GEOFIN Working Paper No. 13
Sokol, M.(2021) Financialisation, central banks and the ‘new’ state capitalism in advanced market economies. GEOFIN Working Paper No. 13. Dublin: GEOFIN research, Trinity College Dublin.
This paper argues that the debate on ‘state capitalism’ should pay greater attention to extraordinary state interventions taking place in the most advanced market economies in the West. The ‘visible hand’ of the state in the capitalist core became even more visible in the aftermath of the Global Financial Crisis of 2008 and is now very apparent during the current pandemic-induced crisis, particularly in the form of massive fiscal and monetary interventions. The paper focuses on the monetary policy side and the neglected role of central banks in contemporary Western economies and the implications of their actions for uneven development. The paper argues that central banks (and their monetary interventions) need to be put at the very centre of our efforts to understand state capitalism in the West. Applying the concept of ‘financial chains’, the paper highlights the key role central banks play in financialised capitalist economies and their economic geographies. It appears that without increasingly unconventional interventions by major central banks, such as the US Federal Reserve or the European Central Bank, advanced market economies would have already collapsed. The paper suggests that, going forward, the attention should be focused on the question of whether the enormous power central banks currently enjoy could be used to support more socially just, more environmentally sustainable and more territorially balanced economic futures.
Keywords: state capitalism, financialisation, monetary policy, central banks, economic geography