Mello sabadini (eds ) financial speculation and fictitious profits; a marxist analysis (2019)

Sabadini eds., Financial Speculation and Fictitious Profits, Marx, Engels, and Marxisms, https://doi.org/10.1007/978-3-030-23360-0_1 Introduction Helder Gomes, Gustavo Moura de Cavalca

Series Editors

Marcello Musto

York University

Toronto, ON, Canada Terrell Carver

University of Bristol

Bristol, UK

of capitalism re-emerges, there is an intellectual and political demand for new, critical engagements with Marxism The peer-reviewed series Marx, Engels and Marxisms (edited by Marcello Musto & Terrell Carver, with Babak Amini and Kohei Saito as Assistant Editors) publishes monographs, edited volumes, critical editions, reprints of old texts, as well as translations

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Gustavo Moura de Cavalcanti Mello Mauricio de Souza Sabadini

Editors Financial Speculation and Fictitious Profits

A Marxist Analysis

ISSN 2524-7123 ISSN 2524-7131 (electronic)

ISBN 978-3-030-23359-4 ISBN 978-3-030-23360-0 (eBook)

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Gustavo Moura de Cavalcanti Mello

Department of Economics and

Post-Graduate Programme in

Social Policy

Federal University of Espírito

Santo (UFES)

Vitória, Espírito Santo, Brazil

Mauricio de Souza Sabadini Department of Economics and Post-Graduate Programme in Social Policy

Federal University of Espírito Santo (UFES)

Vitória, Espírito Santo, Brazil

Marx, Engels, and Marxisms

This study was written by some members of CAPES-PRINT Inter- nationalization Project from UFES and was financed in part by the Coordenação de Aperfeiçoamento de Pessoal de Nível Superior—Brazil (CAPES)—Finance Code 001

the mArx revivAl

The Marx renaissance is underway on a global scale Whether the puzzle

is the economic boom in China or the economic bust in “the West”, there

is no doubt that Marx appears regularly in the media nowadays as a guru, and not a threat, as he used to be The literature dealing with Marxism, which all but dried up 25 years ago, is reviving in the global context Academic and popular journals and even newspapers and online journal-ism are increasingly open to contributions on Marxism, just as there are now many international conferences, university courses and seminars on related themes In all parts of the world, leading daily and weekly papers are featuring the contemporary relevance of Marx’s thought From Latin America to Europe, and wherever the critique to capitalism is remerging, there is an intellectual and political demand for a new critical encounter with Marxism

types of publicAtions

This series bring together reflections on Marx, Engels and Marxisms from perspectives that are varied in terms of political outlook, geographical base, academic methodologies and subject matter, thus challenging many preconceptions as to what “Marxist” thought can be like, as opposed to what it has been The series will appeal internationally to intellectual com-munities that are increasingly interested in rediscovering the most power-ful critical analysis of capitalism: Marxism The series editors will ensure

that authors and editors in the series are producing overall an eclectic and stimulating yet synoptic and informative vision that will draw a very wide and diverse audience This series will embrace a much wider range of scholarly interests and academic approaches than any previous “family” of books in the area.

This innovative series will present monographs, edited volumes and critical editions, including translations, to Anglophone readers The books

in this series will work through three main categories

Studies on Marx and Engels

The series will include titles focusing on the oeuvre of Marx and Engels which utilize the scholarly achievements of the ongoing Marx-Engels

Gesamtausgabe, a project that has strongly revivified the research on these

two authors in the past decade

Critical Studies on Marxisms

Volumes will awaken readers to the overarching issues and world- changing encounters that shelter within the broad categorization, “Marxist” Particular attention will be given to authors such as Gramsci and Benjamin, who are very popular and widely translated nowadays all over the world, but also to authors who are less known in the English-speaking countries, such as Mariátegui

Reception Studies and Marxist National Traditions

Political projects have necessarily required oversimplifications in the tieth century, and Marx and Engels have found themselves “made over” numerous times and in quite contradictory ways Taking a national per-spective on “reception” will be a global revelation and the volumes of this series will enable the worldwide Anglophone community to understand the variety of intellectual and political traditions through which Marx and Engels have been received in local contexts

Bristol, UK

Toronto, ON, Canada

This book, authored by Gustavo Mello and Mauricio Sabadini, is tant not only because of the clarity of its explanation of a difficult subject, but also because it comes at a time when financial globalization once again threatens to provoke a large-scale economic crisis It provides the neces-sary elements for understanding the potential effects of an increase in speculative parasitism and fictitious profits on the economy and, therefore,

impor-on labor, from the point of view of both wages and unemployment.Increases in financial activity are not naturally parasitic In general, companies operate in a macroeconomic environment over which they have little long-term control and in which they operate with incomplete information Today, the complexity of production increases uncertainty regarding the profitability of projects Covering these new risks leads to the development of complex financial products In a way, the complexity

of the financial market is a consequence of the complexity of production Such financial complexity is developed through financial liberalization (de-compartmentalization, disintermediation and deregulation) This has

a cost, but it makes it possible to obtain a higher profit that exceeds this

cost.1 Therefore, the development of finance and the growth of

sophisti-cated financial products makes possible, in abstract, the development of

capital This is because the capital cycle only develops if financial activities permit the growth in value of productive capital Currently, the growth of the industrial sector demands a more than proportional development of the financial sector

However, finance, like a Janus, has two faces One is “virtuous”, as we have just mentioned; the other is “vicious”, having acquired an uncontrollable amplitude with financial globalization Financialization is

the childhood disease of finance, its own monster Financialization is the

threshold from which the financial sector, more profitable than the industrial sector, develops to the detriment of the latter That there has been a shift

toward “financialization,” since its development is mainly due to the attraction exerted by these new financial products in themselves, rather than the function of reducing risk in production

In this way, the financial sector seems to become autonomous from the productive sector and, in this sense, we can say that the relationship between finance and labor is both fetishized and complex It is fetishized because finance and labor seem to operate in separate watertight spaces: money seems to become autonomous, just like the miracle of bread, and

to generate money from itself without there being a relationship with labor and working conditions It is complex because there are relation-ships between the development of finance and working conditions (total wages, employment and types of jobs), relationships that develop under-ground, appearing more clearly in times of crisis In the context of com-mercial and financial globalization, these relationships, in addition to national determinants, are difficult to decipher, especially since the virtu-ous and vicious aspects are the two faces of the same coin In other words, virtuous finance contains within it the tendency to financialization Therefore, there is a dialectical relationship between them

Much has been written about the origins and causes of the financial crisis in developed countries and its highly negative consequences for eco-nomic activity The development of speculative bubbles and their bursting have been facilitated by: (1) techniques that are at the very least “mislead-ing” in assessing risks, (2) the possibility of banks profitably “selling” the risks they take by designing and issuing increasingly complex derivative financial products (securitization) and deleting them from their balance sheets, and (3) the adoption of accounting rules that value assets based on their market prices (“mark to market”) Financial engineering, conceived

in this way, provided an exciting logic: credit is less and less granted from the prospective income of lenders, being more and more from the antici-pation of the asset value acquired by these lenders, as we observe with the case of real estate and financial bubbles To return to Minsky’s expression,

Ponzi-type financing is quickly arrived at and instability is reproduced The

financial system implodes with brutal devaluation of assets and what

previ-ously favored the bubble (the equity value, that is, the positive difference

between the market value and its commitments) becomes its opposite (the market value plummets, falling below the value of the loans to be repaid).The resumption of the cycle causes an acute shortage of liquidity Financial companies seek liquidity to finance a risk that only the day before, transferred and disseminated, was considerably revalued Banks

stop lending to each other and, à fortiori, brutally break their loans to

companies to individuals Non-financial companies, with the devaluation

of their capitalized securities, see a series of rates “turn red” and are fronted with a growing lack of liquidity The “credit crunch” turns finan-

con-cial crisis into economic crisis It becomes systemic, affecting companies

and banks, including those that have maintained prudent management of their assets It forcefully spreads across borders through the channels forged by financial globalization

In search of liquidity, banks and multinational companies liquidate a portion of their assets abroad, particularly in Latin America, repatriating a significant portion of their profits and interrupting the purchasing of bonds Foreign banks provide much less credit to Latin American export-ers In addition to these difficulties, there is a reduction of commitments

in industrialized countries due to the crisis in the real economy that is developing Lack of liquidity, capital flight and reduction of external com-mitments are the factors that transform the financial crisis into a crisis of the real economy in emerging economies

Interest rates and the importance of these currencies have made various authors return to the foundations of the Marxist theory of currency, devel-

oped in Book I of Capital, and of finance, developed in Book III of

Capital Thanks to this theoretical deepening, the authors go beyond

simple description to grasp the essence of the causes and consequences of financial globalization If currency and financial globalization are given priority in this remarkable book, it is because financial globalization is much more prominent than commercial globalization When the financial crisis in advanced countries provoked a “credit crunch” (an accentuated shortage of liquidity), the subsidiaries of multinational companies repatri-

ated a significant portion of their profits to compensate for the lack of liquidity of the parent companies in advanced countries, resulting in a change to the world economy The foundations of the emerging Latin American countries, although relatively good, with a low degree of open-ness, simply did not constitute a sufficient defense against the “solidarity”

of the balance sheets of transnational companies and the financial crisis, through contagion, affected the “real” world with a force ten times stronger

to surplus value, is accentuated and, to a certain extent, indirectly tive labor becomes unproductive That is, incapable of creating value, even

produc-if indirectly In this way, two distinct dimensions coexist in this type of work: indirectly productive and unproductive With financialization, the second factor prevails over the first.

1 Terrell Carver and Daniel Blank, A Political History of the Editions

of Marx and Engels’s “German Ideology” Manuscripts, 2014.

2 Terrell Carver and Daniel Blank, Marx and Engels’s “German

Ideology” Manuscripts: Presentation and Analysis of the “Feuerbach chapter,” 2014.

3 Alfonso Maurizio Iacono, The History and Theory of Fetishism, 2015.

4 Paresh Chattopadhyay, Marx’s Associated Mode of Production: A

7 Ranabir Samaddar, Karl Marx and the Postcolonial Age, 2017.

8 George Comninel, Alienation and Emancipation in the Work of

Karl Marx, 2018.

9 Jean-Numa Ducange and Razmig Keucheyan (Eds.), The End of

the Democratic State: Nicos Poulantzas, a Marxism for the 21st Century, 2018.

10 Robert Ware, Marx on Emancipation and the Socialist Transition:

Retrieving Marx for the Future, 2018.

11 Xavier LaFrance and Charles Post (Eds.), Case Studies in the

Origins of Capitalism, 2018.

12 John Gregson, Marxism, Ethics, and Politics: The Work of Alasdair

MacIntyre, 2018.

13 Vladimir Puzone and Luis Felipe Miguel (Eds.), The Brazilian Left

in the 21st Century: Conflict and Conciliation in Peripheral Capitalism, 2019.

14 James Muldoon and Gaard Kets (Eds.), The German Revolution

and Political Theory, 2019.

Shaibal Gupta, Marcello Musto & Babak Amini (Eds), Karl Marx’s Life,

Ideas, and Influences: A Critical Examination on the Bicentenary

Juan Pablo Rodríguez, Resisting Neoliberal Capitalism in Chile: The

Possibility of Social Critique

Igor Shoikhedbrod, Revisiting Marx’s Critique of Liberalism: Rethinking

Justice, Legality, and Rights

Alfonso Maurizio Iacono, The Bourgeois and the Savage: A Marxian

Critique of the Image of the Isolated Individual in Defoe, Turgot and Smith

Ducange, Jean-Numa, Jules Guesde: The Birth of Socialism and

Marxism in France

Spencer A.  Leonard, Marx, the India Question, and the Crisis of

Cosmopolitanism

Kaan Kangal, Friedrich Engels and the Dialectics of Nature

Victor Wallis, Socialist Practice: Histories and Theories

Marcello Mustè, Marxism and Philosophy of Praxis: An Italian Perspective

from Labriola to Gramsci

“This book offers a wide-ranging critique of contemporary political economy grounded in the work of Karl Marx The contributions focus on value, money, finance and financialisation, and their transformations under neoliberalism

Financial Speculation and Fictitious Profits is a refreshing and original perspective

which will inform debates within Marxist Political Economy for many years Scholars and students will find here a treasure trove of materials to be examined, discussed and developed: a truly valuable contribution to Marxist debates!”

—Alfredo Saad Filho, Professor of Political Economy, SOAS

University of London, UK

“This collection of essays is a timely intervention at this contemporary stage of predatory capitalism, with fictitious capital dominating economy and society A refreshed understanding of the nature of fictitious capital in both its historical evolution and contemporary forms is necessary for the search for alternatives to end its tyranny and for a new chapter of humanity to unfold.”

—Lau Kin Chi, Professor, Lingnan University, Hong Kong

“The distinguishing feature of today’s post-industrial evolution into finance talism is fictitious capital—that is, finance capital on the liabilities (debt) side of the balance sheet taking over economic management from industry and also from government The chapters in this book provide a much-needed background to see the extent to which financial engineering has replaced industrial engineering as the key to rising ‘wealth.’”

capi-—Michael Hudson, Professor of Economics, University of Missouri–Kansas City,

and Researcher, Levy Economics Institute at Bard College, USA

“The destructive march of capital makes it imperative to systematically study the Marxian critique of political economy In undertaking this task, throughout the chapters that compose this work the authors offer us relevant contributions to a critical interpretation of contemporary capitalism, especially through a careful and original analysis of the fictitious forms of capital.”

—Wen Tiejun, Professor of Economics, Fujian Agriculture &

Forestry University, China

centrality in the working of capitalism since the turn of the 21st century and its role in the 2008 financial crisis, it has remained an extremely unresearched domain

of Marxist scholarship The two decades of work from economists at the Federal University of Espirito Santo has been a notable exception, and this book brings it finally to Anglophone researchers.”

—François Chesnais, Professor Emeritus, University of Paris XIII, France

Helder Gomes, Gustavo Moura de Cavalcanti Mello,

Paulo Nakatani, Mauricio de Souza Sabadini, and

Adriano Lopes Almeida Teixeira

Adriano Lopes Almeida Teixeira

Reinaldo Antonio Carcanholo

4 Crypto-Currencies: From the Fetishism of Gold to Hayek

Paulo Nakatani and Gustavo Moura de Cavalcanti Mello

5 Financialization and the Contradictory Unity Between the

Paulo Nakatani, Adriano Lopes Almeida Teixeira, and

Helder Gomes

6 Parasitic Speculative Capital: A Theoretical Precision on

Financial Capital, Characteristic of Globalization 117

Reinaldo Antonio Carcanholo and Paulo Nakatani

7 Profit, Interest, Rent, and Fictitious Profit 139

Gustavo Moura de Cavalcanti Mello and

Mauricio de Souza Sabadini

8 The Nature and the Contradictions of the Capitalist Crisis 183

Paulo Nakatani and Helder Gomes

Index 213

Reinaldo  Antonio  Carcanholo (in memoriam) was a professor at the

Department of Economics and at the Post-Graduate Programme in Social Policy at the Federal University of Espírito Santo (UFES), Brazil He received his doctorate in Economics from the National Autonomous University of Mexico (UNAM)

Helder  Gomes is a post-doctoral fellow at the Federal University of

Espírito Santo (UFES), Brazil He received his doctorate in Social Policy from the Federal University of Espírito Santo (UFES)

Gustavo  Moura  de  Cavalcanti  Mello (Ed.) is  a professor at the

Department of Economics and at the Post-Graduate Programme in Social Policy at the Federal University of Espírito Santo  (UFES), Brazil He received his doctorate degrees in Sociology from the University of São Paulo (USP)

Paulo  Nakatani is a professor at the Department of Economics and

at the Post-Graduate Programme in Social Policy at the Federal University

of Espírito Santo (UFES), Brazil.  President of the Brazilian Society of Economic Policy (SEP) (2008–2012) He received his doctorate in Economics from the University of Picardie, France

Mauricio de Souza Sabadini (Ed.) is a professor at the Department of

Economics and at the Post-Graduate Programme in Social Policy at the Federal University of Espírito Santo (UFES), Brazil. Director (2016–2018)

and President of the Brazilian Society of Economic Policy (SEP) (2018–2020) He received his doctorate in Economics from the University

of Paris 1 Panthéon Sorbonne, France

Adriano Lopes Almeida Teixeira is a professor at the Department of

Economics at the Federal University of Espírito Santo (UFES), Brazil He received his doctorate in Economics from the Federal University of Minas Gerais (UFMG)

Fig 2.2 The artistic whole (section I of Capital) (Source: Our own

production based on section I of chapter one of Capital

Fig 8.1 Monetary base and means of payments USA (US$ billions)

(Source: Federal Reserve: http://www.federalreserve.gov/

Fig 8.2 USA: Short-term interest rates—2005–2018 (Source: Federal

Reserve: H.15 Selected Interest Rates for Sep 25, 2018 Our

Fig 8.3 Monetary base and means of payments in the Eurozone

(€ billions) (Source: http://sdw.ecb.europa.eu/browse.

Fig 8.4 Balance of payments balance in current account accumulated

between 2006 and 2017 (US$ trillions) (Source: World Bank: http://data.worldbank.org/indicator/bn.cab.xoka.cd) 201 Fig 8.5 International Reserves 2017—Selected countries with the

largest reserves (US$ billions) (Source: World Bank: http://

data.worldbank.org/indicator/fi.res.totl.cd Our own

production) 201

Table 8.1 Total assets of banks and other financial institutions (US$

billions) 189 Table 8.2 Market value of companies in stock exchanges (US$ billions) 191 Table 8.3 Selected government debt securities (US$ billions) 193

© The Author(s) 2019

G M de C Mello, M de S Sabadini (eds.), Financial Speculation

and Fictitious Profits, Marx, Engels, and Marxisms,

https://doi.org/10.1007/978-3-030-23360-0_1

Introduction

Helder Gomes, Gustavo Moura de Cavalcanti Mello, Paulo Nakatani, Mauricio de Souza Sabadini,

and Adriano Lopes Almeida Teixeira

The recurrent and devastating economic crises, the widened reproduction

of inequality and misery, militarism, the unmeasured thirst for surplus value, advancing predatorily not only on the working population but also

on nature, to the point of putting at risk the very existence of humanity,

in short, the barbaric dynamics of capital once again silenced the death sentences of Marxian criticism to political economy In particular, after the 2007–8 crisis and amid the popular revolts that responded to their effects,

H Gomes ( * )

Post-Graduate Programme in Social Policy, Federal University of Espírito Santo (UFES), Vitória, Espírito Santo, Brazil

G M de C Mello • M de S Sabadini • P Nakatani

Department of Economics and Post-Graduate Programme in Social Policy, Federal University of Espírito Santo (UFES), Vitória, Espírito Santo, Brazil e-mail: mauricio.sabadini@ufes.br

A L A Teixeira

Department of Economics, Federal University of Espírito Santo (UFES), Vitória, Espírito Santo, Brazil

Marx’s thinking was revived, leading to a proliferation of efforts to lize its analyzes for a critical understanding of contemporary capitalism As one of its most salient features is the prominence of the financial dimen-sion of accumulation, Marx’s analysis of the fictitious forms of capital has acquired particular interest and in recent years has been the subject of increasing research It is precisely this investigation that constitutes the fundamental object of the studies gathered in this book Composed of seven chapters, besides this Introduction, three of them unpublished and the other four revised and expanded versions of articles already published (but unpublished in English), this book tries to synthesize more than 20

mobi-years of research and debates fictitious wealth and fictitious capital Its

content suggests the need to distinguish the present stage of capitalist accumulation from the period that stretches from the end of the Second World War to the mid-1970s This distinction goes beyond the traits of the so- called globalization to the consequences of the restructuring of production and the application of neoliberal policies The authors seek to emphasize the fundamental characteristics and contemporary specificities

of the current stage of the evolution of capital: the domination of fictitious

capital over other forms of capital, together with which it forms a

contra-dictory totality

In this sense, the book presents a close reading of fictitious capital and the place it holds in the Marxist exposure of the process of autonomiza-tion and subjectivation of capital, emphasizing the power and topicality of the work of Marx In addition to this logical approach and considering the development of capitalist social formations, the authors explore the his-torical uniqueness of today’s dynamic of capital accumulation, guided by the appropriation of fictitious profits From this analysis, the authors pro-vide an explanation of the recent economic crises, highlighting the 2007–8 crisis, and make considerations about the gloomy prospects for capitalism

in the immediate future

The fictitious reproduction of capital as a modern novelty is not at issue The proposal is to consider the special character of this stage of the accumulation of wealth in which the strong dominance of fictitious capital

is reproduced over and above other forms of capital throughout the world, particularly going forward from the economic stagnation that began in the late 1960s This means that the logic of capitalist expansion is cur-rently based on the fictitious production of wealth and the centralized

appropriation of fictitious profits Such conclusions did not, however, arise

instantaneously They began with concerns of researchers Paulo Nakatani

and Reinaldo A.  Carcanholo, Professors at the Federal University of Espírito Santo since the early 1990s, about what they considered to be limits in the interpretations of Marxist economists of the economic crisis that had been deepening over the preceding decades.

The great challenge, proposed by these authors, was to overcome the resistance against updating the embryonic concepts developed by Karl

Marx in Capital They were convinced that dialectic categories, and not

finished definitions, should always be considered in the process of formation, ready to be used at any time and place If social phenomena are

trans-by nature dynamic, in a continuous metamorphosis, then the simplicity of the definitions fails to capture and interpret them with adequate precision The dialectic perspective overcomes some of the obstacles to the proces-sual construction of knowledge about the current capitalist crises from the Marxist viewpoint

In the face of somewhat imprecise interpretations and to qualify the

phenomenon of the current capitalist crisis, the general use of the term

financial capital seemed lacking, both in designating the distinct forms

that capital interest assumes and in referring to the various modes of ulation that have multiplied since the collapse of the Bretton Woods sys-tem in the early 1970s The quest for greater precision led them to look at

spec-the Marxist category of fictitious capital, little investigated at spec-the time,

which then became the springboard for the theoretical effort that these researchers undertook

From this point onwards, the authors were able to better interpret the

capitalist crisis, seeing it not as inherently problematical, but as an

impor-tant moment in the search for solutions to the growing contradictions that periodically threaten the widening reproduction of capital The research-ers’ choice was to explore the process of the dematerialization of wealth under capitalism, seeking to understand more precisely the production of

fictitious wealth and the various operational practices used for their unequal

appropriation This would be based on the analytical assumption that the journey to the most recent stage in the development of capitalism has required the creation of ever more advanced forms of mercantile relation-ships In these relationships, both money and capital are mainly demateri-alized from their concrete forms, a phenomenon that gains more significance as speculative creativity advances This is the result of an intense process of value nullification in which there is an increasing social relevance of the command, by some class factions, over the stock of wealth and, especially, of wealth that could be produced in the future by more sophisticated speculation mechanisms

Along the same line of investigation, we attempt to make explicit the

double character of fictitious wealth and its connections with distinct forms

of speculation According to the authors, a substantial part of fictitious

wealth appears as if it were a real wealth In other words, as appearance is

also a dimension of reality, this form of wealth is both fictitious and real at the same time This means that a unit of fictitious capital can realize the portion of fictitious wealth under its command From the point of view of appearance, a portion of fictitious wealth can be exchanged for tangible

commodities (land, factories, means of consumption, etc.) In other words, in the process of circulation, each new holder of the right granted

by possession of a title (which represents a unit of fictitious wealth) could exchange it for any other commodity (real wealth).

However, if considered in a broader context (separate from isolated

exchanges), a considerable part of the fictitious wealth produced today is

revealed Derivative titles, for example, are a right and can be passed from hand-to-hand, being transferred uninterruptedly, in individual transac-tions They can, therefore, be transferred but cannot be consumed or used materially Their destruction would only happen with the suspension of

the belief that their holder could convert it into any real wealth in the

future From an even broader perspective, one realizes that this form of

fictitious wealth has no material connection to its effective realization It

exists only as a command power over a promised future wealth, which does not ensure that it will be produced at any future point

Capital has, for decades, found ways of managing the current global economic crisis, creating all sorts of speculative and regulatory instru-ments that have maintained a system that exponentially multiplies ficti-tious rights over wealth that, supposedly, will be produced at some unknown point in the future It is, therefore, a single moment in which fictitious value, in the more sophisticated forms of speculation, contradicts the social relations of current production The interpretation is, therefore, that this is a structural crisis in which the search for alternatives have only deepened its reproductive dynamism Starting from a more abstract analy-

sis of the evolution of the forms of current fictitious wealth production, the

book sets out concrete relations on the contemporary stage of tion, demonstrating how the new management of imperialism has been used for the maintenance of the dollar as a world currency under strong pressure from the European Union and Asian countries, which has required great upheavals in the metamorphosis of state intervention, gen-erating large-scale geopolitical crises

accumula-In the second chapter, “The Place of Money in Marx’s Theory of Capital,” Adriano L. Teixeira seeks to place Marx’s theory of money in relation to the major objective of his intellectual thinking, which sought to reveal the shape of capitalist sociability through a theory of capital Marx’s theory of money appears as a theoretical snapshot before the advent of capital, which, notwithstanding the category of money, assumed the role

of protagonist in the process of social reproduction, modifying the forms

of capital (money) and reconfiguring the elements of a possible Marxist monetary theory

In the next chapter, “Speculative Capital and the Dematerialization of Money,” Reinaldo A. Carcanholo explores in more detail the process of the dematerialization of wealth under capitalism and presents the prac-tices employed for unequal appropriation through speculation, which has meant the creation of ever more advanced forms of mercantile rela-tionships As the creative forms of parasitic speculation advance, both money and capital are dematerialized in their concrete forms, throwing off the operational impediments to the expanded reproduction of specu-lative capital, including creating new forms of regulation of securities transactions, which have come to dominate decisions throughout the capitalist world

Still with the aim of apprehending the concept of money as a moment

of the concept of capital, but having as its immediate object the emergence

of crypto-currencies, in Chap 4, “Crypto-currencies: From the Fetishism

of Gold to Hayek Gold,” Paulo Nakatani and Gustavo M de C. Mello, based on the Marxist perspective of money and particularly Marx’s analysis

of the fetishism of money and capital, grapple with the nature of crypto- currencies, highlighting their explosive growth in 2017 as a part of the dynamics of the overaccumulation of capital, which has been circling the world for decades, particularly in financial markets, in search of new and old assets that might serve as the means for the appropriation of fictitious income and which have taken on the most foolish and fetishized forms

In its turn Chap 5, “Financialization and the Contradictory Unity Between the Real and Financial Dimensions of Capital Accumulation,” by Paulo Nakatani, Helder Gomes and Adriano L.  Teixeira, rigorously exposes the co-pertinence and contradictions between “real” capital and monetary capital in order to highlight their specificities in contemporary capitalism To achieve this, the authors unpack the concept of capital in general and its metamorphoses under autonomous functional forms, put-ting emphasis on the monetary capital form and its reproduction in the credit system The authors hence established the foundation of the con-

cept of interest-bearing capital and their fictitious forms Under such a theoretical framework, we consider the elementary ways in which the functional forms of capital manifest themselves in effective reality.

In the following chapter, “Parasitic Speculative Capital: A Theoretical Precision on Financial Capital, Characteristic of Globalization,” written in

1999, Reinaldo A. Carcanholo and Paulo Nakatani analyze the early forms

of fictitious capital and apprehend the dual aspects of fictitious wealth

which give rise to significantly distinct forms of speculation Through this investigation, the authors expose the categories speculative capital and parasitic speculative capital as an unfolding of the fictitious capital Furthermore, Nakatani and Carcanholo defend the heterodox thesis that contemporary capitalism is distinguished by the process of conversion of industrial capital into speculative capital, and its logic is totally subordi-nated to speculation and dominated by parasitism In this way, it is the speculative logic of the capital on its circulation and reproduction in the international space that defines this new stage

In the seventh chapter, “Profit, Interest, Rent, and Fictitious Profit,” in the light of phenomena that have gained importance in the recent decades, such as the exponential growth of derivatives markets and the relevance assumed by intellectual property, Mauricio de S. Sabadini and Gustavo M

de C. Mello seek to conceptualize the different forms of income of the capital on the basis of the Marxian analyses of the categories of profit, interest and ground rent In the light of increasing rate and means of exploitation of the labor force in the midst of a reconfiguration of the international division of labor, we seek to theorize moments of what we

call fictitious profits, pari passu, to the expansion of the fictitious forms

of capital

Finally, in the last chapter, “The Nature and the Contradictions of the Capitalist Crisis,” Paulo Nakatani and Helder Gomes seek to reveal the privileges achieved by the US economy due to its position in imperialist relations and its reaction to the capitalist crisis and to the threat of the replacement of the dollar as the world currency Based on empirical evi-dence on international economic relations, the chapter seeks to demon-strate how the enforcement of the dollar reserve on most countries ends

up financing the continuous US external deficits, thereby guaranteeing the fractional reserves model and maintaining US command over the reg-ulation of the speculative race around the world

In short, the texts gathered here are intended to contribute to the updating of Marxist criticism to capitalist barbarism, which, once learned

in its totalizing and totalitarian nature, prohibits any reformist whimsy and shows the imperative urgency of theoretical and practical engagement in its overcoming As Marx correctly grasped, this overcoming corresponds

to the determined negation of the capital form, and therefore of tion, heteronomy, competition, hierarchization, and of a whole system of inequalities that is immanent to it Finally, the destruction of the fetishist forms of subsumption, exploitation and oppression of humanity—the social forms of commodity, money, state, the cultural industry, as well as patriarchy, racism and so on—through the conscious, planned and collec-tive assumption of control over the forms of material and spiritual repro-

reifica-duction of social life Hic Rhodus, hic salta!

© The Author(s) 2019

G M de C Mello, M de S Sabadini (eds.), Financial Speculation

and Fictitious Profits, Marx, Engels, and Marxisms,

so on This interest is partly due to the search for a theoretical structure capable of accounting for the financial phenomena that have occurred since the Bretton Woods crisis, especially in relation to the 2008 crisis, and partly due to a curious attempt to rehabilitate Marx in the economic debate from perspectives that harmonize him with authors like Keynes and others, as if this procedure might confer on him the missing pieces of a monetary theory that could not be developed by him in its entirety.Regardless of the motives for recuperating Marx, it is common to find a procedure that is foreign to the scientific method that guides the

process of exposing his theory in Capital Marx is generally studied in a

A L A Teixeira ( * )

Department of Economics, Federal University of Espírito Santo (UFES), Vitória, Espírito Santo, Brazil

sliced form, trying to isolate in his work a theory of money independent

of other determinations or a theory of the state, or of art, or of history, and so on

In fact, the perspective of totality adopted by Marx in The Poverty of

Philosophy is somewhat alien to the postulants of a positive science, who

often make cuts and segment reality, storing each component in specific

boxes Hence, the mainstream mistakes on this theme.

The Marxian critique of political economy as discussed in Capital will

be the basis from which it will become evident that a rigorous ing of the category of money in Marx must be made in the light of its concept of capital and its process of reproduction This requires the link-ing, therefore, of the distinct levels of abstraction that constitute it, and the nexuses between its fundamental determinations (the “sphere of the essence”) and those specific to the phenomenal plane (the “sphere of appearance”) are investigated

understand-In this sense, this chapter finds its core in chapter three of Capital,

where Marx analyzes the determinations of money before the advent of capital, which occurs in chapter four of that work, although it is pre-supposed from the beginning This choice underlies the central argu-ment of this work that it is not possible to derive from Marx’s work a theory of money which is totally free from traces of capital.1 In the process of theoretical exposition, money imposes determinations on capital that, on receiving them, projects new determinations onto money This argument is developed in the following three sections in two ways; firstly, by the description of Marx’s theoretical pathway regarding money, which occupies the first two sections, and secondly,

by the analysis of money in Capital, in the last section, and followed by

final considerations

In the next section we highlight the importance of money in Marx’s intellectual pathway through a brief description of the various moments and stages of his studies regarding that category In Section “The Saga ofChapter Three: Money as the Antecessor of Capital”, we analyze what we will call the “Saga of chapter three,” which was Marx’s theoretical effort

to construct a methodological bridge between money and capital before

the publication of Capital In the fourth and final section, we analyze how this saga finds its final terminology in the second section of Capital, and

then, in a logical sequence, we neatly describe the contradictions proper to money that result in the category, capital

Money In Marx’s Intellectual Pathway to caPItal

Marx’s research on money was not an end in itself nor was it an attempt to contest or perfect this constituent part of nascent economic science His research on the subject was part of a larger project which was the under-standing of the genesis, development, crises, and eventual collapse of capi-talist society

Marx arrived in Paris in October 1843 intending to create a newspaper,

the Franco-German Annals, in partnership with his friend Arnold Ruge

In that newspaper, Marx published a text, On the Jewish Question, early in

1844, in which money appears only as the raw material of a moral critique, still a long way from his future critique of political economy During this period, as Bensaid (2010, p. 93) states, “he still did not conceive of money

as the general equivalent of generalised mercantile exchange, as the supreme form of commodity fetishism, but only as a monetary fetish … money … is a concept waiting for its critical development.”

At that time, under the influence of Engels, who had written Outline of

a Critique of Political Economy, and of the philosopher Moses Hess, with

his Essence of Money, his inferences about money had an ethical-moral tone

and were closely related to a hostile view of capitalist social relations,

formed during his time at the Rheinish Zeitung.

In some works of that period, and therefore prior to Grundrisse, bly in Hegel’s Critique of the Philosophy of Law of 1843 and in the Economic

nota-and Philosophic Manuscripts of 1844, Marx’s relation to political economy

was marked by deep animosity (Coutinho 1997) In them, money is also analyzed in the context of an ethical and moral critique of the alienation

of labor and private property Marx’s analysis was still hostage to his demnatory view of the works of political economists, considered by him as the fruits of cynicism and as intending to provide a theoretical basis justify-ing the current order When he analyzes James Mill’s writings on money

con-in the 1844 Paris Manuscripts, Marx emphasizes the centrality of the

sub-ject of alienation:

The essence of money is not, in the first place, that property is alienated in

it, but that the mediating activity or movement, the human, social act by which man’s products mutually complement one another, is estranged from man and becomes the attribute of money, a material thing outside man

(Marx and Engels 1975 , p. 212).

To develop a theoretical concept of money itself, Marx would still need empirical elements Philosopher in formation, he would spend the follow-ing years reckoning with the philosophy of his time In addition to the

texts on Hegel’s Philosophy of Right, Marx writes with Engels, between

1844 and 1846, The Holy Family and The German Ideology.

It was only in The Poverty of Philosophy, 1847, that Marx would soften the hostile tone of the Economic and Philosophic Manuscripts, 1844, this being written simultaneously with the Paris Manuscripts, regarding the

understanding that cynicism was not a personality trait of political mists, but a reflection of the scientific content of political economy, which had developed tools of analysis capable of illuminating essential aspects of the material relations of existence

econo-Having been expelled from France, Marx arrived in Brussels on February 2nd, 1845, from where he was again expelled on March 3rd,

1848 He returned to France and, after a few months, left for Cologne, capital of the Rhineland, with the aim of founding a newspaper called

Neue Rheinish Zeitung In this, Marx published several articles on

mone-tary, fiscal, and financial management issues Being expelled again, he left for London, where he would live until the end of his life He arrived in the English capital at the end of 1849 and had already begun his studies relat-ing to money The failure of the revolution of 1848 had awakened in Marx

an interest in studying economic crises and other essential elements of the

circulation process, money, and credit, the starting point of the London

Notebooks (See Table 2.1)

In his early years in London, Marx resumed journalistic activities, becoming familiar with the financial events of the time During this period,

as a correspondent for the New York Daily Tribune, he closely monitored

the movements of the European economy, compiling data on the London Stock Exchange, bank balances, the labor market, industry, and so on.When he felt that a great economic crisis was approaching, Marx finally

began to write what he thought was his magnum opus In Grundrisse,

written between 1857 and 1858, money is once again its opening theme,

appearing shortly after the well-known Introduction of 1857, as seen in

Table 2.2

Marx begins the analysis of money in Grundrisse with a discussion

about credit, somewhat surprising when compared to the expository rigor

of Capital He then focuses on a discussion of the relationship between

money circulation and balance of payments and goes on to discuss a highly complex topic, the relationship between the means of circulation and price

Group Period Notebook Principal themes and authors analyzed

1st Sept 1850

to Mar 1851 I–VII History and theories of economic crises, money and credit/Thomas Tooke, James Taylor, Henry

Thornton, Adam Smith, David Ricardo 2nd Apr to Nov

1851 VIIIIX–X Salaries, ground rent/David Ricardo, James SteuartCritical works on Ricardo/John Tuckett, Thomas

Hodgskin, Thomas Chalmers, Richard Jones, Henri Carey

XI The working-class condition—salaries, workers’

standard of living, strikes, child labor/J. Fielden,

P. Gaskell, Thomas Hodgskin a

XII–XIII Agricultural chemistry—ground rent/Justus Liebig,

James F. W Johnston XIV Debate on the theory of population, pre-capitalist

modes of production, colonialism/Thomas Malthus, Archibald Alison, Adolphe D de La Malle, William

M 23 August 1857 to the middle of September Introduction of

IV The middle of December 1857 to 22 January 1858

V 22 January 1858 to the beginning of February

VI February 1858

VII The ends of February and March, the end of May

and the beginning of June

of Banking Reform by Alfred Darimon, was written in the months of January and February 1857, not, as the editors of Grundrisse thought, in October”

levels Later, in his investigation of the genesis of money, he moderated his discourse, seeking a path of his own, with increasingly rare references to

Darimon In a sort of rehearsal of what would appear in Capital, his study

of the genesis of money begins with commodity

From there the discussion takes another turn Marx cites the ties of money, all of them arising from the determination which money possesses as exchange value, namely, “(I) measure of commodity exchange; (2) medium of exchange; (3) representative of commodities (hence object of contracts); (4) general commodity alongside the par-ticular commodities […].” (Marx 1993, p. 146) Referring to this latter property, Marx anticipates another dialectical transition, which takes place between money and capital, the fact that the embodiment of the exchange value of all commodities happens through money, converts it into capital, “the form of capital’s appearance which is always valid” (Marx 1993, p. 146)

proper-As we can see, Marx’s analysis of money overlaps with his analysis of

the nature of capital Both in the Grundrisse and in subsequent works

there are several attempts by Marx to establish the methodological bridge between money and capital It is no coincidence that the theme of the

“transformation of money into capital” appears in three works, namely,

the Grundrisse, the Urtext, and the Manuscripts of 1861–1863, which

were written by Marx for himself as research and not for publication (See Table 2.3)

On the contrary, spurred by a contractual obligation to the editor,

Marx began to reveal his findings in the Contribution to the Critique of

Political Economy, written between November 1858 and January 1859

(Marx and Engels 1987a, p. 258), reserving the second chapter for the issue of money Shortly before, between early August and mid-November,

he had written a text that became known as the Fragment of the early

ver-sion of Contribution (Urtext) (Marx and Engels 1987a, p. 548) In this, Marx reserves the greater part for once again analyzing aspects related to money (money as currency, functions of money, precious metals, etc.) Not having the elements necessary to enter into the theme of capital,

Marx closed the Contribution to the Critique of Political Economy and, two

years later, returned to the same theme, writing hundreds of pages in the

Manuscripts of 1861–63 and those of 1864–65, and only in Capital did he

feel ready to expose his criticism, in chapter four2 to be precise, entitled

“The Transformation of Money into Capital.”

the saga of chaPter three: Money

as the antecessor of caPItal

Marx was never an economist strictu sensu Analyzing economic categories

was not the goal of his research, but an intermediate step in understanding the mode of being of capitalist society For this reason, he clarifies in his

foreword to the first edition of Capital: “What I have to examine in this

work is the capitalist mode of production, and the relations of production

and forms of intercourse [Verkehrsverhiiltnisse] that correspond to it”

(Marx 1990, p. 90) In the preface of 1859, he had already indicated that his interest was to unravel the anatomy of bourgeois society (Marx and Engels 1987a, p. 262) In this project, which was at the same time intended

to critique economy policy, the category capital would be central.3

In 1857, with an imminent economic crisis of great proportions ing, Marx found himself pressed to write his book on Economics He

loom-wrote the famous Introduction of 1857 based on a long series of studies of

the classical economists undertaken over the previous 15 years, in which

he stated categorically: “Capital is the all-dominating economic power of bourgeois society It must form the starting-point as well as the finishing-point, and must be dealt with before landed property” (Marx 1993, p. 107).4Capital, therefore, was long known to Marx, who had read the works

of Adam Smith, David Ricardo, and others who identified capital with things such as machines, tools, installations, raw materials, and also authors with different perspectives, like Thomas Hodgskin—who was classified by

● Paris Manuscripts (1844)

Brussels notebooks (1847)

London notebooks (1850-1853)

● Contribution to the Critique of Political economy

(Nov 1858 – Jan 1859)

● Manuscripts of 1861-1863

(notebooks I to V – Aug 1861 – Mar (1862)

● Manuscripts of 1864-1865 analyses of the relation of money capital

Source: Our own production

some as a Ricardian socialist—who saw capital as much as the means of production as a coercive social relation (Hunt 2011, p. 171).

Although familiar with the idea of capital, the problem lay in how to present it A general idea of capital was not acceptable for an author who, having based his theory on a materialistic conception of history, insisted

on taking a different path from the classical economists with their

“Robinsonades.” Nor would he start with money For this reason, Marx goes back in stages toward an earlier simpler idea, an abstraction, but

which was at the same time concrete He went back to value, a category

that had already proved inadequate as a starting point in earlier works

Meanwhile, value and money were categories that also had to be deduced

and explained Differentiating himself from the classics, Marx went further

and attained the idea of commodity The classical method of plucking ready

and finished categories of reality, as if the researcher had already reached all determinations, was simply not compatible with Marx’s methodology.Money, therefore, is a methodological link preceding capital Considering that one must be deduced from the other, its antecedent, but appears to be a consequence, Marx would publish new determina-tions on money that would not appear in the first three chapters of

Capital How money transformed into capital was a real problem for

Marx From Fig 2.1, it is possible to see how in various works he positions the categories so that capital appears as the result of a logical development It is observed that capital never appears before money In

the Grundrisse, there are a series of mediations before arriving at capital,

as he was still investigating both the determinations of the categories and

the logical connections between them, but in Capital, capital appears

immediately after the discussion about the money

In Grundrisse, Marx ends the chapter on money and begins that on

capital with the following subtitle: “Chapter on money as capital.” Further

on, in the section titled “Forms That Preceded Capitalist Production,” he turns to history to understand the transformation of money into capital,5

a process not evident in Capital when focusing only on chapter three

After citing various historical events that marked the beginning of ism, he emphasized that “all of these promoted on one side the dissolution

capital-of the old relations capital-of production, sped up the separation capital-of the worker or non-worker but able-bodied individual from the objective conditions of his reproduction, and thus promoted the transformation of money into capital” (Marx 1993, p.  508) Therefore, he was able to delineate the theme “It is inherent in the concept of capital, as we have seen – in its

origin – that it begins with money and hence with wealth existing in the form of money” (Marx 1993, p. 505) (Fig. 2.1).

In early June 1858, Marx interrupted the Grundrisse but soon returned

to writing Already involved in the writing of the Contribution to the

Critique of Political Economy, he wrote a letter to Engels dated September

21, 1858, saying, “For the same reason my manuscript is only now about

to go off (in 2 weeks), but there will be 2 instalments AT ONCE. Even though I had nothing to do but correct the style of what had already been written, I might sometimes sit for hours before getting this or that phrase right” (Marx and Engels 1983, p. 341) Marx did not keep the promise and, at the end of October, wrote to Engels saying that he would need some weeks more (Marx and Engels 1983, p. 351) He had been busy during that time writing a text composed of three notebooks, of which

only a part has been found, the Urtext In it, Marx develops his study of

money and trade and attempted to reveal, for the first time, the subject of the transformation of money into capital There is also a chapter entitled

Money:

international means

of purchase and of payment

Transition to capital Cap III – The capital

A – Process of capital production

Form of ownership

MANUSCRITOS

OF 1861/63 **

Transformation of money into capital

Absolute Surplus-Value

CCEP *

(1859)

Commodity

Exchange value

“the manifestations of the law of appropriation in simple circulation,” which precedes the chapter in which Marx deals with the “transition to

capital.” According to the “Note to the French edition” of the Contribution

to the Critique of Political Economy, these notebooks “are still drawn up in

philosophical language very close to the Hegelian vocabulary […] and in them we see Marx indulge in a deduction of the various determinations of

capital, starting from the very concept of capital” (apud Marx 2011, p. 16).

So, Marx arrived at capital, but he was not yet sure how to make the final exposition of his discoveries In fact, he had finished the two chapters

of the Contribution to the Critique of Political Economy but failed to

advance to the third, on capital He wrote a letter regarding this to Lassalle

on November 12th, 1858, saying that the delay in sending the manuscript was mainly due to the following fact: “the material was to hand and all that

I was concerned with was the form […] My aim is not to produce an elegant exposé” (Marx and Engels 1983, p. 354) The difficulty for Marx was not, therefore, stylistic, but methodological

In a letter written between January 13th and 15th, 1859, Marx updated

Engels as to the content of the Contribution to the Critique of Political

Economy: “The manuscript amounts to about 12 sheets of print (3

instal-ments) and – don’t be bowled over by this – although entitled Capital in General, these instalments contain nothing as yet on the subject of capi-tal.” Later, he declares himself hopeful, “If the thing is a success, the third chapter on capital can follow very soon” (Marx and Engels 1983, p. 368)

When he finished writing the Contribution to the Critique of Political

Economy, he writes a letter to Engels on January 21st, 1859, saying “The

ill-fated manuscript is ready” (Marx and Engels 1983, p. 369) You can see that he was not enthusiastic about what he had done so far Without the presence of its protagonist, capital, he had been brought to a halt

The saga of chapter three would advance with time Marx felt the need for a methodological bridge linking money to capital, only after that could capital be presented 1860 would be, in large part, spent on the publication

of Herr Vogt, a book of around 200 pages in which Marx, in another of his

political swipes, responded to the accusations made by Mr Vogt

The resumption of studies for the writing of a “third chapter” would

only take place in the following year, in the Economic Manuscripts of

1861–1863, in which Marx begins the first chapter, The Process of Capital

Production, on the theme of “the transformation of money into capital.” The first five notebooks of this manuscript were written between August

1861 and March 1862, containing the sections on “transformation of