2010/04/01 by Ravi Arvind Palat · 9 citations
Economics, Econometrics and Finance · Social Sciences · #Economic Theory and Policy #World Systems and Global Transformations #Political Economy and Marxism #Economics #Speculation #Capital (architecture) #Capitalism #Financial crisis #Liberian dollar #Market economy #China #Emerging markets #Economic system #Finance #Macroeconomics #Political science
paper · doi:10.1080/01436597.2010.488465
published in Third World Quarterly 31(3), 365-384 (Taylor & Francis)
openalex publication_date 2010/04/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/29
By focusing on the consequences of the dismantling of regulations over the financial sector, the current debate on the causes of the global economic meltdown obscures the cyclical occurrence of speculation in capitalism, as the accumulation of more capital than can be profitably invested in the production and sale of commodities results in financial expansion. Historically financial expansion has signalled the end of one world-scale system of accumulation and the transition to a new system as capital flows from declining powers to rising powers. However, the contemporary period is distinguished by capital flows from rising powers to declining ones. An analysis of the current crisis suggests a reversal of this anomaly as it reduces the ability of China and other East Asian states to support the US dollar. At the same time ‘emerging market economies’ have begun to forge new relationships that could provide the framework for a new system of partnership between states and enterprises to reconstruct a new cycle of accumulation if two hurdles are overcome: 1) absorption of labour that is being displaced because of the high organic composition of capital and 2) dampening of the growing inequalities in income which has not only restricted the growth of markets but is also fuelling increasing social conflict.