Re: [OPE] Two brief excerpts on the financial crisis

From: Jurriaan Bendien <>
Date: Sat May 29 2010 - 07:27:40 EDT


Thanks for your comment. I agree that it is a mistake to regard capital
finance as an epiphenomenon. The trouble though with Hilferding's analysis
is that he does little more than to rewrite, elaborate and systematize
chapters of Capital Vol. 3. The people around Lapavitsas and Toporowski have
done work on rentier capitalism but it is often not really clear what the
purpose of the analysis is. Most left analysis which consider finance
seriously propose some variant of post-Keynesianism. I think myself that is
because their foundational concepts are often in error.

There are several scientific problems in my opinion:

1) the organization and nature of production and exchange in our time has
changed to such an extent, that the categorization schemes used in economic
theory and statistics, which were mainly devised in the middle of the 20th
century, are not longer adequate. This creates the interesting situation,
that even most public servants and academics relying on official statistics
are not even very aware of the real nature of private sector operations.
2) There is almost no profound analysis of the social and economic relations
of services economy.
3) Marx - whose theory was very much unfinished - never provided an analysis
of the labour market which is absolutely central to capitalist economies.
4) Analyses of capital accumulation and economic reproduction have largely
ignored, that the results of these processes create a larger and larger
stock of physical durables and financial assets not invested in production,
being neither an input nor an output of production.
5) Marx's story about the capitalist mode of production is typically
conflated by Marxists with capitalism generally, or with capitalist society.
This mistake creates an enormous handicap for social scientific analysis. On
average, total tax revenue in the EU equals about 40% of the EU's combined
GDP (nearly 5 trillion euros), and therefore, if we want to talk seriously
about the allocation of resources, an analysis of public finance is
absolutely essential. Yet there is almost no substantive analysis of it. How
can you form an adequate understanding of state politics, without
understanding the finance that it behind it? I don't think you can.

I think therefore what is needed is a critique of political economy.



----- Original Message -----
From: "Dave Zachariah" <>
To: "Outline on Political Economy mailing list" <>
Cc: "Jurriaan Bendien" <>
Sent: Saturday, May 29, 2010 11:53 AM
Subject: Re: [OPE] Two brief excerpts on the financial crisis

> On 2010-05-26 01:19, Jurriaan wrote:
>> > > Jayati Ghosh writes succinctly:
>> > >
>> > > ... there is no alternative to a major restructuring of the Greek
>> debt,
>> > > involving a loss taken by the international lenders who did not
>> exercise
>> > > due diligence in the act of lending in the first place. If it does
>> not
>> > > happen now, it will in any case have to happen at some time in the
>> future,
>> > > after creating a great deal of material distress in Greece. Why is
>> such an
>> > > obvious conclusion not even being talked about? A restructuring of
>> the
>> > > Greek debt would involve quite a large haircut for the German and
>> French
>> > > banks who lent extensively during the boom, and helped to create the
>> > > imbalances that have made the Greek economy less competitive than
>> that of
>> > > Germany, for example. This cannot be allowed to happen, so the
>> burden of
>> > > adjustment is placed entirely on the Greek people, for several
>> > > generations, in what will clearly be an unsustainable process.
>> [...] The problem is that the
>> > > power of finance - in politics, in media and in determining
>> national and
>> > > international economic policies - remains undiminished despite its
>> recent
>> > > excesses and failures. That is why the restructuring of public
>> debts is
>> > > not on the agenda; that is why talk of fiscal balancing so rarely
>> even
>> > > mentions taxes on capital, and much less on the same financial
>> sectors
>> > > that benefited from large publicly funded bailouts and are now
>> holding to
>> > > ransom the hands that have fed them.
>> > >
>> >
> I think Ghosh has been the economist that has put issue this most clearly
> recently.
>> As I have mentioned previously on OPE-L in reply to Paul Cockshott,
>> effectively the financial sector has the economy "by the balls" insofar
>> as
>> it owns or controls the largest chunk of it. [...]
>> And most leftists do not have much of a clue about finance,
>> beyond rhetorics about the extraction of surplus value. A new generation
>> has
>> appeared which has very little experience of a serious political fight.
>> Presumably therefore, if there is a political response, it will focus on
>> "visible" targets such as particular politicians and businessmen, state
>> institutions and on particular property. The ultimate weapon workers have
>> is
>> to go on strike, but the question is, whether a general strike can
>> achieve
>> anything, and how much support it can get.
> I'd say we are broadly in agreement here. The Left forces need a clear
> theory of rentier-dominated capitalism and a set of measures to deal with
> the rentier interest. I think Dumenil and Levy have done some very good
> work in this direction. Paul C and myself have tried to popularize some of
> this too.
> By contrast, despite all of Shaikh strengths as a researcher, in his
> framework the balance of class forces -- and the rentier interest in
> particular -- does not have any significant or explicitly theorized impact
> in capitalism. At least this is what I could gather from his presentation
> and discussion at the Historical Materialism conference this year:
> But perhaps when he publishes this talk I will revise my opinion. The same
> goes for Andrew Kliman's response in a different session. Finance appears
> here more as an epiphenomenon, rather than the master in the current
> configuration of the economy.
> //Dave Z

ope mailing list
Received on Sat May 29 07:30:10 2010

This archive was generated by hypermail 2.1.8 : Mon May 31 2010 - 00:00:02 EDT