Re: [OPE-L] The Financialization of Capitalism

[Francisco Paulo Cipolla <cipolla@xxxxxxx>]

Some of the derivatives come from productive globalization, for instance, protection against exchange rate movements which may threaten profits. It follows that we cannot view the growth in financial products as a mere offspring of unaccumulated industrial corporate profits. On the other hand, as Foster suggests, stagnation in rates of growth have the effect of enlarging the accumulation fund but not the depreciation fund since the latter one has to keep at least simple reproduction. The citation is interesting, thought provoking but maybe a little simplistic.
Paulo

Rakesh Bhandari wrote:

> From
> John Bellamy Foster.  I
> am wondering whether there is an alternative explanation for the mounting
> stock of surplus in the form of liquid money capital... http://www.monthlyreview.org/0407jbf.htm The
> monopoly capitalist economy, Baran and Sweezy suggested, is a vastly productive
> system that generates huge surpluses for the tiny minority of monopolists/oligopolists
> who are the primary owners and chief beneficiaries of the system. As capitalists
> they naturally seek to invest this surplus in a drive to ever greater accumulation.
> But the same conditions that give rise to these surpluses also introduce
> barriers that limit their profitable investment. Corporations can just
> barely sell the current level of goods to consumers at prices calibrated
> to yield the going rate of oligopolistic profit. The weakness in the growth
> of consumption results in cutbacks in the utilization of productive capacity
> as corporations attempt to avoid overproduction and price reductions that
> threaten their profit margins. The consequent build-up of excess productive
> capacity is a warning sign for business, indicating that there is little
> room for investment in new capacity.
> For the owners
> of capital the dilemma is what to do with the immense surpluses at their
> disposal in the face of a dearth of investment opportunities. Their main
> solution from the 1970s on was to expand their demand for financial products
> as a means of maintaining and expanding their money capital. On the supply
> side of this process, financial institutions stepped forward with a vast
> array of new financial instruments: futures, options, derivatives, hedge
> funds, etc. The result was skyrocketing financial speculation that has
> persisted now for decades.