ABSTRACT
After a long “golden age” of relative economic growth and stability, Keynesian welfare state capitalism faced intensifying crises. While the viability of welfare state capitalism was being challenged, the American financial landscape was being transformed. This chapter reconsiders this financial transformation during the dénouement of welfare state capitalism via the contradictory imperatives implied in the “finance as servant” proposition. Preceding chapters argued that the New Deal financial regulatory framework confronted contradictory imperatives in order to both promote commercial bank profitability and create conditions conducive to the availability of investment capital on attractive terms. This chapter will make the case that, despite their adroit handling of these contractions, New Deal banking reforms also set in motion pressures in the form of competitive struggles among financial capitalist firms (and others). As these pressures intensified, pax financus devolved into bellum financus, and Glass-Steagall’s financial compartmentalization became increasingly unsustainable and was ultimately repealed in 1999.
