In his general analysis of the evolution of capitalism, Marx had posited that industrial capital would subjugate (autonomous) financial capital, manifested in the private banking infrastructure, on the grounds that interest-bearing capital derives from the capitalist production process (and is therefore ultimately dependent on it) and further that commercial credit was a secondary function (merely concerned with facilitating circulation) to the value-adding production process (p.468) (Marx 1971). Yet, shortly after Marx, events appeared to contradict his prediction. The rise of the joint-stock firm, for instance, suggested that (investment) banks had gained decision-making power over the corporate(s) through integration ? the Hilferding notion of finance capital (Hilferding 1910; Lenin 1996). Substantial tribute is also, of course, extracted from the economy in the form of interest. I argued, in a previous AHE paper, that financial rentiers are now less integrated, strengthening their position relative to productive capitalists (Mouatt 2005). Hedge funds and private-equity firms that ?short-sell? leveraged funds for instance, that are authorised by the decisions of private bankers, are able to manipulate currency and stock prices that can belie the market fundamentals and bamboozle small investors. Redistributive accumulation, asset stripping, and corporate monopolization can then follow any subsequent currency (or share-price) shock. It seems that finance (and those that control it) has triumphed. Yet, there are contemporary signs of systemic weakness. Banks are increasingly exposed to the vagaries of international financial markets and earn a smaller proportion of profit from interest. In addition, firms are now less dependent on the bankers, as a result of retained profits, and are also further developing their own monies, payment systems and banks. This financial innovation, with new circulation channels, requires a re-think on (modern) money.
|Publication status||Published - 2008|