Fictitious Capital and Crises

Meacci, Ferdinando (1998): Fictitious Capital and Crises. Published in: Bellofiore R. (ed.), Marxian Economics: A Reappraisal , Vol. Vol.1, No. London: Macmillan (1998): pp. 189-204.

Abstract

This paper is concerned with chapters 25-35 of Part V, The Division of Profit into Interest and Profit of Enterprise, of Volume 3 of Capital. These chapters may be properly grouped in an ideal Part to be possibly titled "Credit and Crises, or Money Capital and Fictitious Capital" and is referred to in this paper as 'the unidentified Part'. This Part should be strictly considered as a follow-up of Part IV, The Transformation of Commodity Capital and Money Capital into Commodity-Dealing Capital and Money-Dealing Capital (Merchant's Capital) in the sense that while the former deals with the role played by merchant's capital, and particularly by money-dealing capital, the latter deals with the obstruction or perversion inflicted on this role by money capital being turned into fictitious capital by an improper use of credit. The paper is structured in three ideal sections. The aim of the first section is to clear the debris of 'the unidentified Part' and to reconstruct Marx's own thinking about the nature and role of credit and of fictitious capital in relation to the concept of merchant's capital and to the phenomenon of crises. On the contrary, the second section, which is mostly focused on different forms versus different sets of crises, highlights some contradictions in Marx's unsystematic treatment of the relations between financial and real crises. The third section is derived from the arguments set out in the previous two sections. Its aim is to assess Marx's similarity with Keynes on the matter of 'money as money' and of financial crises. Its conclusion (which is also the conclusion of the paper) is that this similarity, however strong with regard to the role of money as a store of value, is bound to collapse if Marx's law of the falling rate of profit is believed to be true. For in this case the fictitious-capital theory of crises developed in 'the unidentified Part' acquires a secondary importance while financial crises come to be viewed as a typical effect, rather than as the cause, of real crises.

• Item Type: MPRA Paper
• Language: English
• Keywords: Marx, fictitious capital, money capital, financial crises
• Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles; B - History of Economic Thought, Methodology, and Heterodox Approaches > B1 - History of Economic Thought through 1925 > B14 - Socialist ; Marxist; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E11 - Marxian ; Sraffian ; Kaleckian

References

ARNON A. (1984), 'Marx's theory of money: the formative years', History of Political Economy, 16:4, 555-75

DILLARD D. (1984), 'Keynes and Marx: a centennial appraisal', Journal of Post Keynesian Economics, VI:3, 421-32

FISHER I. (1906), The Nature of Capital and Income, New York: Macmillan

KENWAY P. (1980), 'Marx, Keynes and the possibility of crisis', Cambridge Journal of Economics, 4, 23-36

KEYNES J.M. (1930), A Treatise on Money, in D. Moggridge (ed.), The Collected Writings of John Maynard Keynes, Vols. V-VI, London: Macmillan, 1971

KEYNES J.M. (1933a), 'A Monetary Theory of Production', in D. Moggridge (ed.), The Collected Writings of John Maynard Keynes, Vol.XIII, The General Theory and After. Part I: Preparation, London: Macmillan, 1973, 408-11

KEYNES J.M. (1933b), 'The Distinction Between a Co-Operative Economy and an Entrepreneur Economy', in D. Moggridge (ed.), The Collected Writings of John Maynard Keynes, Vol. XXIX, The General Theory and After: A Supplement, London: Macmillan, 1979, 76-87

KEYNES J.M. (1936), The General Theory of Employment, Interest and Money, London: Macmillan, 1964

MARX K. (1867), Capital, Volume 1, Harmondsworth: Penguin, 1976

MARX K. (1885), Capital, Volume 2, Harmondsworth: Penguin, 1978

MARX K. (1894), Capital, Volume 3, Harmondsworth: Penguin, 1981

MARX K. (1905), Theories of Surplus-Value, 3 Volumes, London: Lawrence & Wishart, 1968-72

MARX K. (1939), Grundrisse, Harmondsworth: Penguin, 1973

MEACCI F. (1989a), 'Different Divisions of Capital in Smith, Ricardo and Marx', Atlantic Economic Journal, 17, 13-21

MEACCI F. (1989b), 'Irving Fisher and the classics on the notion of capital: upheaval and continuity in economic thought', History of Political Economy, 21, 409-24

MEACCI F. (1991), 'The organic composition of capital and the falling rate of profit', in G. Caravale (ed.), Marx and Modern Economic Analysis, Volume II, Aldershot: Edward Elgar, 85-109

PERELMAN M. (1987), Marx's Crises Theory. Scarcity, Labor and Finance, New York: Praeger

RICARDO D. (1821), Principles of Political Economy and Taxation, in P. Sraffa (ed.), The Works and Correspondence of David Ricardo, Cambridge: Cambridge University Press, 1951-73

SCHUMPETER J.A. (1954), History of Economic Analysis, London: Routledge, 1994

SHACKLE G.L.S. (1967), The Years of High Theory. Invention and Tradition in Economic Thought 1926-1939, Cambridge: Cambridge University Press

SMITH A. (1776), An Inquiry into the Nature and Causes of the Wealth of Nations, Oxford: Clarendon Press, 1976