Sotiropoulos, Milios, & Lapatsioras' A Political Economy of Contemporary Capitalism and its Crisis
I began this book rejecting, in a sense, its founding argument: that we must rescue Marxist political economy from Ricardian deviation, that is, the idea that rents and profits represent a reduction of labor’s share considered socially. The authors identify strains of this line of thought particularly in Keynes and Veblen, where it manifests in the figure of the ‘absentee owner’ who appears as a distorting, unprofitable leech obtaining an absolute rent, as opposed to the entrepreneurial capitalist who deals in capital valorization. Initially, I opposed this argument as it seemed to me to be evacuating the content of exploitation and class struggle as concepts from economic models. However! I am pleased to report this was a wrong-headed view. Accepting the authors’ positions open up a coherent and salient account of what, exactly, finance is within capitalism.
Finance is, to put it bluntly, the commodification of abstract risk within the total economy. This has numerous ramifications; I’ll focus here on two. The first is that commodifying risk is not an idle declaration, but completely reconsiders capital market products, specifically derivatives and futures in secondary markets. The authors content that essentially all capital market products are sui generis commodities which work to fetishize the concept of risk itself — that is, in this first instance, a future-oriented bet against class struggle. This class struggle point is particularly interesting: essentially, for a futures market to actually work, liquidity is prioritized over investment, and the availability of said liquidity furthermore must be protected in open class war by drawing ever more investors in who are committed to seeing through their investment. Essentially, this means that the status quo, the assurance of continued availability of liquidity, must be protected at all costs, so as to minimize social abstract risk (that said, individually assumed risk is of course irrelevant in this analysis). This opens onto the 2nd point implied by commodification of a mystified relation: an element of Foucauldian governmentality, in the sense that “finance is a technology of power”, swims into view. The authors turn around the previous point, declaring that risk isn’t betting on the future but disciplining the present. This manifests as prudence, but also acceptance, and above all, giving in to the dressage of market society.
Thirdly, risk highlights the ‘stickiness’ of capitalist markets, especially in the face of declarations by Hayek & co. that market information is only discoverable and legible within capitalism. The authors propose something daring here: that the socialist calculation problem is not about planning at all, but a duel of competing models with differing understandings of finance capital as a whole. They use Oskar Lange and pit him against Hayek, and come away with the surprising conclusion that Lange, the socialist, had a weaker critique of capitalism than is uncoverable in Hayek, highlighting the utterly ingrained nature of finance in capitalist economics—this was not a tumor which could be excised, but rather a pure distillation of capitalist activity.
This brings me to another point driving the text. The authors suggest that the historical ‘rise’ of finance capital may be connected to a greater shift for abstract surplus value extraction (i.e. the extension of the working day) to relative surplus value extraction, through the development of various tools and measures, usually technological in nature, which increase productivity. Here, the authors write:
…financial intermediation is definitely a ‘productive’ capitalist activity: it produces surplus-value and exploits labor according to the established capitalist patterns[…]financial firms are also governed by the two mechanisms of absolutely and relatively increasing the rate of surplus-value[…]This means that as in exery other individual capital, innovations in financial firms are competition-driven by the realization of extra surplus-value. Competitive financial intermediaries always seek to introduce innovations to give themselves a comparative advantage”
Thus, the authors agree with Hayek and offer the idea that finance maximizes the extraction of relative surplus value; therein, it deals directly with increased exploitation. In fact, this picture of exploitation is rather more sophisticated than the one offered by Ricardian socialism, and further highlights its socially relational character. Thus, there is a pushback against the idea of finance capital as an unwelcome and unproductive distortion, freighted by the nostalgia for a truer ‘industrial capitalism’ of yesteryear. Hilferding, who appears as a touchstone throughout the text, refers to the ‘marginal profit’ obtained by the speculator as the purest form of capitalist activity in finance, appearing as “business-in-itself” and identifying capitalism “as a system of exploitation that is associated with an active portfolio management process”. In another way, we may call this pure capital “interest bearing capital”, “rather the most general and developed form of capital”.
Finally, however, labor returns to the equation in a modified form, as the engine of the industrial circuit of capital which in turn drives the circuits of circulating, and yes, financial capital. The authors lay out an ever-shifting scrum of capitalist firms and concerns allied to particular factions who may occupy the role of any particular capitalist at any given time, but nevertheless constantly relate to each other through competition so as to function as a single bloc by virtue of their mutual dependence.