By RENILDO SOUZA*
The Marxian theoretical ancestry of finance
Introduction
Over the last three decades, the topic of financialization has been insistently addressed, especially by Marxist authors. But what are some clues to the financialization of Marx's own farming? The objective of this article is to excavate the Marxian theoretical ancestry of finance. The analysis will be restricted to Section V of book III d'The capital. Marx, in the case of this book, explains the concrete level of distribution of surplus value, within the framework of the enormity and variety of phenomena and contingencies of social life as a whole in capitalism.
Diverse problems such as the 2008 crisis, fiscal austerity policies, neo-fascist threats, environmental catastrophes and social plunder, as well as the technological and productive restructuring of value chains, intensified the debate on financialization. Finance has become omnipresent in contemporary times. This finding, with an air of consensus among Marxists, is, however, challenged by theoretical difficulties in understanding the nature and scope of the phenomenon.
How to explain financialization, how to overcome the challenges of its interpretation? Is financialization a mere increase, a quantitative change in financial assets, more of the same, especially due to the exponential volumes of fictitious capital today? The aforementioned ubiquity and its own process of accelerated transformations make it difficult to consolidate the interpretation of financialization.
Based on the tautology that everything is part of everything and everything matters, there is a risk of confusing the understanding of distinct phenomena. The approximation of some common structural features between different objects of contemporary capitalism tends to confuse, in a certain way, the character of financialization, a transformed logic of capital accumulation, with neoliberalism, a political and ideological doctrine. In the same sense, conceptual approaches to the digitalization of the economy, a central contemporary technological transformation, can also make it difficult to identify the quality of finance today.
Of the much that Marx elaborated, the most distinctive feature is the accumulation of surplus value. Lenin said that the main distinguishing feature of the imperialist phase of capitalism, since the end of the 19th century, was monopolies. And now, without prejudice to the centrality of Marx and Lenin's thought, what can we say? In the arena of general, more global interpretations, there is no shortage of examples in the square. The qualification of neoliberal capitalism is centered on criticizing institutional deregulation and privatization, denouncing the voracity of the market. The notion of parasitic speculative capitalism reflects crucial and true aspects, but speculation and parasitism are the innards of capital's logic and life.[I] The proposition of technofeudalism seems to be a fetishization of technological monopolies.
Financial centrality
In another context, the approach to the topic of financial capital is also burdened with problems, the source of which is vulgar economics, as Marx protested. Finance is wrapped up in the most varied visions and justifications. It is a minefield of capital interests. It has an overwhelming apologetic impact propagated by the mass media. The bankers' bad faith, as Marx said, is a permanent cavalry assault on the minds and hearts of the population, through the media and governments.
The current era, marked by financial centrality, provides additional incentives for confusion and false ideas about money and capital. Faced with the rising tide of neoliberal mystification, it becomes necessary to sharpen the criticism and rethink the understanding of capitalism's monetary economy. Going back to the basics, which, instead of being denied, is being reaffirmed, under transformations, by financialized capitalism. And go back to the story. In this sense, Marx has something fundamental to tell us in this 21st century.
Marx's explanations about interest-bearing capital and fictitious capital are concentrated in the aforementioned section V. It should be noted, from the outset, that there is an invaluable contribution from Friedrich Engels, responsible for editing book III (also book II), 11 years after Marx's death, who had left sketches, as we know.
Engels lamented: “The main difficulty occurred in section V, which also deals with the most intricate subject in the entire book. (…) We do not have here, therefore, a first finished version or even a scheme whose contours could be completed, but only a beginning of elaboration that, on more than one occasion, leads to a chaotic pile of notes, observations and materials in the form of a extracts”. After three failed attempts to fill gaps and develop fragments just indicated, Engels decided simply to “order the existing material as much as possible and make the most essential additions”.[ii]
Despite all the setbacks, the aforementioned section V, with its 16 chapters, provides the starting point and some theoretical and methodological clues for approaching today's financialized capitalism. Marx exposes and criticizes false monetary theories, resorting to disputes between the authors (many of them bankers) of the currency principle (school of metallic counterparts) as well as the banking principle (banking school). Marx's elaboration, from England, is based both on economic facts, on the phases of the industrial cycle and on crises, and on criticism of the speech of bankers and economists in testimonies before the Parliamentary Commissions of Inquiry.
In the aforementioned section V, Marx discusses the relationships and unity between the spheres of circulation and production. It clarifies the immanent and external aspects of the valorization process in capitalism. It makes, in reference to the parts and the whole, distinctions between individual, isolated transactions and global, collective situations, including gains and losses of value. It clarifies the importance and implications of different forms of value. It demonstrates the evolution, contradictions and trends of the credit system. He always insists on analysis centered on historical circumstances, identifying stages and phases.
It explains, considering the appearance and essence of reality, the fetishism of money and the capitalist nature of the mode of production. It exposes, through the interaction and unfolding of phenomena, how interest-bearing capital drives both accumulation, speculation and crises. It dialectically elaborates the concept of fictitious capital as illusion and existence. It reaffirms, with all its strength, without equivocation: only living work creates value and surplus value.
Financialization made the capitalist relationship even more external and more fetishistic, in addition to what Marx was already amazed by the interest-bearing capital form. Instead of a social relationship, capital appears even more shamelessly as a simple thing. The concept of fictitious capital, especially, has reached extreme relevance in the conditions in which capital has been configured since the last two decades of the 20th century.
Interest-bearing capital
If money is converted into interest-bearing capital, it becomes a special commodity, which is lent, rather than sold for an equivalent value, to the functioning capitalist. This merchandise sui generis It has the use value of allowing, as capital, the generation of profit resulting from surplus value. With interest-bearing capital, the money form corresponds to the capital content. It had to be disbursed as working capital in the purchase of means of production or merchandise, respectively by industrial or commercial capital. Through the hands of the moneylender, there is no metamorphosis of merchandise or reproduction of capital.
These processes depend on the borrower of the interest-bearing capital, that is, the capitalist in commercial activity, in one case, or industrial, in another. When it becomes paid-up capital, the money has already yielded surplus value to its owner, because there was an appropriation of a part of the profit, which is called interest. However, Marx warns that loans can “also serve transactions without any relation to the capitalist process of reproduction”.[iii] It is in the sense of this warning that the financialized capitalism of the 21st century has exacerbated the autonomy of finance in relation to the reproduction of capital.
The external and separate form of the capital reflux, in the face of the effective mediation process in the capital cycle, is the peculiarity of interest-bearing capital. Apparently, money multiplies money. The mediation, unity and set of the real and immanent movement of capital in its complete cycle D – M – D' are ignored. Interest-bearing capital takes the form of a legal transaction. Like a contract, it appears not to be determined by the production process.
Thus, the mere form of interest-bearing capital, as D – D', “is only the conceptless form of the effective movement of capital”. This form of capital denounces the irrational nature of capitalism. The D – D' form is the “objectification of production relations raised to maximum power”, “capitalist mystification in its most blatant form”, “purest fetishistic form”, in Marx's words.
Determination of profit and causality of interest
The understanding of the simple exchange of ordinary commodities is not useful for approaching this special commodity, the form of interest-bearing capital. What is the price of this commodity? Interest is the price of what? To answer this, it is necessary to address the origins of profit and interest and their interaction.
Marx points out the irrationality, contradiction and absurdity of interest as the price of capital, as seen on the surface and normality of market transactions. A certain amount of interest-bearing capital is a commodity of a certain magnitude, which has its value and hence its market price. But, at the same time, here in interest-bearing capital, is there another price, of different quality, which is called interest? As? Why? If it is another price, then it is not an expression of that value of the same interest-bearing capital. It is as if there were duplicity of value and price. In fact, when imposed, the use value of this monetary capital has this second price called interest.
The profit generated by the use value of this capital is divided, arbitrarily and casually, between business gain and interest. Here, there is no economic law to regulate this distribution, other than competition between lenders and borrowers in the money market. Within the scope of this form of legal transaction, there are no natural interest rates, natural interest limits, term subordination of effective capital rotation, etc.
But the magnitude, maximum limit and possible courses of interest are conditioned by profit, determined by its general rate, rather than by profit rates in specific branches or the extra profit of a capitalist. The general rate of profit, in turn, depends on the relationship between surplus value and the value of total capital due to competition, mobility and magnitude of capital in different branches and organic compositions.
Interest cannot have its own general laws of determination, because it is derived from the average profit, in accordance with the aforementioned incessant movement of equalization of particular profit rates. The financialized capitalism of the 21st century exacerbates the causality of interest, as well as preserving the tendency towards the general rate of profit, based on the surplus value of total capital, according to Marx's theory.
“Therefore, the general rate of profit is determined by completely different and much more complicated causes than the market interest rate, which is due directly and immediately to the relationship between supply and demand (…)”.[iv] The fun of all this is that financiers see tangibility, intelligibility and rationality in the so-called price of money, despite volatility and bubbles, while they hesitate, perplexed, before the course of the general rate of profit, a nebulous matter in their eyes, as already noted Marx.
Merely moral condemnation
Interest-bearing capital, like usurious capital, was already the form, and interest was already its sub-form, before capitalism. Loan capital and commercial capital are part of the antediluvian history of capital. Marx, to discuss his time, felt the need to recall the ancient origin of money capital, as well as its moral condemnation. The times and forms and nature of the money trade are very different when comparing the modes of production.
However, there has always been and is a very easy propensity for merely moral condemnation of business with money, given the real privileges of this type of businessman. In the Middle Ages, the condemnation of usury by the Catholic Church is well known. Martin Luther was indignant: “Such usury will not devour the world in a few years?” [v]
The immense usurious interest rates ruined landowners, helped to expropriate small producers – peasants and artisans – and led to a strong concentration of monetary capital. For Marx, in capitalism, the credit system developed through banks was a response, without moral connotations, against usury. The subordination of interest-bearing capital to the demands of the conditions of the capitalist mode of production was established. There was no longer room for the voracity of usurious interest on the entire surplus value. The purpose of the money was for the capitalist to exploit the labor of others in production.
And today? Financialization, corresponding to advanced capitalist production, can now expropriate those who are already expropriated, the wage earners. To this end, a new type of debt slavery was created through credit cards, mortgages, student loans, credit for individual consumption, including food, etc. Marx recognized that the working class was scandalously extorted, for example in loans for their homes, but he assessed that this was secondary exploitation, alongside the original exploitation, located in the production process. [vi] Usury impoverished, but preserved the pre-capitalist mode of production. Financialization preserves capitalism by accumulating gigantic masses of financial wealth for a tiny minority, encompassing, through the market, everything and everyone in financial transactions.
Interest-free capitalism
Marx, in his time, criticized Proudhon's mistaken reasoning on money lending. Interest was superimposed on the value of the merchandise, in addition to wages, Proudhon believed. He was not aware of the concept of price of production in the process of competition and transfer of value due to the tendency to form the average rate of profit between different capitals in organic composition, within an economy in which capital carrying capital already existed normally. fees. For him, it was a fake increase in interest. He thought that this was what prohibited workers' access to the fruits of their labor. It was in this way, he supposed, that the price of the commodity exceeded the magnitude of wages.
Proudhon did not realize that interest was already a derivative of profit, resulting from the surplus value created by workers in the production of goods. This loan capital already participated in the advance for the purchase of productive capital in the reproduction process. Proudhon did not understand the place of wages in the form of commodity value. Furthermore, without understanding the form of interest-bearing capital, Proudhon protested because the loaned capital returned to its owner and, to make matters worse, returned with interest. In his comparison with the trade of goods, he did not realize that, in the case of interest-bearing capital, the lender makes the (temporary) transfer of a sum of value, without the counterpart of receiving its equivalent, explained Marx.
Interest-free capitalism? Production of goods, but with free credit, as Proudhon wanted? Mature capitalism today, without financialization? This polemic between Marx and Proudhon teaches a lot about the pious desires in this 21st century for a type of financial regulation that leads to the illusory project of a humanized and productive capitalism.[vii]
*Renildo Souza He is a professor of economics and international relations at the Federal University of Bahia (UFBA). Author, among other books, of A China de Mao and Xi Jinping (UFBA Publisher).
Notes
[I] CARCANHOLO, Reinaldo A.; SABADINI, Mauricio de S. Fictitious capital and fictitious gains. Available in: http://actuelmarx.parisnanterre.fr/cm5/com/MI5_Eco_Carcanholo_SouzaSabadini.pdf
[ii] ENGELS, Friedrich. Preface. Capital. Book III. São Paulo: Boitempo. 2017. Kindle version.
[iii] MARX, K. Chapter 21, Book III, Kindle version.
[iv] MARX, K. Chapter 22, Book III, Kindle version.
[v] apud MARX, K. Chapter 24, Book III, Kindle version.
[vi] MARX, K. Chapter 36, Book III, Kindle version.
[vii] This article is a modified version of a chapter from the book Karl Marx: pioneering a new world in the 21st century, collection organized by Adalberto Monteiro and Augusto Buonicore, by publisher Anita Garibaldi, in 2018.
the earth is round there is thanks to our readers and supporters.
Help us keep this idea going.
CONTRIBUTE
