"A Financialized Monetary Economy of Production," by Andrea Fumagalli and Stefano Lucarelli: A Comment

Lucy Badalian and Victor Krivorotov

International Journal of Political Economy, 2012, vol. 41, issue 1, 95-107

Abstract: Fumagalli and Lucarelli blame the ongoing crisis on overinvestment in the information and communications technology (ICT) revolution/cognitive capitalism. We present evidence that this is a stable pattern: capital-augmenting technological progress of ICT revolutions/financializations also unfolded as part of global trade infrastructures during earlier globalizations, such as a century ago, under the British empire. Historically, this started a transition to a new economic era: the mature dominant economy was "hollowed out" via financialization/outsourcing, while awakening the periphery. We model this as "opening up" the mature dominant economy: its falling fundamentals are compensated for by running a gigantic globalizing economy of scale. Fumagalli and Lucarelli are correct: The road to a healthy economy lies in restarting labor-augmenting technological progress. Historically, governments led in testing, refining, and commercializing revolutionary technologies—alas, usually during major wars.

Date: 2012
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DOI: 10.2753/IJP0891-1916410104

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