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Credit, Indebtedness and Speculation in Marx's Political Economy

Author

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  • Miguel D. Ramirez

    (Trinity College, Hartford, CT USA)

Abstract
This paper contends that Marx develops in Volume III of Capital an incisive conceptual framework in which excessive credit creation, indebtedness and speculation play a critical and growing role in the reproduction of social capital on an extended basis; however, given the decentralised and anarchic nature of capitalist production, the credit system does so in a highly erratic and contradictory manner which only postpones the inevitable day of reckoning. The paper also highlights Marx's relatively neglected but highly important analysis of the separation of ownership from management in the advanced capitalism of his day, England, and its modern-day implications for excessive risk-taking and debt-fuelled speculation up until the eve of the crash. More importantly, the paper argues that in Volumes II and III, Marx implicitly connected the expanding role of credit (which he associated with the development of capitalism) to a significant reduction in the turnover period of capital, thereby boosting the rate of surplus-value, and countering in a highly erratic and contradictory manner, the fall in the rate of profit. The growing role of credit has been relatively ignored in the Marxian literature as an important counteracting factor to the law of the declining rate of profit. It is not mentioned at all by Marx in his famous Chapter XIV, Vol. III of Capital where he discusses other important counteracting forces to the falling rate of profit, nor by Engels (in this particular context) who edited both Volumes II and III.

Suggested Citation

  • Miguel D. Ramirez, 2019. "Credit, Indebtedness and Speculation in Marx's Political Economy," Economic Thought, World Economics Association, vol. 8, pages 46-62, December.
    • Handle: RePEc:wea:econth:v:8:y:2019:i::p:46
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    References listed on IDEAS

    as
    1. David M. Kotz, 2015. "Capitalism and Forms of Capitalism," Review of Radical Political Economics, Union for Radical Political Economics, vol. 47(4), pages 541-549, December.
    2. Brewer,Anthony, 1984. "A Guide to Marx's 'Capital'," Cambridge Books, Cambridge University Press, number 9780521276764, September.
    3. Rudy Fichtenbaum, 1988. "'Business Cycles,' Turnover and the Rate of Profit: An Empirical Test of Marxian Crisis Theory," Eastern Economic Journal, Eastern Economic Association, vol. 14(3), pages 221-228, Jul-Sep.
    4. Aldo Barba & Giancarlo de Vivo, 2012. "An 'unproductive labour' view of finance," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 36(6), pages 1479-1496.
    5. Miguel D. Ramírez, 2014. "Credit, The Turnover of Capital, and the Law of the Falling Rate of Profit: A Critical Note," Contributions to Political Economy, Cambridge Political Economy Society, vol. 33(1), pages 61-68.
    6. J. M. Keynes, 1997. "The General Theory of Employment," Voprosy Ekonomiki, NP Voprosy Ekonomiki, vol. 5.
    7. Royall Brandis, 1985. "Marx Keynes? Marx Keynes?," Journal of Economic Issues, Taylor & Francis Journals, vol. 19(3), pages 643-659, September.
    8. Miguel D. Ramirez, 2007. "Marx, Wages, and Cyclical Crises: A Critical Interpretation," Contributions to Political Economy, Cambridge Political Economy Society, vol. 26(1), pages 27-41.
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    Cited by:

    1. Miguel D. Ramirez, 2022. "Ricardo’s and Marx’s Conception of Absolute and Relative Value: A Critical Overview," Bulletin of Political Economy, Bulletin of Political Economy, vol. 16(2), pages 103-132, December.
    2. Pelin Akçagün-Narin & Adem Yavuz Elveren, 2024. "Financialization and Militarization: An Empirical Investigation," Review of Radical Political Economics, Union for Radical Political Economics, vol. 56(1), pages 70-100, March.

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