The Finance Curse: Britain and the World Economy

John Christensen, Nick Shaxson, Duncan Wigan

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    Abstract

    The Global Financial Crisis placed the utility of financial services in question. The crash, great recession, wealth transfers from public to private, austerity and growing inequality cast doubt on the idea that finance is a boon to the host economy. This article systematizes these doubts to highlight the perils of an oversized financial sector. States failing to harness natural resources for development led to the concept of the Resource Curse. In many countries, resource dependence generated slower growth, crowding out, reduced economic diversity, lost entrepreneurialism, unemployment, economic instability, inequality, conflict, rent-seeking and corruption. The Finance Curse produces similar effects, often for similar reasons. Beyond a point, a growing financial sector can do more harm than good. Unlike the Resource Curse, these harms transcend borders. The concept of a Finance Curse starkly illuminates the condition of Britain’s political economy and the character of its relations with the rest of the world.
    Original languageEnglish
    JournalThe British Journal of Politics and International Relations
    Volume18
    Issue number1
    Pages (from-to)255-269
    Number of pages15
    ISSN1369-1481
    DOIs
    Publication statusPublished - Feb 2016

    Bibliographical note

    The research presented in the contribution was funded by the H2020 grant ‘European Legitimacy in Governing through Hard Times (#649456 – ENLIGHTEN).

    Keywords

    • Finance Curse
    • Financialisation
    • International political economy
    • UK economy

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