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6: Can Capitalism Short Itself?
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Published:April 2021
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Abstract
Macrofinancial put options are one of many ways to secure capital markets from disruption: there is also policing, encryption, surveillance, repression, etc., the cost of which should be added to the liquidity premium (ch. 5). Big finance is generally able to collect these costs by previsualizing its own illiquidity and and creating financial products and services through which it implicitly shorts itself and thus benefits from threats. But it is now possible for a subversive, alt-finance constellation of movements to leverage capitalism's willingness to short itself by issuing alt-coins that can be indexed (using derivatives) to the illiquidity these movements threaten and sometimes create. Capital markets cannot not arbitrage spreads based on such securities: this is both their inner truth and their Achilles’ heel. And by exploiting this truth, capitalism’s gravediggers could develop strategies to benefit from capitalism’s inherent need to destabilize itself in order to fund justice-seeking movements that are ahead of their time. Such an approach to democratic politics would work through finance to diminish the political power and influence of the financial sector without needing to believe that this makes the financial sector more democratic.
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