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Abstract

This paper investigates how and why equity markets for trading the rights to a share in the profits of a small and declining number of public corporations became such a powerful force in shaping the global economy, despite their renowned caprice and serial devastating crashes. The controversial evolution of publicly traded equity in Amsterdam after 1602 is presented as capitalism’s fork in the road, opening a path to financialized capitalism with equity markets its driving force. This gives the process of financialization a 400-year history that accelerated in the late 20th century. With negative impacts on various enterprising economies since their inception, the forces that have driven the equity market’s ascendancy are examined and the logic underlying this arrangement is questioned. The changes to economic theory and policy that promoted this financialization shed new light on many enduring economic problems. Utilizing lessons from this extended history of financialization, prospects for definancialization are also considered.

Keywords

Capitalism definancialization equity financialization stock market varieties of capitalism

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Financializing capitalism: 400 Years of equity market development

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