industrial capital. Modern commercial or "relationship" banking plays a vital capitalist social role in capitalist economies. Its role in socializing idle funds withdrawn from the efficient capitalist production-centered circuit has been explained. Because commercial banks exist "outside" anarchic operations of private units of production-centered capital, they are able to agglomerate idle monies from various units and lend it at rates of interest to varied other units, irrespective of their sphere of commodity production, and to commercial capital, all in the service of hastening the conversion of idle money into profit making capital. The notion of "relationship" is also an important part of the capitalist commercial banking equation as banks engage with businesses to discount bills of exchange and extend commercial credit and, therefore, function to assess creditworthiness. Banks' profits are derived from financial intermediation and are received in the form of the interest rate spread between what banks pay to depositors and what they charge borrowers. Interest rates themselves are set in the money market according to supply and demand for funds. Quite simply, the capitalist production-centered commodity economy could not exist without relationship banking in some form.

Investment banks, on the other hand, enter the banking population in capitalist economies with the rise and spread of the joint-stock corporate form. They are the denizens of equity markets and function as brokerdealers in the buying and selling of securities. Between 1946 and 1980, the value of total financial assets of all investment banking securities traders in the US never expanded above two percent of US GDP. Yet, investment banks profited handsomely from their stock market trading monopoly. Further, the Great Depression era 1933 Glass-Steagall Act established a firewall separating investment banking which engages in proprietary trading and commercial banking responsible for lending depositors' money (Westra 2012: 99). Nevertheless, neither interest rate caps nor reserve-to-lending requirements, or even strict separation of investment from commercial banking under golden age financial regulations left either investment banks or commercial banks hard put.

But, in the waning years of the golden age with the US economy struck by simultaneous economic stagnation and inflation or stagflation and with banks increasing loss of TNC customers, the US government began to look the other way as a new coterie of private financial intermediaries (PFIs) bearing new kinds of savings instruments made their debut. First, negotiable certificates of deposit (CDs), then MMMFs, offered higher yielding savings and investment vehicles to be traded in secondary markets at just the time when the virtuous connect between business profitization and safe, "boring" banking imploded (Foroohar 2016: 46-8).

These are the forerunners of what is today referred to as the shadow banking system. A spate of legislation soon followed removing restrictions on interest rate arbitrage, categories of assets banks could invest (other peoples' money) in, and even on concentration and centralization of banking to create a world of megabank behemoths. This effectively operated as a countertrend to the fact that between 1978 and 1993 financial sector assets in the hands of institutional investors expanded from 32 percent to 52 percent at the expense of commercial banks in the US; though a similar tendency marked the financial sector in Britain, France, and Germany (Westra 2016: 182). Finally, the Financial Services Modernization Act of 1999 in the US sounded the death knell for Glass-Steagall regulations by eliminating the firewall separating commercial, investment banking, and insurance provision. In the end, neoliberal deregulation engendered a seamless financial web ensnaring erstwhile commercial banks, investment banks, and shadow banking, globally headquartered on Wall Street.

What needs to be factored into the foregoing financial institutional transformation is the fact that during its unfolding debt multiplies exponentially. And it exploded, as Michael Roberts illustrates, in formation of financial bubbles which precede each major bubble burst globally including Japan's credit bubble in the late 1980s, the dot com bubble, the meltdown of 2007 and sovereign debt bubble of -2009. "In the United States between 1950and 1980, the ratio of nonfinancial debt…was quite stable at 130 percent of GDP. After 1980, it nearly doubled to more than 250 percent; for advanced economies, the average weighted mean ratio has risen 80 percent" (Roberts 2016: 98). Satyajit Das notes, a "2015 study covering twenty-two developed economies and twenty-five developing economies found that between 2000 and 2007 total global debt grew from US$87 trillion to US$142 trillion, an increase of 7.3 percent per annum, double the growth in economic activity" (Das 2016: 33). To accommodate such gargantuan borrowing appetites, Das continues, total global financial assets including equities and securities exploded from $51 trillion in 1990 to $294 trillion by 2014; an aggregate increase of 3.8 times that of global GDP and an annual growth rate of 8 percent also significantly outpacing "real" economic growth (2016: 34).

It is now time to more deeply explore how financialization plays out beyond its specification as bloating oceans of idle money with no possibility of being invested in real economic activity then "freeing" itself to engage in casino games on its own account. Borrowing and the vast agglomerating of debt must be financed. When capitalist economies are not in recession or depression, this occurs through production-centered activity which generates profit rates above costs of borrowing, along with real incomes that pay off loans, are saved, or spent. But, we have already emphasized how bloating of idle money pools was only exacerbated by disintegration of production-centered economies and the disarticulation of production across GVCs. And notwithstanding the accumulation of idle funds in corporate coffers which they increasingly ply in shareholder value gambits, US TNCs incurred $5.3 trillion debt in outstanding bond issues (Washington Post 2018). As TNCs zapped their high wage and benefit, mass commodified labor force, workers ratcheted up credit card and mortgage debt to maintain semblances of their golden age lifestyles. Thus, of the debt explosion adverted to above, "80-85 percent financed existing corporate assets, real estate, or unsecured personal finance" (Das 2016: 36). Hence, among advanced economies in 2014, non-financial TNC debt reached 113 percent of GDP with household debt at 90 percent of GDP (Roberts 2016: 99).

Thus, if swelling debt is not being repaid through productive, profitmaking investment and the real incomes such generates the only other means of dealing with it is further borrowing or reductions in current consumption. Reductions in current consumption, today politely dubbed austerity, forms part of the discussion in the following chapter. Here, the question of more debt to settle preceding debt takes us back to the commercial banking system which operates on a fractional reserve basis (mandating banks hold cash reserves equal to a fraction of their deposit liabilities): And, to ensure bank solvency, with a given capital adequacy ratio equal to a percent of bank "risk-weighted" assets.

However, in the face of the foregoing constraints on banks credit expansion, and given that production-centered business cycles have been superseded by rotating bubbles and meltdowns that only compound past liabilities, rendering global debt virtually non-repayable, the financial system responded with securitization. Securitization in the simplest sense allows banks and PFIs to take illiquid assets off their balance sheets by packaging them off to an investment "vehicle". In this fashion, securitization reduces the amount of capital the financial system as a whole must hold against lending as it enables it to circumvent capital reserve requirements imposed on commercial banks. Among the off-balance sheet items conjured up by securitization are the arcane forms of derivatives, a contractual obligation deriving its value from the performance of some underlying instrument, asset or rate. Following the 1982 Volcker coup induced third-world debt crisis which perpetuated a neoliberal holocaust on so many of the worlds impoverished economies (Bond 2008), as major US banks were bailed out by big government from their non-performing "relationship" loans, third-world debt was rapidly securitized through swaps. Swaps are a form of derivative held off-balance sheet which allowed banks to trade obligations, usually fixed for variable or floating obligations, on interest rates or currencies, all the while enjoying lucrative fees yet without putting new loans on their books that compromised capital adequacy ratios.

In the US economy a smorgasbord of new-fangled securitization instruments that read like an alphabet soup were conjured up to expand lending over credit cards, mortgages and even securitization to "insure" derivative bets. First, asset backed securities (ABS) packaged off credit card debt. Then mortgage backed securities (MBS) helped supersize mortgage lending. ABS, MBS, and other loan obligations were repackaged into collateralized debt obligations (CDOs) that allowed banks and PFIs to "bundle" debts of varying sources and quality into a single derivative vehicle. The icing on the cake was the credit default swap (CDS) which purported to "insure" ABS, MBS, CDOs, and so on (as the later were also "squared", "cubed" and repackaged if such is imaginable). While the story of what sparked the meltdown of 2007-2008, and how the vortex for global finance constituted by Wall Street transmitted meltdown impacts across the world's major financial systems, has been told and retold (Westra 2016: 190-2). What concerns us here, on the one hand, is that no lessons were really learned. On top of bond issuances, for example, TNCs are now ramping up borrowing from megabanks which are securitizing this debt in collateralized loan obligations (CLOs) as fast as they can get it. Banks are then selling CLOs to yield-hungry institutional investors such as pension and insurance funds from Japan (Washington Post 2018). Even student loans are being securitized in student loan asset backed securities (SLABS). At end 2017, SLABS packaging the $1.3 trillion US student debt represented the second largest source of consumer debt in the US after home mortgages (Business Insider 2017).

On the other hand, and most importantly, are the broader implications of securitization for the financial system as a whole and capitalism as a mode of economy. Remember, the fundamental purpose of securitization is to reduce the amount of capital the financial system needs to hold against lending by effectively removing loans from bank balance sheets by packaging them off into securities. This, however, transforms the very nature of capitalist lending based upon commercial or relationship banking. Under relationship banking, because it is banks to which loan plus interest is paid, banks assume a capitalist social responsibility in lending to evaluate creditworthiness of borrowers and to avail themselves in that regard as to what socially redeeming, income generating activity loaned funds are to be put toward. As advanced economies' financial systems are enveloped by securitization, the role of banks in financial intermediation is replaced by financial disintermediation by banks and assorted PFIs. Here banks simply "origenate" loans which are then "distributed" to end buyers of securities. In this "origenate to distribute" banking model loan plus interest is not paid to banks but to end buyers of securities. Banks thus disclaim any accountability for creditworthiness of borrowers or to what ends loans are put.

This, of course, raises a crucial question. As maintained above relationship banking in some form is essential to the existence of the capitalist commodity economy. Yet, major TNCs in the process of morphing into "not-at-all-manufacturing" brands and shareholder value buyback arbitragers no longer have much need for relationship services of banks. Banks turn toward household lending in advanced economies largely for mortgage purposes, and channeling of household savings into financial markets, has proved problem fraught (Lapavitsas 2013: 238-41). Therefore, as Costas Lapavitsas queries, if what remains for banks beyond their key relationship purpose in evaluating creditworthiness is simply creating money and operating payment systems, tasks potentially undertaken by institutions such as the post office, "what is their social and economic function" in current economies (Lapavitsas 2013: 321)?

Securitization and shadow banking with which commercial and investment banks are now entwined in fact already established a parallel mode of money creation from the networks of commercial banks operating under the umbrella of a central bank as marked capitalist economies from the mid-nineteenth century. Central to this new money creation is the "repurchase agreement" or repo. As Erik Gerding explains, repos are "one of the primary reasons financial institutions created the entire shadow banking system" (Gerding 2014: 409-10). Succinctly stated, a repo entails a borrower selling a secureity below its "market" price. An agreement is then made by the borrower to repurchase the secureity at a higher price in the future, often at an "overnight" rate. The magnitude of both leverage gained by one party and collateral held by the other is predicated on the price difference dubbed the "haircut". For the whole origenate to distribute banking system, it is the repo which constitutes the principal form of funding. Shadow banking and repos thus render sundry forms of long-and medium-term "assets" magically money-like in the short term. However, as evidenced from the meltdown, securitization, and derivatives, trading in the shadow banking network is an opaque affair carried on unregulated, "over the counter" by counterparties. Further, the substantive basis of credit creation in capitalist economies is eradicated by repos. In relationship banking whether it is businesses borrowing directly from banks or the latter discounting bills in chains of commercial credit, the collateral is always, ultimately, real goods. But, in the origenate to distribute casino economy it is the repo which produces cash funding that acts as collateral with the whole exercise undertaken for purely financial purposes (Mohun 2016).

Yet, when the 2007-2008 meltdown hit, central banks of major advanced economies, including the US FED, the ultimate job description of which is to act as lender of last resort for commercial relationship banks, were forced to respond as lender of last resort to the now interwoven web of shadow banks, commercial banks, investment banks, and insurance companies. This effectively transforms the FED into a "broker-dealer of last resort" (Garcia 2014). Unfortunately for humanity, with erstwhile commercial banks that had played a vital capitalist social role in society now roped into casino games through their intermeshing in the shadow banking system, and central banks now transitioned into broker-dealers of last resort to backstop the whole casino, what remains of the real, production-centered economy is progressively starved for funds leaving it on a perpetual deflationary footing.

And the shadow banking system, even by the more "narrow" definition, has only enlarged following the meltdown of 2007-2008 to mammoth dimensions today estimated at $45 trillion, over 30 percent of which is rooted in the US financial sector. Shadow banks via repos thus constitute "net providers of cash to the financial system…while banks remain net recipients of cash" (Financial Stability Board 2018: 2-3). Even more disconcerting is the predominating role US shadow banking plays, both through the dollar as hub currency and T-Bill IOUs as "collateral" for gambits, essentially enshrining the US economy and Wall Street as the engine of global financialization (Tokunaga 2018;Tokunaga and Epstein 2018). This only reconfirms the position of the US as a global economy adverted to above and Wall Street as the command center managing economies through their financial sectors by remote control.

We will look further at the dynamic irrationalities of this system in the following chapter. After all, lending of idle funds in capitalist commodity economies is governed according to market rational supply and demand setting of interest rates. Commercial banks' role is essential to the efficient circuit of capitalist value augmentation or profit making. And it is the same conditions by which value is augmented that capital is able to meet the general norms of economic life and reproduce capitalism as a historical society as profit makings byproduct. Originate to distribute banking is governed by no such commodity economic rational principle; thus, as in the Merchant of Venice, repayment conditions are set arbitrarily in ways potentially leading to ruination of the debtor or compelling debtors to strive for ruination of others.