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The recent financial meltdown and the resulting global recession have rekindled debates regarding the nature of contemporary capitalism. This book analyses the ongoing financialization of the economy as a development within capitalism, and explores the ways in which it has changed the organization of capitalist power. The authors offer an interpretation of the role of the financial sphere which displays a striking contrast to the majority of contemporary heterodox approaches. Their interpretation stresses the crucial role of financial derivatives in the contemporary organization of c

"The recent financial meltdown and the resulting global recession have rekindled debates regarding the nature of contemporary capitalism. This book analyses the ongoing financialization of the economy as a development within capitalism, and explores the ways in which it has changed the organization of capitalist power. The authors offer an interpretation of the role of the financial sphere which displays a striking contrast to the majority of contemporary heterodox approaches. Their interpretation stresses the crucial role of financial derivatives in the contemporary organization of capitalist power relations, arguing that the process of financialization is in fact entirely unthinkable in the absence of derivatives. The book also uses Marx's concepts and some of the arguments developed in the framework of the historic Marxist controversies on economic crises in order to gain an insight into the modern neoliberal form of capitalism and the recent financial crisis. Employing a series of international case studies, this book will be essential reading for all those with an interest in the financial crisis, and all those seeking to comprehend the workings of capitalism."--Publisher

This study looks at the valuation of U.K. investment trusts for the 50 years following their appearance as companies in the 1880s. Based on a large and unique dataset compiled from primary sources, our calculations reveal a huge variation between the ordinary share prices of investment trusts and their underlying net asset "fundamental" values. This mismatch is a well-known puzzle in modern financial markets and has attracted a large volume of research because it casts doubt on the concept of market efficiency. We investigate possible explanations for this pricing puzzle and shed light on U.K. investor behavior before the 1930s.

AbstractUK investment trust companies were at the forefront of financial innovation during the so‐called first globalization era before the First World War. This study examines their portfolio strategies in detail, using a unique dataset of 115 portfolio observations for 30 different investment trust companies, comprising a total of 32,708 portfolio holdings. Our results reveal strong performance and relatively sophisticated asset management, which was based on a mixture of a buy‐and‐hold investment strategy and active portfolio management. Investment trusts employed global rather than domestic diversification. The early predominant investment in bonds in the 1880s gradually declined in favour of ordinary and preferred shares. North and Latin American markets were the main geographical target of UK investment trusts, with less appetite for domestic investments and negligible interest in continental European financial securities. There is significant cross‐sectional variation in asset allocation between investment trusts; they thus avoided herding behaviour in portfolio choice and developed a wide range of different portfolio strategies.

The present study puts forward a plan for solving the sovereign debt crisis in the euro area (EA) in line with the interests of the working classes and the social majority. Our main strategy is for the European Central Bank (ECB) to acquire a significant part of the outstanding sovereign debt (at market prices) of the countries in the EA and convert it to zero-coupon bonds. No transfers will take place between individual states; taxpayers in any EA country will not be involved in the debt restructuring of any foreign eurozone country. Debt will not be forgiven: individual states will agree to buy it back from the ECB in the future when the ratio of sovereign debt to GDP has fallen to 20 percent. The sterilization costs for the ECB are manageable. This model of an unconventional monetary intervention would give progressive governments in the EA the necessary basis for developing social and welfare policies to the benefit of the working classes. It would reverse present-day policy priorities and replace the neoliberal agenda with a program of social and economic reconstruction, with the elites paying for the crisis. The perspective taken here favors social justice and coherence, having as its priority the social needs and the interests of the working majority.

AbstractAfter the introduction of limited liability, a growing number of individuals in Britain from a widening social spectrum, including the less affluent, began to own stocks and shares. Drawing upon a unique and large dataset of 35 848 investors between 1870 and 1935, this study analyses joint holdings which have been a neglected aspect of investor behaviour. Our findings reveal that joint holdings were quite common and that about one in five UK investors were involved in a joint investment. Men were more likely to be joint holders than women for reasons related to institutions of social ownership such as trusts and executorships.

AbstractThis article examines the long‐run evolution of local bias by UK investors between the 1870s and the 1930s. It uses a large sample of nearly 30,000 shareholders based on 197 sets of share records, a large and representative database of the investor population across sectors and time. It investigates the structure and the evolution of local investment preference between shareholders and the companies in which they invested, as measured by the distance between where they lived and corporate headquarters. The study offers evidence of strong initial local investment preference, which declined over time for non‐Londoners, but remained strong for Londoners until the 1930s. Local investment preference of security holders was related to the size of the board of directors and, for wealthy investors, was related to the age of the firm. For large firms, local networks between investors and directors appear stronger when director shareholdings and voting rights were important. This study supports the analytical hypothesis of local informal trust networks between investors and directors as a means to overcome informational asymmetries and weak legal protection, and provides evidence that local preference was a means to curb insider opportunism and private benefits of control.

Abstract
This study investigates the portfolio asset allocation of UK investment trusts between 1914 and 1928 using a unique hand-collected dataset of 41 companies, which comprises 40,875 portfolio holdings. UK investment trusts not only survived WWI without major losses but also had a remarkable performance in the 1920s, which led to a wave of new incorporations. The 1920s was a period of significant shifts in investment trust portfolio composition and our analysis examines the main reasons for this. We show that investment trust managers were able to adjust quickly to the new socioeconomic circumstances and secure high profitability for their shareholders.

AbstractSetting savings goals can increase wealth accumulation behaviour, yet it depends on how challenging the goals are. Using rarely available savings goal data from 1,760 clients of an advisory investment firm, we identify gender attitudinal differences in goal amounts: men choose more ambitious savings goals than women, independently from expected life‐long earnings. This, however, holds only for individuals living in a couple, for which men's savings goals reach the highest levels. Based on insights from qualitative research (56 semi‐structured interviews of 60 participants), we argue that these differences originate from gender‐normative roles assigned to members within the households. Most women are assigned to daily budget management, exacerbating worries about financial security issues in the short term and negatively impacting savings goals. This observation holds even when women, rather than men, manage long‐term investment for the household. Men's assignment to long‐term financial planning is related to optimism and ambition with regards to their savings goal choice, but these attitudes remain conditional on the fact that they do not deal with day‐to‐day budget management.