Capitalism With Derivatives
Capitalism With Derivatives
Capitalism With Derivatives
the recent volatile regime of floating rates derivatives are permitting capital and
commodities to flow as if there were a single anchor [106]. [T]hey can perform
this function because they exist at the intersection of money and commodities [13132]. Chapter 6: New, Global, Capitalist Money, further focuses on the thesis that the
system of derivatives functions as global (capitalist) money: [W]hat makes
derivatives distinctive as a form of money-as-social relation is that they are, by their
nature, the embodiment of competitive calculation [143]. Chapter 7: Global
Competition, stresses the intensification, through the system of derivatives, of
capitalist competition on the global level, which in the last instance accentuates
pressure on labor, to ensure higher profit rates. The authors define competition in
accordance with Marxs theory (e.g. Grundrisse, Penguin 1993: 650-1] as being what
capital does [163]. Competition means that where the rate of profit is low,
investment withdraws; where it is high, new investment enters [168].
Part III: Debating Derivatives, deals with the questions of speculation and
deregulation/regulation of financial markets. In Chapter 8: Speculation, Derivatives
and Capital Controls, the authors review the functioning of financial derivatives, to
argue that any attempt to control derivative markets, as e.g. through a Tobin tax, is
unable to check the speculative aspects they contain and is also bound to fail, as they
are an important expression of capitalist relations, not a pathological growth [197].
Finally, in Chapter 9: Derivatives and the Development of Capitalist Relations, the
authors summarize the regulatory functions of derivatives and their role in the
expanded reproduction of the capitalist system as a whole. So, they conclude, the
issue is not to free the real economy from the yoke of derivatives. To confront
derivatives is to confront the class nature of capitalism itself [214].
The book is an important new work not only for dealing in an original way
with major aspects of finance in contemporary capitalist economies, but also because
it raises crucial issues as regards Marxist value and money theory.
Marxist theorists often accept notions stemming from heterodox bourgeoisie
approaches, according to which finance mainly arises from profits not finding
profitable spheres of investment in the real economy, which thus get involved into a
casino-like zero-sum game of buying and selling fictitious values. This book clearly
and originally shows that such approaches have little to do with Marxist theory. The
process of creating financial commodities runs parallel to the creation of credit
money, in accordance with the dynamics of the expanded reproduction of social
capital.
Marx himself, in his first self-published mature economic work (the 1859
Contribution) introduces Finance by referring to the function of money on the one
hand as means of payment, when commodities are purchased without the advance
of money, which is replaced by a contract for future payment (functioning as credit
money) and on the other as means of purchase, when a quantity of money (is agreed
to be) exchanged with commodities or other values in the future most often, in both
cases, entailing the claim on a fraction of a profit-to-be-produced. The first scheme
introduces the credit sphere, while the second puts forward a notional context for the
analysis not only of the buyer-up, but also of the derivatives markets: In the first
case, the price will only be realised at a predetermined later date [] the buyer as a
personal symbol gives rise to private, legally enforcible, contracts among commodityowners. Conversely, [] money as a real means of purchase may be alienated, thus
realising the price of the commodity [] before the commodity is handed over (Karl
Marx, 1981, A Contribution to the Critique of Political Economy, London: Lawrence
& Wishart, pp. 139-40).
Bryan and Rafferty exemplarily show how derivatives blend together these
two forms of financial processes.
John Milios