Abstract

"Oil money, corporations, and global financial markets: from the 1960s unregulated money markets to the financial revolution of the 1980s"

Simone Selva, University of Naples L'Orientale and Harvard University (simone_selva@yahoo.it)

The relationship between developments in global financial markets and the rise to centerstage of the OPEC and other oil producing countries in world financial relations since the 1970s has been the subject of a variegated cohort of studies both at the time and in the current historical and political economy literature. This scholarship has persistently associated such involvement with financial assets accruing to the oil producers as a result of the first and second oil crises of the 1970s, which engulfed oil producers with dollar-denominated oil revenues popularised by the term “petrodollars”. This literature was premised over three assumptions: the financialisation of the oil producers and world oil industry is specific to the decade of the 1970s; secondly, the reinvestment of the oil producers financial assets has taken place mostly overseas, either directly or through the establishment of multilateral entities aimed at serving as the engine for global reflowing, as well as through the supranational bodies set up under the aegis of western democracies to lock into their hands the reinvestment of the OPEC countries; thirdly, this literature has partially underestimated the financial, monetary and macroeconomic scenario that served as the backdrop for the reinvestment of OPEC financial assets.
By contrast, this paper aims at providing a reconstruction of the relationship between the development of global financial markets, first and foremost unregulated money markets in the 1960s and 1970s, then the brand-new international financial scenario typical of the decades commencing in the early 1980s, and world oil markets and producers. In so doing, it also aims at offering a partial reconstruction of the influence that macroeconomic developments stemming from the first and second oil crises had on the ways unregulated market evolved from non-resident currency markets typical of the 1960s and 1970s (Eurocurrencies), to money market mutual funds as the basis for the rampant ascendancy of securitisation in the 1980s.