Abstract: Returning to Marx’s analysis in the third volume of Capital we shall endeavour to outline a Marxist interpretation of contemporary capitalism, contemporary financialization and the crisis of 2008. Crucial in this connection are the concept of fictitious capital and the associated with it process of capitalization. Financialization should be conceived as a type of organization and a mode of exercising capitalist power, which consists of a whole set of instruments, techniques, levels of application and targets. In this way, financialization as a generalization of these processes into a complex system comprises a decisive link for the enforcement of the capital domination. This means that our study does not concentrate merely on the ‘productive’ or ‘unproductive’ effects that financialization might have on ‘development’ or ‘consumption’, but on a whole series of other possible and crucial effects which seem marginal at first sight. As a consequence, we regard finance as a complex social function that cannot be isolated from ‘real’ economy.
Accordingly, such argumentation, based, of course, on Marxian concepts, provides the terms to rethink contemporary neoliberal form of capitalism and modern crisis as expressions of the contradictions inherent in this organization of capital hegemony, and contemporary form of imperialism, as well. Our analysis also comes up with some conclusions concerning the discussions within Marxism on whether derivatives are commodities or money (or even some other representation of capitalist wealth) and how should we comprehend the global crisis of 2008 in the light Marxian argumentation.

1. Heterodox approaches to neoliberalism and the recent financial crisis

A crucial aspect of many heterodox approaches to crisis is the idea that the domination of neoliberalism and of the globalized financial sector of the economy produces a predatory version of capitalism, a capitalism that inherently tends towards crisis.

The current financial crisis is without precedent in the post-war period. However, financial instability and income redistribution are crucial aspects of modern capitalism but they do not capture its essence.

Recent heterodox literature is dominated by a single and persistent argument. The argument is that contemporary financial liberalization should be approached as a process in which the financial elites and financial intermediaries, i.e. contemporary rentiers in the Keynesian terminology, have a leading role in working out the details of the neoliberal form of capitalism. Writing in the mid 1930s, Keynes (1973: 377) predicted the eventual extinction (“euthanasia”) of the rentiers “within one or two generations”. Many present-day Keynesians portray the developments of the last decades as the return of the rentiers three generations later to take over the economy. Neoliberalism thus amounts to the “revenge of the rentiers” (Smithin 1996: 84, coins this phrase), who are said to have shaped the contemporary political and economical agenda in accordance with their own vested interests.

The relevant economic literature coined the term financialization to denote this phenomenon In this quasi-Keynesian discourse the economic and political strengthening of rentiers entails: (i) an increase in the economic importance of the financial sector as opposed to the “real” industrial sector of the economy, (ii) the transfer of income from the latter to the former, thereby increasing economic inequalities and depressing effective demand, (iii) the exacerbation of financial instability, transforming it into a central aspect of modern capitalism.

According to recent post-Keynesian and institutional analyses, industrial corporations have ceased to be the “steam-engine of the economy” that Keynes and Schumpeter portrayed them as in the past. Their priority is to serve the interests of rentiers (i.e. of major shareholders and the financial institutions representing them): to increase remuneration for major shareholders, enhancing their influence over company decision-making at the expense of the interests of other stakeholders’ (viz. workers, consumers and managers).

It appears that two relevant changes have taken place in enterprises. Firstly, joint-stock companies are now conceived of as portfolios of liquid subunits that home-office management must continually restructure to maximize their stock price at every point in time. Secondly, and as a consequence of the first change, there is a fundamental (forced) change in the incentives of top managers who now think rather in terms of maximization of short-term stock prices. The end-product of the whole process is anti-labour business policies on the one hand and on the other a focus on short-term (speculative) gains rather than on long-term economic development, stability, and employment.

Hence, for Keynesian-like argumentation, neoliberalism is an “unjust” (in terms of income distribution), unstable, anti-developmental variant of capitalism whose direct consequence is contraction of workers’ incomes and the proliferation of speculation. To put matters schematically, the rentier owners of financial securities induce a fall in the “price” of labour so as to increase the value of their stocks (bonds and shares) at the same time engaging in speculation so as to obtain short-term advantages vis-à-vis rival rentiers.

This general conception seems to be prevalent in the realm of Marxist discussion also. For a number of theoreticians influenced by it, neoliberal capitalism has not succeeded (at least to date) in restoring the profitability of capital (the rate of profit) to high levels, that is to say to levels satisfactory for dynamic capitalist accumulation (what could such levels be? one wonders). It appears to be entrapped (since the mid-1970s) in a perennial crisis, the end of which is not readily visible. The result of this is that large sums of capital are unable to find outlets for investment. This has two probable consequences. Firstly, this “surplus” capital stagnates in the money markets, creating “bubbles”, or is used to underpin ineffective policies of forced accumulation that depend on lending and debt (Brenner 2001, 2008, Wolff 2008). Secondly, this capital circulates internationally in pursuit of accumulation by dispossession, even profiting, that is to say, not from exploitation of labour but from direct appropriation of income chiefly from those who are not financially privileged or do not occupy an appropriate position in the market for credit (Lapavitsas 2008).

Their basic weakness – and it is at the same time the link that holds them together – is that they represent the neoliberal formula for securing profitability of capital not as a question of producing surplus value but as a question of income redistribution pertaining essentially to the sphere of circulation. It thus appears that the developmental “ineptitude” and the instability of present-day capitalism are the result of a certain “insatiability”, or at any rate of bad regulation, in the relations governing income. Are we in the final analysis all Keynesians?

Before formulating our negative answer to the above question let us make a passing reference to the role of the financial sphere and the present crisis.

Marxist theory, financial system and crisis of 2008