Over the past half-century, financial markets have expanded far beyond their traditional roles to permeate every aspect of economic life, from housing and education to labor, governance, and climate policy. The dominance of finance in the global economy has reshaped not only how capital is allocated, but how value, risk, and social priorities are defined. But what, exactly, does finance do? Who does it serve? And given the recurring financial crises, rising inequality, and mounting instability that characterize the present global economy, what would it mean to analyze finance not as a neutral system of exchange, but rather as a social institution and dynamic site of power, law, and political struggle?
This course will trace the historical development of modern finance—from early forms of credit and banking to the rise of global capital markets, derivatives, and shadow banking—while interrogating the theories and ideologies that sustain them. We will begin by examining classical foundations in the work of Adam Smith and John Stuart Mill, before turning to Karl Marx’s concept of “fictitious capital” and Thorstein Veblen’s analysis of financial predation. We will proceed through the Keynesian and postwar eras, exploring how financial innovation and deregulation reshaped economies in the late twentieth century. Particular attention will be given to the contemporary rise of what has been called “asset manager capitalism,” a system in which large institutional investors exercise concentrated ownership and governance power across the global economy. What assumptions about rationality, equilibrium, and information make these models possible? What role does the legal system play in underwriting these claims—defining property rights, enforcing contracts, and legitimating financial innovation itself? What would it mean to reorient finance toward long-term public goals? In addition to engaging with classic texts of political economy, readings will include selections by Hyman Minsky, Donald MacKenzie, Felix Martin, Katharina Pistor, and Perry Mehrling.
