What's special about fintech as distinct from shopping-tech or anythingelse-tech? asks Francis Diebold. I read that question as I was on the phone to my Isa provider, who told me that to contribute to my Isa, they had to post me some documents which I had to post back. How very 19^th century

Which reminded me of a paper (pdf) by Thomas Philippon who points out that decades of technological progress has not reduced costs of finance to customers:

The unit cost of [financial] intermediation is about as high today as it was at the turn of the 20th century. Improvements in information technologies do not appear to have led to a significant decrease in the unit cost of intermediation.

His work has been replicated (pdf) for Europe and the UK by Guillaume Bazot.

If you look at spreads between deposit and borrowing rates, or at fund managers' charges, it's clear that decades of technical progress has not led to finance giving customers better value. And this is before we consider the atrocious lack of potentially useful products; various mis-selling and market-rigging scandals; terrible management; and the enormous cost of financial crises.

From a customer's point of view, pretty much the only useful financial innovations of recent years have been the ATM and the index tracker funds. Finance seems to be a big exception to William Nordhaus's finding that producers capture only a "minuscule fraction" of the social benefits of innovation.

History, then, tells us that the answer to Francis' question is in the negative. In finance, technical change does not benefit customers. In the day job, I've suggested reasons for this such as customer inertia, distrust and barriers to entry. Fintech might instead be just another way for casino capitalism to spin its roulette wheels even faster.

This raises the question posed by J.W.Mason. If finance is so lousy at doing what the just-so stories of capitalist apologists pretend, might it not serve another function instead? Might it be instead, as he says, "the enforcement arm of the capitalist class as a whole."

There are several ways in which the answer could be: yes.

- High debt as a result of student loans and high house prices compel people to work harder and longer. They're a form of modern-day debt bondage. They help maintain a high and acquiescent labour supply.

- Leveraged private equity encourages firms to sweat their assets. Private equity seems to increase productivity (pdf), but this might simply mean increased work intensity.

- The shareholder-owned company is an efficient way for bosses to extract rents, but not so obviously a good way of increasing investment.

- The centrality of banks to the economy has allowed them to extract a massive "too big to fail" subsidy.

On top of all this, finance helps to strengthen capitalists' power over governments. We all know that if a government can print its own money then the only constraint upon doing so is inflation, as Frances says. But as Michal Kalecki pointed out, the belief in the myth of bond market vigilantes is very useful to capitalists:

Under a laissez-faire system the level of employment depends to a great extent on the so-called state of confidence...This gives the capitalists a powerful indirect control over government policy: everything which may shake the state of confidence must be carefully avoided because it would cause an economic crisis. But once the government learns the trick of increasing employment by its own purchases, this powerful controlling device loses its effectiveness. Hence budget deficits necessary to carry out government intervention must be regarded as perilous. The social function of the doctrine of 'sound finance' is to make the level of employment dependent on the state of confidence.

I'm tempted, therefore, to agree with J.W. Mason. The question is: how did this arise? There's a danger of this looking like a conspiracy theory. I suspect instead that it's an emergent process - the (at least partly) unintended consequence of countless decisions.

There is, though, another point here. The fact that decades of technical progress hasn't improved the financial "services" industry tells us that in a capitalist economy technology alone does not determine outcomes. Instead, the potential offered by new technologies can be wasted by market failures and capitalist power. As Marx said, "the barriers of capitalist production are not barriers of production generally," Techno-optimists are apt to forget this.