RESEARCH ON MONEY AND FINANCE (RMF) is a network of political economists that have a track record in researching money and finance. It aims to generate analytical work on the development of the monetary and the financial system in recent years. A further aim is to produce synthetic work on the transformation of the capitalist economy, the rise of financialisation and the resulting intensification of crises. RMF carries research on both developed and developing countries and welcomes contributions that draw on all currents of political economy. It also organises seminars and conferences on the political economy of money and finance.
RMF intends its work to influence public debate on money and finance. Unlike mainstream financial economics, it aims to contribute ideas that could transform the monetary and financial system in the interests of working people. Its guiding principle is that public and collective provision should replace malfunctioning private and individual mechanisms of money and finance. RMF’s work is of use to organised labour as well as to organisations engaged in developing alternative monetary and financial mechanisms. More broadly, RMF’s work is relevant to all political organisations concerned with the workings of the capitalist economy.
Money and finance dominate contemporary capitalism. Financial institutions, markets and assets penetrate most areas of the economy, while everyday life is increasingly organised through money. The financial sector has become proportionately larger in developed and developing countries across the world. For large corporations the expansion of finance has brought greater opportunities to participate independently in financial markets. For working people, in contrast, the rise of finance has brought rising personal indebtedness for housing and consumption as well as greater reliance on private financial institutions for pensions and insurance. Large parts of financial profits are drawn directly out of wages and salaries. Meanwhile, new social layers associated with finance have enriched themselves exacerbating inequality across society.
The rising significance of finance has also profoundly changed the world economy. Free capital flows have facilitated foreign direct investment and international borrowing. This expansion, however, has taken place in the absence of a true world money, with a dominant US dollar acting as a surrogate. Thus, on the one hand, developing countries have had to adopt restrictive domestic policies to facilitate entry of volatile foreign capital. And on the other they were forced to accumulate large reserves of US dollars, leading to massive capital flows from developing to developed countries, particularly the USA. The poor have been financing the rich in the world economy.
A further unambiguous result of the financialisation of capitalism has been heightened economic instability. Financial crises have dotted the last three decades, but none has been larger and more complex than that which commenced in August 2007. These crises originate in the inherent instability of capitalist finance, which has been exacerbated as finance became more autonomous within the capitalist economy. The costs have been borne by working people in both developed and developing countries.
Political economy has offered penetrating analyses of these processes, but its voice has been drowned by neo-liberal mainstream economics. However, the crisis that started in 2007 poses a decisive challenge to the dominance of neo-liberal theory and practice. It is no longer possible to maintain the superiority of free markets, while dismissing critical ideas out of hand, or denying them a hearing. For political economy, this represents an opportunity to increase its visibility in the field of money and finance, the original sources of the present instability and crisis. More broadly, the crisis has created scope for alternative proposals to organise money and finance. There are growing demands for collective and public provision of financial services that serve the needs of the working majority. RMF focuses its efforts to meeting these demands.