The Ascendancy of Finance by Joseph Vogl

Author:Joseph Vogl [Vogl, Joseph]
Language: eng
Format: azw3, epub
Publisher: Wiley
Published: 2017-06-15T04:00:00+00:00

5

Fourth Power

Security Apparatus

The economization of government from the seventeenth century not only involved the differentiation of state apparatuses and economic dynamics. It also stabilized a form of seigniorial power characterized by the systematic interconnection of treasury and finance, of political interests and the interests of private business. The expansion of financial markets correlated with the normalization of (financial-)political states of emergency, the perpetuation of national debt and public credit, and the permanent involvement of private finance in the exercise of politics. As a part of the executive, these forms of power – the Bank of England being the first example – obtained a privileged and eccentric institutional status within the spectrum of governmental practice. Constraints on the sovereign entailed an apotheosis of finance; the emancipation of financial power was guaranteed by the self-restriction of political sovereignty. This means, on the one hand, that the emergence of modern governmentality cannot be described in terms of concepts of homogeneous statehood. Even at its inception, the state reveals itself as an ensemble of heterogeneous, ‘disaggregated’ elements lacking clear demarcation. On the other hand, sporadic and occasional arrangements, such as that between royal debtors and private creditors, took on the character of discrete enclaves for the accumulation of a new form of political-economic policy-making power. The Bank of England acted as a channel for the integration of finance capital and investors into government.

That is one reason why the Bank of England soon inspired the foundation of similar institutions – with varying degrees of success and longevity – in Europe and the US throughout the eighteenth and nineteenth centuries. Originally, the Bank of England was not a central bank or bank of issue in the modern sense. It had no autonomous monetary policy and was entrusted solely with administering state deficits and guaranteeing the reliable servicing of debt and the satisfaction of the creditor cartel. Only gradually did these institutions gain an independent remit. Mostly as a result of the concrete historical situation, what had begun as privately run government banks now became responsible for issuing notes and creating money, for safeguarding the banking system, for acting as lenders of last resort, for overseeing the value of the currency, for regulating the money supply, and for matters concerning price stability, interest policy and inflation.

Regardless of the diversity, incompatibility and heterogeneity of their historical forms and functions, and whether they were founded and run as private companies or as public facilities, these institutions are integral elements of modern governmental practice. As monopolists in the system of credit, central banks are agencies for the consolidation and expansion of financial markets. Moreover, with their fusion of sovereign, fiscal and private economic roles, they demonstrate how power is organized under the conditions of finance capitalism. Central banks are evidence of the emergence of a powerful finance capital from a complex synergy of political institutions and private agents. Together with the routines of government, the modern financial system developed beyond executive and legislative controls.

At the same time, there was constant

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