Greta Krippner’s ‘Capitalizing on Crisis: The Political Origins of the Rise of Finance’

Greta Krippner’s recent book Capitalizing on Crisis: The Political Origins of the Rise of Finance operates within a question as old as sociology itself: what is modern about modernization? The advent of capitalism and the industrial revolution were the backdrop for Weber, Durkheim, Marx, and Smith. For contemporary sociologists like Daniel Bell, Manuel Castells, Fred Block, and a host of Europeans, the subject has become: what is advanced about advanced capitalism? The answers have been many: globalization, informationalism, deindustrialization, post-industrialism, neoliberalism, post-fordism, etc. These words all serve to characterize contemporary capitalist society. Krippner’s book makes the case for another post-1970 pillar of advanced capitalism — financialization.

In a 2005 article, which can be read here, sociologist Greta Krippner first laid out the case that the American economy has been effectively “financialized.” The case was well made. The use of data was skillful. In particular, the author showed financialization in how profit was generated rather than on how occupational structure had changed. And the author documented non-financial firms’ heavy reliance on finance. Just looking at financial firms wasn’t enough. In the 2005 article she wrote:

“One indication of financialization is the extent to which non-financial firms derive revenues from financial investments as opposed to productive activities.” (182)

The book gives the example of an automobile industry that makes more money on the financing of the car than they do on the car itself, and reprints a quote from a Morgan Stanley investment banker that “Corporate America is rapidly becoming Bank America.”

Unlike the article, the book is able to attempt a larger explanation. It tries to give a state-centered picture of the “conditions conducive to the rise of finance” — to not only establish the fact of financialization, but explain how it came about. Of this part, I am working on a more polished review.

For now let me say I think it’s a good book. It displays exceptional skills in research and analysis. Plus, for what it’s worth, she used the method of in-depth interviewing, which I advocate. (For an impressive list of interviews, see Appendix B of the book.) I do have a few questions, and I’m skeptical of a few of her arguments. But overall, it powerfully expresses the way in which money, credit, debt, and finance are central to understanding the modernization of capitalism from the 1970s to 2001.

(…that she reports on data until 2001 but not after is an unfortunate fact of the book. She states that as a historical sociologist, it makes sense to create a state of temporal separation from the data. I will agree to agree. In any case, after whatever remove she deems necessary, I’d eagerly spend time reading the author’s analysis of the data after 2001.)

Full citation: Krippner, Greta. 2011. Capitalizing on Crisis: The Political Origins of the Rise of Finance. Harvard University Press. Available here.

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