Liberalism and Capitalism Today

3The Birth of a New Capitalism in a New World: Financial Capitalism

Whatever the form of capitalism, commercial or industrial, the use of money and finance has been essential. Yet they were only means of accompanying trade and production, as we can see, for example, in the 19th century, with English companies that could only set up in India with the support of their country’s banking system. Financial capitalism responded to another logic: a considerable part of the economy revolved exclusively around money and finance, which became two industries in their own right involving real “production”.

3.1. The emergence and development of financial capitalism

Although it is difficult to date the beginning of this new capitalism, it seems to us that the abolition of the gold standard is an acceptable benchmark, that is, at the beginning of the 1930s, even though the original system disappeared at the end of World War I. Until then, the gold standard and fixed exchange rate system allowed for “natural” control of monetary expansion and automatic restoration of the balance of payment deficits. From then on, the quantity of money in circulation was no longer limited by the available stock of gold and began to increase at an ever-increasing rate, allowing finance to obtain the ingredient necessary for its development, which everyone would try to profit from.

However, previous crises of capitalism, especially the one following the crash of 1929, ought to have been a warning sign about the ...