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Justice Is an Option: A Democratic Theory of Finance for the Twenty-First Century

Online ISBN:
9780226734514
Print ISBN:
9780226702889
Publisher:
University of Chicago Press
Book

Justice Is an Option: A Democratic Theory of Finance for the Twenty-First Century

Robert Meister
Robert Meister
University of California, Santa Cruz
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Published online:
20 January 2022
Published in print:
19 April 2021
Online ISBN:
9780226734514
Print ISBN:
9780226702889
Publisher:
University of Chicago Press

Abstract

This book argues that compounding the effects of past injustice is a further injustice attributable to the specific role of asset market liquidity in preserving and accumulating value. In times of political and economic turbulence, Politically-driven threats to asset market liquidity are typically made by the financial sector to thwart demands for justice in turbulent times, and elicit government guarantees of the value of the securities used to collateralize private credit markets. After this occurred in 2008, prominent financial macroeconomists have used options theory to value the premium that the US government could have extracted for prioritizing liquidity over justice as peaking at c. $9T. Based on options theory, this macrofinancial liquidity premium in a democracy is a proxy for the present value of postponing an event of sudden disaccumulation, which is how political revolution could wipe out the cumulative benefits of past injustice without redistribution. In nonrevolutionary times, the macrofinancial liquidity premium is the price democracy can extract for allowing capital accumulation to continue in ways that mitigate and reverse its tendency to compound past injustice. It follows that a democratic politics within financialized capitalism should seek to raise the present value of justice as an option, thus reclaiming the ongoing benefits of bad history and redeeming the suffering of its victims.

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