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In Locke's philosophy money is 'naturalised' and thus ostensibly removed from political contestation. Locke has been criticised for marginalising monetary politics, and thus downplaying the conventional character of money that could potentially allow for democratic monetary reform. Drawing on Marx's writings, this paper shows that money is indeed a social convention, but its inherent economic functioning restricts its susceptibility to political contestation. There are limits to the democratic reform of money in a capitalist economy that spring from money's own nature. Specifically, the politics of money is rooted in the tension between money as measure of value and money as unit of account. The state draws political power from setting the unit of account, but the measurement of value occurs spontaneously among commodity producers, thereby generating tension that curbs monetary politics. In contemporary conditions, this is typified by central banks having the freedom to manage the unit of account but subject to heavy economic constraints rooted in value measurement. In this light, democratic monetary reform requires restricting the spontaneous measurement of value, thus intervening at the heart of the capitalist economy. For money to be democratic it needs to have a much narrower range of economic functioning. [ABSTRACT FROM AUTHOR]

Financialisation in developing countries is the subject of an expanding literature but its characteristic features and its relationship to developed countries remain unclear. Reviewing the literature, this paper shows that financialisation in developing countries should be distinguished from financial liberalisation and financial globalisation. Furthermore, its character is partly derivative from financialisation in developed countries, as is confirmed by two theoretical approaches, related but different from each other, namely 'subordinate' and 'dependent' financialisation. By further reviewing the empirical literature, the paper also shows that financialisation in developing countries is highly variable and different from that in developed countries regarding the conduct of non-financial enterprises, banks, and households. Moreover, the literature addresses several sources of vulnerability for developing countries relating to financialisation. Finally, there are significant literature gaps, above all, the connection between financialisation and the globalisation of production as well as the role of the state. [ABSTRACT FROM AUTHOR]

According to mainstream economic theory the contractual relationship between borrower and lender is characterized by asymmetry of information regarding the project to be financed. It is assumed that trust among credit participants is constructed individually as they collect and assess requisite information. In contrast, this paper argues that trust and information among credit participants have compelling social constituents that depend on economic function and social context. More specifically, the paper shows that financial institutions transform trust into a social and objective relationship. The capitalist credit system comprises a set of institutions that construct trust socially by using increasingly general information. Nonetheless, the foundation of credit-related trust is the ability to repay money. Hence the moral content of credit is thin, giving rise to fraud and deception. Keywords: credit; trust; information; trade credit; banking credit; money market; central banking; credit system.

In a recent debate in Economy and Society, Ingham criticized Marxist theory of money on the grounds that it relates money to commodities through the labour theory of value, while ignoring credit money. Ingham suggested instead that money is constituted by social relations characteristic of credit, namely relations of 'promise to pay'. Drawing on Marx, this article shows that, pace Ingham, it is necessary theoretically to relate money to commodities. Money is indeed constituted by social relations, but these are commercial relations among 'foreign' commodity owners, not credit relations. The social relations of money are successfully captured by Marx's concept of the universal equivalent, when that is interpreted as monopoly over the ability to buy. In this light, both commodity and credit money are forms of the universal equivalent, but qualitatively different from each other. Keywords: Theory of money; Marx; barter; commodity exchange; labour theory of value; post-Keynesianism.

The new interpretation (NI) offers a particular understanding of important problems in value theory, especially the value of money and labor power and the structure and dynamics of capitalist accumulation. The NI is to be welcomed for raising these issues but not for the way in which it has dealt with them. Above all, the NI falsely assumes that value is directly and immediately represented by money. The authors propose alternatives that emphasize the processes (mediations) through which value is expressed as price. They draw on an alternative methodology and understanding of money, the value of labor power, and production and circulation of capital in the context of accumulation. JEL classification: 020; 050 Keywords: transformation problem; labor theory of value; labor power; value of money; Marxist theory of price

This article addresses the issue of how the market and the non-market are to be understood especially by concentrating on the theory of money. For mainstream economics, the market is simply an institution facilitating exchange, money being the key instrument for alleviating the inefficiencies of barter. In contrast, recent work in other social sciences, such as that by Zelizer, distinguishes among markets, and various roles of money, depending on cultural and social content. While being sympathetic to such an approach, we claim that the commodity is a better analytical starting point than the market. Based on Marx's work, we then show what commodities have in common and establish a common essence for money as generalized purchasing power. This is a peculiarly bland essence that allows money to undertake the variety of social roles identified by Zelizer. Keywords: money; exchange; commodity relations; political economy; culture.

This article reviews Robert Brenner's 'The Economics of Global Turbulence', New Left Review, May/June, 1998. Several decisive weaknesses of Brenner's contribution are identified. First, Brenner's theoretical treatment of capitalist competition and accumulation is in the spirit of Adam Smith and mainstream economics rather than Marx. Second, Brenner ignores the significance of credit for capitalist crisis. Third, he leaves entirely out of account the internationalisation of production and finance, phenomena which constitute the most salient feature of the contemporary global economy. Fourth, in short, Brenner's approach is not at all value-theoretic, a weakness that can also be found in some of his earlier historical work.

Monetary economists can benefit from Karl Marx's monetary theories, which support the tenets of the anti-Quantity Theory tradition. Marx's analysis of the association between prices and money was stronger than that of the Banking School as his assimilation of the School's theory of the variety of the functions of money and the importance of the hoarding function resembled the theory of value. Marx also succeeded in showing that the movement of money corresponds to the rules of the circulation of commodity capital and in furnishing theoretical proof that determination moves from prices to money.

The ratio of financial to nonfinancial profits in the U.S. economy has risen greatly during the last four decades, a period often called the financialization of capitalism, but the reasons for the increase are not well understood. This article tackles the issue by developing a model that incorporates the relationships between financial and nonfinancial capitalists that are characteristic of the period of financialization. It is shown that the ratio of financial to nonfinancial profits depends positively on the net interest margin and the noninterest income of banks, but negatively on the general rate of profit, the noninterest expenses of banks, and the ratio of the capital stock to interest-earning assets. Empirical estimation for the United States strongly supports the model and reveals that financial profits have varied mainly with respect to the net interest margin, although non-interest income has also been important. [ABSTRACT FROM AUTHOR]

The Greek turmoil commenced as a balance of payments, or "sudden stop," crisis induced by large current account and primary government deficits. It became an economic and social disturbance of historic proportions. Its proximate cause was loss of competitiveness within the Eurozone due in large part to domestic German wage policies. The bailout policies, imposed by the lenders primarily for reasons of Eurozone stability and adopted by Greece, have had disastrous effects on both economy and society. The "historical bloc" that dominates Greek society willingly submitted to the bailout strategy, losing sovereignty, for reasons including fear and identity. [ABSTRACT FROM AUTHOR]

In the period following the Great Recession of 2007–2009 the financialization of the US economy reached a watershed characterized by stagnant financial profits, falling proportions of financial sector and mortgage debt, and rising proportion of public debt. The main macroeconomic indicators of financialization in the USA show structural breaks that can be dated around the period of the Great Recession. The reliance of households on the formal financial system appears to have weakened for the first time since the early 1980s. The financial sector has lacked the dynamism of the previous three decades, becoming more reliant on government. The state has increased its own indebtedness and supported large financial institutions via unconventional monetary policy measures. At the same time, state intervention has tightened the regulatory framework for big banks. The future path of financialization in the USA will depend heavily on government policy with regard to state debt and financial regulation, although the scope for boosting financialization is narrow. [ABSTRACT FROM AUTHOR]

Abstract: Changing a country's currency involves a redenomination risk arising due to assets and liabilities that are impossible to redenominate because of contracts governed by foreign law. Depreciation or appreciation of the new currency could, therefore, result in losses or gains, thus creating a risk for economic agents. The risk can be estimated by splitting the economy into public, private, banking and central banking sectors, and summing up exposed aggregate assets and liabilities. This method is applied to Greece showing that exiting the EMU would certainly entail forbidding redenomination losses for the Greek public sector, leading to default. Surprisingly, however, the impact on the private and the banking sectors would actually be positive (gain). The impact on the Bank of Greece would be ambiguous depending primarily on the legal status of TARGET2 liabilities. It is notable that even the Bank of Greece possesses a significant cushion in the form of bonds under foreign law. In all, the redenomination risk for the Greek economy is modest, with the exception of the public sector. [ABSTRACT FROM AUTHOR]

During the eurozone crisis much of the Left argued in favor of remaining in the European Monetary Union (EMU) and the European Union, often in the name of internationalism, while developing a broad alliance against austerity and neoliberalism. However, the EMU has functioned in practice as a mechanism of ascendancy for German manufacturing capital, based on suppressing German workers. As the eurozone crisis is pacified, an entrenched division in Europe has emerged between an unstable core dominated by Germany, a Southern periphery withno growth prospects, and a Central European periphery dependent on German industry. Faced with this harsh reality, a class-based strategy for the Left must include rejecting the EMU, clashing with the eu, and demanding popular sovereignty. That would provide a true basis for internationalism in Europe. [ABSTRACT FROM AUTHOR]

The current crisis is one outcome of the financialisation of contemporary capitalism. It arose in the USA because of the enormous expansion of mortgage-lending, including to the poorest layers of the working class. It became general because of the trading of debt by financial institutions. Th ese phenomena are integral to financialisation. During the last three decades, large enterprises have turned to open markets to obtain finance, forcing banks to seek alternative sources of profit. One avenue has been provision of financial services to individual workers. Th is trend has been facilitated by the retreat of public provision from housing, pensions, education, and so on. A further avenue has been to adopt investment-banking practices in open financial markets. Th e extraction of financial profi ts directly out of personal income constitutes financial expropriation. Combined with investment-banking, it has catalysed the current gigantic crisis. More broadly, financialisation has sustained the emergence of new layers of rentiers, defined primarily through their relation to the financial system rather than ownership of loanable capital. Finally, financialisation has posed important questions regarding finance-capital and imperialism. [ABSTRACT FROM AUTHOR]

Costas Lapavitsas (see, Costas Lapavitsas et al., ‘Euro-zone crisis: beggar thyself and thy neighbour’,Journal of Balkan and Near Eastern Studies, v.12, n.4, December 2010), a Professor of Economics at SOAS, University of London, and now elected member of the Greek parliament with left-wing party, Syriza, talks to Sebastian Budgen about Marxism and Keynesianism; the Euro-zone crisis; Greece’s predicaments; and ways out of the economic and political crisis that hit Greece and the continent. We are thankful to Sebastian Budgen and theJacobinmagazine for allowing reproduction of the interview inJBNES. [ABSTRACT FROM PUBLISHER]

Costas Lapavitsas charts the growth of the 'unstable, unequal and slow-growing' system of financialised capitalism that has taken root in mature economies over the past 40 years, and outlines initial steps to disentangling businesses, services, workers and households from its grasp. [ABSTRACT FROM AUTHOR]

The article presents information on the Royal Society of Arts event on "How to Change the Post-Crash Economy." The panelists at the event included Ben Chew, Economics Editor of The Independent; economics professor Costas Lapavitsas; and Paul Mason, Culture and Digital Editor of Channel 4 News. They discussed financialisation of contemporary mature capitalism, and increasing involvement of households in the activities of the financial system.

Financialization is a systemic transformation of capitalism that has occurred during the last four decades. This paper shows that the concept of financialization originates in Marxist theory, though its meaning remains unclear. It then proposes a theory of financialization as rooted in the altered behaviour of the fundamental agents of capitalist accumulation, including non-financial corporations, banks and workers. Finance has reshaped the activities of all three, also resulting in new forms of profit. It follows that opposing financialization is a complex process that involves creating public financial institutions but also re-establishing public provision for workers across a broad range of activities. Financialization cannot be reversed without re-establishing the command of the social and collective over the private and individual for the modern era. [ABSTRACT FROM AUTHOR]

Financialisation remains an unclear term in social science. We deploy a Marxist framework to establish that financialisation represents a structural transformation of advanced capitalist economies with three characteristic tendencies: non-financial enterprises have acquired capacity to engage in financial activities independently; banks have turned to mediating transactions in open markets as well as lending to households; and households have been drawn into the formal financial system. Nonetheless, despite common underlying tendencies, both the form and the content taken by financialisation vary according to institutional, historical and political conditions in each country. We use data from the USA, the UK, Japan, Germany and France to establish both the underlying tendencies and the specific forms of financialisation. [ABSTRACT FROM AUTHOR]

The article examines how the integration of developing counties into the eurozone geopolitical and economic zone has been impacted following the global economic recession of 2008-2009. The author discusses the relationship between European Union (EU) member states such as Germany and peripheral eurozone countries such as Greece, noting the effect European monetary unions and the creation of the European Central Bank have had on financial integration and interdependence in the region. The role of national competitiveness within the EU and the impact of the U.S. mortgage bubble crisis on the German economy are also addressed.

Costas Lapavitsas considers the political economy of bloated finance and makes a case for establishing democratically-run public banks, which, he asserts, could strengthen the social and the collective in modern economies [ABSTRACT FROM AUTHOR]

Financialisation of developed countries includes increased lending to individuals as well as adoption of investment banking by commercial banks, thus contributing directly to the crisis of 2007-9. Financialisation has acquired an international aspect since the 1990s, primarily through liberalised capital flows. In the 2000s international financialisation has resulted in net capital flows from developing to developed countries, thus imposing substantial costs on the former, while subsidising the USA as leading issuer of quasi-world-money. International financialisation has also spurred domestic financialisation in developing countries through development of bond markets and foreign bank entry. Developing countries have been drawn into the crisis as current accounts declined and short-term capital flows were reversed. [ABSTRACT FROM AUTHOR]

The current crisis is one outcome of the financialisation of contemporary capitalism. It arose in the USA because of the enormous expansion of mortgage-lending, including to the poorest layers of the working class. It became general because of the trading of debt by financial institutions. These phenomena are integral to financialisation. During the last three decades, large enterprises have turned to open markets to obtain finance, forcing banks to seek alternative sources of profit. One avenue has been provision of financial services to individual workers. This trend has been facilitated by the retreat of public provision from housing, pensions, education, and so on. A further avenue has been to adopt investment-banking practices in open financial markets. The extraction of financial profits directly out of personal income constitutes financial expropriation. Combined with investment-banking, it has catalysed the current gigantic crisis. More broadly, financialisation has sustained the emergence of new layers of rentiers, defined primarily through their relation to the financial system rather than ownership of loanable capital. Finally, financialisation has posed important questions regarding finance-capital and imperialism. [ABSTRACT FROM AUTHOR]

Technological innovation has contributed to recent changes in the conduct and character of banking, but its impact has been contradictory. First, money-dealing transactions have become cheaper, but investment costs have increased and a broader range of services had to be provided. The cost efficiency of banks has not improved. Second, banks have developed computationally intensive, 'arms length' techniques to assess creditworthiness and manage risk. Thus, they have been able to generate new revenue streams from lending to individuals and from fees for money market mediation. This shift has signalled a decline of 'relational' banking. Third, new technology and related practices have facilitated the entry of foreign banks into developing countries, where they can exploit 'arms length', technologically demanding niches in domestic markets. This has not improved the efficiency of host banking systems, nor increased the availability of credit to the productive sector. [ABSTRACT FROM AUTHOR]

Examines the relations of power and trust as components of contemporary money and finance. Significant aspects of contemporary money and finance namely personal finance, independent central banking and world money; Economic and social power of money; Role of trust in credit transactions.

Money's emergence in commodity exchange remains an unresolved issue within economic theory. Current general equilibrium models offer an explanation that rests on the economic advantages of a universally accepted means of exchange that is partly established through social custom. These models neither fully explain money's unique ability to buy, nor theorise the customary practices required for money's emergence. They are dominated by Menger's earlier analysis of money's emergence, which pays more attention to the social foundations of money but is still hampered by Austrian individualism. An alternative explanation is given here, drawing on Marx's theory of value but involving a thorough reworking of it. An analytical process is established through which money finally emerges as monopolist of the ability to buy. Particular social custom, whose determinants are consistent with the social underpinnings of commodity exchange, plays a vital role in money's emergence. [ABSTRACT FROM AUTHOR]

The formation of money hoards, which underpins the demand for money, is typically treated by mainstream monetary theory as originating in the motives of the rational individual. In contrast, Marx’s discussion of money hoarding treats hoard formation as a necessary tendency of capitalist production and circulation rather than as a result of the individual’s predilections. Based on Marx’s analysis, this article identifies several structural reasons for money hoard formation in the circuit of capital. It is also shown that Marx’s discussion, despite its insight, suffers from a technical error in analysing the overlapping of production and circulation time in the circuit, and in drawing the implications for hoarding. Finally, it is argued that the broader significance of capitalist money hoarding lies in the foundations it provides for the emergence of the credit system. [ABSTRACT FROM AUTHOR]

Presents a structural analysis of the theory of credit money. Connection between the forms of money and the functions it performs in capitalist exchange; Derivation and characteristics of credit money; Qualitative difference among different forms of money.

A preface for the March 1999 issue of the journal "Capital & Class" is presented.