Re: [OPE-L] The Financialization of Capitalism

From: Francisco Paulo Cipolla (cipolla@UFPR.BR)
Date: Wed May 16 2007 - 16:36:20 EDT

Some of the derivatives come from productive globalization, for
instance, protection against exchange rate movements which may threaten
profits. It follows that we cannot view the growth in financial products
as a mere offspring of unaccumulated industrial corporate profits. On
the other hand, as Foster suggests, stagnation in rates of growth have
the effect of enlarging the accumulation fund but not the depreciation
fund since the latter one has to keep at least simple reproduction. The
citation is interesting, thought provoking but maybe a little

Rakesh Bhandari wrote:

> From John Bellamy Foster.  I am wondering whether there is an
> alternative explanation for the mounting stock of surplus in the form
> of liquid money
> capital... The monopoly
> capitalist economy, Baran and Sweezy suggested, is a vastly productive
> system that generates huge surpluses for the tiny minority of
> monopolists/oligopolists who are the primary owners and chief
> beneficiaries of the system. As capitalists they naturally seek to
> invest this surplus in a drive to ever greater accumulation. But the
> same conditions that give rise to these surpluses also introduce
> barriers that limit their profitable investment. Corporations can just
> barely sell the current level of goods to consumers at prices
> calibrated to yield the going rate of oligopolistic profit. The
> weakness in the growth of consumption results in cutbacks in the
> utilization of productive capacity as corporations attempt to avoid
> overproduction and price reductions that threaten their profit
> margins. The consequent build-up of excess productive capacity is a
> warning sign for business, indicating that there is little room for
> investment in new capacity.
> For the owners of capital the dilemma is what to do with the immense
> surpluses at their disposal in the face of a dearth of investment
> opportunities. Their main solution from the 1970s on was to expand
> their demand for financial products as a means of maintaining and
> expanding their money capital. On the supply side of this process,
> financial institutions stepped forward with a vast array of new
> financial instruments: futures, options, derivatives, hedge funds,
> etc. The result was skyrocketing financial speculation that has
> persisted now for decades.

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