[...] Not only does finance measure and profit by speculation on the fundamentals of economic life; it also helps shape and discipline the reality of production and circulation. [...] financialization essentially represents an unaccountable form of global economic planning, yet one with no broad goal, save for the endless competitive maximization of profit. The result is a world cut to fit the financial imagination, whose benefits accrue largely to the wealthiest percentiles, and whose dramatic costs are endured by the majority of humanity. [...]

Perhaps the most terrifying feature of financialization is that there is no one steering the ship; there is no grand conspiracy, though its operations do depend on lesser conspiracies. Rather, I want to understand financialization as a means by which social agency (at both the highest echelons of the financial world and the lowest depths of the sub-prime) is transformed and reoriented towards the reproduction of a pathological and cancerous system.

[...] we take up Marx’s (1981, 594–652) notion of fictitious capital in a way he probably did not fully intend it: capital’s reproduction depends on and transforms the social fictions that animate society. Financial wealth may be largely “fictitious,” but that does not make it any less “real”: as Thomas King (2003), among many others, teaches us, fictions can be among the most powerful forces in human societies. Indeed, it is through shared fictions that we reproduce social and subjective life itself.

[...] Louis Althusser (2014) spoke of ideology as an imaginary relationship to the realities in which we live, a false cohesive worldview that covers over the inherently partial, fractured and contradictory nature of our consciousness. In this sense, ideology is not some passively received, generic, prepackaged simulacrum dispensed from on high and swiftly internalized. Rather, as Eagleton explains, ideology is an active creation whereby individuals and groups are constantly in the process of making sense of their world with the intellectual and cultural resources that they find at hand. Likewise, Fredric Jameson (1981; 1984) has approached ideology as a false or fragmentary synthesis based on real experience, or an inherently limited attempt to grasp the unfathomable complexity of capitalist totality. Hence, ideology is not simply “false consciousness,” nor is it merely a “top-down” imposition. Rather, it is a field of contestations and activities, an evolving and emerging set of meanings and explanations created by people as they make sense of their world. But, importantly, it is not a totally free or unmediated process: to build ideology, we draw on those cultural and social resources at our disposal (from fiction to films, from metaphors to measurements) that are, themselves, ideological. We are unduly influenced by those forces of cultural production and social institutions that monopolize meaning and broadcast knowledge: the media, religion, schools, fiction and so forth.

So, perhaps, we can understand financialization as an ideological process, if we apply this expanded definition: it is a process whereby a set of narrative, metaphoric and procedural resources imported from the financial world come to help explain and reproduce everyday life and the capitalist totality of which we are a part. But, in so doing, they also transform that reality more broadly. To the extent that we see ourselves as miniature financiers, investing in and renting out our human capital, we act, behave, cooperate and reproduce social life differently. To the extent that we see health, education, government programming, relationships, games, shopping and work as investments and see our lives as fields of paranoid securitization, we build up an ideological armature which occludes certain aspects of social reality and precludes certain futures. But, further (and this is crucial), financialization also means a moment when the financial system, and the capitalist economy of which it is a part, is dependent on and invested in the ideologies, practices and fictions of daily life as never before. In a moment characterized by ubiquitous debt, escalating consumerism and political quietism (or, worse, reactionism), and by a highly volatile financialized economy, the realms of culture and ideology can no longer be said to be merely the superstructure of a “real” economic base. [...]

[...] What do we make of a system where the rise and fall of whole economies appear to hinge on the performative speech acts of central bank chiefs, or on the confidence and credulity of increasingly fickle investors (Marazzi 2008, 13–36); of a system where stock markets are so jittery and interwoven that they can tumble because of a leaked memo at a Fortune 500 corporation? What do we make of a system that, ultimately, is in the grip of imaginary money, where nearly unfathomable flows of immaterial wealth define and determine the material lives of nearly everyone on the planet? There is something here about the relationship of culture and economics that troubles our established understandings and frameworks.

So, similarly, finance may never have a moment when a financial asset accurately and unproblematically refers to a real-world value (whatever that is, and we would have good reason to question anyone who proposed that there is some accurate measure thereof). And, indeed, as we shall discuss, this is the fundamental root of its crises. But finance as a sector, in spite of this, is useful. It is useful because, as I shall illustrate, it is an essential element of capitalist accumulation, in spite of its problematic relation to the reality it aims to measure. In the same way as metaphor facilitates and occludes social violence, finance disciplines and (mis)measures the financialized capitalist economy, with typically tragic consequences.

[...] Finance’s goal, according to Lazzarato, is to compel us all to imagine ourselves as “financiers of the self,” and embrace precariousness, risk, and economic and existential insecurity. For Lazarrato, debt and finance operate biopolitically: they are techniques of power whereby both bodies and whole populations can be enlisted into the reproduction of capitalist power relations. Finance’s ultimate objective, then, is not simply profit but the creation and reproduction of compliant subjectivities, workers germane to a decentralized and disorganized form of global capitalism.

Importantly, Marx makes the key point that a stock or bond is, in essence, a claim on the future surplus value yet to be extracted from labour. In other words, a share in BP may have a price for which it exchanges on the speculative market, but its underlying value is really a claim to a certain share of surplus value yet to be extracted from its workers as they are, in turn, compelled to exploit the planet. For Marx, the vast majority of financial wealth was, ultimately, fictitious. The price of financial assets was a hallucination, a conjecture created when multiple claims to the same underlying surplus value were sold to multiple parties. As long as all the capitalists did not seek to claim the real surplus value at once, the fictitious capital could continue to function and could, in fact, “double and triple” as promises built upon promises. Should they all attempt to exchange their fictitious capital for the assets for the material wealth or productive capacity it claims to represent, this would lead to a crisis. The full consequences can perhaps only be seen today, when, before the financial crisis, the total circulating value of over-the-counter derivatives contracts was estimated to be at least 70 times the total planet’s gross domestic product, and when in one day the volume of speculative currency transfers alone equalled the world’s annual economic output (Foster and Magdoff 2010, 58). Fictitious capital indeed

[...] For Harvey, fictitious capital represents not a claim on actually existing value but a share of future surplus value yet to be extracted (2006, 265–268). But, for Harvey, finance does not exist purely as the realm of elite skulduggery, it is a crucial set of economic institutions by which capital “fixes” its inherent tendency towards overproduction and, as such is an essential, if crisis-prone, component of capitalist accumulation. In order for capital to expand, it requires mechanisms by which multiple otherwise competitive capitalists can pool their resources to undertake ventures that are too risky or too large for any single capitalist to undertake alone (270–273). As capitalists are not by their nature cooperative, a financial system becomes necessary which can put capital to work, rather than sitting in a vault in the money form. Colonial expeditions, railways, mines and certain forms of technological innovation are all examples of aspects of capitalism that require this sort of financialized collaboration between otherwise competitive capitalists. These necessitate a speculative market. However, one problem, as Marx noted, is that, for various reasons, it is easy for the financial sector to become more profitable than other sectors of capital, and it increasingly comes to dominate the economy as capitalists seek to invest in speculative returns based on the difference between the buying and selling prices of various securities (Harvey 2006, 316–324). But, since finance does not actually produce any “real” value itself, its increased power means a gradual widening of the gap between the price of financial assets, which might be said to escalate geometrically, and the actual underlying value of labour to which those assets lay claim, which might increase only arithmetically.

The reasons why capital never accurately measures the value of labour as embodied in commodities are varied, but one key reason is the tremendous influence of finance and banking over the value and quantity of money. At no moment has capitalism been free from the influence of finance, and at no moment has finance failed to produce fictitious capital – that is, freely circulating claims to future surplus value that act as money and so distort the ideal capitalist economy. The result is that, for this and other reasons, there is always more capital than value to which it has a claim, and this excess fictitious capital, while to a certain extent necessary to overcome certain crises in capitalist economics, fundamentally and essentially skews capital’s reckoning of value. As I have argued elsewhere (Haiven 2011), capital consistently mis-imagines value. Price is an essential but inherently flawed means of measuring underlying value.