[...] 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.

When I speak of neoliberalism, I’m talking about a package of policies—if you were going to date it, the transformations begin in China in 1978, and accompany the election of Margaret Thatcher in Britain in 1979, and Ronald Reagan in the U.S. in 1980—where, under the banner of rolling back socialism and the welfare state and letting markets reign supreme again, they cut back social service spending dramatically. They privatized state-run utilities, industries, and so on. And they attacked the power of unions. In the British case the battle over the coalmines was crucial in terms of rolling back the unions and driving down the wage levels that workers in the North can command.

That’s the first side of the neoliberal agenda. The second is the attempt to impose enormous hardship on the Global South—to use the debt crisis, which comes to a head with the recession on 1980–82, to go in and essentially rewrite the rules of the game in the Global South through structural adjustment programs orchestrated by the International Monetary Fund and to some degree the World Bank. Where they literally go and say, “You have $450 million in debt that you could never possibly pay with your little economy; well, guess what? You can have new loans that will allow you to make your payments, we’ll lend you the money, but you’re going to have to do all the things that I’ve just described and worse. You have to lay off 20 percent of all public employees. You must get rid of any subsidies for fuel and food for the poor. You must massively privatize, you must open up your financial industries, so that Western banks can come in and essentially gobble them up.”

That offensive against labor in the North and against the peoples of the Global South generally did lay the basis for a new wave of capitalist expansion. They boosted profits by cannibalizing the South on one hand and by driving down wages in the North on the other. And then they began to relocate production facilities to low-wage zones of the South.

[...] When we talk about financialization, all we’re really talking about is that the provision of a larger share of all goods and services involve financial transactions—more of education, healthcare, housing is provided through the market and through credit markets in particular—and that more of the profits made from the production of goods and services are staying in the hands of the financial sector. In fact the financial sector’s share of profits rose from about 10 percent of profits some thirty years ago to 40 percent in the last few years. So what financialization really means is that financial transactions are becoming more and more prominent in everyday life and they are becoming more and more lucrative, more and more profitable.