THE POLITICS OF A PERMANENT ECONOMIC STATE OF EXCEPTION: the silent struggle between financial markets and democratic institutions

Abstract

This article discusses the rise of financial capital over the democratic state, threatening the fundamental principles of democratic regimes and the hard-won social welfare achievements. The Fordist economic model has given way to a capitalism led by the financial sector, prioritizing the allocation of capital in financial rather than productive spheres. This shift, initiated after the 1929 crisis but especially from the 1970s onwards, was consolidated with the deregulation of the financial sector. The text highlights the influence of financial capital on public policies, undermining representative institutions and promoting and/or exacerbating social inequalities. The research adopts an exploratory approach — from the literature review — to understand the financialization of the state and its political implications, emphasizing the interdependence that has consolidated between the financial market and state action. It concludes that the growing influence of finance jeopardizes democratic stability and social welfare, requiring the strengthening of accountability mechanisms and a review of the state's role in promoting economic and social development. In summary, financialization represents a huge challenge for democracies — both consolidated and emerging —, demanding an assertive approach that ensures a more inclusive and equitable development model.