Monopoly-finance capital

Monthly Review

Volumn 58, Issue 7, 2006, Pages 1-14

  Foster, John Bellamy ^a  

^a NONE

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EID: 33845790213     PISSN: 00270520     EISSN: None     Source Type: Journal    
DOI: 10.14452/MR-058-07-2006-11_1     Document Type: Review

References (26)

1. In using the term "finance capital" here I am not doing so in the specific sense in which it was introduced in Rudolf Hilferding's great work Finance Capital (1910) where it was defined at one point as "capital controlled by the banks and utilized by the industrialists." Rather the term is meant in this case to refer to the employment of money capital in financial markets and speculation more generally. In this regard, Doug Henwood's sharp criticism of Hilferding's position on bank control is worth quoting: "I'm very critical of Hiferding...for arguing that the German-style model of capitalism, with a handful of big banks owning big industrial concerns, was the future of the system, and that the Anglo-American stock-market system was on the way out. He couldn't have been more wrong; as the gloomy Wall Street economist Henry Kaufman put it a few years ago, we're seeing the Americanization of global finance." Doug Henwood interviewed by Geert Lovink, Finance and Economics After the Dotcom Crash, December 20, 2001, http://www.nettime.org. See also Paul M. Sweezy, The Theory of Capitalist Development (New York: Monthly Review Press, 1942), 266.
2. Joseph Schumpeter, Capitalism, Socialism and Democracy (New York: HarperCollins, 1942), 90n.
3. Michal Kalecki, Theory of Economic Dynamics (London: George Allen and Unwin, 1954), 161.
4. See also Josef Steindl, Maturity and Stagnation in American Capitalism (New York: Monthly Review Press, 1976).
5. Later in their book Baran and Sweezy also pointed to historical factors, such as the second wave of automobilization of the U.S. economy in the 1950s (which included the building of the interstate highway system, the growth of the suburbs, etc.). However, the automobilization of the U.S. economy, they argued, was no longer an expansive factor, and was entering a period of simple reproduction.
6. For a work applying this theory to today's global economy see Bill Lucarelli, Monopoly Capitalism in Crisis (New York: Palgrave Macmillan, 2004).
7. The dominance of finance is not the same thing as a shift in power from non-financial to financial institutions, since the distinction between the two has become increasingly blurred. Non-financial corporations from General Motors to Wal-Mart are increasingly involved in lending activities from which they derive much of their income, as well as in outright speculative finance. For empirical evidence of what could be called the financialization of non-financial firms see Greta R. Krippner, "The Financialization of the American Economy," Socio-Economic Review 3, no. 2 (2005): 173-208.
8. Harry Magdoff, "Monopoly Capital," Economic Development and Cultural Change, 16, no. 1 (October 1967): 145-50
9. and "Problems of United States Capitalism" in Paul M. Sweezy and Harry Magdoff, The Dynamics of U.S. Capitalism (New York: Monthly Review Press, 1972), 7-29.
10. See in particular Harry Magdoff and Paul M. Sweezy, Stagnation and the Financial Explosion (New York: Monthly Review Press, 1987).
11. Fred Magdoff, "The Explosion of Debt and Speculation," Monthly Review 58, no. 6 (November 2006): 7.
12. The figures on the debt explosion in the U.S. economy, though startling, underestimate the growth of financial speculation. There is no accepted way of measuring the full scale of such speculation since numerous financial instruments now exist that, as Henwood points out, are "completely outside the conceptual realm of traditional accounting, which can think of debt and equity, liabilities and assets, but not more insubstantial instruments like options, futures, and inverse floaters. And unlike stocks or loans, it's hard to put a dollar volume on them, since the purported value of the transaction - the notional principal - is usually far more than the sum of money actually at risk....But the very immeasurability of the things underscores the point about financialization: layers of claims have been piled upon layers of claims, most of them furiously traded, with some resisting definition and measurement...[I]f there were some way to capture their growth, the line on the chart would no doubt run off die page." Doug Henwood, After the New Economy (New York The New Press, 2005), 192.
13. See also Doug Henwood, Wall Street (New York: Verso, 1997).
14. The enormous difficulties that economists encounter in any attempt to relate "real" and financial markets can be seen in John H. Cochrane, ed., Financial Markets and the Real Economy (Northampton, MA: Edward Elgar, 2006).
15. John Maynard Keynes, The General Theory of Employment, Interest and Money (London: Macmillan, 1973), 160-61.
16. John Maynard Keynes, Essays in Persuasion (New York: Harcourt, Brace and Co., 1932), 169.
17. Keynes, The General Theory, 159.
18. For a critique of the "New Economy" myth used to rationalize the stock market bubble of the late 1990s (prior to its bursting in 2000) see The Editors, "The New Economy: Myth and Reality," Monthly Review 52, no. 11 (April 2001): 1-15. One of the empirical points brought out in this piece is that the great bulk of information technology investment occurs in the finance, insurance and real estate sector and other services (such as retail trade) and not in manufacturing.
19. Hyman P. Minsky, John Maynard Keynes (New York: Columbia University Press, 1975)
20. and Can "If:" Happen Again?: Essays on Instability and Finance (Armonk, NY: M.E. Sharpe, 1982).
21. See also Gary Dymski and Robert Pollin, eds., New Perspectives in Monetary Macroeconomics: Explorations in the Tradition of Hyman P. Minsky (Ann Arbor: University of Michigan Press, 1994).
22. Eric J. Weiner, What Goes Up: The Uncensored History of Modern Wall Street (New York: Little, Brown and Co., 2005).
23. Henwood, After the New Economy, 231.
24. Michael M. Hutchinson and Frank Westermann, eds., Japan's Great Stagnation (Cambridge, MA: MIT Press, 2006).
25. Karl Marx, Capital, vol. 1 (London: Penguin, 1976), 799.
26. See The Editors, "A Prizefighter for Capitalism: Paul Krugman vs. the Quebec Protesters," Monthly Review 53, no. 2 (June 2001): 1-5.