The huge growth of deregulated finance has been associated to a new financial regime and great transformations in the pattern of economic growth. Looking back, there has been a narrow relationship between the crisis of the post-war accumulation pattern, the evolution of the international monetary system and the process of financial deregulation. In fact, as Bello (2006) warned, in the 1980s, Reaganism and structural adjustment were not successful attempts to overcome the post-war accumulation crisis. One decade later, the Clinton administration embraced globalization as an American strategy. First, this strategy aimed to accelerate the integration of production and markets by transnational corporations. Secondly, it aimed to create a multilateral system of global governance centred on the World Trade Organization, the International Monetary Fund and the World Bank.
In the last decades, financial capital exercised control over the structural forms necessary for the continuing cycles of valorisation of productive capital, thanks to the centralized money at disposal. Different growth models overwhelmed this global scenario: while some countries have presented a consumption-driven growth model fuelled by credit, generally followed by current account deficits, other countries have shown an export-driven growth model, mainly characterized by modest consumption growth and large current account surpluses (Stockhammer, 2009). The growth of financial assets, generated by the new debt cycle, included growing and sophisticated risk management practices. Besides, the financial expansion also proved to subordinate the pace of investment to financial commitments. The overall changes strengthened private and public debt and further social inequalities.
The idea of autonomous monetary management has collapsed under the 2008 global financial crisis and the tensions that emerged within the markets have been shifted to the political sphere. In truth, the financial crisis and the erratic movements of key-currencies have shown that central banks do not have control on the complexity of global, innovative and speculative markets. Otherwise, central banks´ actions are not independent from private and public pressures.
In addition, macroeconomic policies that currently privilege fiscal austerity and further labour market flexibility can be socially costly. Considering the labour markets, employability seems to be conditioned to private strategies that aim cost reductions, labour flexibility and efficiency targets. Longer working hours, job destruction, turnover, outsourcing, workforce displacement and loss of rights have also been part of the spectrum of management alternatives aimed at cost reduction. Indeed, the current dynamics of labour markets favoured the vulnerability of workers, mainly young people, and precarious jobs.
The apprehension of this political and social reality is decisive in the attempt to reformulate the economics curriculum in order to include a deep reflection on current labor challenges that coudl take into account the changing employment relationship. Students must be increasingly aware that, considering the current investment scenario and its outcomes in terms of labour challenges, that in the near future workers will be increasingly polarized into two forces: on one side, an elite that controls and manages the high-tech and financial global economy; and on the other side, a growing number of displaced workers who have few prospects for meaningful job opportunities.
Bello, W. (2006) “The capitalist conjuncture: over-accumulation, financial crises, and the retreat from Globalization”’,Third World Quarterly, 27:8, pp. 1345 — 1367.
Minsky, H.P (1986), Stabilizing an Unstable Economy. New Haven, Connecticut: Yale University Press.
Stockhammer, E. (2009), “The finance-dominated accumulation regime, income distribution and the present crisis”, Department of Economics Working Paper Series, Vienna: Vienna University of Economics & B.A.