[...] The deregulation of financial services really followed structural transformations within the world capitalist economy. As capital went global, particularly in the form of the multinational corporation, it encouraged the growth of lending institutions which could operate outside of national boundaries, in the so-called offshore banking system. Particularly through the Eurodollar market, in which banks could deal in dollars in unregulated spaces, like the Caymans, we got a financial system that was responding to a much more internationalized production system. As a result, regulated financial markets like the U.S. and the UK were losing a lot of business to these offshore banks. Sooner or later they pressed to have liberalization and deregulation so they could get into some of these financial operations from which they had been excluded.

What I’m tracing for you here is a process by which first comes the great global reorganization of manufacturing industries through the multinational corporation, then come forms of financing that fit that new world economy, and then comes the deregulation in the major centers. To reregulate you have to imagine that somehow you could wind it all back and that you could have capitalist economies that were predominantly national again—not based on multinational production and the financial arrangements that go with it. So I think the problem for the people that emphasize deregulation is that they are really unable to account for these structural changes—not just policy changes by some evil characters in government. Of course, I do think they are quite evil characters in government, but they were responding to structural changes. If that’s true, then no attempt to reregulate could possibly work in a new world of globalized production and finance.