Financialization under state capitalism: steering capital markets in the BRICSS

• Applicant: Professor Dr. Andreas Nölke
• Subject Area: Political Science
• Term: since 2020
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 446618653

The role of capital markets in economic development has increased significantly with an increasing financialization in recent decades. At the same time, the role of the state and governmental steering of capital markets are hardly discussed in the financialization debate in the social sciences; Seen from this angle, the latter has a "hollow core". Mostly, the functioning of capital markets is automatically assumed to largely correspond to those in the ideal type of liberal capitalism. Capital markets appear as homogeneous entities, analytically separated from the state and following a neoliberal paradigm that hardly knows any state control and governmental steering. However, an analysis of Chinese capital markets has shown that the latter function quite differently in state-capitalist systems, fulfil different socio-economic roles and lead to different social consequences than the liberal ideal type. There is also evidence from other major emerging markets - and in some cases from Western industrialised countries – that these deviate from the liberal model. In view of the growing importance of large emerging markets in global capitalism, the question therefore arises whether the discussion of financialisation not only has a "hollow core", but also starts from an understanding of capital markets that is empirically outdated and overly homogenizing.To answer this question, the project first develops an alternative ideal type of "state-capitalist" capital markets that stands in contrast the neoliberal ideal type. Based on these two ideal types, the project engages in a comparative analysis of the capital markets of Brazil, Russia, India, China, South Africa and South Korea (BRICSS). These countries are not only among the economically and politically most important emerging markets, they also have dynamically growing capital markets. Moreover, each of these countries indicates a higher degree of state capitalist elements in their economy, regardless of democratic or authoritarian regime type. This comparative analysis, for which we have developed an analytical toolkit combining statistical data, document analysis, expert interviews and participation in financial market conferences, intends to show the extent to which the capital markets of these countries tend towards the neoliberal or state-capitalist ideal type. Building on this analysis, the third sub-goal investigates the implications of differently managed capital markets, on the one hand with respect to economic development at the national level and on the other hand with respect to the global financial architecture.Our project aims not only to provide a more empirically and theoretically solid basis for the financialization literature, but also to assess whether the rise of these (at least partially) state-capitalist emerging markets will lead to a challenge of the liberal order in the field of capital markets.

• DFG Programme: Research Grants