How Financialization Is Raced, Gendered and Classed

Dating from the 1970s, financial markets, actors, institutions and motives have become increasingly influential in social life. However, the leading causal theories of financialization are notably blind to gender and race except insofar as class is gendered and raced (e.g., 1. financialization as a functionalist evolutionary process to solve societal problems; 2. as a temporary reprieve from a crisis of accumulation; 3. as performativity theory in which elites reshape the economy to fit their neoliberal theories or ideologies, or 4. as a pragmatic replacement for the dissolution of corporations in organizing economic and social life).

Drawing on existing empirical research, this paper theorizes well-specified links to how financialization is altering these durable modes of social stratification. The point of departure is the commodity chain literature which specifies how economic growth and profit-making can be created by finding or creating a low-competition niche or bottleneck in a commodity value chain in market space. This paper makes an analogous argument for finance; the finance industry is composed of commodity chains extending across geographic space that shift capital across time. Financialization is the consequence of actors inserting themselves in these chains to extract profits and/or expand financial markets to new areas of social life. Such disintermediation and entrepreneurship can be productive, but it need not be. Unique to finance, financial actors’ profits are also drawn from exploiting information asymmetries up and down the chain, or by shifting risk up or down the chain. Drawing on empirical research, I demonstrate how these chains are gendered and raced, and contrast this with mid-century social stratification. I argue that while financialization has entrenched these durable forms of inequality, it can also empower disadvantaged groups; the net effect of financialization in the future is therefore very much open to contestation.