[lbo-talk] Capitalism on Derivatives?

[brad bauerly]

Marv wrote:
>So then, part of what neoliberalism amounts to in my view is the
>discovery by capital that more profit could be made by investing in
>financial `products' than investing in production of tangible goods and
>services. In the large picture huge sums were taken out of industrial
>production systems and moved to non-production systems. There were many
>other aspects to neoliberalism's financialization model like expansion
>through mergers and acquisitions rather than investment in new
>production systems.
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I would rather see it as capital finding new forms of social discipline
through finance and companies using these methods to increase productivity
and increase profits.  Neoliberalism also witnessed the arrival of new ways
to value and new ways to divide up capital and other assets into its parts,
differentiate them by risk exposure, and then trade that exposure to those
who want it.  Derivatives, to Bryan and Rafferty, are able to commensurate
across what were prior very different forms of capital, thereby, enabling
the judgement or valuation of capital in new ways.  What this means is
increased competitive pressure and heightened socialization of capital.

Bryan and Rafferty, not sure that I completely agree, make a comparison
between derivatives and the rise of the joint stock company and stock
markets, which many saw at the time as being a drain on the real economy,
mere speculation, and not productive to capital.  But the history of the
joint stock company, while having its share of crises, is not one of a drain
on the real economy or mere speculation.  It is the history of a new phase
in capitalism's expansion through a new technical and institutional advance
which increased the power and scope of capital, with real gains (for
capital). They argue that derivatives mark such a further shift, with
associated gains for capital.  I do agree with their point that the left
should not just dismiss it all as a speculative drain on the real economy,
or as capital deciding it is no longer interested in production.  To do so
is to miss the changing nature of capitals social power and leads to a
politics that, what?, seeks to return to the good old days before
derivatives.

Brad