“Défoncer la finance néolibérale: principes et méthodes,” by Frédéric Lordon, first appeared on 26 May 2026 under the heading “Politique de la crise financière – 2,” as an installment of “La pompe à phynance,” Lordon’s column at Le Monde diplomatique. Also read on Communis “A window of historic opportunity.”

“We’ll have to run roughshod over the argumentative framework of neoliberal finance. Not a single tenet of its sociological doctrine holds water. This will provide further encouragement to stick to the methodological line that will guide the entire undertaking: strike hard. Strike very hard, in fact. Ignore all the whining, all the pleas for ‘complexity.’ On the contrary: send finance back to the Stone Age—that is, to the highest degree of simplicity. Any pocket of residual ‘complexity’ is a potential breeding ground for the very things we must break with: ‘innovation,’ circumvention—that is, escape.”

— Frédéric Lordon

Disclaimer: “Neoliberal finance,” not simply “finance.” People often say they want to do away “with finance.” Mention the word “finance,” and immediately a whole host of associated images comes to mind: trading floors, three-piece suits or scruffy traders, outrageous bonuses, cocaine galore. We want to put an end to all that. And we’re right. Even if, in this case, saying “finance” is an approximation—one that’s perfectly acceptable for polemical purposes at this time. Strictly speaking, however, we must treat “finance” the same way we treat “capitalism”: by defining the concept—which will remain an abstraction—and then by examining its successive historical manifestations. Neoliberal finance is one such manifestation—but it does not exhaust the concept. Finance, as a concept, is defined as the set of institutions and processes that allow certain agents to spend more than they earn for a certain period of time. And that is all. Finance is necessary to initiate production—that is, to gather the necessary resources in advance when one lacks the means to do so. In other words, finance is the system of advance payment. That is its concept. There is no economic organization with a sufficiently deep division of labor that does not require a system of advance funding. Even a communist economy would require a financial system—a way of collectively organizing advances: in this case, outside any market, and in the form of a federal system of economic cooperatives.

A Few (Neoliberal) Arguments to Ignore

Using the financial crisis for political purposes means dismantling neoliberal finance. The extent to which the latter has solidified its justifying arguments is impressive. We must not be swayed by any of them. Four in particular:

1) The argument that innovation and derivatives serve as risk-hedging instruments. There is instability in the markets—so the argument goes. This instability, in turn, creates the risk of losses when asset prices move in the wrong direction. So let’s invent “new assets” (futures), derived from those against whose fluctuations we need protection. These new derivative assets will move in the opposite direction of their underlying assets, thereby offsetting any potential losses. Or insurance products (CDS: Credit Default Swaps) that, in exchange for a premium, would reimburse the loss in value of a bond if it were to default. Or a way to capture the higher return of an asset because it is riskier, while leaving the fallout from a default to other investors lower down in a certain hierarchy (structured finance, ABS: Asset-Backed Securities). Or, or… All these derivatives are, at their core, bets: bets on the future fate of certain assets. However, there’s nothing stopping us from taking it a step further and placing bets on bets. bets on how the reference bet will turn out. And then bets on bets on bets. And so on. This is why derivatives have become a world unto themselves, subject to inflation driven by quasi-autonomous speculative forces, whose connection to the real economy is becoming increasingly tenuous. An increasingly useless speculative world.

2) A world that is also becoming increasingly unstable. Here is the second—paradoxical—argument. Recall that, originally, these derivatives were justified in the name of hedging risk—that is, reducing instability. Incidentally, we encounter one of the most characteristic tropes of capitalism as a whole: it is true that the expansion of accumulation brings with it a few minor side effects. Never mind: here is yet another development designed to reduce the drawbacks of previous developments. Example: sure, we’re emitting a little (too much) CO₂, but we’ll invent “carbon offsetting” (nonsense) by planting trees (any old way), and hey, while we’re at it, we’ll invent a new (nice) market for pollution permits. In finance: same story. The prices of underlying assets (stocks, bonds, foreign exchange) have become a bit volatile (admittedly, due to speculation), but we’ll invent new layers of the market (derivatives) to smooth out the minor fluctuations in the underlying layer. If, by chance, this additional layer were to become unstable in turn, we’d stack a third one on top of it. And so on. The moral of the story: everything done in neoliberal finance in the name of “protection against instability” only brings about further instability. This, of course, “justifies” the addition of yet another level to the entire structure.

In reality, market finance thrives on instability: since it makes its profits from price fluctuations, it has no interest in reducing instability—quite the opposite. Moreover, all these new forms of instability serve as a pretext for new “financial innovations,” whose true function is as follows: to unleash into the world a mechanism that is as complex and incomprehensible as possible—one that only its designers have any real grasp of, and which competitors will take some time to master in turn, initially making errors in their pricing calculations, so that handsome arbitrage profits can be made throughout the period while others are learning the ropes—in a sense, the Schumpeterian version of innovation as applied to finance.

3) The “liquidity” argument. We are now told that it is important for as much money as possible to be poured into the markets, and for activity there to be as intense as possible, in order to guarantee the cardinal property of any capital market: liquidity, precisely. Liquidity consists of the ability of any investor to enter and exit a given asset market at any time without their individual action causing a significant price change. Liquidity is the certainty that every buyer will find a seller, and every seller will find a buyer, at the current market price and without their transaction affecting that price. And for this to be the case, there must be “movement” and “volume” in circulation.

First, it must be emphasized that liquidity is a property with asymmetric utility: it is primarily of interest to sellers—that is, to all those who feel they must exit a particular market segment and expect to be able to do so without incurring losses. Obviously, contrary to what financial ideologues believe, liquidity is not a natural or technical property: it is a social property. It absolutely requires a non-polarized state of financial beliefs. For if everyone begins to share the same belief—the belief, for example, that a certain market segment must be avoided at all costs—then everyone becomes a seller… and, as a result, there are no longer any buyers. The asset’s price plummets, and everyone is left stuck with their junk on their hands: liquidity has evaporated.

The point of interest here, however, is another. It is that, in the name of liquidity, we have tolerated—indeed, justified, and even encouraged—the pouring of ever-colossal sums of money into the markets, with no connection whatsoever to the financial needs of the real economy. And for good reason: the volume of these funds actually determines the size of the playing field for neoliberal finance—and thus its potential for profits—but profits that are purely speculative, for which the realities of the real economy are no longer even a distant backdrop.

In short, neoliberal finance has led us to believe that the sine qua non for an investor to deign to buy a stock or a bond—and grant us the favor of financing the economy—was that astronomical volumes, bearing no relation to the financing of the economy, would drive market activity in the name of liquidity. As a result, there is a world of difference between the actual financing of the economy and the enormous volumes that are supposed to provide the necessary conditions for it.

4) We have saved for last the argument generally put forward first by the ideologues of neoliberal finance: efficiency. There are several definitions of it, but the most useful from an ideological standpoint holds that markets are necessary by virtue of their ability to optimally allocate capital. Only they know how to direct the funds entrusted to them by savings institutions toward the most efficient, productive, and promising uses. The argument is doubly absurd. First, as we have just seen, because capital is essentially “allocated” to the speculative merry-go-round, and in the proportions we just mentioned relative to what is directed toward the real economy. Second, because even for the portion that goes to the real economy, the allocative disasters of the “holy market” are truly spectacular. In fact, all financial crises are a real-world demonstration of this. The “Internet” bubble burst in 2000–2001 after colossal amounts of funding were poured into startups with no profits or even revenue—and the parallels with what is happening today in the AI sector could soon become deafening. The subprime crisis served as a lesson for pouring $800 billion into mortgages extended to borrowers who were notoriously unable to afford them. We therefore suggest tempering the cries of triumph regarding the “optimal allocation of capital.”

The term “white elephants” has traditionally been reserved for grandiose—and catastrophic—construction projects spearheaded by the governments of developing countries and backed by international institutions, such as the World Bank. As always, the aim was to stigmatize the inability of public actors to make any intelligent investment decisions: only “the market” knows—provided we avoid looking at its own graveyards of white elephants, its hundreds or even trillions of dollars vaporized in allocations each more inept than the last, bubbles, and other insane ventures. Take, for example, Meta by the brilliant Zuckerberg, who burned through $80 billion on his wondrous metaverse—before shutting it down, yet without a single “commentator” seeing this as any possible call into question of the fundamental wisdom of “private-sector” decisions.

A simple strategy: strike hard

That, in essence, is the argumentative framework of neoliberal finance. We’ll have to run roughshod over it, without the slightest regard. Not a single tenet of its sociological doctrine holds water. This will provide further encouragement to stick to the methodological line that will guide the entire undertaking against neoliberal finance: strike hard. Strike very hard, in fact. Ignore all the whining, all the pleas for “complexity.” On the contrary: reduce finance to the Stone Age—that is, to the highest degree of simplicity. We must impose on finance the most basic ideas and the future framework for its operations. We must regard any pocket of residual “complexity” as a potential breeding ground for the very things we must break with: “innovation,” circumvention—that is, escape.

As for the strategic approach, it is as follows: returning to its very concept, finance’s first and last function is to provide the advances required by production. It will be rigorously confined to this function. It will remain firmly anchored to it and will not be permitted to do anything else. It follows that its new organization will break radically with the principle of quick turnover (reselling as soon as one has bought) and speculation, in order to establish a financial economy based on commitment and holding. To invest is to commit—that is, to hold onto the assets that embody that commitment, and thus to assume and bear the risk—under conditions that are, of course, bearable and differentiated for the various classes of asset holders: conditions of very high security for modest household savers, in particular.

Savers differ according to their motives for saving. The motive most firmly entrenched by the myths of deregulated finance is, of course, the pursuit of wealth. “Greed is good”—it was Gordon Gekko, consigning Kant to the dustbin of history, who, as early as the mid-1980s, formulated the new categorical imperative. We will therefore reinstate Kant. The idea that saving serves to build fortunes will be discarded. First, because the scope of finance will be drastically restricted to restore it to its original—narrow—functional scope. Second, because even within that scope, returns will be severely reduced—we will see later through which mechanisms.

A Clear Course: De-financialization, Restored Social Protection

The second reason for saving—the only one that concerns low-income households—is foresight: precautionary savings. This is an entirely legitimate motive for security in the face of the unpredictable twists and turns of the future. However, we must once again recognize here the capitalist pattern already mentioned: creating problems / providing (capitalist) solutions to the problems created. For in a predominantly financial accumulation regime, the uncertainties the future holds for low-income households stem almost exclusively from the instabilities… generated by the dominance of neoliberal finance over the economy. This system has, moreover, methodically dismantled all forms of collective protection (unemployment, health, old age), which now lie in tatters: under these conditions, it is understandable that households are committed above all to maintaining a precautionary savings buffer—since they are no longer protected from anything and are left to fend for themselves. And they know they can count on the entire financial system—banks and insurance companies—to offer them the most enticing “solution” savings products.

It is up to a policy of “de-neoliberalization” of the world to restore all these forms of collective, social protection through their single, remarkable instrument: contributions. It is comprehensive social protection that makes precautionary savings unnecessary. There is a crucial point here: the transformations we propose to bring about in the financial sector are deeply intertwined with the comprehensive restoration of social protection. That these two elements are thus inextricably linked is something neoliberalism itself has taught us—but in reverse: by methodically destroying collective models of social protection and replacing them with individualized, financialized models of provision—a substitution that reaches its extreme form in the case of pensions through capitalization. We will turn this substitution on its head. This time, we will place neoliberal finance in the position of the “substituted” party.

With all this established, we can now get down to the nitty-gritty.

Feature image: Dante addresses Pope Nicholas III, committed to the Inferno for his simony. Divine Comedy, Inferno, Canto XIX. Illustration (1861 wood engraving) by Gustave Doré (detail). Wikimedia Commons.

Translated from the French original by Rolando Prats.

Frédéric Lordon