Tuesday, July 31, 2012


A student in my International Political Economy class wrote:

"However, I'd say that it's the reverse that's more true, that the Central Banks are slaves to the markets. The Central Banks can only do so much, and you can bet a million that the private banks will be there to make money when they've done all that they can..."

Which elements in the market are slave to whom, could be analyzed from a Marxist perspective. The capitalist system is the market. The market is motivated by the pursuit of capital above all, not the pursuit of survival. Physical assets and financial products are bought and sold on the market.

Since Marx' death, financial derivatives have arisen that are not based on industrial labor or surplus value derived from labor power. He predicted the rise of credit, but not derivatives, which are a form of gambling ...even on the weather (did you know there are weather derivatives?)

Marx'' analysis of money as a commodity, is useful here. A commodity has use value and exchange value. It's useful for its commensurability in the exchange of commodities, in this case, financial assets like derivatives.

Marx teaches us to relate assets, capital and money back to class interests. Derivatives are a form of competition among hoarders of money. In other words, derivatives hoard and withhold money from the production process (not to speak of the tax shelters that also hoard trillions of dollars). Derivatives prevent the freedom of money to circulate. But I don't think that just eliminating derivatives is going to 'solve' a capitalist crisis, which occur regularly with or without derivatives.

What do you think?

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