Financialisation and the State: Global Crisis and British Financial Regulatory Change

This thesis explores the role of states in propelling financialisation. The neoliberal period has been characterised by two interrelated phenomena: financial markets have expanded at a seemingly inexorable rate, while productive output has stagnated across much of the advanced capitalist world. States have acted to further these processes through discrete financial de- and reregulations. The existing literature has theorised states’ roles in this process by pointing either to the power of financial lobbyists and laissez-faire ideology or arguing that the state pursued these policies as an automatic reaction to the stagflation crisis. This thesis evaluates these claims by examining the governing motivations underpinning four key British financial regulatory transformations – the 1971 Competition and Credit Control measures, the 1977-79 abolition of exchange controls, the 1986 Big Bang, and the 1986 Financial Services Act – through the analysis of declassified government, Bank of England, and other documents. The findings presented in this thesis disconfirm both explanations advanced in the financialisation literature: state policy-makers were not dominated by financial lobbyists, entirely beholden to laissez-faire ideology, nor were their actions a reflexive, functional reaction to crisis. Instead, policy-makers employed financial de- and reregulatory measures as pragmatic instruments to strategically navigate the contradictory pressures of the global profitability crisis and the demands of domestic groups. This thesis theorises these findings by drawing from the value-form reading of Marx’s writings and Open Marxist state theory. During periods of crisis, states are forced to reconcile the impersonal domination of global value relations with the tangible demands of the electorate that their immediate needs be met. To do so, policy-makers create statecraft strategies that attempt to either discipline national social relations in line with global imperatives, often in a depoliticised manner, or delay the effects of the crisis through palliative measures in order to maintain political legitimacy. The financial regulatory changes studied in this thesis should be conceptualised as elements of these broader strategies of crisis governance. The British state’s propulsion of financialisation constituted a strategic attempt to govern the crisis- and struggle-ridden nature of capitalist social relations