Slaves versus Champagne: Capitalist Consumption in Marx

A central thesis of Marx is that the rate of profit is the major influence on the level of investment.  In Capital Vol. 1, throughout the chapters on the accumulation of capital it is implicit that it is competition which is driving accumulation.  The profitability achieved by a firm is the decisive test of its … Continue reading “Slaves versus Champagne: Capitalist Consumption in Marx”

Sources of Surplus Money Capital

Marx stressed the role of banks in collecting together money lying idle in the economy and converting it into active capital available to be lent out – loanable capital is one term he uses, interest-bearing capital is another.  He notes that this process involves a centralisation of available money capital. The business of banking consists … Continue reading “Sources of Surplus Money Capital”

Falling Interest Rates and the Weakening of Central Bank Control

One of the major developments in the world economy over the past 15 years has been the extraordinary fall in average real interest rates. (after allowing for inflation.) As the graph below shows, the world average fell from 4 per cent in the 1990s, to 2 per cent in the period just before the financial crisis of … Continue reading “Falling Interest Rates and the Weakening of Central Bank Control”

Surplus Money Capital as a Crisis Mechanism

Profits are at the heart of the chain of crises which started in 2007.  But this is not because the rate of profit has fallen in the major economies.  Rather, a combination of a rising mass and rate of profit and lagging rates of investment has led to a global surplus of money capital. Levels … Continue reading “Surplus Money Capital as a Crisis Mechanism”