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page 40 /
permanentrevolution
1
interview /Political economy
The sub-prime crisis has revealed enormous instability  built into the nancial system. By 2006 nancial assetshad grown to around 350% of global GDP, compared to1980 when it was 100% and 200% in 1990. In your opin-ion how destabilising is this gap?
I’d lik t as  t lls. Fist,  d t utu g  xactly hat acialisati mas f thlg tm scula dlmt f caitalism ad f classlatis ad th xtacti f ts i ky caitalistcutis. Scdly,  d t k ut hat it masf istability ad th fms f cisis.I th st cas I uld say acialisati sts asubstatial tasfmati f th stuctu f ctm-ay caitalism. It has t d ith th asymmtic ssf ac ad al accumulati t th scial ad tch-lgical chags that tk lac sic th mid-1970s. Ths ha faud ac fa m tha al accu-mulati, ad as a csquc ha als faud thcati f acial t  t tha cms fmal accumulati – ducti caital. Th qusti is h ds this acial t cm fm, aticulalysic it has g s musly duig th last thdcads?Claly, much f it cms fm th sam sucs ithas alays cm fm, hich is th sulus alu c-atd i ducti thugh th xlitati f ks.H, I uld als agu much f it cms fm adict squzig f my ut f th ags f diay kig l.Fiacial t igiats icasigly fm th a-cial xlitati f ls’ my icm, as ll asstablishd s f alu ad my,  s f su-lus alu catd i ducti. Istability is latd tths mchaisms f xtactig ths ts. Th a may ascts t this istability. At t, ista- bility has t d ith th fact that th acial systmxtacts ths ts ut f my icm hil myicm has t b gig  t gig aticulalystgly duig th last th dcads.
 
Costas Lapavitsas
is a leading  Marxist economist specialising incapitalist nance and banking, whoteaches at the School of Oriental and African Studies, London. He spoke to Keith Harvey in mid-July about thecourse of the credit crunch and thechanges it has revealed in thestructure of nance capital.
InTervIew: CoSTAS LApAvITSAS
Finance andthe credit crisis
 
Autumn 2008 / page 41
 Th mchaisms thugh hich that has b dha bcm icasigly caius ad th udlyigcaacity t cat ths ts has t b xadigayh as stgly as ths h mak thm uldlik thm t bcm.
This idea of double exploitation of the worker, once inproduction, once as a consumer – it sounds to me likeone of the aspects of Lenin’s theory of imperialism setout 100 years ago — the concept of parasitism, involvingthe enormous expansion of speculative capital.
 This is xactly th issu  ha t cft as Maxistsad litical cmists. what ds it ma f th classstaticati f dld caitalist scitis? what dsit ma f th lays h aiat ths xta alus? A  itssig th cati f a ti lay, aasiti-cal tis h a takig adatag f all ths xtats, catig this sac. w claly ha t la fmth classical Maxist dbats, but  d t b aa f h thigs ha chagd ad a difft .Lt us tak th tis f xaml. May l talkabut th ti cmig back, that this is th caitalism  a liig i. I am a bit m sctical abut this. Thti, i mst fmulatis, is a s h s idlmy, my aailabl f ldig. Sh  h has -ty i my ad maks this my aailabl t ths.H  sh lds it ad gts a tu thugh cliig thcus – “M Mybags”.of cus, t a xtt that is tu. Th a lf that ty ad th a ich l h bt fmth chags i that ay. But I d’t thik this chaact-iss th class chags ’ s i th last 20-30 yas.I d’t thik th is a aticulaly isibl scti f thclassical class f this ty that sts th tms ad dictatscmic licy.I thik th ti tday, isfa as  ca call him h a ti, th s h aiats this acialt, ds s atly thugh ty but mstly thughth siti thy ccuy i th acial systm. If yulk at th l makig ths icdibl sal ts h a thy? Thy a l h u hdg fuds, -l h u hug idustial ad cmmcial tiss.Bth f ths tys ay thmsls i stck tis, thy bt thugh caital gais (hich a y ft ttaxd)  thy ay thmsls hug salais ad bussf th sics thy gi. w k this is a façad. Th a  sics thata th $1b a ya, but that’s h it aas. Thyd’t ay thmsls ths tus f th ty thy ad th caital thy ha lt but bcaus f tasksthy ha caid ut i lati t th acial systm al accumulati hich all thm t aiatthis alu. Ths l a t tis i th sam ay that usd t thik f i th ast. M bably ts accut th lays as ll, t ly th hugly ich I’ justmtid. Th a als sigicat lays f l ha basically tchical adjutats f ac: lays, tch-ical aalysts f xaml. Th a sigicat sctisf l h a assciatd ith th acial systm h ay thmsls mus salais  substatial fs
 
aually hich, if yu multily th umbs, sutl i a y sigicat ttal sum f alu, hich ds’t accu bcaus f ty dictly but bcaus f siti adfucti ithi th acial systm  mdiatig btducti ad ac.Su, a lt f thm, c thy’ ad ths tus, uld ist thm i husig ad th assts, ad maksu this ks gatig xta tus. But my ss ist at th mmt that this is th mai suc f thiaigs.
For Marx, moving from free competition capitalism of the 19th century into the epoch of monopoly capital,there is a shift from a capitalist’s nancial claim overa direct piece of property, (e.g. ownership of a particularfactory) towards joint stock capital. With the latter you’retalking about a general claim to a part share of totalsurplus value. That claim takes the form of equities, bonds etc. Surely, what you describe is adding anotherlayer on top of that. But you’re still talking of nancecapital i.e. what marks imperialism out as a stage of capitalism, you’re still working within that concept andnot a higher form of capitalist exploitation?
It’s had t tll. w’ all stugglig t ut u g dlmts hich a  ad idtly y im-tat. w ca thik f a id aud th tu f th 20thctuy as th st at f acialisati, h jitstck caital dmiatd, big busiss tk  smallcaital, big baks tk  small baks ad big busissad big baks statd latig t ach th ad gat-ig tus f ach th i ays that  us ith middl f th 19th ctuy.I a ss hat  a itssig  is a scd butf acialisati but this scd but is t a titif th st but. It’s t hat had 100 yas ag,ly m s. Th ti tday xtacts u as llfm th icms f diay l, t simly fm thicms fm sulus alu catd i ducti. Thti tday ca cmmad  lat t sums mbilisdfm th saigs f diay l  a ucdtdscal. This did t ha 100 yas ag. Th si fuds, isuac cmais, my tusts,istmt fuds, th s-calld istitutial ists, basically cmmad th idl mis that th hl f sci-ty gats. Th ti lats t that, t by ldigit, bcaus it’s t th ti’s t ld but by maagigit ad as icm fm fs assciatd ith that adsquzs diay l h,  aag, mak y lit-tl ut f this my that thy mak aailabl f thisis. oft thy gt dfaudd ut f it.
 
 The pension funds, insurance companies,money trusts, investment funds, theinstitutional investors, command the idlemonies that the whole of society generates
 
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permanentrevolution
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interview /Political economy
It’s a  hm, ctaily  th scal that ’bsig thm. If yu lk at th liabilitis f diayl, t thi assts, yu ca s a gth f idiidualidbtdss hich is ucdtd. pl b t buy huss, csum, t sd thi child t schl.pl b t mt futu ds. May f ths thigsusd t b mt i difft ays. n it bcms thti’s lagd ld f xtactig fs f maagigths s.
Clearly these “new rentiers” such as hedge funds aredestabilising, but how essential are they to the processof production and circulation of capital in spreadingrisk through the system? Can they be reigned in andcurtailed without major dislocation?
 Th st at f th qusti is t cssaily xclusif th scd. what ’ itssig I thik, is a cs-say utgth f th dlmts f th last 30 yas.I that ss it is sstial. It flls fm all th chagsthat ha tak lac i th istitutis ad gulatis.Ca it b chagd? Ys. It ca b ctlld, gulatd fam asily tha ducti caital ca b lacd udgulaty ssu by th stat  th authitis. Itca b gulatd bcaus ac is a culia caitalistactiity. It’s t cctd t ducti, it’s t bud by tchlgy, al ags, tu i th sam matial ay that ducti caital is ad thf admits f gulati ad iuc much m adily tha thfms f caital. Ys it ca b chagd. w k this. If   lk back at th histy f caitalism,  ill s thacial caital has g thugh ids f tm-dus gth ad xasi hich fqutly dd ui disast; th it as igd i thugh gulatiad lgal chag. That ti is alays aailabl t thcaitalist class.
But it is part of the credit system and capitalism cannotfunction without a generalised credit system, certainly the proponents of capitalism and nancialisation pointto the virtues of the system which is spreading risk andmaking a larger pool of capital available for expansion.That’s the historic role the credit system plays in capi-talism. Is there a cut off point? A point where it can bereigned into?
Fiacialisati is a tmdus xlsi f ac but it is t th sult f mtig th gat ciculatids f ducti caital. of cus, th cdit systm iscssay i ay dld caitalist cmy t dlicisly ths sics that ha t d ith tuf caital, acclatig ductiity, th tability f caital ad makig su that caital is fcitly usdamg difft scts f th cmy.But hat  itssd  th last t  th dc-ads is t that. It’s a gth fa byd that hich hast d ith gatig ts ad tus i ays thata t dictly assciatd ith this. If yu lk at hatducti caital has b dig th ictu is y it-stig. Yu ill s it is m stgly imlicatd i thcicuits f ac tha bf, bth  th asst sid ad th liability sid.It bs haily ad it hlds acial assts haily.It’s bcm acialisd i that ay. It gags i a-cial actiitis ad tasactis itslf. If yu balac it allut yu ill s that as fa as t liac is ccdducti caital ca d y ll, idustial caital caly  taid ts  if it ds xtal fuds, hichit still ds, it ducs its  a hich it ushs ith  makts. Th  makts ha bcm hug ad yu gt thschaly ad fcitly; it ds’t d th baks. I d’ts ay mchaisms  ssus at th mmt that ill mak this chag i th a futu. Ths cicula-ti ds f caital yu itd ut aa t b as-ably ll mt at st. It’s th th thigs that hacm  t f that that ha catd th cut, ub-liabl situati. Ths ha t d ith th chics thacial istitutis mad as a sult f th m lim-itd tuitis thy had t ld t ducti caital. Thy dcidd t tu tads sal dbt, t ad makts h thy ca mak ts ut f mdiatigtasactis. Thy bga t at as bks ad scu-lats t a lag xtt.
I want to turn to the credit crunch. Do you think thescale of the credit crunch could overwhelm the resourcesthe Federal Reserve and other central banks can callupon to deal with it?
 Th cisis i th US is y sius. Th as a timduig this last ya i hich l ha tid t say th st is  ad its b dalt ith. Its  cla ith thts f Fay Ma i July ad Idi Mac this cmaythat t bust i th US, that thigs a t gttig bt-t. Thigs a y sius imaily bcaus baks ahldig i thi hads ast amuts f thlss assts.Its y had t ut yu g  h big th sum is, butits i th tillis f dllas; if yu maktd thm lytday thi alu uld b tty cls t z. Th blm stats fm that. As a sult f this baksa luctat t ld t ach th ad thy cat btaifuds asily t ctiu ith thi th busiss. Thblm ill t b sld util ad ulss th baksmaag t shift ths blmatic scuitis ff thi bal-ac shts.Ha thy std gig? n. I d’t thik thy hastd gig bcaus th husig makt ctiust duc m f thm. e th ttal siz f th b-lm assts thy hld is t al yt.It ill ctiu t g I susct it 2009 bcaussub-im mtgags hich a th t f th blmtyically xtd t t t th yas. Th last id f xtdig ths as 2006, s th d f 2008  bgi-
 The crisis in the US is very serious.Its now clear with the events of Fanny Mae in July and Indie Mac, thatthings are not getting better
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