“Financialization” may sound like an unwelcome buzzword, yet its meaning is surprisingly simple to grasp. It marks a late stage in capitalism where debt and the power of financial markets pull more weight than the producteurs and real goods behind the scenes. This shift centers on turning business and services into financial instruments that can be traded, hedged, or speculated upon, including derivatives that aim to lock in future prices to mitigate risk and manage exposure.
The core idea is clear: finance becomes the dominant driver, influencing decisions in industry and agriculture long before production itself. In this view, profits flow through the financial system rather than through tangible, productive activity, and the result can be a widening gap between capital ownership and the real economy that sustains jobs and communities.
Observed volatility in commodity markets over recent decades is not explained solely by classic supply and demand dynamics. It is largely shaped by large-scale financial flows and speculative activity that ripple across prices, futures, and contracts. These financial positions in the food sector, for instance, have shown dramatic growth, with the scale of futures and futures-related contracts expanding rapidly over a span of years, underscoring the influence of speculation on prices faced by producers and consumers alike.
In discussions about the scale of derivatives trading, it has been noted that the value of financial instruments linked to raw materials has grown far beyond traditional benchmarks. Such observations point to a complex, often opaque landscape where the total value of traded derivatives can surpass the underlying physical world’s measurable output by large margins, making oversight and risk assessment an ongoing challenge.
Beyond this, a sequence of global events—the financial downturn of 2008, followed by the disruptions from a global pandemic, and later the geopolitical shocks of conflict—has intensified market instability. Energy costs surged, affecting households and the industrial base alike, and exposing vulnerabilities in many economies that rely on a balance between affordable energy and steady production. In many cases, policymakers responded with public support measures aimed at cushioning shocks, but such measures are not always sufficient to restore balance in the longer term.
Concerns have also been raised about the concentration of financial power and its close ties to media interests, both at national and international levels. This concentration can influence policy options and public discourse, potentially limiting the range of responses available to democratic institutions seeking to maintain social and economic balance. The result is a growing sense of social anger in various regions, raising questions about the resilience of liberal democracy when political leadership is unable to fully address the underlying causes of discontent.
Across several European countries, there are signs that discontent can translate into the rise of movements that challenge established political forces. The fear is that responses grounded in austerity or insufficient attention to the needs of ordinary people may fuel shifts that favor quick political remedies over durable, collaborative solutions. In this climate, returning finance to its place as a tool that serves real production becomes not just desirable but essential. Without that reorientation, there is a real risk of destabilizing the economic and social fabric that sustains communities.
-
In a piece published in the Italian newspaper Il Foglio, the discussion around these dynamics is explored, highlighting the interplay between financial markets and tangible production.