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Marx's theory of crisis in the context of financialization. analytical insights on the current crisis

Stravelakis, Nikos (2012): Marx's theory of crisis in the context of financialization. analytical insights on the current crisis.

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Abstract

In the context of the current crisis a vigorous debate is taking place with regard to its’ cause . A debate which has important policy implications in the sense that it justifies or condemns the main reaction policy to the evolution of the crisis i.e. the persistent securitization of financial capital on a global scale through trillions of government and central bank money resting in private bank vaults until proven insufficient, triggering a new round of bank refinance and / or recapitalization. The main question to be answered, in order to understand the present crisis, is whether the explosion of interest rates and the lack of credit is the cause or the trigger of a depression and why. If financial turmoil is the cause of depressions then each crisis is unique, the result of a «black swan» game and securitization will prove efficient since no risk arises from capitalist production and the reproduction of capital. Of course, history has taught us that capitalist economies experience periods of prosperity followed by depressions with almost periodical recurrence. However, the present crisis poses additional questions for Marxist and heterodox economics, since it prevailed following a period of stable (not declining) profit rates associated with weak corporate growth side by side with an explosion of financial sector growth a phenomenon referred to as financialization of capital. Contributing to the response to these questions is the main scope of this paper.

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