Financial times

Issue: 142

Joseph Choonara

A review of Costas Lapavitsas, Profiting Without Producing: How Finance Exploits Us All (Verso, 2013), £20

In the substantial body of Marxist literature emerging in the wake of the economic crisis that began in 2007-8, two broad positions have been evident.1 The first emphasises that the crisis erupted as a result of long-term tendencies within the capitalist process of production, generally focusing on a decline in the rate of profit in the post-war decades that has not subsequently been fully reversed. Exponents of this position include Robert Brenner and Anwar Shaikh, along with various writers who have been published in this journal, notably Michael Roberts, Guglielmo Carchedi, Andrew Kliman and Chris Harman.2 The second position concentrates on the specifically financial dimension of the crisis and typically downplays the tendency for the rate of profit to decline. The work under review confirms its author, Costas Lapavitsas, as one of the most important and intellectually sophisticated representatives of this position.

Of course, the two positions cannot be neatly disentangled. All of those mentioned above who fall into the first camp have been forced to grapple with the undeniable financial aspect of the crisis. Lapavitsas, too, is at pains to point out that finance cannot be understood without tracing its origins in wider processes within the capitalist economy. It is neither entirely autonomous of production, nor is it a parasitic outgrowth feeding upon it.

Indeed, Lapavitsas’s accounts of the monetary and financial aspects of capitalism, and their relation to the system as a whole, are among the highlights of this work. They draw on a political economy rooted in Karl Marx’s Capital but informed both by the debates in the English-speaking world and by Japanese Marxism, especially the Uno School that has historically focused to a greater extent than most traditions on the role of money and credit. Unusually for accounts of these complex phenomena, Lapavitsas’s is comparatively clearly written.3

From Hilferding to Uno

The first of three sections in the book begins by surveying some of the literature on finance and concludes with a presentation and critique of the important work of the Austro-German Marxist Rudolf Hilferding. Hilferding, who is perhaps best known for his influence on Lenin’s account of imperialism, sought to extend Marx’s political economy, in particular the unfinished and fragmentary account of finance in the third volume of Capital, in order to apply it to the transformed capitalism of the early 20th century. Hilferding argued that the increasingly large capitalist firms developing in the age of imperialism were being drawn together with banks, with industrial and banking capital merging into what he called “finance capital”, and that on this basis banks would increasingly intervene to organise production. Elements of Hilferding’s account have been disproved by subsequent history. Notably, the concept of finance capital is, as Lapavitsas shows, unhelpful in characterising the modern relationship between banks and other capitalist firms. Yet much of the theoretical framework developed by Hilferding is of enduring value.

Lapavitsas develops this framework in the second section of the book. His argument, following Hilferding, is that a theory of finance must rest on an account of money. This leads to a tremendously useful statement of Marx’s theory of money, which demolishes the common criticism that this theory is incompatible with contemporary forms of money that are not rooted in a particular commodity (such as gold). A careful reconstruction of Marx’s position allows us to make sense of modern forms of money such as fiat money (symbolic representations of money with little or no intrinsic value but compulsory circulation), credit money (formed by capitalist firms and, later, banks, issuing their own liabilities) and even electronic money.

On the basis of this, Lapavitsas turns to the way in which finance interweaves with capitalism. Hoards of idle money tend to form spontaneously in the course of production and circulation, and this money can potentially be mobilised through lending. This lays the basis for what Marx calls “interest-bearing capital”—money that from the outset is mobilised as capital, as value with the potential to expand through the exploitation of living labour in production.4 But, rather than being used by the person who initially owns the capital to engage in production, it is loaned to another capitalist for the purpose. Once surplus value is produced and realised through the sale of commodities, it is divided into the “profit of enterprise” retained by the capitalist and interest payments made to the lender.

In this Marxist account credit is capable of pushing capitalist production and accumulation beyond its limits, by allowing capitalists who do not have spare funds to borrow money elsewhere and by mobilising the funds of those who do not have any use for them. However, finance also becomes a source of instability and crisis, because it entails obligations on the debtor that must be met. The chains of credit and debt that form during periods of economic expansion can become the conduits through which crisis is generalised when things begin to falter and confidence fades.

One strength of Lapavitsas’s account, which he derives from the Japanese Uno School of political economy, is to draw this abstract account of interest-bearing capital together with an understanding of the various institutions involved in finance. The Uno School see these as forming a pyramid of different elements. At the base trade credit—obligations to pay at a later date for goods and services—develops spontaneously as capitalist firms extend credit to one another in the course of their activities. The second layer is banking, comprising the key institutions of finance that acquire and mobilise loanable capital. Atop this layer sits the “money market”, which financial institutions themselves turn to in order to obtain the liquidity they require by lending to one another, centred on the interbank market. The pyramidal structure is completed by the central bank, which emerges as a “bankers’ bank”, dominating the money market and extending the highest grade of credit—central bank credit. In a developed capitalist economy central banks are generally the bank of the state, regardless of whether they are formally independent as most are today, a fact reaffirmed by the role that the Bank of England, Bank of Japan and US Federal Reserve have played in response to the current economic crisis.5

Alongside this pyramid of credit, there is a second structure, the capital (or stock) market in which equity and bonds are traded. Issuing shares or bonds are alternative ways in which capitalist firms can finance themselves, in this case obtaining money directly from investors, but, as Lapavitsas points out, here too investment banks often play a key role of financial intermediation. The two structures are furthermore connected, because “both draw funds from a common pool of idle money generated in the course of capitalist accumulation”, and because the rate of interest in the money market exerts a powerful influence on the price of securities issued in the capital market.6

Profit without production

Lapavitsas completes his account of finance by considering the question posed by the provocative title of his book: how does profit arise out of this system? The problem is a particularly important one for Marxists, for whom the ultimate source of profit is the surplus value appropriated from the labour of workers at the point of production. If that is true, then neither banks nor stock markets can generate new surplus value.

The key concept developed by Lapavitsas is “profit upon alienation”. In line with Marx’s analysis, this involves obtaining profits within the sphere of circulation, as “zero-sum transactions”;7 in other words, one participant’s loss is another’s gain. There are various ways that this can come about. The most straightforward is through advancing loans and receiving interest in return, the paradigmatic form taken by interest-bearing capital, which was outlined above. Here the source of profit for the lender is interest payments that are simply a subdivision of the surplus value appropriated by the capitalist utilising the loan. Lapavitsas shows that the profitability of a capitalist will tend to rise as their leverage (the ratio of loaned capital to their own capital) grows. In other words, a capitalist who borrows large sums of money, and mobilises it alongside their own, will tend to obtain a greater return relative to their own capital even after they have paid the loan back with interest—assuming that production and the sale of the output take place as planned. But the price of greater leverage is the establishment of external obligations to the lender. If something goes wrong, this can increase the problems of the capitalist as they struggle to pay back their loans and may even push them into bankruptcy.8

More complex forms of financial profit-making include purchasing shares in order to attain dividends, which are, again, a share of the surplus value generated by a corporation, and trading in financial assets. The latter is the most complicated form of financial profit to analyse. Lapavitsas’s detailed analysis ultimately shows: “Capital gains in the pure case of capitalists trading equity with each other—and all dividends being paid as expected—ultimately amounts to a redivision of surplus value among counterparties”.9

Some theoretical conundrums

In some of Lapavitsas’s earlier writings he used the term “direct exploitation” to characterise the way that financial institutions earn profits, though he has now dropped this in favour of “financial expropriation”.10 Now, what does this involve? The logical core of Lapavitsas’s position is that financial institutions do not simply obtain a share of surplus value from capitalist production. Interest-bearing capital may be mobilised not to lend money to producers but to lend to workers, for example, to cover the cost of buying a house, going to university or even to fund their day to day consumption. The worker does not use the loan as capital, does not appropriate surplus value through exploiting the labour power of another and does not profit from the use of the money, but they still have to pay interest to the lender. In this sense, the lender is treating their loaned money as capital—they
expect a return on it, regardless of how it is used. This opens up the possibility of potentially predatory relations in which financial institutions derive profits from obtaining some of the income of workers and others. On top of this, banks can derive a profit from fees they charge for all sorts of other financial services.11

It is undeniable that such things do happen and that they are an increasingly prevalent feature of contemporary capitalism. But, by abstracting financial relationships from wider social relations, Lapavitsas only captures one aspect of the problem. Of course, there are all sorts of potentially predatory relationships that can develop under capitalism. If a thief steals from me, there is a sense in which they are “exploiting” me; they are, after all, obtaining free of charge wealth from me against my own interests. But this is quite secondary to the key form of exploitation that governs capitalism, namely the appropriation of surplus value by capitalists in the process of production. It is in this process that the class of capitalists, who have ultimate control over the means of production, systematically pumps value out of the class of direct producers, workers. Other forms of what we might call “secondary exploitation” have to be analysed in this context. In particular, if financial institutions obtain profits from workers this has implications for the social relations between the class of workers and the class of capitalists. As I wrote about an earlier version of Lapavitsas’s argument five years ago:

What is at stake is not whether this [financial firms obtaining profits from workers] takes place but whether it represents a “systemic transformation of the capitalist economy”. Such processes are certainly not historically novel. In the context of a discussion of the “lending” of houses to workers at usurious rates in 19th century capitalism, Marx writes: “That the working class is also swindled in this form, and to an enormous extent, is self-evident; but this is also done by the retail dealer, who sells means of subsistence to the worker. This is secondary exploitation, which runs parallel to the primary exploitation taking place in the production process itself. The distinction between selling and loaning is quite immaterial in this case and merely formal, and…cannot appear as essential to anyone, unless he be wholly unfamiliar with the actual nature of the problem.”

The analogy with price rises by retailers who sell wage goods to workers is apt. If almost 20 percent of disposable income went towards debt-servicing in the US by 2007, this means that it has become more expensive for the system to reproduce labour power. To the extent that wages rise to account for this, it is a mechanism that shifts surplus value from capitalists concerned with production to those concerned with lending money, just as an arbitrary rise in the price of bread would (if wages rose correspondingly) shift surplus value to bread-producing capitalists. To the extent that wages are held down, it represents an increase in the overall exploitation of workers, just as an arbitrary rise in food prices would under conditions of wage repression. And to the extent that workers default on their debts, whether credit cards or subprime mortgages, it represents a decline in a market in fictitious capital, with banks (and others) holding claims over future wage income, some of which turn out to be worthless. Whatever happens, the generation of surplus value within capitalist enterprises remains central to the system as a whole.12

This problem seems to reflect a wider tension in Lapavitsas’s writing on finance. On the one hand, he is extremely sensitive to wider trends in capitalism beyond finance in giving rise to financial phenomena and in his historical description of the “financialisation” of capitalism, which I consider below. On the other hand, at times he seems to want to see the increasing dominance of financial relations in abstraction from, and overly autonomous of, the wider economy. Perhaps that explains the slight exaggeration contained in his argument that the “Marxist theory of credit and finance is inherently monetary in the sense that it rests analytically on the theory of money”.13 The importance of a Marxist analysis of money to the analysis of finance is developed persuasively in this book. But analytically credit and finance rest on more than a theory of money. They rest primarily on the fetishised social relations of capitalist accumulation, hence the importance of interest-bearing capital. Once there is a fully established system of capitalist accumulation, the logic of which is capital’s ability to grow through a hidden process of exploitation in the workplace, the illusion of the autonomous self-expansion of capital through interest payments is possible. As Marx puts it: “The relations of capital assume their most externalised and most fetish-like form in interest-bearing capital. We have here M—M’, money creating more money, self-expanding value, without the process that effectuates these two extremes”.14 Lapavitsas is, of course, a serious student of Marx and he does set out an account of interest-bearing capital.15 But the temptation persists to focus on the sphere of circulation at the expense of production—or, more accurately, at the expense of the fetishised system of capital accumulation that integrates together the spheres of production and circulation. The ambiguity resurfaces when he argues that “financial expropriation represents a throwback to ancient forms of capitalist profit-making that are independent of the generation of surplus value”.16 Now, as Marx points out, “usurer’s capital” is one of the “antediluvian forms of capital, which long precede the capitalist mode of production”. However, Marx goes on to argue, the “characteristic forms” of usurer’s capital “repeat themselves on the basis of capitalist production, but as mere subordinate forms. They are no longer the forms which determine the character of interest-bearing capital”.17 The emergence of capitalist social relations takes up and transforms older relationships and phenomena, subjecting them to its own logic.18

Interestingly, and perhaps in consequence of his theoretical framework, Lapavitsas largely leaves out of his account certain aspects of the financial system that have played an important role in recent discussions. He is not, for instance, terribly interested in Marx’s category of fictitious capital. Lapavitsas is correct to complain about the widespread abuse of the concept in Marxist writing. But he is wrong to describe it as a “technical idea amounting to net present value accounting”.19 It is true that “loanable capital itself is anything but fictitious” and that efforts to collapse the two concepts into one another should be resisted.20 However, within Marx’s account, interest-bearing capital is “the fountainhead of all manner of insane forms” that arise out of the fetishisation of social relations that constitute it. This includes the emergence of paper claims over future wealth that appear to function as capital but which have their “own laws of motion”. With the more elaborate development of the financial system “all connection with the actual expansion process of capital is…completely lost, and the conception of capital as something with automatic self-expansion properties is thereby strengthened”.21 The resulting category of fictitious capital is a potentially useful basis on which to explore the increasingly complex areas of finance that have grown up in recent years.

Lapavitsas also tends to downplay the importance of “shadow banking”, comprising institutions such as hedge funds, money market funds and so on, that lie beyond the traditional activities of banking, and which in the US form a sector similar in size to regular commercial banking.22 There is also relatively little discussion of the theory required to analyse the massive trade in derivatives that has been such a prominent feature of the contemporary financial system. It may be, as Lapavitsas argues, that “derivatives markets rely on banks” or that the crisis of 2007-8 can be seen simply as a “system-wide bank run which did not occur in the traditional but in the securitised banking sector”, but given the debate around these issues, a more sustained engagement with them would have been welcome.23

The rise of financialisation

The theoretical strengths and weaknesses discussed above feature strongly in the third and final section of the book, which deals with the emergence of what Lapavitsas calls “financialised capitalism”, the crisis that erupted in 2007-8 and possible political responses to financialisation.

For Lapavitsas, financialisation rests on three changes to capitalism. The first is that capitalist enterprises increasingly rely on their own income to fund their activities or, in the case of large firms, derive their funding directly from the market, rather than relying on bank loans. Indeed large enterprises are now typically far more involved in financial activities generally. The second is that banks have, as a result, sought to move into new areas, in particular deriving their profits from lending to consumers, including workers, from deriving fees for services they provide, and from trading in open markets—and these activities have been extremely profitable for the financial sector.24 The third, and more controversial, aspect is that financialisation has generated new characteristic social and economic relationships.

In fact, Lapavitsas’s careful empirical investigation of trends in the US, UK, Japan and Germany ought to give rise to a certain degree of caution as regards the last of these. For one thing, financialisation is a very uneven process, with some broad trends but quite sharp differences between the countries he analyses. Some of the trends are rather at odds with what we might expect. For instance, the level of employment in the financial sector proper (as opposed to the wider category of “financing, insurance, business services, and real estate”) has remained pretty stable across the four economies between 1991 and 2007, even falling a little in the UK, probably as a result of productivity rises in this sector which mean that the same or more work can be done with fewer employees.25

More importantly, when it comes to assessing the impact of financialisation on households and individuals, the growth in household financial liabilities has been driven to a huge extent by mortgages.26 While some of this may have been people remortgaging homes to fund consumption, Lapavitsas is sceptical about claims that the growth in credit has covered for wages that have only increased slowly or been stagnant in recent years, or been directed primarily towards consumption.27 On the other side of the household balance sheet, the biggest change has been the accumulation of financial assets, in particular in the form of private pension funds.28

It is therefore quite reasonable to say that individuals and households are often more caught up in financial relations, and it is true that financial activities and profits have grown in recent decades. However important these shifts are, though, they do not constitute a fundamental transformation of the social relationships underpinning capitalism. There are two reasons. The first is that, as I have argued, these financialised relationships do not operate in a vacuum. The central social relation of capitalism, the exploitative relationship between capital and labour, is still the pivot around which the class struggle revolves. It has always been true that labour encounters capital not simply in the sphere of production, but also in circulation. That is what happens every time you go to the supermarket. But the power of the working class lies in the field of production. It is the resistance of Tesco workers to their exploitation that can lay the basis for a challenge to capitalist domination, not the consumer power of workers who happen to buy their groceries there. Whether being submerged in debt encourages workers to fight or leads them to avoid struggle for fear of the consequences depends, critically, on the degree of class confidence and combativity in the workplace. This remains the terrain on which surplus value essential to the capitalist class as a whole ultimately originates, and it is, therefore, the point at which capitalism is most vulnerable.

This leads to the second issue, that of the overall pattern of accumulation. Lapavitsas sees the rise of financialisation as lying not simply in the action of banks, non-financial companies and individuals, but also wider changes of the capitalist economy from the 1970s. The final collapse in 1973 of the Bretton Woods Agreement, which had created a system of fixed exchange rates, and the emergence from the 1950s onwards of large “eurodollar” markets in dollar-denominated assets that were traded outside the regulatory reach of authorities, paved the way for the rise of new forms of financial speculation. As Lapavitsas shows, states and central banks played an important role in clearing the path for such activities. All of this took place against a background of slowing growth and weak accumulation from the 1970s. Indeed, his account of declining growth rates in the advanced economies in this period is in striking contrast to some other recent accounts.29 But, rather strangely, Lapavitsas is dismissive of the wider trends of profitability over the period since the Second World War in creating this terrain.

That is not to say that financialisation involves the leaching of value out of productive spheres towards a parasitical financial system or the escape of capital from the “real economy” into speculative activities.30 But it is certainly the case that in the context of reduced profitability from the 1980s onwards, the expansion of credit and finance was a factor both in creating the illusion of extraordinary dynamism of capitalism and in driving the system forwards until that process reached its limits in the mid to late 2000s.31 Lapavitsas notes early in the work that “profit rates have remained below the levels of the 1950s and 1960s”, but this revelation plays almost no role in the overall account, despite the centrality of profit generation to the workings of capitalism.32

The desire to avoid saying anything definite on the “law of the tendency of the rate of profit to fall”—the source of an extraordinary degree of controversy between Marxists in recent years—is also reflected in his discussion of capitalist crises. In fact, Lapavitsas seems uncharacteristically agnostic when, after briefly outlining various Marxist theories of crisis, he concludes, “This chapter does not intend to review debates on crisis theory among Marxists”—the equivalent of a disinterested shrug.33 What the reader gets is an elaborate and erudite description of the meltdown of the financial system, followed by a restatement of Lapavitsas’s celebrated account of the emergence of the eurozone sovereign debt crisis.34 But there is no real explanation for why the rate of accumulation slowed so dramatically in the post-war period or to what extent this conditioned the expansion of and subsequent crisis in the financial sector, or why the problems have proved so intractable and growth so sluggish in the wake of the crisis.


The book concludes with a brief chapter on the potential to control finance. After outlining the range of regulatory options open to capitalist governments, and their profound limitations, he suggests that “financialisation cannot be confronted without re-establishing the ideological primacy of the collective over the individual, and the public over the private”. While a little vague, his final words, calling for a fight against financialisation as part of the “struggle for socialism” are to be welcomed.35 They certainly seem to have annoyed the capital markets editor at the Financial Times whose vacuous piece on the book said more about the reviewer than it did about the work itself.36 What this socialism consists of, how far-reaching the transformation required would be, whether the vision is of a reformed capitalism or a system democratically controlled from below by workers—these important debates are not developed here. Lapavitsas’s emphasis in this work is very much on the workings of a financialised capitalism, rather than the struggle against capitalism as such.

Nonetheless, whatever the problems and limitations in this account, and in particular I think the notion of financial expropriation is untenable, this is among the more interesting Marxist works of political economy to emerge in recent years. It stands head and shoulders above much of the work on “financialisation” in terms of its depth of theory, its empirical rigour and its ambition. It deserves, therefore, to be robustly debated and discussed by all those interested in challenging capitalism, its exploitation of labour and the fetishised financial relations that arise out of it.


1: I first developed this argument in a survey of early Marxist responses to the crisis-Choonara, 2009a.

2: See, for example, Brenner, 2008; Shaikh, 2011; Roberts, 2013; Carchedi, 2011; Kliman, 2011; Harman, 2009.

3: The presentation is somewhat let down by the production values of the book itself. Whoever was responsible for the layout should be nailed to the eternal pillory for the stingy margins-the outer ones too slender for notes to be scribbled, the inner so gaunt that the text in places disappears entirely into the binding.

4: Within Marxist political economy, value is the crystallisation of what Marx calls “socially necessary labour time” expended in the production of commodities. Capital, value set in motion to expand, can grow only through pumping new value out of workers. Marx’s argument is that the new value produced will typically be greater than the amount required to reproduce workers’ labour power. Marx refers to the gap between these as surplus value, appropriated by the capitalist and forming the basis of profit. Readers not familiar with these ideas can consult Choonara, 2009b, for a basic introduction.

5: And, as Lapavitsas shows, the rather dysfunctional nature of the European Central Bank in part reflects the fact that it is not the bank of a particular nation-state-see Lapavitsas, 2013, pp300-305.

6: Lapavitsas, 2013, p135.

7: Lapavitsas, 2013, p145.

8: Lapavitsas, 2013, pp151-155. Norfield, 2014, points out that Lapavitsas does not really discuss the important issue of “bank leverage ratios”. As Norfield writes: “The banks do not merely gather up society’s idle funds and lend these out-they also create new deposits and loan assets, and can do so up to (and beyond) prudential limits.”

9: Lapavitsas, 2013, p165. This does not really do justice to Lapavitsas’s elaboration of the problem. He demonstrates how the interplay between the rate of profit obtained by productive capitalists and the stream of income obtained by investors, discounted at the rate of interest, leads to what Hilferding called “founder’s profit” in which the total share price is greater than the value of the actual capital mobilised. Furthermore, he shows how, as the assets rise in price as they are traded, each intermediate seller draws a profit from the loanable capital of the next buyer, with the final buyer financing the whole process in return for a claim over all subsequent streams of income (minus the profit of enterprise of the productive capitalist). See Lapavitsas, 2013, pp159-165. A small amount of algebra is involved, which will delight or demoralise readers depending on their inclination.

10: “Direct exploitation” is a particularly bad choice of phrase because, according to English translations of the third volume of Capital, Marx uses the term to refer specifically to the exploitation of living labour in the process of production. For examples, see Marx, 1972, pp244, 287, 800, 804, 829.

11: As Ben Fine points out (2010, p110), there is a distinction between profits made through mobilising interest-bearing capital, which derives interest as a subdivision of surplus value, and profits made through “money-dealing capital”, which tends to attract the general rate of profit established across the economy. This is an analytical distinction, as the same financial institutions may obtain profits through both mechanisms.

12: Choonara, 2009a, pp90-91. The long passage I cite is from Marx, 1972, p609. Lapavitsas cites the same passage (Lapavitsas, 2013, p144) but not the part about the distinction between selling and loaning being immaterial. Alex Callinicos, independently of me and at about the same time, came to the same conclusions about financial expropriation-see Callinicos, 2010, pp149-150, footnote 26. A useful piece by another Marxist economist, Ben Fine, from around the same time makes similar criticisms, arguing that “credit…is positively constitutive of the value of labour power itself, certainly through its so-called ‘moral and historical’ determination”-see Fine, 2010. Tony Norfield, 2014, makes the same point in his review of Lapavitsas’s book.

13: Lapavitsas, 2013, p69. Interestingly, later in the work, Lapavitsas explains, “It is fundamental to [Kozo] Uno’s [founder of the Japanese Uno School of Marxism] ‘doctrine of circulation’ and forms part of his claim that the object generally traded between borrower and lender is a mere sum of money (shikin), while capital (shihon) is traded in the stock market. In effect it is a denial of Marx’s claim that interest-bearing capital is a sum of money traded ‘as capital’”-Lapavitsas, 2013, pp130-131. Though Lapavitsas, rightly, rejects this formulation, at times he seems to appeal to a similar approach, emphasising the monetary aspects of lending at the expense of its capital aspect.

14: Marx, 1972, p391.

15: Lapavitsas, 2013, pp109-118.

16: Lapavitsas, 2013, p146.

17: Marx, 1972, p594.

18: Fine, 2010, p101, makes a similar argument.

19: Lapavitsas, 2013, p28.

20: Lapavitsas, 2013, p29.

21: See Marx, 1972, chapter 29.

22: Lapavitsas, 2013, pp208-209. Shadow banking, by its very nature, is hard to quantify. However, as Lapavitsas notes, leaving it out does skew attempts to chart the growth of financial assets. See, for instance, Lapavitsas, 2013, pp205-207.

23: Lapavitsas, 2013, pp10, 278. Bryan and Rafferty, 2006, has been particularly important in stimulating debate on the Marxist analysis of derivatives. See for instance Norfield, 2012; Bryan and Rafferty, 2012; Norfield, 2013.

24: Although the rise of the share of profits going to the financial companies (not quite the same as financial profits, but a proxy for it) is far more marked in the US than in the UK or Japan-see the graphs in Lapavitsas, 2013, pp214-216.

25: Lapavitsas, 2013, pp212-213.

26: Lapavitsas, 2013, pp239-241.

27: Lapavitsas, 2013, pp234-235, 238-240.

28: Lapavitsas, 2013, pp241-243.

29: In Choonara, 2012, I took issue with David McNally for presenting an exaggerated picture of growth during the neoliberal period. Lapavitsas adds to my conviction on this score. Interestingly enough, Lapavitsas is also dismissive of the supposed “productivity miracle” in the US in the late 1990s, writing, “The strong productivity gains of the late 1990s were associated with the investment boom in new technology that partly led to the stock market bubble of 1999-2000. In the second half of the 2000s productivity growth in the US and in the other three countries showed no exceptional vitality”-Lapavitsas, 2013, p183.

30: Lapavitsas, 2013, p217. On this, he seems to be in agreement with a recent paper by two theorists with a very different approach, see Kliman and Williams, 2012. By contrast, Fine, 2010, argues that “financialisation is itself the major causal factor of low levels of accumulation”.

31: Norfield, 2014, is sceptical about Marxist attempts to measure profitability, but nonetheless argues persuasively that the crisis of profitability that emerged from the 1970s is the backdrop to the subsequent changes to the system that led, ultimately, to the crisis of 2007-8, arguing, “Financial developments are multi-faceted and their relationship to the rate of profit is complex. However, at the very least, one should not look upon any data showing credit-fuelled profit rates for the period up to 2007 as being a sign of healthy capitalism!”

32: In one of the stranger passages in the book, he argues that productivity rises lead to rising profitability through diminishing the price of wage goods, ignoring the well-known argument from Marx that rising productivity, if it rests on a higher organic composition of capital, tends to undermine profitability-Lapavitsas, 2013, p180.

33: Lapavitsas, 2013, p263.

34: The latter is based on the papers collected in Lapavitsas and others, 2012, and available from the Research on Money and Finance website:

35: Lapavitsas, 2013, p327.

36: Atkins, 2013.


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