Casino Capitalism

Described as an economic system that revolves around short term pricing and market movements, the term “casino capitalism” has significant effects on the economies of many nations and international relations. Coined by the influential international political economist, Susan Strange, and recorded in a book with the similar name, the term has described the economies of many nations, notably the United States.  The book “Casino Capitalism” is classified as a radical yet critical analysis of the international financial system. The book focuses on the weaknesses posed by the financial system. The book focuses on fraud, corruption, cases of money laundering and bank failures. The significant roles played by money are discussed and well argued in the book by Susan Strange. The term casino capitalism is a popular term coined by Susan Strange to refer to the trends in the global markets that largely rely on speculation for the advancement of the market.

The book “Casino Capitalism” was published in 1986. The book comprehensively provides insight that has captured the emergence of industrial production, global finance, and the independence of states. The word “casino” in the term “casino capitalism” refers to the roles played by the gambling and speculation play in finance and global markets. Susan was a pioneer in the international political economy, an area of study that re-integrates economics and politics.

The author argues that the global market has increasingly gained power. Susan Strange’s argument is an ingredient in the creation of a wide gap between the strong states and the weak and partial governments. In her words in the book “Casino Capitalism”, Strange states that ‘a dangerous gap’ was arising between weak or partial intergovernmental cooperation and territorially-bound nation states. This way, the markets had a free hand which could be constructive or destructive.

In her book, Strange argues that the whole world is subject to economic disorders, which are largely financial and monetary in nature. The economic problems that the entire world faces are the result of government decisions. The transformation of industrial capitalism into casino capitalism increases the level of corruption and political instability. The book argues that the speed of computerization of the financial markets has in equal measure caused universal changes in the global financial arena and global volatility.

With regard to international relations, the book by Susan Strange addresses economic issues among different states in the world. There are five trends that the book argues out, including the innovations of the financial markets. These developments have not only had adverse effects on the financial markets, but also reasonable impact on the international relations of many countries. With increased cases of corruption and political instability, it is evident that the casino capitalism is a phenomenon with effects on international relations.

World economics and globalization have improved the relations among states with increased opportunities for growth and development. As the author notes, there was a dynamic increase in the size of the financial markets. The growth was radical to the extent of redistribution of wealth in the financial markets. Casino capitalism has also led to debt expansion, which, as a result, has further increased consumption in the industrial economies. Notably, the expansion brought with it multiple forms of competition in the financial spheres. The transformation from industrial capitalism to casino capitalism was characterized with aspects of recurrent growth problems as a result of changed financial superstructures. There have been stagnations in the underlying economy and the growth of finance. The stagnations implied that the capitalists became even more dependent on finance growth to enhance and preserve capital. Strange argues that the economy has been greatly damaged by the major structural adjustments in the unpredictable economy due to factors, such as economic stagnation.

Commercial banks have turned into investment banks all over the world due to globalization. Ease in communication in the world, has allowed more investments to venture at international levels.  As a result, international relations among countries are improving as banks seek to expand to foreign territories. Globalization among the countries is not limited to outsourcing. The dynamics in self-regulation by banks in the perceived free market was an occurrence that had resulted from the casino capitalism. As a result, the banking system was marred with propaganda in the movement towards competitive advantage. Furthermore, the banking system of self-regulation led to the enrichment of a few individuals while at the same time being a disadvantage to others. The self-enrichment of a single class of individuals brought discrepancies, perceived injustice among the involved institutions. The international markets were all affected hence negative impacts on international relations.

A book review by Matt Taibbi argues that the transition and shift in paradigm from industrial capitalism to casino capitalism paves way for the rise and development of capitalism. As a result, the book deduces that the replacement of industrial capitalism with the financial or casino capitalism has been immanent. Similarly, corruption has also widely contributed to the rise of casino capitalism. The transition has been very gradual to the extent that it has not been easily noticeable or even foreseen. The paradigm shift is also as a result of stagnation in the industrial production and radical changes in government policies. Over half a century, the government has continuously implemented changes that have caused industrial and economic production. These changes in turn have caused an expansion in the financial sector.

The author further argues that the financial sector and its expansion are of utmost importance for the ruling elite. The Commodity Futures Modernization Act of 2000 was a policy passed by congress. It serves to the advantage of the ruling elite who are the major stakeholders in the industrial production. Further, review by Matt Taibbi states that top banks become indistinguishable only when they cease the opportune moments of gradually rising as the initial players. In addition, the author also asserts that financial institutions are a dominant player in politics and industrial development. It is due to this fact that political players have become significant among the ruling elite. The parallel developments between the banks/ financial institutions and the radical political force have also played significant roles in the transition from industrial capitalism to casino capitalism.

The transformation of capitalism progresses in subsequent stages, as described by the author of the book review. The introduction of computers, for instance, has brought creativity and innovation into the financial markets. Technology has radicalized industrial markets with the steadfast introduction of real-time trading and online marketing. The society, at national and global level, has been dramatically changed due to the introduction of computer technology. The banking sector has become increasingly transformed due to globalization. The process of globalization has been fastened by the development of ceaseless opportunities in Information Communication Technology (ICT). Due to globalization, there was a dynamic increase in the size of the financial markets. The growth was radical to the extent of redistribution of wealth in the financial markets. As a result, Casino capitalism has also led to debt expansion, which further increased consumption in the industrial economies. Notably, the expansion brought with it multiple forms of competition in the financial spheres. The transformation from industrial capitalism to casino capitalism was characterized with aspects of recurrent growth problems as a result of changed financial superstructures..

The revenge of ideas: Karl Polanyi

In his book review, Polanyi affirms that markets have their self-corrective mechanisms in a bid to reach equilibrium. Although Polanyi’s opinions and mechanisms were considered as highly fictive, the economic crisis accompanied by radical transformations was important in the global markets. Like Susan Strange, the author affirms that the market is unpredictable. Like Susan Strange, Polanyi argued that financial market and industrialism are the responsible factors for the creation of a wide gap between the strong states and the weak and partial governments. The transformation of capitalism progresses in subsequent stages, as described by the author of the book review. The stages are similar to the steps described by the book “Casino Capitalism”. Ha-Joon Chang reviews the issue of casino capitalism in his prominent book, “23 Things They Don’t Tell You About Capitalism”. The author is a strict critic of casino capitalism. According to Chang, globalization is not in any way improving the world as we do not live in the post-industrial age. Unlike Strange, Chang argues that transformations occurring as a result of globalization are highly fictive. The growth termed as radical to the extent of redistribution of wealth in the financial markets is also highly exaggerated. Furthermore, casino capitalism has also led to inequality. Globalization does not make the world richer in any form. Chang further addresses the issue of equality where he asserts that equality of opportunity is unfair if the world seeks to develop more.

The book review further argues that term and concept “free market” does not actually exist. Instead, the “free market” economists together with politicians have over the years hard-pressed specific policies of profit making and de-regulation. With the high expectations and relentless pursuit of short-term profits, there is a surge in frequent financial crises, less growth in the markets, job insecurity, and more inequality.

Chang challenges casino capitalism and the conventional wisdom that surrounds the premises of equality, globalization of self-regulation of the markets. In his opinion, it is worthwhile to control capitals, improve infrastructure, industrial policies, and increase investments. This is due to the assertion that financial investment is the driving force behind economic growth.