Gustavo Moura de Cavalcanti Mello, Mauricio de Souza Sabadini - Financial Speculation and Fictitious Profits. A Marxist Anal

MARX, ENGELS, AND MARXISMS
Financial
Speculation
and Fictitious
Profits
A Marxist Analysis
Edited by
Gustavo Moura de Cavalcanti Mello
Mauricio de Souza Sabadini
Marx, Engels, and Marxisms
Series Editors
Marcello Musto
York University
Toronto, ON, Canada
Terrell Carver
University of Bristol
Bristol, UK
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Editors
Financial Speculation
and Fictitious Profits
A Marxist Analysis
Editors
Gustavo Moura de Cavalcanti Mello Mauricio de Souza Sabadini
Department of Economics and Department of Economics and
Post-Graduate Programme in Post-Graduate Programme in
Social Policy Social Policy
Federal University of Espírito Federal University of Espírito
Santo (UFES) Santo (UFES)
Vitória, Espírito Santo, Brazil Vitória, Espírito Santo, Brazil
ISSN 2524-7123 ISSN 2524-7131 (electronic)

Marx, Engels, and Marxisms
ISBN 978-3-030-23359-4 ISBN 978-3-030-23360-0 (eBook)
https://doi.org/10.1007/978-3-030-23360-0
© The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer
Nature Switzerland AG 2019
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nationalization Project from UFES and was financed in part by the
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v
Series Foreword
The Marx Revival

The Marx renaissance is underway on a global scale. Whether the puzzle
is the economic boom in China or the economic bust in “the West”, there
is no doubt that Marx appears regularly in the media nowadays as a guru,
and not a threat, as he used to be. The literature dealing with Marxism,
which all but dried up 25 years ago, is reviving in the global context.
Academic and popular journals and even newspapers and online journal-
ism are increasingly open to contributions on Marxism, just as there are
now many international conferences, university courses and seminars on
related themes. In all parts of the world, leading daily and weekly papers
are featuring the contemporary relevance of Marx’s thought. From Latin
America to Europe, and wherever the critique to capitalism is remerging,
there is an intellectual and political demand for a new critical encounter
with Marxism.
Types of Publications
This series bring together reflections on Marx, Engels and Marxisms from
perspectives that are varied in terms of political outlook, geographical
base, academic methodologies and subject matter, thus challenging many
preconceptions as to what “Marxist” thought can be like, as opposed to
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munities that are increasingly interested in rediscovering the most power-
ful critical analysis of capitalism: Marxism. The series editors will ensure
vii
viii SERIES FOREWORD
that authors and editors in the series are producing overall an eclectic and
stimulating yet synoptic and informative vision that will draw a very wide
and diverse audience. This series will embrace a much wider range of
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books in the area.
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which utilize the scholarly achievements of the ongoing Marx-Engels
Gesamtausgabe, a project that has strongly revivified the research on these
two authors in the past decade.
Critical Studies on Marxisms

Volumes will awaken readers to the overarching issues and world-changing
encounters that shelter within the broad categorization, “Marxist”.
Particular attention will be given to authors such as Gramsci and Benjamin,
who are very popular and widely translated nowadays all over the world,
but also to authors who are less known in the English-speaking countries,
such as Mariátegui.
Reception Studies and Marxist National Traditions

Political projects have necessarily required oversimplifications in the twen-
tieth century, and Marx and Engels have found themselves “made over”
numerous times and in quite contradictory ways. Taking a national per-
spective on “reception” will be a global revelation and the volumes of this
series will enable the worldwide Anglophone community to understand
the variety of intellectual and political traditions through which Marx and
Engels have been received in local contexts.
University of Bristol Terrell Carver

Bristol, UK
York University Marcello Musto
Toronto, ON, Canada
Foreword
This book, authored by Gustavo Mello and Mauricio Sabadini, is impor-

tant not only because of the clarity of its explanation of a difficult subject,
but also because it comes at a time when financial globalization once again
threatens to provoke a large-scale economic crisis. It provides the neces-
sary elements for understanding the potential effects of an increase in
speculative parasitism and fictitious profits on the economy and, therefore,
on labor, from the point of view of both wages and unemployment.
Increases in financial activity are not naturally parasitic. In general,
companies operate in a macroeconomic environment over which they
have little long-term control and in which they operate with incomplete
information. Today, the complexity of production increases uncertainty
regarding the profitability of projects. Covering these new risks leads to
the development of complex financial products. In a way, the complexity
of the financial market is a consequence of the complexity of production.
Such financial complexity is developed through financial liberalization
(de-compartmentalization, disintermediation and deregulation). This has
a cost, but it makes it possible to obtain a higher profit that exceeds this
On the theme of Marxism, he is the author of Sur la Valeur (Ed. Maspero), in

partnership with Valier J.; Une introduction à l’économie politique (Ed. Maspero)
in partnership with Mathias G.; L’Etat surdéveloppé (Ed. Maspero-La decouverte)
and Nature et formes de l’Etat capitaliste, analyses marxistes contemporaines (Ed.
Syllepse), with A. Artous, JL Solis Gonzales and T. Hai Hac.
ix
x FOREWORD
cost.1 Therefore, the development of finance and the growth of sophisti-

cated financial products makes possible, in abstract, the development of
capital. This is because the capital cycle only develops if financial activities
permit the growth in value of productive capital. Currently, the growth of
the industrial sector demands a more than proportional development of
the financial sector.
However, finance, like a Janus, has two faces. One is “virtuous”, as we
have just mentioned; the other is “vicious”, having acquired an
uncontrollable amplitude with financial globalization. Financialization is
the childhood disease of finance, its own monster. Financialization is the
threshold from which the financial sector, more profitable than the industrial
sector, develops to the detriment of the latter. That there has been a shift
toward “financialization,” since its development is mainly due to the
attraction exerted by these new financial products in themselves, rather
than the function of reducing risk in production.
In this way, the financial sector seems to become autonomous from the
productive sector and, in this sense, we can say that the relationship
between finance and labor is both fetishized and complex. It is fetishized
because finance and labor seem to operate in separate watertight spaces:
money seems to become autonomous, just like the miracle of bread, and
to generate money from itself without there being a relationship with
labor and working conditions. It is complex because there are relation-
ships between the development of finance and working conditions (total
wages, employment and types of jobs), relationships that develop under-
ground, appearing more clearly in times of crisis. In the context of com-
mercial and financial globalization, these relationships, in addition to
national determinants, are difficult to decipher, especially since the virtu-
ous and vicious aspects are the two faces of the same coin. In other words,
virtuous finance contains within it the tendency to financialization.
Therefore, there is a dialectical relationship between them.
Much has been written about the origins and causes of the financial
crisis in developed countries and its highly negative consequences for eco-
nomic activity. The development of speculative bubbles and their bursting
have been facilitated by: (1) techniques that are at the very least “mislead-
ing” in assessing risks, (2) the possibility of banks profitably “selling” the
risks they take by designing and issuing increasingly complex derivative
financial products (securitization) and deleting them from their balance
sheets, and (3) the adoption of accounting rules that value assets based on
their market prices (“mark to market”). Financial engineering, conceived
FOREWORD xi
in this way, provided an exciting logic: credit is less and less granted from
the prospective income of lenders, being more and more from the antici-
pation of the asset value acquired by these lenders, as we observe with the
case of real estate and financial bubbles. To return to Minsky’s expression,
Ponzi-type financing is quickly arrived at and instability is reproduced. The
financial system implodes with brutal devaluation of assets and what previ-
ously favored the bubble (the equity value, that is, the positive difference
between the market value and its commitments) becomes its opposite (the
market value plummets, falling below the value of the loans to be repaid).
The resumption of the cycle causes an acute shortage of liquidity.
Financial companies seek liquidity to finance a risk that only the day
before, transferred and disseminated, was considerably revalued. Banks
stop lending to each other and, à fortiori, brutally break their loans to
companies to individuals. Non-financial companies, with the devaluation
of their capitalized securities, see a series of rates “turn red” and are con-
fronted with a growing lack of liquidity. The “credit crunch” turns finan-
cial crisis into economic crisis. It becomes systemic, affecting companies
and banks, including those that have maintained prudent management of
their assets. It forcefully spreads across borders through the channels
forged by financial globalization.
In search of liquidity, banks and multinational companies liquidate a
portion of their assets abroad, particularly in Latin America, repatriating a
significant portion of their profits and interrupting the purchasing of
bonds. Foreign banks provide much less credit to Latin American export-
ers. In addition to these difficulties, there is a reduction of commitments
in industrialized countries due to the crisis in the real economy that is
developing. Lack of liquidity, capital flight and reduction of external com-
mitments are the factors that transform the financial crisis into a crisis of
the real economy in emerging economies.
Interest rates and the importance of these currencies have made various
authors return to the foundations of the Marxist theory of currency, devel-
oped in Book I of Capital, and of finance, developed in Book III of
Capital. Thanks to this theoretical deepening, the authors go beyond
simple description to grasp the essence of the causes and consequences of
financial globalization. If currency and financial globalization are given
priority in this remarkable book, it is because financial globalization is
much more prominent than commercial globalization. When the financial
crisis in advanced countries provoked a “credit crunch” (an accentuated
shortage of liquidity), the subsidiaries of multinational companies repatri-
xii FOREWORD
ated a significant portion of their profits to compensate for the lack of

liquidity of the parent companies in advanced countries, resulting in a
change to the world economy. The foundations of the emerging Latin
American countries, although relatively good, with a low degree of open-
ness, simply did not constitute a sufficient defense against the “solidarity”
of the balance sheets of transnational companies and the financial crisis,
through contagion, affected the “real” world with a force ten times stronger.
Paris XIII University Pierre Salama

Paris, France
Note
1. In Marxist terms, work in the financial sector is “indirectly productive”, like
those of the commercial activities analyzed by Marx. The work that develops
is not productive, but it is not unproductive either. Paid on account of the
added value, it allows for free growth, among other things, of a significant
increase in the rotation of capital. However, the growth of the financial sec-
tor does not only meet the conditions of capital appreciation, it is also the
cause and consequence of speculation. Its predatory dimension, in relation
to surplus value, is accentuated and, to a certain extent, indirectly produc-
tive labor becomes unproductive. That is, incapable of creating value, even
if indirectly. In this way, two distinct dimensions coexist in this type of work:
indirectly productive and unproductive. With financialization, the second
factor prevails over the first.
Titles Published
1. Terrell Carver and Daniel Blank, A Political History of the Editions

of Marx and Engels’s “German Ideology” Manuscripts, 2014.
2. Terrell Carver and Daniel Blank, Marx and Engels’s “German
Ideology” Manuscripts: Presentation and Analysis of the “Feuerbach
chapter,” 2014.
3. Alfonso Maurizio Iacono, The History and Theory of Fetishism, 2015.
4. Paresh Chattopadhyay, Marx’s Associated Mode of Production: A
Critique of Marxism, 2016.
5. Domenico Losurdo, Class Struggle: A Political and Philosophical
History, 2016.
6. Frederick Harry Pitts, Critiquing Capitalism Today: New Ways to
Read Marx, 2017.
7. Ranabir Samaddar, Karl Marx and the Postcolonial Age, 2017.
8. George Comninel, Alienation and Emancipation in the Work of
Karl Marx, 2018.
9. Jean-Numa Ducange and Razmig Keucheyan (Eds.), The End of
the Democratic State: Nicos Poulantzas, a Marxism for the 21st
Century, 2018.
10. Robert Ware, Marx on Emancipation and the Socialist Transition:
Retrieving Marx for the Future, 2018.
11. Xavier LaFrance and Charles Post (Eds.), Case Studies in the

Origins of Capitalism, 2018.
xiii
xiv TITLES PUBLISHED
12. John Gregson, Marxism, Ethics, and Politics: The Work of Alasdair
MacIntyre, 2018.
13. Vladimir Puzone and Luis Felipe Miguel (Eds.), The Brazilian Left
in the 21st Century: Conflict and Conciliation in Peripheral
Capitalism, 2019.
14. James Muldoon and Gaard Kets (Eds.), The German Revolution
and Political Theory, 2019.
Titles Forthcoming
Michael Brie, Rediscovering Lenin: Dialectics of Revolution and Metaphysics

of Domination
August H. Nimtz, Marxism versus Liberalism: Comparative Real-Time
Political Analysis
Shaibal Gupta, Marcello Musto & Babak Amini (Eds), Karl Marx’s Life,
Ideas, and Influences: A Critical Examination on the Bicentenary
Juan Pablo Rodríguez, Resisting Neoliberal Capitalism in Chile: The
Possibility of Social Critique
Igor Shoikhedbrod, Revisiting Marx’s Critique of Liberalism: Rethinking
Justice, Legality, and Rights
Alfonso Maurizio Iacono, The Bourgeois and the Savage: A Marxian
Critique of the Image of the Isolated Individual in Defoe, Turgot and Smith
Ducange, Jean-Numa, Jules Guesde: The Birth of Socialism and
Marxism in France
Spencer A. Leonard, Marx, the India Question, and the Crisis of
Cosmopolitanism
Kaan Kangal, Friedrich Engels and the Dialectics of Nature
Victor Wallis, Socialist Practice: Histories and Theories
Marcello Mustè, Marxism and Philosophy of Praxis: An Italian Perspective
from Labriola to Gramsci
xv
Praise for Financial Speculation and Fictitious Profits
“This book offers a wide-ranging critique of contemporary political economy

grounded in the work of Karl Marx. The contributions focus on value, money,
finance and financialisation, and their transformations under neoliberalism.
Financial Speculation and Fictitious Profits is a refreshing and original perspective
which will inform debates within Marxist Political Economy for many years.
Scholars and students will find here a treasure trove of materials to be examined,
discussed and developed: a truly valuable contribution to Marxist debates!”
—Alfredo Saad Filho, Professor of Political Economy, SOAS
University of London, UK
“This collection of essays is a timely intervention at this contemporary stage of

predatory capitalism, with fictitious capital dominating economy and society. A
refreshed understanding of the nature of fictitious capital in both its historical
evolution and contemporary forms is necessary for the search for alternatives to
end its tyranny and for a new chapter of humanity to unfold.”
—Lau Kin Chi, Professor, Lingnan University, Hong Kong
“The distinguishing feature of today’s post-industrial evolution into finance capi-

talism is fictitious capital—that is, finance capital on the liabilities (debt) side of the
balance sheet taking over economic management from industry and also from
government. The chapters in this book provide a much-needed background to see
the extent to which financial engineering has replaced industrial engineering as the
key to rising ‘wealth.’”
—Michael Hudson, Professor of Economics, University of Missouri–Kansas City,
and Researcher, Levy Economics Institute at Bard College, USA
“The destructive march of capital makes it imperative to systematically study the

Marxian critique of political economy. In undertaking this task, throughout the
chapters that compose this work the authors offer us relevant contributions to a
critical interpretation of contemporary capitalism, especially through a careful and
original analysis of the fictitious forms of capital.”
—Wen Tiejun, Professor of Economics, Fujian Agriculture &
Forestry University, China
“The theory of fictitious capital belongs only to Marx. Yet curiously, despite its
centrality in the working of capitalism since the turn of the 21st century and its
role in the 2008 financial crisis, it has remained an extremely unresearched domain
of Marxist scholarship. The two decades of work from economists at the Federal
University of Espirito Santo has been a notable exception, and this book brings it
finally to Anglophone researchers.”
—François Chesnais, Professor Emeritus, University of Paris XIII, France
Contents
1 Introduction 1
Helder Gomes, Gustavo Moura de Cavalcanti Mello,
Paulo Nakatani, Mauricio de Souza Sabadini, and
Adriano Lopes Almeida Teixeira
2 The Place of Money in Marx’s Theory of Capital 9

3 Speculative Capital and the Dematerialization of Money 43

Reinaldo Antonio Carcanholo
4 Crypto-Currencies: From the Fetishism of Gold to Hayek

Gold 63
Paulo Nakatani and Gustavo Moura de Cavalcanti Mello
5 Financialization and the Contradictory Unity Between the

Real and Financial Dimensions of Capital Accumulation 87
Paulo Nakatani, Adriano Lopes Almeida Teixeira, and
Helder Gomes
6 Parasitic Speculative Capital: A Theoretical Precision on

Financial Capital, Characteristic of Globalization117
Reinaldo Antonio Carcanholo and Paulo Nakatani
xix
xx Contents
7 Profit, Interest, Rent, and Fictitious Profit139

Gustavo Moura de Cavalcanti Mello and
8 The Nature and the Contradictions of the Capitalist Crisis183

Paulo Nakatani and Helder Gomes
Final Words 211
Index213
Notes on Contributors
Reinaldo Antonio Carcanholo (in memoriam) was a professor at the

Department of Economics and at the Post-Graduate Programme in Social
Policy at the Federal University of Espírito Santo (UFES), Brazil. He
received his doctorate in Economics from the National Autonomous
University of Mexico (UNAM).
Helder Gomes is a post-doctoral fellow at the Federal University of
Espírito Santo (UFES), Brazil. He received his doctorate in Social Policy
from the Federal University of Espírito Santo (UFES).
Gustavo Moura de Cavalcanti Mello (Ed.) is a professor at the
Department of Economics and at the Post-Graduate Programme in Social
Policy at the Federal University of Espírito Santo (UFES), Brazil. He
received his doctorate degrees in Sociology from the University of São
Paulo (USP).
Paulo Nakatani is a professor at the Department of Economics and
at the Post-Graduate Programme in Social Policy at the Federal University
of Espírito Santo (UFES), Brazil. President of the Brazilian Society of
Economic Policy (SEP) (2008–2012). He received his doctorate in
Economics from the University of Picardie, France.
Mauricio de Souza Sabadini (Ed.) is a professor at the Department of
Economics and at the Post-Graduate Programme in Social Policy at the
Federal University of Espírito Santo (UFES), Brazil. Director (2016–2018)
xxi
xxii NOTES ON CONTRIBUTORS
and President of the Brazilian Society of Economic Policy (SEP)

(2018–2020). He received his doctorate in Economics from the University
of Paris 1 Panthéon Sorbonne, France.
Adriano Lopes Almeida Teixeira is a professor at the Department of
Economics at the Federal University of Espírito Santo (UFES), Brazil. He
received his doctorate in Economics from the Federal University of Minas
Gerais (UFMG).
List of Figures
Fig. 2.1 Ordering of categories in diverse works 17

Fig. 2.2 The artistic whole (section I of Capital). (Source: Our own
production based on section I of chapter one of Capital.
∗ C = commodity, V = value, W = work, M = money) 23
Fig. 2.3 Development of forms of value 24
Fig. 2.4 The contradictions in motion 28
Fig. 8.1 Monetary base and means of payments USA (US$ billions).
(Source: Federal Reserve: http://www.federalreserve.gov/
releases/H3/default.htm. Our own production) 196
Fig. 8.2 USA: Short-term interest rates—2005–2018. (Source: Federal
Reserve: H.15 Selected Interest Rates for Sep 25, 2018. Our
own production) 198
Fig. 8.3 Monetary base and means of payments in the Eurozone
(€ billions). (Source: http://sdw.ecb.europa.eu/browse.
do?node=bbn27. Our own production) 198
Fig. 8.4 Balance of payments balance in current account accumulated
between 2006 and 2017 (US$ trillions). (Source: World Bank:
http://data.worldbank.org/indicator/bn.cab.xoka.cd)201
Fig. 8.5 International Reserves 2017—Selected countries with the
largest reserves (US$ billions). (Source: World Bank: http://
data.worldbank.org/indicator/fi.res.totl.cd. Our own
production)201
xxiii
List of Tables
Table 2.1 London notebooks (1850–1853) 13

Table 2.2 Grundrisse (1857–1858) 13
Table 2.3 From money to capital 15
Table 8.1 Total assets of banks and other financial institutions (US$
billions)189
Table 8.2 Market value of companies in stock exchanges (US$ billions) 191
Table 8.3 Selected government debt securities (US$ billions) 193
Table 8.4 Global OTC derivatives market (US$ trillions) 194
xxv
CHAPTER 1
Introduction
Helder Gomes, Gustavo Moura de Cavalcanti Mello,
Paulo Nakatani, Mauricio de Souza Sabadini,
and Adriano Lopes Almeida Teixeira
The recurrent and devastating economic crises, the widened reproduction

of inequality and misery, militarism, the unmeasured thirst for surplus
value, advancing predatorily not only on the working population but also
on nature, to the point of putting at risk the very existence of humanity,
in short, the barbaric dynamics of capital once again silenced the death
sentences of Marxian criticism to political economy. In particular, after the
2007–8 crisis and amid the popular revolts that responded to their effects,
H. Gomes (*)
Post-Graduate Programme in Social Policy, Federal University of Espírito
Santo (UFES), Vitória, Espírito Santo, Brazil
G. M. de C. Mello • M. de S. Sabadini • P. Nakatani
Department of Economics and Post-Graduate Programme in Social Policy,
Federal University of Espírito Santo (UFES), Vitória, Espírito Santo, Brazil
e-mail: mauricio.sabadini@ufes.br
A. L. A. Teixeira
Department of Economics, Federal University of Espírito Santo (UFES),
Vitória, Espírito Santo, Brazil
© The Author(s) 2019 1

G. M. de C. Mello, M. de S. Sabadini (eds.), Financial Speculation
and Fictitious Profits, Marx, Engels, and Marxisms,
https://doi.org/10.1007/978-3-030-23360-0_1
2 H. GOMES ET AL.
Marx’s thinking was revived, leading to a proliferation of efforts to mobi-

lize its analyzes for a critical understanding of contemporary capitalism. As
one of its most salient features is the prominence of the financial dimen-
sion of accumulation, Marx’s analysis of the fictitious forms of capital has
acquired particular interest and in recent years has been the subject of
increasing research. It is precisely this investigation that constitutes the
fundamental object of the studies gathered in this book. Composed of
seven chapters, besides this Introduction, three of them unpublished and
the other four revised and expanded versions of articles already published
(but unpublished in English), this book tries to synthesize more than 20
years of research and debates fictitious wealth and fictitious capital. Its
content suggests the need to distinguish the present stage of capitalist
accumulation from the period that stretches from the end of the Second
World War to the mid-1970s. This distinction goes beyond the traits of
the so-called globalization to the consequences of the restructuring of
production and the application of neoliberal policies. The authors seek to
emphasize the fundamental characteristics and contemporary specificities
of the current stage of the evolution of capital: the domination of fictitious
capital over other forms of capital, together with which it forms a contra-
dictory totality.
In this sense, the book presents a close reading of fictitious capital and
the place it holds in the Marxist exposure of the process of autonomiza-
tion and subjectivation of capital, emphasizing the power and topicality of
the work of Marx. In addition to this logical approach and considering the
development of capitalist social formations, the authors explore the his-
torical uniqueness of today’s dynamic of capital accumulation, guided by
the appropriation of fictitious profits. From this analysis, the authors pro-
vide an explanation of the recent economic crises, highlighting the 2007–8
crisis, and make considerations about the gloomy prospects for capitalism
in the immediate future.
The fictitious reproduction of capital as a modern novelty is not at
issue. The proposal is to consider the special character of this stage of the
accumulation of wealth in which the strong dominance of fictitious capital
is reproduced over and above other forms of capital throughout the world,
particularly going forward from the economic stagnation that began in
the late 1960s. This means that the logic of capitalist expansion is cur-
rently based on the fictitious production of wealth and the centralized
appropriation of fictitious profits. Such conclusions did not, however, arise
instantaneously. They began with concerns of researchers Paulo Nakatani
1 INTRODUCTION 3
and Reinaldo A. Carcanholo, Professors at the Federal University of

Espírito Santo since the early 1990s, about what they considered to be
limits in the interpretations of Marxist economists of the economic crisis
that had been deepening over the preceding decades.
The great challenge, proposed by these authors, was to overcome the
resistance against updating the embryonic concepts developed by Karl
Marx in Capital. They were convinced that dialectic categories, and not
finished definitions, should always be considered in the process of trans-
formation, ready to be used at any time and place. If social phenomena are
by nature dynamic, in a continuous metamorphosis, then the simplicity of
the definitions fails to capture and interpret them with adequate precision.
The dialectic perspective overcomes some of the obstacles to the proces-
sual construction of knowledge about the current capitalist crises from the
Marxist viewpoint.
In the face of somewhat imprecise interpretations and to qualify the
phenomenon of the current capitalist crisis, the general use of the term
financial capital seemed lacking, both in designating the distinct forms
that capital interest assumes and in referring to the various modes of spec-
ulation that have multiplied since the collapse of the Bretton Woods sys-
tem in the early 1970s. The quest for greater precision led them to look at
the Marxist category of fictitious capital, little investigated at the time,
which then became the springboard for the theoretical effort that these
researchers undertook.
From this point onwards, the authors were able to better interpret the
capitalist crisis, seeing it not as inherently problematical, but as an impor-
tant moment in the search for solutions to the growing contradictions that
periodically threaten the widening reproduction of capital. The research-
ers’ choice was to explore the process of the dematerialization of wealth
under capitalism, seeking to understand more precisely the production of
fictitious wealth and the various operational practices used for their unequal
appropriation. This would be based on the analytical assumption that the
journey to the most recent stage in the development of capitalism has
required the creation of ever more advanced forms of mercantile relation-
ships. In these relationships, both money and capital are mainly demateri-
alized from their concrete forms, a phenomenon that gains more
significance as speculative creativity advances. This is the result of an
intense process of value nullification in which there is an increasing social
relevance of the command, by some class factions, over the stock of wealth
and, especially, of wealth that could be produced in the future by more
sophisticated speculation mechanisms.
4 H. GOMES ET AL.
Along the same line of investigation, we attempt to make explicit the

double character of fictitious wealth and its connections with distinct forms
of speculation. According to the authors, a substantial part of fictitious
wealth appears as if it were a real wealth. In other words, as appearance is
also a dimension of reality, this form of wealth is both fictitious and real at
the same time. This means that a unit of fictitious capital can realize the
portion of fictitious wealth under its command. From the point of view of
appearance, a portion of fictitious wealth can be exchanged for tangible
commodities (land, factories, means of consumption, etc.). In other
words, in the process of circulation, each new holder of the right granted
by possession of a title (which represents a unit of fictitious wealth) could
exchange it for any other commodity (real wealth).
However, if considered in a broader context (separate from isolated
exchanges), a considerable part of the fictitious wealth produced today is
revealed. Derivative titles, for example, are a right and can be passed from
hand-to-hand, being transferred uninterruptedly, in individual transac-
tions. They can, therefore, be transferred but cannot be consumed or used
materially. Their destruction would only happen with the suspension of
the belief that their holder could convert it into any real wealth in the
future. From an even broader perspective, one realizes that this form of
fictitious wealth has no material connection to its effective realization. It
exists only as a command power over a promised future wealth, which
does not ensure that it will be produced at any future point.
Capital has, for decades, found ways of managing the current global
economic crisis, creating all sorts of speculative and regulatory instru-
ments that have maintained a system that exponentially multiplies ficti-
tious rights over wealth that, supposedly, will be produced at some
unknown point in the future. It is, therefore, a single moment in which
fictitious value, in the more sophisticated forms of speculation, contradicts
the social relations of current production. The interpretation is, therefore,
that this is a structural crisis in which the search for alternatives have only
deepened its reproductive dynamism. Starting from a more abstract analy-
sis of the evolution of the forms of current fictitious wealth production, the
book sets out concrete relations on the contemporary stage of accumula-
tion, demonstrating how the new management of imperialism has been
used for the maintenance of the dollar as a world currency under strong
pressure from the European Union and Asian countries, which has
required great upheavals in the metamorphosis of state intervention, gen-
erating large-scale geopolitical crises.
1 INTRODUCTION 5
In the second chapter, “The Place of Money in Marx’s Theory of

Capital,” Adriano L. Teixeira seeks to place Marx’s theory of money in
relation to the major objective of his intellectual thinking, which sought to
reveal the shape of capitalist sociability through a theory of capital. Marx’s
theory of money appears as a theoretical snapshot before the advent of
capital, which, notwithstanding the category of money, assumed the role
of protagonist in the process of social reproduction, modifying the forms
of capital (money) and reconfiguring the elements of a possible Marxist
monetary theory.
In the next chapter, “Speculative Capital and the Dematerialization of
Money,” Reinaldo A. Carcanholo explores in more detail the process of
the dematerialization of wealth under capitalism and presents the prac-
tices employed for unequal appropriation through speculation, which
has meant the creation of ever more advanced forms of mercantile rela-
tionships. As the creative forms of parasitic speculation advance, both
money and capital are dematerialized in their concrete forms, throwing
off the operational impediments to the expanded reproduction of specu-
lative capital, including creating new forms of regulation of securities
transactions, which have come to dominate decisions throughout the
capitalist world.
Still with the aim of apprehending the concept of money as a moment
of the concept of capital, but having as its immediate object the emergence
of crypto-currencies, in Chap. 4, “Crypto-currencies: From the Fetishism
of Gold to Hayek Gold,” Paulo Nakatani and Gustavo M. de C. Mello,
based on the Marxist perspective of money and particularly Marx’s analysis
of the fetishism of money and capital, grapple with the nature of crypto-
currencies, highlighting their explosive growth in 2017 as a part of the
dynamics of the overaccumulation of capital, which has been circling the
world for decades, particularly in financial markets, in search of new and
old assets that might serve as the means for the appropriation of fictitious
income and which have taken on the most foolish and fetishized forms.
In its turn Chap. 5, “Financialization and the Contradictory Unity
Between the Real and Financial Dimensions of Capital Accumulation,” by
Paulo Nakatani, Helder Gomes and Adriano L. Teixeira, rigorously
exposes the co-pertinence and contradictions between “real” capital and
monetary capital in order to highlight their specificities in contemporary
capitalism. To achieve this, the authors unpack the concept of capital in
general and its metamorphoses under autonomous functional forms, put-
ting emphasis on the monetary capital form and its reproduction in the
credit system. The authors hence established the foundation of the con-
6 H. GOMES ET AL.
cept of interest-bearing capital and their fictitious forms. Under such a

theoretical framework, we consider the elementary ways in which the
functional forms of capital manifest themselves in effective reality.
In the following chapter, “Parasitic Speculative Capital: A Theoretical
Precision on Financial Capital, Characteristic of Globalization,” written in
1999, Reinaldo A. Carcanholo and Paulo Nakatani analyze the early forms
of fictitious capital and apprehend the dual aspects of fictitious wealth
which give rise to significantly distinct forms of speculation. Through this
investigation, the authors expose the categories speculative capital and
parasitic speculative capital as an unfolding of the fictitious capital.
Furthermore, Nakatani and Carcanholo defend the heterodox thesis that
contemporary capitalism is distinguished by the process of conversion of
industrial capital into speculative capital, and its logic is totally subordi-
nated to speculation and dominated by parasitism. In this way, it is the
speculative logic of the capital on its circulation and reproduction in the
international space that defines this new stage.
In the seventh chapter, “Profit, Interest, Rent, and Fictitious Profit,” in
the light of phenomena that have gained importance in the recent decades,
such as the exponential growth of derivatives markets and the relevance
assumed by intellectual property, Mauricio de S. Sabadini and Gustavo M.
de C. Mello seek to conceptualize the different forms of income of the
capital on the basis of the Marxian analyses of the categories of profit,
interest and ground rent. In the light of increasing rate and means of
exploitation of the labor force in the midst of a reconfiguration of the
international division of labor, we seek to theorize moments of what we
call fictitious profits, pari passu, to the expansion of the fictitious forms
of capital.
Finally, in the last chapter, “The Nature and the Contradictions of the
Capitalist Crisis,” Paulo Nakatani and Helder Gomes seek to reveal the
privileges achieved by the US economy due to its position in imperialist
relations and its reaction to the capitalist crisis and to the threat of the
replacement of the dollar as the world currency. Based on empirical evi-
dence on international economic relations, the chapter seeks to demon-
strate how the enforcement of the dollar reserve on most countries ends
up financing the continuous US external deficits, thereby guaranteeing
the fractional reserves model and maintaining US command over the reg-
ulation of the speculative race around the world.
1 INTRODUCTION 7
In short, the texts gathered here are intended to contribute to the

updating of Marxist criticism to capitalist barbarism, which, once learned
in its totalizing and totalitarian nature, prohibits any reformist whimsy and
shows the imperative urgency of theoretical and practical engagement in
its overcoming. As Marx correctly grasped, this overcoming corresponds
to the determined negation of the capital form, and therefore of reifica-
tion, heteronomy, competition, hierarchization, and of a whole system of
inequalities that is immanent to it. Finally, the destruction of the fetishist
forms of subsumption, exploitation and oppression of humanity—the
social forms of commodity, money, state, the cultural industry, as well as
patriarchy, racism and so on—through the conscious, planned and collec-
tive assumption of control over the forms of material and spiritual repro-
duction of social life. Hic Rhodus, hic salta!
CHAPTER 2
The Place of Money in Marx’s

Theory of Capital
Introduction
Marx’s theory of money has been the subject of increasingly frequent
debates among scholars of his work around themes such as the nature of
inconvertible money, contemporary monetary forms, financialization, and
so on. This interest is partly due to the search for a theoretical structure
capable of accounting for the financial phenomena that have occurred
since the Bretton Woods crisis, especially in relation to the 2008 crisis, and
partly due to a curious attempt to rehabilitate Marx in the economic
debate from perspectives that harmonize him with authors like Keynes and
others, as if this procedure might confer on him the missing pieces of a
monetary theory that could not be developed by him in its entirety.
Regardless of the motives for recuperating Marx, it is common to
find a procedure that is foreign to the scientific method that guides the
process of exposing his theory in Capital. Marx is generally studied in a
A. L. A. Teixeira (*)

https://doi.org/10.1007/978-3-030-23360-0_2
10 A. L. A. TEIXEIRA
sliced form, trying to isolate in his work a theory of money independent

of other determinations or a theory of the state, or of art, or of history,
and so on.
In fact, the perspective of totality adopted by Marx in The Poverty of
Philosophy is somewhat alien to the postulants of a positive science, who
often make cuts and segment reality, storing each component in specific
boxes. Hence, the mainstream mistakes on this theme.
The Marxian critique of political economy as discussed in Capital will
be the basis from which it will become evident that a rigorous understand-
ing of the category of money in Marx must be made in the light of its
concept of capital and its process of reproduction. This requires the link-
ing, therefore, of the distinct levels of abstraction that constitute it, and
the nexuses between its fundamental determinations (the “sphere of the
essence”) and those specific to the phenomenal plane (the “sphere of
appearance”) are investigated.
In this sense, this chapter finds its core in chapter three of Capital,
where Marx analyzes the determinations of money before the advent of
capital, which occurs in chapter four of that work, although it is pre-
supposed from the beginning. This choice underlies the central argu-
ment of this work that it is not possible to derive from Marx’s work a
theory of money which is totally free from traces of capital.1 In the
process of theoretical exposition, money imposes determinations on
capital that, on receiving them, projects new determinations onto
money. This argument is developed in the following three sections in
two ways; firstly, by the description of Marx’s theoretical pathway
regarding money, which occupies the first two sections, and secondly,
by the analysis of money in Capital, in the last section, and followed by
final considerations.
In the next section we highlight the importance of money in Marx’s
intellectual pathway through a brief description of the various moments
and stages of his studies regarding that category. In Section “The Saga of
Chapter Three: Money as the Antecessor of Capital”, we analyze what we
will call the “Saga of chapter three,” which was Marx’s theoretical effort
to construct a methodological bridge between money and capital before
the publication of Capital. In the fourth and final section, we analyze how
this saga finds its final terminology in the second section of Capital, and
then, in a logical sequence, we neatly describe the contradictions proper to
money that result in the category, capital.
2 THE PLACE OF MONEY IN MARX’S THEORY OF CAPITAL 11
Money in Marx’s Intellectual Pathway to Capital

Marx’s research on money was not an end in itself nor was it an attempt to
contest or perfect this constituent part of nascent economic science. His
research on the subject was part of a larger project which was the under-
standing of the genesis, development, crises, and eventual collapse of capi-
talist society.
Marx arrived in Paris in October 1843 intending to create a newspaper,
the Franco-German Annals, in partnership with his friend Arnold Ruge.
In that newspaper, Marx published a text, On the Jewish Question, early in
1844, in which money appears only as the raw material of a moral critique,
still a long way from his future critique of political economy. During this
period, as Bensaid (2010, p. 93) states, “he still did not conceive of money
as the general equivalent of generalised mercantile exchange, as the
supreme form of commodity fetishism, but only as a monetary fetish …
money … is a concept waiting for its critical development.”
At that time, under the influence of Engels, who had written Outline of
a Critique of Political Economy, and of the philosopher Moses Hess, with
his Essence of Money, his inferences about money had an ethical-moral tone
and were closely related to a hostile view of capitalist social relations,
formed during his time at the Rheinish Zeitung.
In some works of that period, and therefore prior to Grundrisse, nota-
bly in Hegel’s Critique of the Philosophy of Law of 1843 and in the Economic
and Philosophic Manuscripts of 1844, Marx’s relation to political economy
was marked by deep animosity (Coutinho 1997). In them, money is also
analyzed in the context of an ethical and moral critique of the alienation
of labor and private property. Marx’s analysis was still hostage to his con-
demnatory view of the works of political economists, considered by him as
the fruits of cynicism and as intending to provide a theoretical basis justify-
ing the current order. When he analyzes James Mill’s writings on money
in the 1844 Paris Manuscripts, Marx emphasizes the centrality of the sub-
ject of alienation:
The essence of money is not, in the first place, that property is alienated in
it, but that the mediating activity or movement, the human, social act by
which man’s products mutually complement one another, is estranged from
man and becomes the attribute of money, a material thing outside man.
(Marx and Engels 1975, p. 212).
To develop a theoretical concept of money itself, Marx would still need

empirical elements. Philosopher in formation, he would spend the follow-
ing years reckoning with the philosophy of his time. In addition to the
texts on Hegel’s Philosophy of Right, Marx writes with Engels, between
1844 and 1846, The Holy Family and The German Ideology.
It was only in The Poverty of Philosophy, 1847, that Marx would soften
the hostile tone of the Economic and Philosophic Manuscripts, 1844, this
being written simultaneously with the Paris Manuscripts, regarding the
understanding that cynicism was not a personality trait of political econo-
mists, but a reflection of the scientific content of political economy, which
had developed tools of analysis capable of illuminating essential aspects of
the material relations of existence.
Having been expelled from France, Marx arrived in Brussels on
February 2nd, 1845, from where he was again expelled on March 3rd,
1848. He returned to France and, after a few months, left for Cologne,
capital of the Rhineland, with the aim of founding a newspaper called
Neue Rheinish Zeitung. In this, Marx published several articles on mone-
tary, fiscal, and financial management issues. Being expelled again, he left
for London, where he would live until the end of his life. He arrived in the
English capital at the end of 1849 and had already begun his studies relat-
ing to money. The failure of the revolution of 1848 had awakened in Marx
an interest in studying economic crises and other essential elements of the
circulation process, money, and credit, the starting point of the London
Notebooks (See Table 2.1).
In his early years in London, Marx resumed journalistic activities,
becoming familiar with the financial events of the time. During this period,
as a correspondent for the New York Daily Tribune, he closely monitored
the movements of the European economy, compiling data on the London
Stock Exchange, bank balances, the labor market, industry, and so on.
When he felt that a great economic crisis was approaching, Marx finally
began to write what he thought was his magnum opus. In Grundrisse,
written between 1857 and 1858, money is once again its opening theme,
appearing shortly after the well-known Introduction of 1857, as seen in
Table 2.2.
Marx begins the analysis of money in Grundrisse with a discussion
about credit, somewhat surprising when compared to the expository rigor
of Capital. He then focuses on a discussion of the relationship between
money circulation and balance of payments and goes on to discuss a highly
complex topic, the relationship between the means of circulation and price
Table 2.1 London notebooks (1850–1853)
Group Period Notebook Principal themes and authors analyzed
1st Sept. 1850 I–VII History and theories of economic crises, money and
to Mar. 1851 credit/Thomas Tooke, James Taylor, Henry
Thornton, Adam Smith, David Ricardo
2nd Apr. to Nov. VIII Salaries, ground rent/David Ricardo, James Steuart
1851 IX–X Critical works on Ricardo/John Tuckett, Thomas
Hodgskin, Thomas Chalmers, Richard Jones, Henri
Carey
XI The working-class condition—salaries, workers’
standard of living, strikes, child labor/J. Fielden,
P. Gaskell, Thomas Hodgskina
XII–XIII Agricultural chemistry—ground rent/Justus Liebig,
James F. W. Johnston
XIV Debate on the theory of population, pre-capitalist
modes of production, colonialism/Thomas Malthus,
Archibald Alison, Adolphe D. de La Malle, William
H. Prescott.
XV History of technology/Johann Poppe, J. gray
XVI Diverse questions of economic policy/Bastiat,
Proudhonb
3rd Apr. 1852 to XVII–XXIV Historical controversies about the Middle Ages,
Aug. 1853 history of literature, of culture and customs.
Source: Musto (2010, pp. 81–88)

Rubel (1974, p. 315)
a
Rubel (1974, p. 318). Notebook written between October and November 1851
b
Table 2.2 Grundrisse (1857–1858)

Notebook Period Content
M 23 August 1857 to the middle of September Introduction of

1857
I–II (first seven October 1857a Chapter on
pages) money
II November 1857 Chapter on
III 29 November to the middle of December 1857 capital
IV The middle of December 1857 to 22 January 1858
V 22 January 1858 to the beginning of February
VI February 1858
VII The ends of February and March, the end of May
and the beginning of June
Source: Marx (2007, pp. 02, 36, 176)

a
According to Musto (2010, p. 96), “the first draft of Notebook I, which contains Marx’s critical analysis
of Banking Reform by Alfred Darimon, was written in the months of January and February 1857, not, as
the editors of Grundrisse thought, in October”
levels. Later, in his investigation of the genesis of money, he moderated his

discourse, seeking a path of his own, with increasingly rare references to
Darimon. In a sort of rehearsal of what would appear in Capital, his study
of the genesis of money begins with commodity.
From there the discussion takes another turn. Marx cites the proper-
ties of money, all of them arising from the determination which money
possesses as exchange value, namely, “(I) measure of commodity
exchange; (2) medium of exchange; (3) representative of commodities
(hence object of contracts); (4) general commodity alongside the par-
ticular commodities […].” (Marx 1993, p. 146). Referring to this latter
property, Marx anticipates another dialectical transition, which takes
place between money and capital, the fact that the embodiment of the
exchange value of all commodities happens through money, converts it
into capital, “the form of capital’s appearance which is always valid”
(Marx 1993, p. 146).
As we can see, Marx’s analysis of money overlaps with his analysis of
the nature of capital. Both in the Grundrisse and in subsequent works
there are several attempts by Marx to establish the methodological bridge
between money and capital. It is no coincidence that the theme of the
“transformation of money into capital” appears in three works, namely,
the Grundrisse, the Urtext, and the Manuscripts of 1861–1863, which
were written by Marx for himself as research and not for publication
(See Table 2.3).
On the contrary, spurred by a contractual obligation to the editor,
Marx began to reveal his findings in the Contribution to the Critique of
Political Economy, written between November 1858 and January 1859
(Marx and Engels 1987a, p. 258), reserving the second chapter for the
issue of money. Shortly before, between early August and mid-November,
he had written a text that became known as the Fragment of the early ver-
sion of Contribution (Urtext) (Marx and Engels 1987a, p. 548). In this,
Marx reserves the greater part for once again analyzing aspects related to
money (money as currency, functions of money, precious metals, etc.).
Not having the elements necessary to enter into the theme of capital,
Marx closed the Contribution to the Critique of Political Economy and, two
years later, returned to the same theme, writing hundreds of pages in the
Manuscripts of 1861–63 and those of 1864–65, and only in Capital did he
feel ready to expose his criticism, in chapter four2 to be precise, entitled
“The Transformation of Money into Capital.”
Table 2.3 From money to capital
● Paris Manuscripts (1844)

Brussels notebooks (1847) analyses of money
London notebooks (1850-1853)
● Grundrisse (Chapter on money – Oct. 1857) transformation of money into capital
● Urtext (Aug. – Nov. 1858) transformation of money into capital
● Contribution to the Critique of Political economy theory exposition
(Nov. 1858 – Jan. 1859)
● Manuscripts of 1861-1863 Transformation of money into
(notebooks I to V – Aug. 1861 – Mar. (1862) capital
● Manuscripts of 1864-1865 analyses of the relation of money capital
● Capital (1867) Theory exposition (begins the book at chapter IV,
the transformation of money into capital)
Source: Our own production
The Saga of Chapter Three: Money

as the Antecessor of Capital
Marx was never an economist strictu sensu. Analyzing economic categories

was not the goal of his research, but an intermediate step in understanding
the mode of being of capitalist society. For this reason, he clarifies in his
foreword to the first edition of Capital: “What I have to examine in this
work is the capitalist mode of production, and the relations of production
and forms of intercourse [Verkehrsverhiiltnisse] that correspond to it”
(Marx 1990, p. 90). In the preface of 1859, he had already indicated that
his interest was to unravel the anatomy of bourgeois society (Marx and
Engels 1987a, p. 262). In this project, which was at the same time intended
to critique economy policy, the category capital would be central.3
In 1857, with an imminent economic crisis of great proportions loom-
ing, Marx found himself pressed to write his book on Economics. He
wrote the famous Introduction of 1857 based on a long series of studies of
the classical economists undertaken over the previous 15 years, in which
he stated categorically: “Capital is the all-dominating economic power of
bourgeois society. It must form the starting-point as well as the finishing-
point, and must be dealt with before landed property” (Marx 1993, p. 107).4
Capital, therefore, was long known to Marx, who had read the works
of Adam Smith, David Ricardo, and others who identified capital with
things such as machines, tools, installations, raw materials, and also authors
with different perspectives, like Thomas Hodgskin—who was classified by
some as a Ricardian socialist—who saw capital as much as the means of

production as a coercive social relation (Hunt 2011, p. 171).
Although familiar with the idea of capital, the problem lay in how to
present it. A general idea of capital was not acceptable for an author who,
having based his theory on a materialistic conception of history, insisted
on taking a different path from the classical economists with their
“Robinsonades.” Nor would he start with money. For this reason, Marx
goes back in stages toward an earlier simpler idea, an abstraction, but
which was at the same time concrete. He went back to value, a category
that had already proved inadequate as a starting point in earlier works.
Meanwhile, value and money were categories that also had to be deduced
and explained. Differentiating himself from the classics, Marx went further
and attained the idea of commodity. The classical method of plucking ready
and finished categories of reality, as if the researcher had already reached
all determinations, was simply not compatible with Marx’s methodology.
Money, therefore, is a methodological link preceding capital.
Considering that one must be deduced from the other, its antecedent,
but appears to be a consequence, Marx would publish new determina-
tions on money that would not appear in the first three chapters of
Capital. How money transformed into capital was a real problem for
Marx. From Fig. 2.1, it is possible to see how in various works he
positions the categories so that capital appears as the result of a logical
development. It is observed that capital never appears before money. In
the Grundrisse, there are a series of mediations before arriving at capital,
as he was still investigating both the determinations of the categories and
the logical connections between them, but in Capital, capital appears
immediately after the discussion about the money.
In Grundrisse, Marx ends the chapter on money and begins that on
capital with the following subtitle: “Chapter on money as capital.” Further
on, in the section titled “Forms That Preceded Capitalist Production,” he
turns to history to understand the transformation of money into capital,5
a process not evident in Capital when focusing only on chapter three.
After citing various historical events that marked the beginning of capital-
ism, he emphasized that “all of these promoted on one side the dissolution
of the old relations of production, sped up the separation of the worker or
non-worker but able-bodied individual from the objective conditions of
his reproduction, and thus promoted the transformation of money into
capital” (Marx 1993, p. 508). Therefore, he was able to delineate the
theme “It is inherent in the concept of capital, as we have seen – in its
GRUNDRISSE URTEXT CCEP * MANUSCRITOS CAPITAL

(1857/1858) (1858) (1859) OF 1861/63 ** (1867)
Money as Commodity Transformation of

Money Commodity
money money into capital
Form of Exchange Absolute

Commodity Value
ownership value Surplus-Value
Exchange Relative
Money: Money
Surplus-Value
Work
value international means
of purchase and of
payment
Work Money
Transition to
capital
Capital Capital
Cap. III – The capital
A – Process of capital
production
1 – Transformation of
money into capital
Fig. 2.1 Ordering of categories in diverse works
origin – that it begins with money and hence with wealth existing in the
form of money” (Marx 1993, p. 505) (Fig. 2.1).
In early June 1858, Marx interrupted the Grundrisse but soon returned
to writing. Already involved in the writing of the Contribution to the
Critique of Political Economy, he wrote a letter to Engels dated September
21, 1858, saying, “For the same reason my manuscript is only now about
to go off (in 2 weeks), but there will be 2 instalments AT ONCE. Even
though I had nothing to do but correct the style of what had already been
written, I might sometimes sit for hours before getting this or that phrase
right” (Marx and Engels 1983, p. 341). Marx did not keep the promise
and, at the end of October, wrote to Engels saying that he would need
some weeks more (Marx and Engels 1983, p. 351). He had been busy
during that time writing a text composed of three notebooks, of which
only a part has been found, the Urtext. In it, Marx develops his study of
money and trade and attempted to reveal, for the first time, the subject of
the transformation of money into capital. There is also a chapter entitled
“the manifestations of the law of appropriation in simple circulation,”

which precedes the chapter in which Marx deals with the “transition to
capital.” According to the “Note to the French edition” of the Contribution
to the Critique of Political Economy, these notebooks “are still drawn up in
philosophical language very close to the Hegelian vocabulary […] and in
them we see Marx indulge in a deduction of the various determinations of
capital, starting from the very concept of capital” (apud Marx 2011, p. 16).
So, Marx arrived at capital, but he was not yet sure how to make the
final exposition of his discoveries. In fact, he had finished the two chapters
of the Contribution to the Critique of Political Economy but failed to
advance to the third, on capital. He wrote a letter regarding this to Lassalle
on November 12th, 1858, saying that the delay in sending the manuscript
was mainly due to the following fact: “the material was to hand and all that
I was concerned with was the form […]. My aim is not to produce an
elegant exposé” (Marx and Engels 1983, p. 354). The difficulty for Marx
was not, therefore, stylistic, but methodological.
In a letter written between January 13th and 15th, 1859, Marx updated
Engels as to the content of the Contribution to the Critique of Political
Economy: “The manuscript amounts to about 12 sheets of print (3 instal-
ments) and – don’t be bowled over by this – although entitled Capital in
General, these instalments contain nothing as yet on the subject of capi-
tal.” Later, he declares himself hopeful, “If the thing is a success, the third
chapter on capital can follow very soon” (Marx and Engels 1983, p. 368).
When he finished writing the Contribution to the Critique of Political
Economy, he writes a letter to Engels on January 21st, 1859, saying “The
ill-fated manuscript is ready” (Marx and Engels 1983, p. 369). You can see
that he was not enthusiastic about what he had done so far. Without the
presence of its protagonist, capital, he had been brought to a halt.
The saga of chapter three would advance with time. Marx felt the need
for a methodological bridge linking money to capital, only after that could
capital be presented. 1860 would be, in large part, spent on the publication
of Herr Vogt, a book of around 200 pages in which Marx, in another of his
political swipes, responded to the accusations made by Mr. Vogt.
The resumption of studies for the writing of a “third chapter” would
only take place in the following year, in the Economic Manuscripts of
1861–1863, in which Marx begins the first chapter, The Process of Capital
Production, on the theme of “the transformation of money into capital.”
The first five notebooks of this manuscript were written between August
1861 and March 1862, containing the sections on “transformation of
money into capital,” “absolute surplus value,” and “relative surplus value.”
Notebooks VI to XV were written between March and November 1862,
in which Marx formed new categories and deepened the issue of surplus
value from a historical perspective, the greater part of which would be
integrated into Book IV of Capital, edited by Kaustsky under the title of
“Theories of Surplus Value” (Dussel 2008, p. 21). At last, Notebooks XV
to XXIII were written between December 1862 and July 1863 (De Deus
2010, p. 13) and include part of the material corresponding to Book III
of Capital (Notebooks XVI to XVIII), a study on machinery (Notebooks
XIX, XX, and the last part of V), and the last three on various issues.
The Economic Manuscripts of 1861–1863 seem to have given Marx the
elements he needed to deal with the subject of the transformation of
money into capital, especially, in relation to the first five notebooks.6 After
completing these notebooks, Marx radically changed the subject of his
studies, demonstrating that he had realized that, after a more judicious
treatment of the category of surplus value, he could confront the great
exponents of political economy in the following notebooks. The key to
explaining Marx’s satisfaction with his progress appears to be in the first
five books of the manuscripts and more specifically in the first part.
In fact, he only advanced the analysis of relative and absolute surplus
value after analyzing “the two components into which the transformation
of money into capital is divided.” In this subsection, Marx seems to have
found the methodological pathway, the missing link7 in his exposition, in
the form of a double contradiction8:
The whole movement that money performs to be converted into capital

therefore falls into two distinct processes: the first is an act of simple circula-
tion, purchase on one side, sale on the other; the second is the consumption
of the purchased article by the buyer, an act which lies outside circulation,
takes place behind its back. […] In this consumption process the buyer and
the seller enter into a new relation with each other, which is at the same time
a relation of production. (Marx and Engels 1988, p. 105)
As Dussel (2008, p. 73) points out, Marx, in Grundrisse, had advanced

the matter of “two components” but rather slowly, “with frequent com-
ings and goings, in the logical order of discovery” and with “few advances
in the order of exposition.” This was the aforementioned saga, the need to
find the proper way to explain the logical-genetic development of the
object that starts with the commodity form and arrives at the money form
(which he had already done), but which would have to arrive at the capital
form by the same dialectical method.
Marx had already discovered the surplus value in Grundrisse, as well as
the role of working capacity in explaining capital. He had also shown that
machines and equipment alone do not generate larger amounts of value.
In simple circulation, in which commodities and money appear in the
exchange process as C-M-C, there could be no appreciation, for they are
exchanges of equivalents. For appreciation to occur some transgression in
the equivalence of the exchanges is necessary. But how to justify the viola-
tion of the law of commercial appropriation, the advent of a time marked
both by the exchange of equivalents and by non-equivalents, in which
commodity and money appear in inverted form M-C-M’, with M’ greater
than M? Marx explains as follows:
The first act fully corresponds to the laws of commodity circulation, to

which it belongs. Equivalents are exchanged for equivalents. The money
owner pays out on the one hand the value of the material and means of
labour, on the other hand the value of the labour capacity. […] The second
act displays a phenomenon which in its result and its conditions is not only
entirely alien to the laws of simple circulation but even appears to be at odds
with it. […] There comes into being, outside the simple exchange process,
a relation of domination and servitude, which is however distinguished from
all other historical relations. (Marx and Engels 1988, pp. 105–106)
With the emergence of commodity “labour capacity,”9 the cycles

C-M-C and M-C-M’ coexist. “The worker goes through the form of cir-
culation C—M—C. He sells in order to buy. […] The capitalist, in con-
trast, goes through M—C—M. He buys in order to sell” (Marx and
Engels 1988, p. 135). The emergence of the cycle of capital, M-C-M’,
early in chapter four of Capital, cannot be considered as a mere
epistemological resource or ideological ploy.10 Marx is just logically deriv-
ing the historical emergence of capital. The ontological direction, the
quest for the mode of being of capitalist society is the motor of his analysis
of that chapter:
The circulation of commodities is the starting-point of capital. The produc-

tion of commodities and their circulation in its developed form, namely
trade, form the historic presuppositions under which capital arises. World
trade and the world market date from the sixteenth century, and from then
on the modern history of capital starts to unfold. (Marx 1990, p. 247)
It is important to take one last quote from Marx in the Economic

Manuscripts of 1861–1863 in the final part of the section on the two
components.
We started out of circulation in order to come to capitalist production. This

is also the course of events historically, and the development of capitalist
production therefore already presupposes in every country the development
of trade on another, earlier production basis. We shall have to speak of this
in more detail. What we have to consider more closely in the following is the
development of surplus value. (Marx and Engels 1988, p. 136)
An historical moment stands out in the above quote. The identification

of surplus value in Grundrisse marked a fundamental step in the under-
standing of capital, but it was left to Capital for Marx to deliver a full
exposition, to find a way of articulating in one dialectical unit both the
aspects of the equivalence of exchange (circulation) and non-equivalence
(production). The studies he had undertaken in Grundrisse and Urtext
had given him the keystone: historical circumstances had created a new
social class, salaried workers, freed from lacking the means of production
but possessing a new commodity capable of creating value, the workforce.
In the following two years, Marx wrote the Economic Manuscripts of
1864–1865, with themes that would go on to form Book III of Capital,
and a version of Book I that was lost, leaving only the unpublished chapter
four. In these manuscripts, he was already able to discuss the determina-
tions of money after the advent of capital. Therefore, it goes into themes
such as commodities, commercial capital, money capital, interest-bearing
capital, fictitious capital, among others.
If when finishing the Contribution to the Critique of Political Economy
Marx felt dissatisfied with the “wretched manuscript,” Capital seemed to
recover his reputation. In its first part, Marx demonstrates satisfaction
with what he had achieved in the Contribution to the Critique of Political
Economy. He testifies that his analyses of commodity and money, as well as
the categorical ordering in which they are regarded as antecedents to capi-
tal, although it is predicted by them, were enough for his propositions of
that moment. For this reason, in the preface to the first edition of
Capital he wrote:
The substance of that earlier work is summarized in the first chapter of this
volume. This is done not merely for the sake of connectedness and com-
pleteness. The presentation is improved. As far as circumstances in any way
permit, many points only hinted at in the earlier book are here worked out
more fully, while, conversely, points worked out fully there are only touched
upon in this volume. The sections on the history of the theories of value and
of money are now, of course, left out altogether. (Marx 1990, p. 89)
Only in the second edition would Marx revise the format of chapter
one to divide it into three chapters, incorporated in section I of the book.
In the prologue to the second edition, dated January 24th, 1873, he
informs us that such modifications were made for didactic reasons at the
suggestion of his friend Kugelmann. On the relevance of the modifica-
tions, Marx says: “It would be pointless to go into all the partial textual
changes, which are often purely stylistic” (Marx 1990, p. 94).
In fact, Marx began to write Book I using the same format adopted in
the Economic Manuscripts of 1861–1863, for “the transformation of money
into capital,” and only in 1867, in the year in which it was published, did
he remove the first chapters of the book and based it on that which he had
already written in the Contribution to the Critique of Political Economy, of
1859. In this sense, it is quite significant that Dussel (1990, pp. 22–23)
had indicated that Marx had started Book I with precisely the chapter
where surplus value appears, chapter four, giving the impression that he
had few doubts about what might precede it. Marx could only have begun
Capital with chapter four precisely because he had already dealt with
money, in all its opacity, in previous works and studies.
The Category Money in Capital

In the two previous sections, the aim was to demonstrate the place of
money in Marx’s theory of capital by analyzing his intellectual pathway on
the theme, highlighting the various moments in which he stopped to
investigate monetary issues pari passu with the evolution of his economic
thinking, as well as his attempts at unraveling the categories of money and
capital. In Capital, his artistic all11 (Fig. 2.2), he found the proper explan-
atory order of categories,12 seeking to restore theoretically the real process
of the formation of the capitalist mode of production.
In section I of Capital, in the first three chapters, Marx reveals simple
circulation, which is the first appearance of the system. There is no talk
here of profit and capital. The analysis begins with commodity, which
already contains within it a basic contradiction between the use of value
and value. It then analyzes the dual nature of labor in capitalist society,
Money Form
CHAPTER 1 CHAPTER 2 CHAPTER 3
*
C V W M Process of exchange Money or the circulation
of commodities
Fetichismo da "The commodity-form ... It is

mercadoria nothing but the definite
social relation between men
“Our perplexity may “Commodities cannot themselves which assumes
perhaps have arisen from themselves go to market here, for them, the fantastic
conceiving people merely and perform exchanges in form of a relation between
as personified categories, their own right." things."
instead of as individuals."
Fig. 2.2 The artistic whole (section I of Capital). (Source: Our own production
based on section I of chapter one of Capital. ∗ C = commodity, V = value,
W = work, M = money)
concrete and abstract work, and then demonstrates the dialectical devel-
opment of forms of value until it arrives at money.
In chapter one, Marx arrives at money, but does not end it without first
introducing a small but dense analysis of the fetishism of the commodity.
Only then does he move on to the next chapter, about the exchange pro-
cess, where he removes any doubts about the real starting point of the
exchange. The exchanges happen not because the goods go alone to the
market, but because their owners take them (Marx 1990, p. 178).
The money form results from a process of value becoming autonomous
(Fig. 2.3), in which it continually seeks to surpass the limits imposed by
the materiality of use value, which halted any attempt by Marx to interpret
money in a conventional way.
The simple or fortuitous form of value denotes the gateway to this cat-
egory in the relationship between producers, since it is the most elemen-
tary form of expression of value. Although with different use values, they
are even because they have a common substance, constituting the first
form of solution of the contradiction between value and use value. The
extensive form is constituted by the generalization of exchanges, the rela-
tion between two commodities ceases to be a casual fact, and a given com-
modity will be able to express its value within a group of other commodities.
The simple or fortuitous form of value denotes the gateway to this cat-
egory in the relationship between producers since it is the most elemen-
tary form of expression of value. Although having different use values,
they are equal because they have a common substance, constituting the
primary form of solution of the contradiction between value and use value.
The extensive form is constituted by the generalization of exchanges, the
relation between two commodities ceases to be a casual fact, and a given
commodity will be able to express its value in a group of other commodi-
ties (Fig. 2.3).
The contradiction between value and use value continues, the first seek-
ing to be independent of the second until it arrives at a time when the
contradiction, a contradiction between the private character and the social
character of the works, finds a new resolution in the general form of value,
in which a commodity is more frequently accepted by all and becomes a
kind of general equivalent. But at this moment, use value—in this case, of
the most accepted commodity—continues to hamper the process of value
autonomy until a commodity, whose value of social use is expressing the
value of all others, appears as money and becomes the general equivalent
The Genesis of Money

Theoretical moments
Simple Extensive General Money
Form Form Form Form
xA = w B wB=xA wB= y Price

=zC zC = z C = ounces Form
xA x= wB xxxx ($)
=kD kD = kD= of
=uE uE = u E = gold
(germ of the money)
“The simple expression of the relative value of a single commodity,

such as linen, in a commodity which is already functioning as the
money commodity, such as gold, is the price form." (Marx, 1990,
p.163).”
Fig. 2.3 Development of forms of value

of the value of all other commodities. On a continuing basis, the price

form is the expression of the value of commodities in the form of money.
In the third and final chapter of the section, Marx deals with the deter-
minations or functions of money, with the suggestive title “Money or the
circulation of commodities.” In fact, the theoretical environment is still
that of circulation. If in the study of the genesis of money, a happy ending
was reached, Marx will go on in chapter three to show how that apparently
resolved tension will continue into the realm of money itself. So, there is a
barrier in the path between the genesis of money and capital. As already
said, what were two chapters became three, and the desired chapter three,
that of the transition to capital, became the fourth, of such importance
that Marx reserves the whole of section II solely for it.
The question then becomes understanding whether the background or
the missing link for the arrival of capital is chapter three, the chapter
immediately before capital’s appearance, or whether it resides in chapter
four itself. Against the first option is the fact that Marx had said that he
had already developed the essentials of money in the Contribution of 1859,
which raises the following question: if the missing link is in chapter three,
and if Marx already had it in 1859, why would it take so long to deal with
the transformation of money into capital? Or, if chapter three completely
solves the question of transition, why did Marx not call chapter four sim-
ply “capital”? Against the second option is the fact that Marx introduces
the category of capital right at the beginning of chapter four, apparently
without mediations,13 which does not seem proper to an author who did
not present his categories before demonstrating the logical development
that led to them, since, in his own words, “it seems to me confusing to
anticipate results which still have to be substantiated” (Marx and Engels
1987a, p. 261).
We defend a third alternative that, because there is a logical-genetic and
historical nexus between them, chapters three and four cannot be dissoci-
ated, making the search for the link alone in one chapter or another point-
less.14 Chapter three, although imbued with history,15 is principally the
presentation of the theoretical instance of circulation, with its prime focus
on the logical development of the contradictions internal to money. It is
certain, as we shall see later, that capital, though not quoted in chapter
three,16 is presupposed, but in chapter four, referring to the emergence of
capital, Marx clarifies that “The historical conditions of its existence are by
no means given with the mere circulation of money and commodities”
(Marx 1990, p. 274). Simple circulation, meanwhile, as a theoretical
moment developed in the first three chapters of Capital, does not ignore
the logical and historical developments of chapter four, where capital, as a
value that self-appreciates, appears as a value extracting power. This power
stems from the advent of the commodity, workforce, and is the back-
ground to the exchange of non-equivalents, as we describe further on. It
is no coincidence that the passage below appears at the very end of the
Grundrisse chapter on money, shortly before Marx enters into the chapter
on capital, whose first section deals with the transformation of money
into capital:
As we have seen, in simple circulation as such (exchange value in its move-

ment), the action of the individuals on one another is, in its content, only a
reciprocal, self-interested satisfaction of their needs; in its form, [it is]
exchange among equals (equivalents). Property, too, is still posited here
only as the appropriation of the product of labour by labour, and of the
product of alien labour by one’s own labour, in so far as the product of one’s
own labour is bought by alien labour. (Marx 1993, p. 238)
Similarly, without circulation as a theoretical moment prior to capital, it

would not be possible to understand the emergence of a special commod-
ity, the workforce, since it is in circulation that its buying and selling
take place.
This third alternative, which does not consider it possible to find the
dialectical genesis of capital in either one chapter or other in isolation, is
certainly related to Marx’s method of exposition. In Grundrisse this junc-
tion is explicitly presented since Marx is investigating and articulating sev-
eral categories at the same time, without concern for the dialectical
exposition of theory, whereas in Capital he sought to organize the exposi-
tion, discarding elements that were necessary to the research and which
were not obliged to appear there.17 The same can be said when comparing
Capital with Contribution when Marx (1990, p. 89) makes points in the
preface to the first edition of Capital that had only been indicated and
developed in Contribution and that the reverse had also happened, in
addition to pointing out that the part on the history of the theory of the
value and the money had been eliminated. In this sense, while in Grundrisse,
written without rigorous theoretical exposition, the categories are articu-
lated in a more measured and explicit way, in Capital, the exposition
demanded that Marx separate, apparently abruptly, simple circulation
(exchange of equivalents) from the next section in which, as its antithesis,
would appear as the exchange of non-equivalents.18
Chapter four, then, supplies the fundamental historical ingredient

required for the emergence of capital, the workforce. It is necessary, then,
to demonstrate how the contradictions of money described by Marx in
chapter three engender the development of categories that allowed him to
dialectically derive capital from the functions or determinations of money19
As a general equivalent, money resolved, albeit temporarily, the basic
contradiction of capitalism between use-value and value, which found its
resolution in exchange. But this contradiction, which is also the contradic-
tion between the private and the social character of work, never finds a
definitive solution. The contradiction of money always tends toward tem-
porary solutions that produce even sharper contradictions.
When it appears as the general equivalent, the commodity money,
which has its material representation in gold, has the attribute of measur-
ing the values of all commodities, and it does so because it has value in its
concreteness. With this function or determination,20 that of measure of
value, money still faces the complex contradiction between the private and
the social character of work. This is because money functions as a measure
of value but cannot measure the value of commodities because what gives
substance to value, abstract labor, is only realized at the time of exchange.
Furthermore, commodity money itself may vary in value, causing difficul-
ties for the measurement of various other commodities—hence the
requirement that values be expressed through prices, and that money, in
its function of value measurement, must appear as a price standard, form-
ing the first contradiction, as indicated in Fig. 2.4.
In Marx’s words:
As measure of value, and as standard of price, money performs two quite

different functions. It is the measure of value as the social incarnation of
human labour; it is the standard of price as a quantity of metal with a fixed
weight. As the measure of value it serves to convert the values of all the
manifold commodities into prices, into imaginary quantities of gold; as the
standard of price it measures those quantities of gold. (Marx 1990, p. 192)
Money as a price standard, therefore, resolves the problems of money

as a measure of value, both by allowing the flexibility required by value in
its social form21 and by deciding the variability of value, rather than a fixed
weight of metal. When operating as a price standard, conditions are estab-
lished for money to function as a means of circulation because for goods
to circulate it is necessary that their prices can be expressed in the same
FROM MONEY TO CAPITAL

1st 2nd 3rd Processing
Contradiction Contradiction Contradiction Contradiction
measure means of
Money measure circulation
a b of c d
...
as the
x
General x
of
value
value x
treasury / capital ...
x
Equivalent x means of
means of
price payment
circulation
standard
chapter I chapter III chapter IV
Simple Circulation (C – M – C) (M – C – M’)

Section I Section II
Fig. 2.4 The contradictions in motion
way, in the same element. This opens the doors to the next contradiction
between money as a measure of value and as a means of circulation (arrow
b in Fig. 2.4), since, as Marx (1990, p. 221) says, “Money takes the shape
of coin because of its function as the circulating medium.” As the goods
express their value in fixed weights of gold, circulation will reduce the
coins through natural wear and tear, which together with the frauds and
forgeries that have occurred historically, will promote the process of dis-
sociation between the material content and the actual content of the cur-
rency. Hence, the contradiction in which “The weight of gold fixed upon
as the standard of prices diverges from the weight which serves as the cir-
culating medium, and the latter thereby ceases to be a real equivalent of
the commodities whose prices it realizes. […] Their function as coins is
therefore in practice entirely independent of their weight, i.e. it is inde-
pendent of all value” (Marx 1990, pp. 222–223), allowing gold to be
replaced by metal codes or symbols.
Up to this point, Marx had not presented capital. It arises as a result of
the unfolding of these internal tensions of money. The next contradiction,
the third contradiction in Fig. 2.4, is that between money as a means of
circulation and money in its third determination, as treasury and as a
means of payment.22
In this third determination, new contradictions manifest themselves,

propelling money out of circulation. In Capital, Marx said, “Instead of
being merely a way of mediating the metabolic process [Stoffwechsel], this
change of form becomes an end in itself” (Marx 1990, p. 228), but the
passage that correlates to Grundrisse is even clearer: “M-C-C-M; in which
money appears not only as medium, nor as measure, but as end-in-itself,
and hence steps outside circulation” (Marx 1993, p. 215); he further
added: “The third attribute of money, in its complete development, pre-
supposes the first two and constitutes their unity” (Marx 1993, p. 216).
The path to the advent of the capital category is being paved, but it is
significant that Marx indicates that this third determination “already
latently contains its quality as capital” (Marx 1993, p. 216). If in this third
determination, analyzed by Marx in the third chapter of Capital, capital
appears only in a latent form, we shall look in the next chapter for the
nexuses that bring capital out of its latent state. Because of this, we have
previously argued that the internal contradictions of money analyzed by
Marx in chapter three, become new contradictions, which he would only
investigate in chapter four, although it is already possible to extract from
the determinations of money as treasury and as means of payment those
elements latent to building the process of transition from money to
capital.23
In the treasury and means of payment functions, money moves away
from circulation. If the cycle that places money as a measure of value and
as a means of circulation was the C-M-C, in its third determination the
circuit becomes the M-C-M′. As Marx points out in the previous cycle,
C-M-C, whose purpose was value in use, the possessors of commodities
arrived at the moment of exchange bearing equivalents of value; in the
circuit M-C-M′, in which money becomes an end in itself and becomes
autonomous from circulation, the objective is the acquisition of money at
an enlarged scale. In fact, historical conditions have spawned this process,
and they must be summoned to illustrate the next steps of category
development.
So, Marx (1990, pp. 232–233) states that “But with the development
of circulation, conditions arise under which the alienation of the com-
modity becomes separated by an interval of time from the realization of its
price,” and further on, referring to the function of means of payment
added, “the relation between, creditor and debtor does have the form of
a money-relation – was only the reflection of an antagonism which lay
deeper.” The fundamental contradictory relationship from which the
transition can be presented resided in what Marx had already discovered

in the Manuscripts of 1861–1863, when he points out a singular relation of
purchase and sale, “a new relation with each other, which is at the same
time a relation of production” (Marx and Engels 1988, p. 105).
So, value continues along its path of becoming autonomous toward a
stage in which it will acquire the conditions of self-appreciation as capital.
Before that, Marx indicates only the contradictions of money as money. As
for money as treasury, he says that the impulse to hoard has no limit,
imposing from there the contradiction between what is qualitatively infi-
nite and what is quantitatively limited. The first, because it is the general
representative of wealth and can be exchanged for any other commodity;
the second, for having to appear as a definite and limited sum of money.
“This contradiction between the quantitative limitation and the qualita-
tive lack of limitation of: money keeps driving the hoarder back to his
Sisyphean task: accumulation […] The more he produces, the more he can
sell” (Marx 1990, p. 231). Money as a means of payment also has the
tendency to become autonomous from circulation:
There is a contradiction immanent in the function of money as the means of

payment. When the payments balance each other, money functions only
nominally, as money of account, as a measure of value. But when actual
payments have to be made, money does not come onto the scene as a circu-
lating medium, in its merely transient form of an intermediary in the social
metabolism, but as the individual incarnation of social labour, the indepen-
dent presence of exchange-value, the universal commodity. This contradic-
tion bursts forth in that aspect of an industrial and commercial crisis which
is known as a monetary crisis. (Marx 1990, pp. 235–236)
As Paulani (2011, pp. 60–61) reminds us, either as a treasure or as a

means of payment, money is absent from the effective circulation. The
“golden chrysalis” arrives at money by these two determinations. It is the
moment when the sphere of production begins to appear more often in
this evolving category. As a treasury, the solution is to produce more and,
in this sense, “hoarding […] presses to surpass itself” (Reichelt 2013,
p. 223). In a related section in Grundrisse, Marx (1993, p. 460) makes the
issue explicit: “But the hoard is transformed into capital only by means of
the exploitation of labour.”
It appears, or ideally forms, as a means of payment, in compensations
or effectively in the payment of balances, the solution is the adoption of
speculative practices that enable the conclusion of the cycle, that is, the
purchase and sale of goods, at a moment in which the greater objective is

no longer the acquisition of use-value but value. Credit-money, which
originates directly from the function of money as a means of payment, is
the vehicle within the credit system for the rehabilitation of this function-
ality, and thus, “the function of money as a means of payment undergoes
expansion” (Marx 1990, p. 238). By making the purchase of merchandise
feasible by someone who had not yet sold his interest emerges, which in its
turn will be paid with part of the surplus generated in production. Once
again, production makes its entrance on the stage as the locus of the gen-
eration of surplus value in such magnitude that it exceeds the payment of
interest. However, “Credit-Money on the other hand implies relations
which are as yet totally unknown, from the standpoint of the simple circu-
lation of commodities” (Marx 1990, p. 238).
This warning from Marx refers to what is essential in the argument
developed here. Although, as mentioned, capital is already latent in the
third determination of money, its full emergence is not to be found there.
Just as for credit-money, the emergence of speculative practices from
money as a treasury and as a means of payment, while reaffirming the
antediluvian forms of capital, belongs to a later point in the exposition to
be developed in Book III. The necessary mediations in the transition from
money to capital are articulated throughout chapter three, but advance
and find their final term only in chapter four, where production appears as
original source of surplus. On this theme, Marx (1990, p. 266) points out:
It can be understood, therefore, why, in our analysis of the primary form of

capital, the form in which it determines the economic organization of mod-
ern society, we have entirely left out of consideration its well-known and so
to speak antediluvian forms, merchants’ capital and usurers’ capital.
Following his analysis in chapter three, Marx points out that the form
of manifestation of money makes no difference (Marx 1983, p. 116).
What matters is the generation of new value, of surplus value, and as such,
it cannot arise in simple circulation, an environment in which the exchange
of commodities of equivalent value predominates, because “If equivalents
are exchanged, no surplus-value results, and if non-equivalents are
exchanged, we still have no surplus-value. Circulation, or the exchange of
commodities, creates no value” (Marx 1990, p. 266).
The logical unfolding of the categories found its limit24 in an indication
that the success of the logical exposition that transformed value into
money would not be repeated in the transformation of money into capital.

On “the limits of the dialectical form of exposition,” Reichelt’s observa-
tion (2013, p. 17) is quite illuminating as far as a self-criticism made by
Marx is concerned, “In this statement Marx refers to the existence of the
working class, whose emergence cannot, itself, be developed from the
concept.” It was necessary, therefore, to seek what was specific to capitalist
society, a time to call upon history.25 In Grundrisse, Marx (1993, p. 460)
gives a succinct explanation of this process:
On the other side, much more important for us is that our method indicates
the points where historical investigation must enter in, or where bourgeois
economy as a merely historical form of the production process points
beyond itself to earlier historical modes of production.
Although Marx points out the importance of identifying moments of

history, this does not appear conspicuously in chapters three and four of
Capital. This apparent abandonment of the dialectical method, as recog-
nized by Bidet, seems more to be related to the difficulty of the exposi-
tion. Only at the end of chapter four, with the advent of the commodity
workforce is history explicitly “summoned.” However, the workforce, as a
commodity, is already the product of capital, which shows that capital was
presupposed from the beginning, and that Marx did not, therefore, aban-
don the dialectic in the transformation of money into capital but only
respected the limits of the method. The fact that the concept of capital
could not be explained previously made the method remain hidden26
(Reichelt 2013, p. 17).
It is interesting to note that Marx’s entire exposition in Capital on the
autonomy of value and the role of the workforce in developing the
theoretical-methodological bridge between money and capital had already
appeared in Grundrisse, in a nascent form, in the chapter on money, on the
relation between exchange value and wage labor. Referring to the value of
exchange, Marx says that historically it was not the nexus rerum and only
became possible in capitalist society under one condition: wage labor.
“Labour must directly produce exchange value, i.e. money. It must there-
fore be wage labour” (Marx 1993, p. 224). The term still used is exchange
value, not value; here Marx is already signaling that in the process of value
becoming autonomous it is imperative to consider the advent of wage
labor in the commencement of a period when money, as the “material
representative of universal wealth,” became the ultimate goal.
In summation, Marx, who in Capital had already advanced the analysis

of the dialectical transitions of commodity to value and from value to
money, followed this with the demonstration of the transition from money
to capital, for which surplus value would be essential to the fundamental
explanation of surplus. This was implied in new determinations for value.
If at first the value was an attribute of commodities, it was necessary to
show how this value becomes substantive, becoming the subject of a pro-
cess in which it acquires the capacity to self-appreciate, a requirement
already contained latently in the third determination of money. This expla-
nation would have to confront two contradictions, without which surplus
value could not be demonstrated and which, in our view, was the cause of
Marx’s delay in finding the proper form of exposition for chapter four, the
one we have called here the “Saga of chapter three”: firstly, the fact that it
has to arise within and outside of the circulation; and secondly, the need
to explain it as capable of accepting the exchange of equivalents and non-
equivalents at the same time.
In the first subsection of chapter four, Marx says: “The value originally
advanced, therefore, not only remains intact while in circulation, but
increases its magnitude, adds to itself a surplus-value, or is valorized [ver-
wertet sich]. And this movement converts it into capital” (Marx 1990,
p. 252). Unlike those who explained surplus as stemming from a swindle
in trade, Marx demonstrated in the following subsection that “The forma-
tion of surplus-value, and therefore the transformation of money into
capital, can consequently be explained neither by assuming that commodi-
ties are sold above their value, nor by assuming that they are bought at less
than their value” (Marx 1990, p. 263). Circulation is the fundamental
sphere of realization of value that has been generated in production.
Explaining surplus value based on the assumption that goods should be
exchanged for their values was completely original:
We therefore have a double result. The transformation of money into

capital has to be developed on the basis of the immanent laws of the
exchange of commodities, in such a way that the starting-point is the
exchange of equivalents. The money-owner, who is as yet only a capitalist
in larval form, must buy his commodities at their value, sell them at their
value, and yet at the end of the process withdraw more value from circula-
tion than he threw into it at the beginning. His emergence as a butterfly
must, and yet must not, take place in the sphere of circulation. (Marx
1990, pp. 268–269)
So, as already mentioned, in section I of Book I, Marx expounds simple

circulation, which is the immediate appearance of the system. He made
section II prominent given the importance and centrality of matter.
Section II contains only chapter Four, unlike the other sections or parts of
Book I, which are composed of several chapters. Marx used section II
solely for developing and presenting surplus value in a sort of antithesis of
the former. Section I deals with simple circulation, in which all individuals
are owners of commodities and free to buy and sell in a world where
equality of conditions and equivalence prevails in trade. Without cancel-
ling out, suppressing or discarding the equivalence dimension that prevails
in the sphere of circulation, section II introduces the view of the loss of
property by some, inequality and non-equivalence.
The second section is not a pure rejection of the first.27 The second sec-
tion confronts the first, to shock it, so that the appearance, as a manifesta-
tion of reality, is incorporated into the whole. To understand the genesis
of capital, it was necessary to abandon the sphere of circulation, but now
immune to the illusions which this sphere presents at first sight, descend
into the subterranean world of production, and to turn our eyes to circula-
tion as the surface of the system.
In the first section of Capital, equality and freedom reigned; in the
second Marx sought to unveil the essence and showed how these attri-
butes are transformed into their opposites. Only there does surplus value
appear as the antithesis to that laid out in section I. Marx left the world of
circulation and entered that of production to redeem surplus value. He
discovered the workforce, a commodity resulting from a historical devel-
opment that alienated the worker from the means of production. In this,
the worker gives the capitalist the value of his labor and receives the value
of his workforce. The excess is the surplus value.
Therefore, by calling upon the category of totality within which the
isolated parts are linked, Marx, who had traveled through the environ-
ment of simple circulation, summoned the opposite pole, that of inequal-
ity, that of the transgression of the law of mercantile appropriation, which
had the exchange of equivalents as its principle:
The exchange of equivalents, the original operation with which we started,

is now turned round in such a way that there is only an apparent exchange,
since, firstly, the capital which is exchanged for labour-power is itself merely
a portion of the product of the labour of others which has been appropriated
without an equivalente. (Marx 1990, p. 729)
If, from the point of view of the exchange value, the equivalence of
values has been maintained, now, from the point of view of use-value, the
transgression of that equivalence occurs. Contradictions, therefore, do not
demarcate specific cases\ but integrate the constitutive logic of being from
which the advent of capital can be understood.
Final Considerations
It is quite common to illustrate Marx’s method by the constant inclusion
of the development of the forms of value in subsection III of chapter one
of Capital. There, shunning the ahistorical impulses of the method of
political economists like Ricardo, he describes the logical evolution from
value to its autonomous form, money. The odyssey of capital exposed in
his most famous work may be even more representative of his style of
doing science by a method that at every moment advocates the subject’s
dependence on the internal determinations of the object being investigated.
It was necessary to leave money willingly, as happened with commodity,
to accompany it in its “metaphysical subtleties and theological niceties”
(Marx 1990, p. 163), and only then, by following its contradictions
closely, unravel the determinations that led to capital as a defining element
of a new sociability. Money is embedded in the universe of social relations
of a new time. It is not possible to remove it without the building, the
artistic whole, collapsing completely.
As he stated in the foreword to the first edition of Capital, what Marx
set out to research was the capitalist mode of production, which has capital
as a central element and which subsumes all previous social forms.
However, bearing in mind Marx’s warning about the difference between
the method of investigation and the method of exposure, money must
appear as antecedent to capital, to determine it and be determined by it.
This is a requirement of the exposition process, although money has also
historically predated capital. In this way, we can say that there is no theory
of money in Capital. In his critique of political economy, clarifying the
form of being of capitalist sociability, the category of money is seen by
Marx as a moment, one of the dimensions of social life, an element sub-
sumed by capital, whose forms of existence are the fetishized expression of
relations of capitalist production.
Possibly, the search for a theory of money in Marx, and by Marxists,
stems from the very fetishism that surrounds it. This error is made more
serious when that attempt is made by only exploring the famous chapter 3
of the first volume of Capital. In this volume, the concern is with the
process of capital production, for which its genesis is a fundamental ele-
ment. The advent of a time when money became an end in itself, demar-
cated the protagonism of capital in the set of social relations that, assuming
such a centrality, lifting money to an even higher level of mystification and
at the same time giving it new determinations.
In the continuity of his work, Marx reconfigured the role of money in
the dynamics of capital accumulation, whether in the sphere of circulation
(Book II) or in the multiple capitals in the universe of competition (Book
III). In it, capital began to present itself as a contradiction in process,
moving continuously through the change of its forms, of which one is
money, in the form of money capital. With the functional forms of capital
(money capital, productive capital, and commodity capital) becoming
autonomous and with the explicit appearance of credit in Book III, Marx
advanced to the study of what he had just quoted in Book I, Credit-
Money, and also to what he calls the most fetishized form of capital,
interest-bearing capital, in which money appears to be capable of generat-
ing more money. In this way, monetary capital becomes autonomous in
the form of interest-bearing capital, which becomes a commodity with a
specific use-value, that is, the generation of value. Interest-bearing capital
is, therefore, a category derived from monetary capital, which, as money
acting in the credit system, will give rise to a mass of securities as a right to
future income, which constitutes the category of fictitious capital.
We observe that all these developments of money, in Books II and III,
cannot deny the expression of capital which, as Marx pointed out, was
already latent in the third determination of money.
Notes
1. This claim confronts two problems: on the one hand, it may sound like a
truism to those already familiar with Marx’s work, but, on the other, may
seem to be incoherent to the proponents of alternative theoretical cur-
rents, even, and perhaps most importantly, for those considered hetero-
dox, who, unaffected by the dialectical method, recognized (or only heard)
how much Marx had delved into the subject of money.
2. In all the Brazilian translations of The Capital and in the renowned Spanish
translations of the Siglo XXI and of Fondo de Cultura Económica, section
II is composed only of chapter four, unlike the one published in English by
Penguin Books, in which section II is distributed in three chapters.
3. We will not here track the evolution of Marx’s theoretical thought which
culminated in the election/discovery of the category of capital as the cen-
ter of his analysis nor will we attempt to indicate the various stages in which
category appeared in Marx’s work until it found relative maturity in the
Grundrisse. What is in focus here moves away from the period of the young
Marx to find a place in the time that begins with The Introduction of 1857,
passes through the Grundrisse (1857/1858) and the Contribution to the
Critique of Political Economy (1859), and ends with the definitive choice of
commodity as the starting point in Capital.
4. This quote is taken by some as proof of the methodological rupture
between the Marx of Introduction and the Marx of Capital since the latter
has commodity as the starting point.
5. Later, we will also highlight how in Capital history plays a fundamental
role in the passing of money to capital, although the categorical ordering
of this work seems to give history a lesser weight, a mere accessory, given
the vigor and prominence of the logic of the exposition. It is in this sense
that Marx (1990, p. 102), in postponing it to the second German edition
of Capital, that Marx advertised the moment for revealing the results of his
research: “if the life of the subject-matter is now reflected back in the ideas,
then it may appear as if we have before us an a priori construction.”
6. Although not widely studied, even by Marxists, these manuscripts are
regarded by authors, such as Heinrich (1989, p. 64), as the vital link
between the Grundrisse and Capital. According to Dussel (2008, p. 18),
“the Economic Manuscripts of 1861–1863 are to be considered as parts of
Chapter III.”
7. Medeiros and Leite (2018) use the term “missing link” to indicate the
categorical development from which capital can appear in Marx’s work.
8. In Grundrisse, Marx (1993, p. 274) began to deal with this double contra-
diction, but at the time he referred to labor, not to labor force, as the com-
modity owned by the worker: “If we consider the exchange between capital
and labour, then we find that it splits into two processes which are not only
formally but also qualitatively different, and even contradictory: (I) The
worker sells his commodity, labour, which has a use value, and, as com-
modity, also a price, like all other commodities (…).”
9. Marx changed the term labor capacity to labor force in Capital.
10. Referring to the transition from money to capital made by Marx in
Grundrisse, Bidet writes (Bidet 2010, p. 115): “this dialectical attempt is
not therefore conclusive.” Just as Marx’s formulation in the Economic
Manuscripts of 1861–1863 bears similarities to the production of Grundrisse,
it is possible to say that same applies to Grundrisse, and that only in Capital
does “Marx therefore proceed in a totally distinct manner (…) starting
from the ideological formulation of every holder of money who makes
capitalist use of it.”
11. In a letter to Engels dated July 31st, 1865, Marx says “(…) the advantage
of my writings is that they are an artistic whole, and this can only be
achieved through my practice of never having things printed until I have
them in front of me in their entirety” (Marx and Engels 1987b, p. 173).
12. We will refer to Grundrisse when the development of the category appears
more clearly in it.
13. We do not agree with a possible objection to this question, when some say
that this should be merchandise, because Marx would have started his
work with category, only to explain it later, since in this case it was the
ground zero of that starting point, a debate that would take us away from
the subject of this chapter.
14. Specifically discussing the transformation of money into capital, Campbell
(2013) makes a thorough analysis of Marx’s argument throughout chapter
4, section II of Capital and stresses the importance of that chapter in
understanding the transition.
15. “The economic categories already discussed similarly bear a historical
imprint” (Marx 1990, p. 273).
16. References to capital in chapter three are made by Marx only in footnotes
and are unrelated to the discussion of capital in its general form.
17. “It would therefore be pointless to counterpose the later, ‘more realistic’
seeming version of the solution in Capital to the more ‘metaphysical’ one
in the Rough Draft. Both are the product of Marx’s dialectical method,
and should therefore be accepted or rejected by the same token. The dif-
ference lies only in the method of presentation” (Rosdolsky 1977,
p. 189–190).
18. Marx will be dealing with a methodological problem that runs through the
causal relationship between the first constitution of a market within which
the purchase and sale of the merchandise “workforce” operates, and the
very role of the workforce for the constitution of a society of capital.
19. We recognize here the influence of the arguments of Leda Paulani (2011).
20. We will not enter into the debate that seeks to distinguish between the
functions and determinations of money.
21. “The possibility, therefore, of a quantitative incongruity between price and
magnitude of value, i.e. the possibility that the price may diverge from the
magnitude of value, is inherent in the price-form itself. This is not a defect,
but, on the contrary, it makes this form the adequate one for a mode of
production whose laws can only assert themselves as blindly operating
averages between constant irregularities” (Marx 1990, p. 196).
22. Following a common procedure, we chose not to deal with the role of
world money in the movement from money to capital. In Marx’s concept
in Capital, world money must appear in its material form, as gold money,
a kind of synthesis of the other two functions, namely, treasury and means
of payment: “World money serves as the universal means of payment, as

the universal means of purchase, and as the absolute social materialization
of wealth as such (universal wealth)” (Marx 1990, p. 242). Therefore, the
analysis of the two functions, which together with world money constitute
the third determination of money, seemed to us satisfactory for the pur-
poses of the section.
23. Considering Marx’s dialectical method, it seems almost redundant to claim
that it is possible to extract from Marx’s analysis the elements for under-
standing the process of transforming money into capital. But, the repeti-
tion of the term “latent” here was not accidental, for we wish to emphasize
that, even though it is possible to rebuild the logic of the genesis of capital
from chapter three, we do not understand that Marx intended to confine
all elements of the “transition” to that chapter, regardless of theoretical
developments throughout chapter four.
24. The incomprehension of this limit led authors like Bidet (2010, 113) to
consider that, in the passage from money to capital, Marx would have
given up dialectics and break with, “the course of an explanation that we
could qualify until present as dialectical-systematic (…) That is why it is
impossible, in this sense, to “pass dialectically” from money to capital.” A
similar position is held by Saad-Filho (2002, p. 13) who, while vindicating
Ilyenkov’s materialistic dialectic, states that “Marx does not derive the con-
cept of capital from the concept of commodity (…) He uses materialist
dialectics to investigate a ‘real fact’ – the fact that the money placed in the
capitalist circulation, passing through all its metamorphoses, brings a
return: surplus value.” Saad-Filho seems to confuse research with exposi-
tion, and thus the dialectics he invokes is guided by purely epistemological
motivations and can be “applied” to investigate the real, without account-
ing for the role of history (already investigated) in Marx’s mode of
exposition.
25. As Luporini (1974, p. 25) points out, “In Capital, the genetic-formal –
that is, the systematic development of ‘forms’ or figures – is only possible
through the insertion of the genetic-historical into certain points.” The
same author, in a later passage, transcribed Marx’s well-known passage on
the transformation of money into capital and concluded “The presence of
such a variable, that is, the presence of the historical-genetic component is
what makes the systematic construction of the model possible” (Ibid.,
p. 33).
26. Regarding this issue, Rosdolsky (1977, p. 189) clarifies: “It can be seen
that this is the same solution to the problem which we have already encoun-
tered in Volume I of Capital; except there the solution is present in its
finished form, with the intermediary stages left out, whereas here, we can
observe it, as it were, in statu nascendi.”
27. It should be noted that section II continues to address a fundamental

aspect of the appearance, that is, the buying and selling of the workforce.
On this, Campbell (2013, p. 151) develops as follows: “Because circula-
tion is a permanent process, but it is incapable of recreating itself, it pre-
supposes capital. By this, our conception of circulation is transformed:
what was formerly conceived as simple circulation, now reveals itself as the
sphere of circulation, a phase of the circulation of capital and ‘simple circu-
lation’ – the conception of commodity exchange, independent of capital –
is recognised as the appearance of the capitalist mode of production.”
References
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questão judaica. In K. Marx (Ed.), Sobre a questão judaica (pp. 75–119). São
Paulo: Boitempo.
Bidet, J. (2010). Explicação e reconstrução do Capital. Campinas: Editora Unicamp.
Campbell, M. (2013). The transformation of money into capital. In R. Bellofiore,
G. Starosta, & P. D. Thomas (Eds.), Marx’s laboratory: Critical interpretations
of the grundrisse (pp. 149–175). Leiden/Boston: Brill.
Coutinho, M. (1997). Marx: notas sobre a teoria do capital. São Paulo:
Editora Hucitec.
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Saad-Filho, A. (2002). The value of Marx. London: Routledge.
CHAPTER 3
Speculative Capital and the Dematerialization

of Money
Reinaldo Antonio Carcanholo
Introduction
The discussion around the current economic globalization of capitalism
and the emphasis that many authors have placed on the idea that the inter-
national dominance of financial capital is one of its most important char-
acteristics has focused us on this concept and its relationship to Marxist
thinking. Our main concern is to relate it to Marx’s theory of value, seek-
ing to find precisely the nexuses he presents, along with the relevant cat-
egories developed on them.
Our efforts have led us to the conviction that, at least from a point of
view derived from Marx’s theory of value and capital, the concept of finan-
cial capital is entirely vacuous, as has been exposed in a previous work
This chapter was originally published in Portuguese with Revista da Sociedade

Brasileira de Economia Política, 8, pp. 26–45, in 2001, and was translated into
English by Kenton James Keys.
R. A. Carcanholo (*)

https://doi.org/10.1007/978-3-030-23360-0_3
44 R. A. CARCANHOLO
(Carcanholo and Nakatani 1999). This conclusion has been met by some
disagreement, but no substantive arguments have been presented so far to
support the employment of that category.1 It is possible that they will
appear soon, and perhaps, some elements presented here may facilitate
this dialogue.
It is also necessary to recognize that the concepts of speculative capital
and parasitic speculative capital, presented for the first time in the work
mentioned above, are not easy to grasp, as they stem from concepts such
as industrial capital and fictitious capital developed by Marx only after
numerous determinations, the wider understanding of which is often
impaired by insufficient knowledge of his work. We made a significant
effort in that previous work to make it as educational as possible, but we
accepted that difficulties would still exist. Our objective here is to present
some refinements to these concepts to clarify our point of view, to facili-
tate the understanding of certain aspects proposed in that text, and to
discuss some of the objections that have arisen.
In the second part of this work we will discuss aspects related to the
concept of speculative capital, in particular (a) the redundancy implicit in
this term, as speculation is an inherent part of capital, which takes some-
thing from the concept that we intend to explain, (b) an inexactitude that
remains in the previous work regarding the contamination of productive
capital by speculative logic, (c) greater detail around the idea of the ficti-
tious remuneration of parasitic speculative capital, and (d) the apparent
exaggeration of the conclusions presented in our previous work. In the
final part, we will analyze the theoretical inconsistency apparent between
the concepts of speculative capital and parasitic speculative capital and
Marx’s ideas on the identity of money and gold.
On the Concept of Parasitic Speculative Capital
Redundancy, Contamination, and a New Concept

There are at least two senses in which the term parasitic speculative capital
may have appeared to be redundant. One, because speculation has been a
constituent of the logic of capital since its inception, and two, because
speculative activity is always parasitic, in the strict sense that the profits of
speculation necessarily result from surplus-value produced by others. To
consider this term exclusively is, however, to fixate on it, without taking
into consideration the theoretical determinations investigated that revealed
3 SPECULATIVE CAPITAL AND THE DEMATERIALIZATION OF MONEY 45
the phenomenon, with its two dimensions, appearance, and essence, to

which we applied the term.
It is true that, by its very nature, capital has and always has had a specu-
lative dimension. Speculation has never ceased to be one of its hallmarks.
However, it would be correct to say that, within the concept of industrial
capital, the dialectical synthesis of the circulation of autonomous func-
tional forms and the logic of production is dominant. But what happens
when productive logic is superseded by speculative logic, as in the current
phase of capitalism?
We made explicit in our previous work that the dominance of specula-
tive logic over productive logic occurs because of an excessive growth of
fictitious capital, which transforms it into a new entity—that we have
termed parasitic speculative capital. It redefines industrial capital, inas-
much as it becomes the dominant pole, acting as its opposing force within
the contradiction.
But, why call this new entity parasitic speculative capital and not simply
speculative capital? The issue is that the latter term is now reserved to be
the new name for the contradictory junction of two capitals, industrial
capital and the parasitic speculative capital.
Having established this explanation and precision regarding the terms
used, it is necessary to state that in our previous work we left something
somewhat superficially suggested. We said that speculative logic also con-
taminated productive capital.2 In fact, if we are working on a level of
abstraction in which all functional forms are considered as autonomous,
that statement is inappropriate. The functional form of productive capital
can be subordinated and even redefined, and this is what happens when it
is an aspect of redefined industrial capital, but it can never be understood
as being contaminated by speculative logic.3 In fact, what we intended to
say is that, at an even more concrete level of analysis, companies or corpo-
rations that were fundamentally productive began to operate primarily in
a speculative way because of the effects of speculative capital and the dom-
inance of parasitic speculative capital. We confused different levels of
abstraction. Nevertheless, we wanted to refer to this reality which is
undoubtedly present today.
While the term speculative capital is, in our terms, reserved for denomi-
nating the contradictory union in which industrial capital—now defined
by the dominance of speculative logic—appears as the dominant pole, the
term parasitic speculative capital is intended to denominate the opposite
46 R. A. CARCANHOLO
pole of this union. In other words, parasitic speculative capital is fictitious

capital itself, redefined by the conditions of the dominance of speculation.
In conclusion, the terms chosen to denominate the new forms of capi-
tal may, perhaps, lead to the idea of redundancy, a pleonasm. We believe,
however, that they are more than justified, especially as they appropriately
emphasize decisive characteristics of the phenomena to which they refer.
Pleonasms are, after all, legitimate forms of language when consciously
used for emphasis. They may even, and this was our intention, directly
suggest our critical and questioning stance regarding them. We would be
as guilty as Marx when he chose the terms exploitation, rate of exploita-
tion, and so on, which clearly demonstrate his critical position.
Another objection that could arise from a superficial reading of the
subject is that to create new concepts within Marxist theory is not justi-
fied. Let us leave the discussion on this idea to another occasion as the
concepts of speculative capital and parasitic speculative capital are not
wholly new concepts. They are old concepts modified by new determina-
tions. This is what occurs in Marx’s Capital, for example, when value took
its place in the concept of capital; this is the same concept of value but
further developed by new determinations.
Exaggerated Conclusions, Speculative Capital and Fictitious

Remuneration
Some may consider the conclusions we presented in the previous paper to
be exaggerated; on that occasion we basically concluded that
–– the dominance of parasitic speculative capital is not capable of sus-

taining a new era in the history of capitalism that is capable of surviv-
ing for decades with a new international division of sustainable labor
and with satisfactory economic growth;
–– this period of dominance will be marked by deep and recurring
financial crises;
–– such dominance never radicalizes the polarization of wealth and pov-
erty; and
–– the end of the period of parasitic speculative capital domination is
inevitable.
It seems to us that these conclusions on contemporary capitalism derive

necessarily and directly from the theoretical and methodological perspec-
tive from which we begin: the Marxist theory of value. Within this theory,
and by examining the implications of the dominance of parasitic specula-
tive capital and the consequent subordination of productive capital within
the contradictory synthesis, these conclusions seem to us totally unavoid-
able and free from exaggeration.
There is one aspect that we placed little importance on previously and
which seems fundamental to understanding periods of apparent tranquil-
ity in the functioning of the system, periods that might lead some to con-
sider those conclusions absurd.
The fact is that parasitic speculative capital can be satisfied with ficti-
tious remunerations for quite prolonged periods of time. This is possible
because this type of capital is real fictitious capital, within an adequate
understanding of the term. Such remunerations allow growth in the value
of parasitic speculative capital and its consequent expansion as accumula-
tion without putting acute pressure on the surplus produced by society. It
is an attenuating factor of the immediate manifestations of the contradic-
tion of production/accumulation. It undoubtedly postpones the prob-
lems derived from speculative logic but does so only by amplifying
opposition and antagonism within capitalist society itself.
Fictitious remuneration is, however, only acceptable within certain lim-
its. A portion of speculative gains is intended to increase equity in the form
of the purchase of real assets, and this reduces the capacity of the mitigat-
ing factor, the parasitic speculative capital, within the contradictory rela-
tionship. A considerable part of what appears to be a growth in the real
assets of those who appropriate speculative profits is simply a fictitious
valuation of the price of these assets, a result of the speculation itself.
The mitigating factor also encounters limits because the growth of par-
asitic speculative capital, to the detriment of productive capital, implies an
increase in unproductive expenditures, and especially because it expands
unproductive labor at the expense of production. The broad stratum of
new unproductive workers servicing the needs of parasitic speculative capi-
tal demands a higher degree of appropriation when compared to that
obtained by productive activities, whilst contributing nothing to the pro-
duction of surplus or even to the production of their own wages.
Our conclusions were a direct consequence of the basic contradiction
of capitalism between production and appropriation, which may be under-
stood, from another angle but from the same theoretical point of view, as
the over-accumulation of capital.4 A less pessimistic view of the fate of
parasitic speculative capital is possible, but it necessarily implies an aban-
48 R. A. CARCANHOLO
donment of the more fundamental principles of Marxist value theory.

Furthermore, pessimism about the future of the dominance of speculation
and of capital may be the only possible optimism about the future of soci-
ety itself.
On the Nature of Money
There may be a theoretical inconsistency between the concept of specula-
tive capital (still more, parasitic speculative capital) and the idea, attributed
to Marx, that money necessarily identifies itself with gold.
While the concepts of speculative capital and parasitic speculative capi-
tal, especially the latter, presuppose a high degree of immateriality as
regards the nature of capitalist wealth, Marx is a hostage to excessive mate-
riality when he equates money with gold, or even when it is identified with
merchandise.
It is not difficult to support the thesis that the Marxist idea of money
necessarily being a commodity, and specifically, gold, has been overturned
by the history of capital, so that money today is wholly and completely
immaterial and devoid of intrinsic value. Appearances, at least, tend to
suggest this.5 The easiest way to resolve this question of incompatibility
between the concept of speculative capital and that of money being equal
to gold would be if Marx’s theory had been overturned. That is not our idea.
To support the overturning of Marx’s theory of money presupposes
ignoring his study of the development of the credit system in capitalism
and disregarding the concept of credit money presented by him in Volume
I of Capital. This concept of credit money, which is fundamental to the
understanding of Marxist theory of money in capitalist times, has been
discussed in a very broad way by Germer6 and so spares us the effort of
repetition. We will start from the analysis developed by Germer, which
more easily presents our perspective on some aspects that we consider
fundamental.
Money and Credit Money

It is important to remember, as Marx points out on several occasions, that
credit money is a specific creation of capital that has the function of being
the means of making payments of money, and which, as the basis of the
credit system, is indispensable to the functioning of the capitalist economy.
Once capitalism has been established, credit money comes to fulfill

many functions that were proper to money; at minimum the means of
circulation and of payment. However, for Germer, ultimately, money, real
money, in Marxist theory, cannot be detached from its commodity mate-
riality7 and necessarily identifies itself with gold. Gold for him is, and will
always be, money. In his opinion and for that reason, credit money is not
real money. Let us see in what sense one might think this way.
In all its functions, except one, gold-money can come to function, as
today, through a representative of itself: through a sign, through forced
circulation paper currency, or even through a derivative form such as credit
money. The material presence of gold is not necessary; and this was true
even before the development of capitalism and what we can properly call
credit money.8
With the development of the credit system, this possibility is much
more real and widespread:
[W]ith the development of capitalism the functions of money (= gold) in

circulation, are taken on by forms derived from it, to the point of being
entirely removed from circulating [...]. Thus, in the function of circulation,
money can be replaced, firstly, by signs of value, as indicated above. But in
capitalism money is replaced in this function, predominantly by credit titles,
as commercial credit spreads as a result of the expansion of the mercantile
character of the economy. With this, the role of means of payment becomes
increasingly important and predominant. The function of money is also
replaced by the cancellation of reciprocal debts, with money (= gold) cover-
ing only the remaining balances. The banking system then develops and
assumes the functions of money trading and administrator of the money-
capital balances of the capitalists, which are balances in gold, and converts
them into banknotes, which are used in place of money (= gold) to cover the
debit balances. (Germer 1998, p. 572)
The development of the credit system and, with it, the banking system,
creates a true hierarchy of credit titles and increasingly developed forms of
credit money:
In this way, there are successive forms of credit money in an ascending hier-
archy, firstly commercial credit bonds, whose debit balances are covered by
money (= gold); then, from this base, the banknotes of the individual banks,
which replace money in the payment of debit balances of commercial securi-
ties, the debit balances between banks being covered with money (= gold).
50 R. A. CARCANHOLO
Finally, the central bank’s notes replace money in the coverage of debit bal-
ances between banks, leaving the money to cover debts owed to foreign
trade. Thus, an ascending hierarchy of credit titles replaces money as the
means of payment, constituting the axis of what Marx called the credit sys-
tem. (Germer 1998, p. 572)
One thing is indisputable in the process of commodity circulation, and

even more so in capital value: gold ceases to circulate as money, and in its
function of means of circulation, it is never physically present; it circulates
only through its representative or derivative forms:
[T]he hypothesis of the complete withdrawal of gold from circulation

assumes the full development of the credit system. On the other hand,
Marx’s proposition is strictly delimited: it refers to the withdrawal of gold
from the functions of means of circulation and payment, in which it is
replaced by various forms of credit money. (Germer 1997b, p. 337)
Credit Money and Measures of Value

There would, according to Germer, still be a single function that gold-
money, gold, would fulfill directly. The only function that he does not
accept it as being replaced and would require it to be bodily present is the
measure of values. In fact, in one of his works, Germer seems to indicate
that there are two functions that must be fulfilled by gold through its
physical presence: the function of measurement of values and that of mon-
etary standard. “But the functions of measurement of value and monetary
standard are exclusive to commodity-money, so that gold cannot be sub-
stituted in these functions” (Germer 1997b, p. 337).
However, in other passages, perhaps referring to a still more developed
stage in the history of capitalism, Germer seems to admit that the current
currencies of international circulation, such as the dollar, euro, and so on,
are true monetary standards. In any case, one thing is certain, for him,
only gold fulfills the function of measuring values, and must so directly. It
is precisely because it lacks the power to exercise the function of measuring
values that credit money for him is not real money (Germer 1997a, p. 112).
Regarding functions directly linked to circulation, there is not much
discussion among authors regarding the fact that, at the national level,
within the boundaries that define the power of a national state, credit
money functions without major difficulties during normal times. For
Germer, this is not a problem:
The definition of money as a commodity that functions as the general equiv-

alent of value, which in capitalism became gold, necessarily implies that,
given the current configuration of the credit system, money itself no longer
circulates in national spaces, although it continues to play an important
reserve function and international payment method. In national spaces there
is no circulation of money, but of its representatives, and furthermore, in
1971 gold was formally abandoned as the official basis of the price standard.
Current monetary standards appear to have no intrinsic value or objective
standard, converting money into an entirely symbolic category. (Germer
1997a, p. 120)
As regards the international sphere, some discussion might exist, espe-

cially as Marx, in his time and in Volume I of Capital, suggested that the
function of world money could only be fulfilled directly by gold (and by
silver) (Marx 1990, pp. 240–4). However, currently and increasingly, it
seems indisputable that the credit system has spread and that we can
undoubtedly talk about international credit money. If this were not so, we
would not be able to imagine the presence of so-called financial capital,
widely generalized in the world, and the concept of parasitic speculative
capital would not make sense. Germer himself has no doubts and is rigid
about the existence of international credit money:
Marx himself observed that with the spread of the banking system and credit
money, the circulation of metal could be entirely replaced by credit money
in internal circulation. Although he did not refer to an equivalent phenom-
enon at the international level, the substitution of money in international
transactions—which is also already a reality—is compatible with his theory
for the same reasons that justify it within countries. (Germer 1997a,
pp. 121–122)9
For Germer, the dollar and other currencies have international power
and operate as money for certain functions. He does not, however, con-
cede that they can fulfill or come to fulfill the function of measuring val-
ues. Which arguments lead us to this view regarding Germer? Clearly, he
could not adequately satisfy himself because he could not find references,
by Marx, to this possibility. But the arguments suggested do not seem suf-
ficiently developed.
For him, the existence of a structure of relative prices presupposes the
existence of something physical that supplies material for the measure-
ment of values (1997a, p. 112). Moreover, only something with value
could serve as a measure of values:
52 R. A. CARCANHOLO
First, if one assumes that credit money no longer has an objective standard,
then one of two consequences necessarily follows, both unsustainable within
Marx’s system. Maintaining the theory of labour value, this assumption
would mean explicitly conceding that the function of value of money can be
realised by an immaterial and purely symbolic unit, that is, something that
has no value would be capable of measuring value. It is the same as admit-
ting that an object that does not have weight can serve as a standard of
weight measurement. (Germer 1997a, p. 122)
The dollar, the pound sterling, the euro, and so on, which constitute
price standards, would not, in themselves, have the capacity to function as
measures of value:
The function of value measurement can only be performed by the general

equivalent or money, that is, gold. The price standard is set by the state
based on the measure of value or money. [...] The dollar is not state forced
paper currency, but central bank note, that is, credit money. [...] If the State
does not fix the value of the dollar on the basis of commodity money, it does
nothing but fix its name, which is economically irrelevant. Consequently,
the pricing standard requires a measure of material value as its base. (Germer
1997a, p. 126)
Also: “But the dollar, the euro etc. are monetary units, therefore, they
express price standards, that is, certain quantities of commodity-money”
(Germer 1997a, p. 123).10
Reformulating the Thesis
The thesis analyzed could perhaps be reformulated in such a way as to
maintain that, currently, with all the developments of the international
credit system, international currency appears capable of fulfilling the func-
tions of measurement of values only because it refers to gold and finds its
measure in gold. Gold is physically present in determining the value of the
international currency and it relinquishes its functions to international
currency only because it continues behind the scenes, measuring its value.11
Perhaps the only argument to support the suggested thesis, with any
conviction, is the one put forward by Germer: to measure the value of a
commodity it is necessary to have something of value. At first glance, it
seems to be indisputable: an object that does not have weight cannot serve
as a standard of measure of weight!
It is necessary to say that for Marx the true measure of value is not
made up of money or by its general equivalent. For him, the immutable
measure of value is work, because it is its creative ingredient. Quantity of
labor (time) is the true and inherent measure of value. The quantity of
socially necessary labor determines the value of a commodity, and working
time is its measure.
In practice, however, such a measure is useless. In the day-to-day opera-
tions of the various economic agents, working time cannot even serve as
an approximate measure of the value of the various commodities. Thus,
value does not find a direct and practical measure, but expresses itself,
manifests itself. It does not measure itself; there is no practical measure of
value; it expresses itself. Its expression is the value of exchange. Price, and
its counterpart, money, are not direct measures of value but rather forms
of the manifestation of its magnitude, and as such, the social economic
practice is satisfied. It is quite true that the value of exchange appears, at
first glance, as the equalization of two commodities of the same value, but
this is pure appearance as there is nothing that demands this perfect
equalization.12
To measure temperature, we use one of the properties of the object,
that of modifying its volume; we can use the expansion of a column of
mercury to calculate ambient temperature. In a similar way, because we
are interested in a practical measure, we can measure the magnitude of the
value of a commodity by its manifestation. We do not need to calculate the
abstract amount of work.
Let us now see how Marx treated the concept of money.
From the Simple Equivalent to Money in Marx

There is no doubt that Marx, in his exposition, maintains that the general
equivalent, which can be any commodity, converts into money when gold
performs its functions. This is clear from Chapter I of Capital. It is also
true that in Chapter II, he calls money the pre-existing form of the general
equivalent (Marx 1990, p. 181), and this presents no great difficulty if we
think of it as a reference to the embryonic form of money. It would be like
calling capital the antediluvian forms of commercial capital and lending, or
even, the value-added or surplus that occurs in non-capitalist social forms.
For Marx, money is not only commodity, but necessarily identifies with
gold. Although this is apparent from the author’s words, there are issues
that need to be addressed.
54 R. A. CARCANHOLO
When one reads Marx’s study of the forms of value,13 one encounters a
difficulty that seems to be either an author’s mistake or a translation error.
It is a passage referring to the general form of value, the form C, in which,
for example, linen functions as a general equivalent, he says:
[T]he value of every commodity is now not only differentiated from its own
use-value, but from all use-values, and is, by that very fact, expressed as that
which is common to all commodities. (Marx 1990, p. 158)
Why does Marx now assert that, generally, the value of each commodity
is not only distinguished from its own use-value, but from whatever it
itself is? Should not it say that it is distinguished from any use-value except
the use-value of the general equivalent itself (the linen, in this case)?
Later the reader will understand that the statement is not only correct
but very profound (Carcanholo 1993, pp. 32–33). The equivalent com-
modity appears, in this case, in the relationship of exchange, not as com-
modity, not for its use-value. Its presence is explained as being the pure
representation of value or pure form of value. In other words, in the expres-
sion of exchange, although it is the actual use-value of the equivalent com-
modity that is present-embodied, the seller who exchanges his own
commodity for the equivalent, does not want it for its use-value, but
because it is the representation of value; it is accepted as if it were the value
itself. This equivalent works in exchanges by being unconditionally
accepted by all other possessors of commodities. It becomes the social
representation of value; becomes the general equivalent. So, in the exchange
relationship, the use-value of the general equivalent is dialectically p resent
and absent at the same time. This absence is what determines the true
nature of the general equivalent.
It is fundamental to understand, and this is not trivial, that Marx’s anal-
ysis of the development of forms of value, culminating in the emergence
of money, reveals a basic characteristic of this development: it is the search,
by value, for its increasing differentiation from use-value. From another
point of view, the development of the commodity, which is the other side
of the development of the form of value,14 consists precisely of the devel-
opment of the value/use-value contradiction, which initially presents itself
as a simple differentiation between them.
This value/use-value differentiation, one of the facets of the develop-
ment of the contradiction between these two poles present in the com-
modity, implies increasing domination of the first over the second. This
means that capitalist society is always and increasingly dominated by the

logic of value and less by use-value. The commodity itself is becoming
more and more value and less and less use-value, and this trend continues
until the commodity relationship necessarily disappears. Does this mean
that with the continual development of the contradiction that makes up
the commodity, use-value will disappear completely, leaving value to reign
alone? This cannot happen, since the disappearance of use-value is the
disappearance of the human being himself, and therefore, of the social
relations in which it is summarized and on which value is sustained.
Capitalist wealth, commodity, becomes more and more value, and less
and less use-value. There is a process of dematerialization of wealth at the
same time as the value transformed into capital becomes increasingly sub-
stantive.15 It may be possible to affirm that the dematerialization of capi-
talist wealth is the reverse face of capital-value substantiation.
The dematerialization of wealth shows itself more radically and more
visibly in the equivalent. Its use-value, its materiality, loses ever more rel-
evance, insofar as it passes from the simple form of value, to the total and
to the general.16 It is true that in the first section of Capital the general
equivalent is material; it is certain that money, in Capital, is gold. But we
are in a theoretical moment prior to that in which Marx studies the con-
version of value into capital; before, therefore, of the substantiation of
value. With it and after it, wealth becomes increasingly something in the
process of dematerialization and so does money: it has materiality, but it
becomes increasingly dematerialized. We can say that the development of
the form of value is a process of gradual dematerialization of the e quivalent,
until the value reaches its purest and most abstract representation. In the
words of Corazza (1998), it is a process of liberation from materiality.
What conclusion can we draw from all this? For Marx, money is com-
modity, but it is not something that defines itself once and for all. Above
all, however, commodity is not its material determination. It is a contra-
dictory development process that implies an ever-greater dominance of
value over use-value. Merchandise is decreasingly a material commodity,
for it is increasingly a form, increasingly a pure social relationship, so, can
we continue to maintain the eternal “definition” that money = gold?
Money and Gold
We agree entirely with Germer (1997b, p. 337) that Marx’s theory was
not overtaken by the development of capitalism. Our position is, however,
56 R. A. CARCANHOLO
somewhat different from his in some ways. We agree that money is com-
modity, but not that it is necessary and eternally to be confused with gold.
Germer suggests an interesting scheme to describe the different forms
of money, explicitly based on Brunhoff (1985):
This structure (of the credit system) can be represented by a pyramid, in

which money (= gold) is present at both ends, at the base and the apex. It
appears at the base of the pyramid functioning as a measure of value, and at
the top, functioning as a means of final payment. Between them, forming
the body of the pyramid, there is a succession of levels corresponding to the
various forms of credit money, in ascending hierarchy. (Germer 1998, p. 577)
The difference between the two, for Brunhoff, is that it is effectively a

hierarchical structure of forms of credit money (Brunhoff 1985,
pp. 42–45), at the base of the pyramid is what he calls “private money”
(formed in transactions between banks and companies). Above, would be,
successively, national currency (of the Central Bank) and international
currency.17 Germer adds two further instances: at the bottom, below all
forms of credit money, gold appears as a measure of value; at the top, gold
appears again as a means of final payment, above all forms of credit money.
Germer’s scheme seems better to us. Gold, even in the present day and
despite all the dematerialization suffered by the general equivalent, seems
to play some role in the international (ultimately) reserve of value, and
therefore, still fulfills, to some extent, the function of final payment means,
to use Germer’s expression.18 But there is nothing to assure us that it will
not continue to gradually lose its function, as has been occurring, until
one day, save in circumstances of financial crisis, it completely loses it.19
The thesis that we maintain, of a progressive and tendential dematerializa-
tion of money, and therefore of the nature of capitalist wealth, would thus
be upheld.
Our thesis, for reasons that we will go on to explain, refutes the idea
that gold is ultimately totally and completely irreplaceable in the function
of measurement of values.
Let us depart from a fixed structure of relative prices of all commodities
in the system. Such a structure is dependent on parameters defined by
technology and current appropriation criteria.20 Among these commodi-
ties is, of course, gold.21 Let us also assume that the monetary standard in
this society is the dollar.
For some reason, which we will not discuss here, the dollar will estab-
lish a fixed exchange relationship with all commodities including gold. We
can call this relationship, the purchasing power of the monetary standard.
What is not accepted is that the monetary standard must be backed by
gold, physically, so that its purchasing power can be defined. It is incom-
prehensible that before anything else can happen, an exchange ratio with
gold must be established before it gains purchasing power. What gives
gold the miraculous power of physically touching the monetary standard
to establish its purchasing power? There seem to be no arguments for this.
To accept the existence of such power can only be the result of a submis-
sion to the fetish of gold, which still exists in our society and of which we
are all victims.
For the monetary standard, it is enough to establish its purchasing
power in relation to any commodity in the system, X or Y or the gold
itself, it will then be able to measure the value (or rather, express the mag-
nitude) of any commodity in the system. Given the structure of relative
prices and the “relative price” of the monetary standard for any of the
commodities, their purchasing power is determined.
As such, the reformulated thesis above, is not sustainable, in the sense
that international currency (as a form of credit money) would only appear
able to fulfill the functions of measurement of values by referring
firstly to gold.
In conclusion, our thesis is that gold, though ultimately able to con-
tinue to function as an international means of payment, has already ceased
to be necessary as a measure of values, at least in the normal functioning
conditions of the capitalist economy.22 We maintain the existence,
throughout the development of value—of capital and capitalist society—
of a gradual process of dematerialization of the equivalent, and ultimately,
of money. This dematerialization is, in fact, the reverse side of the develop-
ment and dominance of parasitic speculative capital.
With the considerations presented above, the idea that Marx is hos-
tage to a vulgar materialist concept, when he identifies money with
gold, would be definitively removed. There is no theoretical inconsis-
tency between the concepts of speculative capital and parasitic specula-
tive capital on the one hand and money on the other, between the
immateriality which they presume in relation to the nature of capitalist
wealth and the supposed extreme materiality implicit in the Marxist
concept of money.
58 R. A. CARCANHOLO
Notes
1. Alves Pinto’s (1997) excellent article seems to suggest more the idea of
financial capitalism as a stage of capitalism than that of financial capital as a
concept of Marxist value theory. The more theoretical determinations of
the concept are not specified, although he relates it to that of fictitious
capital.
2. We recall that productive capital is the functional form or autonomous
functional form of industrial capital.
3. If it were so, it would not be autonomous.
4. We understand that the over-accumulation of capital takes on, under pres-
ent conditions of capitalism, the form of parasitic speculative capital domi-
nance. The simple reference to overaccumulation, although not incorrect,
has the disadvantage of not highlighting the dominant character of specu-
lation. The idea that parasitic speculative capital originated from the sur-
pluses of value from the normal circulation of industrial capital, and
particularly of productive capital, does not seem satisfactory to us. These
leftovers would be the result of the normal difficulties, due to natural and
technological limitations, of harmonious circulation and the cycle of capi-
tal. Circulation and the cycle of capital, masterfully analysed by Marx in
Volume II of Capital (1992) and by Hilferding (1973), necessarily pro-
duce inactive money capital. The sums derived therefrom should coalesce
and should operate, according to them, in the sphere of speculation. We
believe that this is not enough to explain the current phase of capitalism,
the dominance of parasitic speculative capital and the subordination of the
logic of production.
5. Germer is one of the authors who has most seriously and intensely dis-
cussed the Marxist theory of money and who, in several of his works, criti-
cizes this thesis, although he acknowledges that, with the development of
capitalism, the bond of money with gold has become increasingly distant:
“With the progressive development of the banking system, throughout the
development of capitalism, especially after World War I, the bond of the
monetary standard with gold became more and more distant, until,
through a succession of events that culminated in 1973, it appeared to
have completely disappeared…” (Germer 1998, p. 564). Nevertheless, he
maintains the idea of the indispensable materiality of money: “… in Marx’s
theory, there is no immaterial money, only forms derived from money to
carry out some of its functions, such as credit money” (Germer 1997a,
p. 109, footnote).
6. By several other authors too, see the bibliographical references.
7. See Germer (1997a, p. 109, footnote).
8. “In the functions of the circulating medium, money has been replaced by
two instruments of circulation, derived from two of its functions, on the
one hand, state paper currency of forced circulation, which is a form of sign
of value and which has its origin in the function of the means of circulation
of money (OC I, page 108) and, on the other hand, credit money in dif-
ferent forms. Credit money, whose most developed forms are the bank
note and the central bank note, are spontaneously born of the function of
money payment medium (OC, I, p. 117), which in turn has its origin in
the emergence of a new economic relationship, commercial credit, or the
creditor/debtor relationship, which overlaps with the relationship of value,
that is, of seller/buyer” (Germer 1997a, p. 121).
9. Cf. also Germer (1998, p. 574).
10. Cf. also Germer (1997b, p. 344). For the author, gold must necessarily
fulfil the “original and irreplaceable function of money” (1997a, p. 112).
He also relies on Brunhoff (1978, p. 88), who holds the same view.
11. We do not know whether the above-mentioned authors, particularly
Germer, would agree on the suggested reformulation, but this does not
matter much for our purposes. It would be a reformulation but would
continue to be characterized as a theoretical perspective on capitalist social
relationships and a prisoner to the physical materiality of the general equiv-
alent. It is, perhaps, a little less radical but, in all ways, it sustains the inevi-
tability of gold as a measure of ultimate values. We cannot agree with such
a perspective, which is also a prisoner of a material conception of the nature
of capitalist wealth.
12. The theory of production prices shows that, in capitalism, this equalization
occurs only by chance.
13. In Volume 1, chapter 1, section 3, of Marx (1990).
14. The development of the commodity, the development of value, the devel-
opment of forms of value, the development of commodity relationships
and, therefore, of commercial society are, in fact, different faces of the
same development (Carcanholo 1993). It not only reaches back to the
birth of capitalism but goes beyond it. Market development has not been
interrupted by the emergence of capitalism but proceeds more rapidly than
ever before.
15. In order to understand the concept of value substantiation, see: Carcanholo
and Nakatani (1999).
16. Cf. the following passages of Marx. The first, referring to the simple form
of value: “In order to inform us that its sublime objectivity as a value differs
from its stiff and starchy existence as a body, it says [the linen – RC] that
value has the appearance of a coat” (Marx 1990, p. 144). The following
passage refers to the total or unfolded form: “Form B distinguishes the
value of a commodity from its use-value more fully than the former”
60 R. A. CARCANHOLO
(1990, p. 155). For a broader discussion on the subject, see: Carcanholo

(1993, pp. 26–28). In addition, Corazza expresses in a synthetic and very
clear way the question: “The succession of forms of manifestation of the
value of goods always goes in the direction of a liberation from materiality,
toward ever more independent, autonomous and free forms of materiality,
that imprison immaterial value, as a straitjacket, a boundary, a barrier to the
social, abstract, and expansive nature of value. In many passages Marx
emphasises this aspect” (Corazza 1998).
17. Here is a difficulty: for it should be gold as an international or universal
currency. The pyramid would not properly represent the scheme of credit
money. It is not, however, gold found here but the dollar that cannot really
replace it in that role (Brunhoff 1985, p. 45).
18. Here is a difficulty: for it should be gold as an international or universal
currency. The pyramid would not properly represent the scheme of credit
money. It is not, however, gold found here but the dollar that cannot really
replace it in that role (Brunhoff 1985, p. 45).
19. This thesis could be contested, saying that when that day comes, the tor-
ments will be so frequent that gold will continue with its function. We tend
to agree with this argument.
20. A simpler example of criterion, at a more abstract level of theory, would be
that of salary equal to the value of the labor force and uniformity of the rate
of profit.
21. Assuming that gold is simply a commodity of luxury consumption and is,
therefore, an input of the main commodities of the system, technological
changes in its production (as it is not difficult to understand) will not alter
the structure of the prices relative to other commodities to each other. The
only thing that will change is the set of its relative prices in relation to other
commodities.
22. Clearly, in conditions of capitalist crisis, especially those determined by
speculative logic, when credit conditions and confidence in the normal
functioning of the system fail, the role of gold and, to a lesser extent, that
of other less dazzling commodities such as silver, copper, and so on, as real
wealth, regains its key importance.
References
Alves Pinto, N. P. (1997). O capitalismo financeiro. Crítica Marxista, 5, 9–26.
Brunhoff, S. de. (1978). A moeda em Marx. Rio de Janeiro: Paz e Terra.
Brunhoff, S. de. (1985). Estado e capital: uma análise da política econômica. Rio
de Janeiro: Forense Universitária.
Carcanholo, R. A. (1993). A dialética da mercadoria: guia de leitura/O capital:
ciclos, circulação e rotação: roteiro de estudo. Cadernos Ange, 4.
Carcanholo, R. A., & Nakatani, P. (1999). O capital especulativo parasitário: uma

precisão teórica sobre o capital financeiro, característico da globalização. Ensaios
FEE, 20(1), 284–304.
Corazza, G. (1998). Marx e Keynes: sobre dinheiro e economia monetária. XXVI
Encontro Nacional de Economia. Anais. Vitória: Anpec.
Germer, C. M. (1997a). Componentes estruturais da teoria do dinheiro no capi-
talismo. Revista da Sociedade Brasileira de Economia Política, (1). Rio de
Janeiro: Sette Letras.
Germer, C. M. (1997b). O dinheiro de crédito e as funções do dinheiro no capi-
talismo. XXV Encontro Nacional de Economia. Anais. Recife: Anpec.
Germer, C. M. (1998). O conceito de padrão-ouro e os equívocos da economia
política. III Encontro Nacional de Economia Política. Anais. Niterói: SEP/UFF.
Hilferding, R. (1973). Finance capital. A study of the latest phase of capitalist
development. London: Routledge & Kegan Paul.
Marx, K. (1990). Capital: Critique of political economy (Vol. I). London:
Penguin Books.
Marx, K. (1992). Capital: Critique of political economy (V. II). London:
Penguin Books.
CHAPTER 4
Crypto-Currencies: From the Fetishism
of Gold to Hayek Gold
Paulo Nakatani and Gustavo Moura de Cavalcanti Mello
Introduction
In Book I of Capital, Marx accurately illustrates the fetishism of money
when he deals with hoarding as one of the consequences of the develop-
ment of commodities. He demonstrates that
circulation becomes the great social retort into which everything is thrown,
to come out again as the money crystal. Nothing is immune from this
alchemy, the bones of the cannot withstand it, let alone more delicate res
sacrosanctae, extra commercium hominum [“consecrated objects, beyond
human commerce”]. (Marx 1990, pp. 229–230)1
This chapter was originally published in Portuguese with Crítica Marxista, 47, in
2018, and was translated into English by Kenton James Keys.
P. Nakatani (*) • G. M. de C. Mello


https://doi.org/10.1007/978-3-030-23360-0_4
64 P. NAKATANI AND G. M. DE C. MELLO
Money has become increasingly fetishized throughout the develop-

ment of capitalist production and, dominated by capital, has become the
chief expression of wealth as a fetish, even by covert capital. From its very
beginning, wealth autonomized as money has taken on various forms,2 as
coins and commodities whose ultimate materialization occurred in the
form of gold coins.
The diversity of currencies and monetary standards, as well as the fun-
damental contradiction between their nominal content (their name) and
their actual content (the amount of gold), opened the way for their
replacement by representatives, symbols of value. The history of coins is
extremely rich in the descriptions of these contradictions and the prob-
lems created by them. The devaluation resulting from the natural wear
and tear of coins and counterfeiting in the process of their minting has
been discussed and criticized since Nicole Oresme (2004) in 1355 to the
present day, along with the problems of controls and determinations on
the national “value of coins”. In 1526, Nicholas Copernicus (2004) wrote
a short text, “On the coin”, that dealt with a proposal for “monetary
reform”, in which he emphasized that the problems around the variety of
names and monetary standards were not only due to devaluation and
counterfeiting but also to the enormous confusion that arose from their
coexistence.
In order to reduce circulation costs and increase safety, together with
the intensification of the number of market transactions, gold storage sites
were developed. Against these deposits, goldsmiths, and later money trad-
ers and banks, began issuing certificates,3 one of the forerunners of
convertible paper currency and, subsequently, forced paper currency (on
the seigniorage gains arising from such operations, see Note 20). From
the outset, those holding these gold deposits issued more certificates than
the amount of gold held, thus creating interest-bearing capital which mul-
tiplied, on paper, the quantity of gold in deposit because these certificates
were loaned with interest charges.4
The history of banking is also rich with descriptions of the currency cri-
ses that arose from bank competition as they began to issue or create paper
money or bank notes beyond their means, with or without gold reserves.
These banking crises evidence the contradiction between the quantity of
gold deposited and the quantity of certificates or banknotes issued.
4 CRYPTO-CURRENCIES: FROM THE FETISHISM OF GOLD TO HAYEK GOLD 65
The confusion created by the different systems, with recurrent crises,

bank collapses, and bankruptcies, led some banks, because of their eco-
nomic and political power in their respective countries, to exercise func-
tions that are currently assigned to the Central Banks.5 These functions
were assigned by the different governments to private banks that have
been successively nationalized over time, most between the late nineteenth
and early twentieth centuries. One exception is the Federal Reserve System
(FED), which remains private to this day.
The history of money is long, varied, and extremely troubled. It is pri-
vate by nature, contrary to what one might imagine or currently defend,
because it is the expression of the value of commodities within a singular
commodity. The contradictions of this commodity have led it to be
replaced by fictitious representatives, unrelated to gold reserves, including
that part which appears as printed paper and the more recent version that
appears as electronic signals in the accounts of companies or banks. In
addition to personal and private ownership, they have all been replaced by
special non-interest bearing and non-maturing securities in the form of
State paper currency (a development of credit money). These securities
have been given the names of their respective national currencies and are
created through credits by the private or public commercial banking sys-
tem.6 It is fictitious money,7 which becomes general with the end of the
convertibility, in fact and right, of the dollar into gold with the collapse of
the Bretton Woods system.
More precisely, the strong wave of the internationalization of pro-
duction, on a “Fordist” and financial bases, and the emergence of the
Euromarkets, in particular, led to an overaccumulation of capital that
manifested itself as “stagflation crises” capitalism, whose reproduction is
based increasingly on promises of a future accumulation of value, in the
form of bearing interest capital and fictitious capital. With this, the
unrestrained character of capital has been reinforced and is expressed in
the proliferation of economic crises that characterize contemporary
capitalism.8
Crypto-Currencies
It is in this context that crises of capital have sharpened and made explicit
the contradictions inherent in currencies and which surged with crypto or
virtual currencies, characterized by extreme instability and a volatility of
exchange rates that greatly heighten foreign exchange risks.
The first of them, called bitcoin, was created and launched in 2009 by a
fictional individual named Satoshi Nakamoto, at least this is how it was
disseminated, but whose real identity or identities, as it may well be a
group, currently remains unknown. One of the expectations is that bitcoin
will become a world currency, as the number of people and companies that
accept it as currency increases. To do so, however, it must fulfill the condi-
tions required to function as a measure of value, standard of prices, means
of circulation, means of payment, means of hoarding, and finally, of
money-capital subject to the fundamental determinations of production,
actualization of capital and appropriation of the surplus value produced.
In short, it would need to reproduce the elementary determinations of
money as money, and hence its functions, as well as those of money as the
form of capital. Given this, it again becomes evident that money can only
be truly understood as the moment of the conception of capital.9
After the successful launch of bitcoin, hundreds of other virtual curren-
cies were created in a decentralized network created from a technology
called blockchain. On 3rd January 2019, a list of more than 2000 crypto-
currency markets10 were to be found on the Crypto-currency Market
Capitalisations website,11 which are joined by others almost daily, and
whose total market capitalization amounted to just over US$130 billion
(at the end of 2017 this amount reached US$600 billion). In addition to
bitcoin, which accounted for more than half of this capitalization, Ethereum
(totaling around US$15.3 billion) and Ripple (Xrp) (US$14.6 billion)
stood out. Most of them were launched as means of circulation or pay-
ment between different national currencies. Its specificity is that it allows
a direct contact between a creditor and a debtor, avoiding the centralized
mechanisms of the world banking system and, more importantly, the vari-
ous national tax systems. In 2015 Hayek gold was launched, which
proposed convertibility into gold, but is not listed in this market of crypto-
currencies—which shows that new fetishes cannot escape the golden
fetish, as will be seen.12
The Creation and Circulation of Bitcoin

Firstly, one should make explicit the nature of these virtual currencies,
based on the question of the nature of money. All virtual currencies are
private by nature, and by the way in which they are put into circulation,
they remain fictitiously created credit money, even if their production
has costs.
The creation of bitcoin is based on an extremely sophisticated, complex,

and global-scale process of networked data processing called, not by
chance, data “mining”.13 Here, we find an analogy with the ancient foun-
dations of metal coins, the mining of gold and silver. But instead of seek-
ing material wealth in nature itself through work, this process is
accomplished through the solving of complicated mathematical algo-
rithms that require increasingly sophisticated machines.
According to Nakamoto’s (2008) article, which revealed the idea of
bitcoin a few months before its launch, the challenge was to establish a
means of circulation and payments that did not depend on the regulation
and trust of a central authority. In addition to voluntary acceptance, it
would be necessary to ensure decentralized mechanisms for the issuance
of currency and surveillance of the system to avoid fraud, and in particular,
“double spending”, that is, use by a malicious individual of the same vir-
tual currency in more than one transaction.
Without entering into technical minutiae, the solution was to create a
peer-to-peer network, where each “point” or each computer constituting
it is both client and server, as in the torrent network, for example, used for
the sharing of music, movies, and so on. Such a network is connected
around an open-source software and each member receives two keys, one
“public”, known throughout the network, and another private. When
transferring bitcoins, an encrypted record is created consisting of the pub-
lic key of the receiver and the private key of the receiver, which legitimizes
the transaction—made “public”—without, however, connecting it to the
receiver. The secrecy of identities is thus preserved, which makes opera-
tions with bitcoins conducive to the practice of money laundering and
illicit payments.14
Each transaction must be verified by the network and registered in a
“block”,15 and to verify its authenticity, the user (“miner”) needs to solve
a complex cryptographic problem (the “stress test”). The first to succeed
receives, as a reward, new bitcoins (currently 25 per test solved) as well as
a transaction fee. This solves two problems at once: the issue of the crypto-
currency and the decentralized zeal for maintaining the system, suppos-
edly through “free competition”. After this, the checked block inserts
itself into the blockchain in a chronologically defined order, receiving a
single encrypted code (hash). The introduction of a new block presup-
poses the verification of that code. So, the blockchain is an immense record
of all crypto-currency transactions, held not by an institution but by each
member of the network.16
In its initial configuration, each block should be published every

ten minutes; it happens that the longer the network, the greater its pro-
cessing power, and in that sense, the bitcoin algorithm was designed to
progressively increase the complexity of the “stress test”. This makes it
increasingly difficult to “mine”, thus simulating actual mining and deple-
tion of deposits. The system foresees the exhaustion of these “virtual
deposits” around the year 2140, with a total production of 21 million
bitcoins (on 3rd January 2019, just under 17.5 million bitcoins had been
mined). So, by analogy, we can associate the creation of bitcoin with the
antiquated production of gold and silver metallic goods, which, when they
enter the circulation of goods and that of capital too, come to function as
money and as currency in its unique forms of existence. As such, it meets
one of the main requirements of the old quantitative theory of money.
The creation of bitcoins implies a cost of production resulting from
equipment wear and energy consumption in addition to the working time
of each “miner”. This currency is priced according to the same standard
currently used by all national currencies, the decimal number system,
which replaced the weight measure of the metal, gold, or silver contained
in each coin. The mechanism for putting it into circulation, without which
it does not acquire an existential status, is the same as any other currency,
either through the purchase of goods or services, loans or debt repay-
ments. Since all these things are listed or denominated in their respective
national monetary standards, such as the dollar, a certain exchange rate
must be established between bitcoin and its national currencies.
When it began, the production cost of each bitcoin was quite low, rising
as larger quantities were mined.17 As demand for them rose, this difference
also rose, reaching stratospheric levels, impelled by speculative demand.
According to the Blockchain website (https://blockchain.info/charts),
from their creation in 2009 until the beginning of 2011, the bitcoin was
worth cents.18 From 2011 until the beginning of 2013, its price rose to a
few tens of dollars, achieving significant appreciation, and went on to be
worth a few hundred dollars. Then, from the second half of 2016, a strong
rise began. To give an idea, from $995.00 on 1st April 2017, each bitcoin
was worth $19,499.00 on 15th December 2017, a 20-fold increase. As a
result of this rise, and further reinforcing this trajectory, on 10th December
2017, bitcoins began to be traded in the futures market, the powerful
Chicago Board Options Exchange and the Chicago Mercantile Exchange,
which had a significant repercussion on the current price. Notwithstanding,
on 29th December 2017, bitcoin price fell to US$13,216, and its total
capitalization fell to US$221.6 billion, and, on 6th February 2018, the

quotation fell below US$6000, which corresponds to a drop of more than
70% compared to the peak of 2017. On 3rd January 2019 bitcoin was
priced at US$3822.00 and its total capitalization was US$66.9 billion. In
any case, the discrepancy between the price of bitcoins in dollars and the
volume of transactions is striking.
The difference between the cost of production and the price, in dollars,
reached by bitcoin, is like the old seigniory in the coin minting process or
the printing of paper money notes.19 This difference may be one of the
explanations for the stimulus to bitcoin mining, due to the frenetic devel-
opment of its market.
Can bitcoin Assume the Functions of Money

in Capitalism?
Measurement of Values
The primary function of money, as a measure of value and price standard,
has already been resolved and developed in its own contradictions by
national currencies. All commodities, debts, and contracts are already
denominated in these currencies. As the accumulation of capital devel-
oped, and because of its own tendencies and contradictions, the money
form has been withdrawing.
Today, the world currency is the US dollar, which, despite all its chal-
lenges and its own contradictions, still occupies the role. So, considering
that an exchange rate between bitcoin and each currency exists, in which
all economic transactions would be denominated in bitcoin, this process
could see national currencies being replaced by bitcoin (in the same way
that the euro replaced all the national currencies in the Eurozone). As the
measurement standard for both is decimal, the exchange would occur with
the change of name and the value would be converted by the respective
exchange rate. The greatest difficulty arises in determining if this conver-
sion rate stems from the spectacular growth of the exchange rate or the
market price of bitcoin, as well as its volatility and its instability, all typical
of an essentially speculative market.
So, even if these special virtual commodities, crypto-currencies, could
take on and replace the role of money as a measure of value and price
standard, the volatility and instability in determining their prices, or
exchange rates, would be generally transferred to the daily prices of goods

and services. There would be enormous upheaval and confusion, because
rather than reflecting the relative variation in the productivity of the dif-
ferent products, both domestic and international, it would carry with it
the speculation of the fictitious virtual currency market. In the few years of
its existence, in which the price of a bitcoin went from a few cents to more
than US$19,000, all prices of goods and services, quoted in dollars, would
have suffered brutal deflation. In the same way, all products previously
quoted in dollars, as well as the company revenues, the amount of profits
and State tax income would all have suffered the same falls.
Means of Circulation
Available information indicates that bitcoin has been used with increasing
frequency and on a worldwide scale20 as means of circulation and means of
payment, that is, it participates in the final conversion of capital, of com-
modity into virtual money. But as a means of circulation, the world of
commodities requires that there be a certain amount of money21 arising
from the prices of commodities to be transacted. Just as the creation of
bitcoin simulates the mining of gold, its quantity has a pre-set limit and its
use has been, so far, very limited. The development of capital in the period
of the gold standard accelerated the emergence of new forms of credit in
place of the limits imposed by the production of gold or silver money. It
follows that this is the pathway that bitcoin, as virtual (fictitious) credit
money, will also have to tread.
Credit money, as a private creation between banks and corporations
and sanctioned by State credit money, is fundamental and determinant in
today’s capitalist world. This credit money is an imaginary, fictitious cre-
ation that expresses commodity values using a decimal standard of mea-
sure. Its existence is ephemeral, determined by the terms of contracts in
which they have their origin and is cancelled as soon as the term expires.
In the circulation of capital, that is, in its continuous metamorphosis, the
entire gigantic mass of wealth in circulation is represented through debit
and credit registers in companies and banks. “Money serves here as money
of account and expresses the values of the commodities in their prices but
does not itself confront the commodities in a material shape” (Marx 1990,
p. 259). In this way, fetish money as credit, whether it bears the name
gold, dollar, sterling, or bitcoin, becomes a purely ideal and idealized rep-
resentation of wealth, money of account, or fictitious money. That is, from
the denomination of the values to the circulation of them, there is a need

to create credit, either in bitcoin or any other or all crypto-currencies,
totally free of any restriction or regulation, as it currently occurs. Their
exchange rates should be determined in virtual markets with thousands of
currencies.
Money Itself
Money, as money, has the functions of hoarding,22 of serving as a means of
payment, and of world money. In this way, all owners of bitcoins, whether
miners or buyers, can keep their wealth in this form as a negotiable asset
in a highly developed virtual market through global computerized net-
works, which allows point-to-point trading, from one owner to another,
without any intermediation and outside national tax systems. The hoard-
ing of bitcoins has implications, as it can only be obtained through mining
or purchase from other owners. This means that a miner can only realize
his wealth through its metamorphosis, that is, through the purchase of
goods or through conversion into a conventional currency, dollars, euros,
pounds, yens, and so on. There is no other form of realization, usufruct or
expansion of this fictitiously created wealth, except the overcoming of the
hoarding of bitcoin. Currently, the difference between the cost of produc-
tion and the market price is a form of transfer of wealth accumulated in
any of the currencies into bitcoins.
In the early days of capitalist production and as already seen in previous
modes of production, hoarding played an important role in the accumula-
tion of wealth. With the development of capital and, particularly, its
autonomous form of interest-bearing capital, hoarding has been replaced
by the new determination that money has acquired in becoming money-
capital. A banking and credit system has developed, which gathers together
all surplus and accumulated wealth in the form of money, mainly the idle
part of it, under the banner of interest-bearing capital. Furthermore, we
have witnessed the credit system begin to produce credit money autono-
mously, a fictitious form of wealth. The current exacerbation of the alien-
ation resulting from the fetish in which all money acquires a mysterious
property of generating more money,23 as is the appearance of bitcoin quo-
tations, stems from this production. Nowadays this occurs daily within the
banking system but also in the markets for currencies, debt, or property
titles, developed and accelerated by the accumulation of capital, no matter
what the specific national currency. It is in this process that bitcoin and all
other crypto-currencies arise and develop yet more alternative forms for
the accumulation of fictitious wealth.
A miner who creates bitcoins and accumulates them without ever con-
verting them into commodities or capital, is outside of the circulation and
global reproduction of capital. He can become a fictitious billionaire and
never take advantage of the best things capitalism has ever produced, those
special commodities produced for the more privileged strata of the inter-
national bourgeoisie, such as spectacular properties, yachts and jets, and
private airplanes. The only way forward is to overcome the fetish of hoard-
ing and move them into the global circulation of capital.
Other functions, such as means of payment and world money could be
exercised by bitcoin, or any other virtual currency, under the condition
that their exchange rates with all other currencies maintain some stability
so as not to cause excessive fluctuations and accelerate currency exchange
risks. In this case, the system would tend to replace it with currencies
whose market prices tend to be more stable.
Money as Capital
In the dynamic, continuous, and global process of the general reproduc-
tion of capital, money functions only as money at two points in the meta-
morphosis of capital: first, in the conversion of money into commodities,
and again, at the end in the reconversion of new commodities into money.
As capital accumulates and advances, capital becomes autonomous in its
forms of money-capital, productive capital, and commodity capital. In its
accumulation, under the autonomous form of money-capital, it acquires a
new property, that is, it becomes capital-money—a new special commodity
whose value of use is to be capital and whose value is determined by its
expression of quantitative value in terms of socially necessary working
time. But in its most developed form, bearing-interest capital, its value will
be determined by capitalizing its income, the portion of surplus value that
it appropriates in the form of interest capitalized at a current or average
rate of interest. This form of capital is not money even if it appears as if it
were. Interest-bearing capital accumulates, fundamentally, and in its great-
est quantity, as credit money, in all its most varied forms, and as debt
securities.
The main and fundamental question is how virtual currencies would
replace current currencies, including the dollar, which still functions as
world currency, in the dynamics of circulation. This hypothetical crypto-
currency would have to exercise the functions of money as money and

money-capital on a daily and increasingly generalized basis, supplanting
the roles played by existing national currencies. It would be a process not
dissimilar to the monetary reforms in countries that replaced the monetary
standard, including the name of the national currency, as occurred with
the creation of the euro. The fundamental condition would be the accep-
tance and incorporation of the crypto-currency into the social imagina-
tion, as the new fetish. To do this, it would be necessary for most private
capital units and nation-states to replace their currencies, whether as cash,
credit money, or as a means of payment, not only in their territories but
also in the world market, in such a way that the new currencies would be
sanctioned and accepted as such. Associated with this, the blockchain net-
works, that produce, circulate, and control these virtual currencies, would
have to surpass the central banks and replace the current credit system, the
interconnectivity of credit markets, and even the banking system, as this
system does not have a share of the global process of capital circulation.
In addition to the difficulties already mentioned, such developments
would run counter to possible resistance from State bureaucracies, which
would be against the subsequent limitation of their monetary policies.
More importantly, they would face economic and geopolitical difficulties
stemming from the United States’ interest in preserving the dollar as the
world currency, and from other countries that might eventually aim for
that position. In addition, as explained above, the fragmentation and mul-
tiplicity of crypto-currencies’ conflicts with the demand for unification
and monetary standardization, driven by competitive capitalist dynamics,
as well as with the increasing mobilization of the State to push forward
financial markets and prevent the collapse of production of fictitious
capital.24 In fact, the trend toward concentration and centralization inher-
ent in capital also occurs in the crypto-currency markets. The three most
important “mining pools”, all Chinese in origin, are BTC.com, AntPool,
and F2Pool, which on 3rd January 2019 held 14.3% 11.9%, and 10.7% of
the bitcoin market, respectively. In fact, among the ten largest world pools,
eight are Chinese, accounting for approximately 80% of the known pro-
duction.25 Regarding the possession of bitcoins, the numbers vary a lot,
but a recent estimate estimates that 0.1% of the computer addresses con-
nected to the bitcoin system concentrate 62% of the total offer.26
One of the mechanisms propelling this centralization, and which also
opens loopholes for all sorts of frauds, is so-called cloud mining, which
consists of outsourcing the bitcoin generation service. Instead of investing
directly in the necessary equipment and inputs, a contract is signed with a

supplier, defining the mobilization of certain computational capacity for a
certain period. In theory, by paying a fee, the supplier would use the
means corresponding to the capacity contracted, and the investor would
receive the bitcoins generated. Finally, online portfolio services are avail-
able from companies that pay interest on deposits held in crypto-currencies,
so that ownership and control of these assets is transferred there.
Soon, despite the devout yearnings of the ultraliberals, and as the young
Engels (1981, p. 69) observed, monopolization will tend to dominate
competition, which, in turn, tends to intensify competition among ever
more monolithic capitals. Such a dynamic, therefore, tends to undermine
one of the pillars of virtual currencies, decentralized production and con-
trol, which would otherwise guarantee them the advantage over national
currencies.
As we know, very different visions have emerged around crypto-
currencies, ranging from utopians who saw in the technologies an instru-
ment for building egalitarian relationships with voracious speculators. As
transactions with crypto-currencies intensify, prices swell, and people
become millionaires overnight, as was particularly the case in 2017, so-
called harmony collapses, and the true nature of these markets becomes
manifest, sans phrase. The technocratic logic of considering the produc-
tion of money as a purely technical issue, conceived in strictly mathemati-
cal terms, collapses in the face of inescapable truth; money is a social form,
a moment of capital form, fraught with contradictions and a tributary of
the turbulent dynamics of capital accumulation.27 Let’s take a closer look
at these issues.
The Crypto-Currencies, Their Theological Mantras,

and Their Ideological Underpinnings
As mentioned, hayek gold, launched in 2015, originally called hayek coin,

differs from other crypto-currencies. Strictly speaking, despite being based
on blockchain technology, hayek gold cannot be considered a virtual cur-
rency; it is rather, a derivative of gold; a title quoted in gold, where each
hayek gold is equivalent to a gram of gold, guaranteed by the reserves of a
company specializing in gold trading, Anthem Vault.28 So, it functions as
an asset, whose price is linked to the gold market, valuing or devaluing
according to the price of gold. But it could be, supposedly, a return to
commodity-convertible currencies, as some nostalgics have suggested.29
Here we have an explicit return to the gold fetish, leading to the parox-
ysm of the mysticism and irrationalism inherent in the ultraliberal creed
that drives the apologists of crypto-currencies, as is shown in this “hom-
age” to Friedrich August von Hayek, the main figure of the “Austrian
School” along with Ludwig von Mises. In a context in which money
becomes autonomous from its substance, it becomes fictitious, and to a
large extent, virtual; it is intended to re-establish a kind of gold ballast, in
the case of hayek gold, or to mimic (virtually) the production of precious
metals, a chimera, of course, but quite significant. Underlying it is a cer-
tain intuition that making money autonomous, in relation to the general
equivalent commodity, undermines an elementary determination of
money, that of measure of value. If this so-called autonomization is in line
with the prominence assumed by the financial markets and the fictitious
forms of capital in the last decades, which is at the same time the product
and nourishment of this trend, it softens the regulating character of value
and enhances the excessive character of the current and increasingly turbu-
lent and explosive dynamics of capital accumulation (Prado 2016).
Far from understanding the roots of this dynamic, which entails employ-
ing a critical and historically grounded view to penetrate the core of capital-
ist social forms and confronting its barbaric nature, many crypto-currencies
ideologues react by reasserting the dogmas that derive from an aesthetic
view of the surface of economic phenomena in the sphere of capital circula-
tion. They understand money primarily as a means of circulation, mediat-
ing an economic metabolism that goes no further than a sophisticated
barter economy, and attributes the contradictions inherent in money form
to pernicious State interventions that hinder the operation of market regu-
lation mechanisms. In summary, society appears merely as the sum of the
actions of individuals carried out according to their supposedly immutable
nature, that of “welfare maximizers” or “of utility”, whose initiative in a
freely competitive environment would be the means of guaranteeing that
which would come close to being the “common good”.
In complex societies, the nexuses established would be essentially mer-
cantile, and the means of communicating with others and acquiring the
information necessary for their rational actions, in accordance with their
will and “preference structures”, would be the price system that emerges
from repeated exchanges. Because consumption is seen as the ultimate
purpose of all economic action and individuals are regarded as fully cogni-
zant “economic agents” (atomized monads) who are remunerated in line
with what they have dedicated to production, and because money is merely
an instrument of trade or, as the Austrians would have it, a sign of “tem-
poral preferences” through interest rates, a “metaphysical balance”
between supply and demand is supposed, as Marx (1969, p. 493)
denounced in his critique of “Say’s law”. The dissonant notes in this idyllic
picture are almost always attributed to the State, which by its arrogant and
autocratic nature extends its functions and manipulates the money supply
by changing the general price level and disrupting the relative price sys-
tem, thereby compromising mercantile harmony. In countering the evils
of State arbitrariness, the cult of technocracy is reinforced, creating mech-
anisms and technical rules based on strict criteria of efficiency and effec-
tiveness and devoid of any political or ideological influence.
In defense of the crypto-currencies, there is a common resonance in
some infamous economic theses that have gained strength in the wake of
the stagflation crises of the 1970s and the ensuing crisis of Keynesianism.
To cite just two, it is worth recalling Hayek’s pamphlet on the “denation-
alization of money”, in which he proposed the abolition of State monetary
authorities and the full privatization of money (Hayek 1976), or Friedman’s
“monetary rules” in works such as Capitalism and Freedom (Friedman
1985), which proposes a constant increase in the monetary base at a fixed
rate, and later proposes replacing the FED with a computational algo-
rithm (Friedman 1994). Unsurprisingly, ultraliberals (Ulrich 2016)
roundly applauded the proposal for a currency that was produced and
“managed” in a supposedly decentralized way, immune to the discretion
of a “monetary authority”, that would guarantee individual privacy and
that would be produced and marketed by means of strict technical rules,
supposedly based on unbridled competition and economic rationality
(teleological), and which would even determine a maximum issue limit,
thus defusing the inflationary and disturbing tendencies of the relative
price system so feared by monetarists and the “Austrian school”.
So, in the ultraliberal idyll, everything appears to be inverted and sim-
plistic: an anarchic and inherently unbalanced production dynamic, which
repeatedly produces disastrous crises (which are the negative of capital
itself, following each step of the concept, according to Grespan 2008) and
to which are attributed mystical self-regulating powers; the State, which is
the political form of capital, reproduces its haughty, excessive, violent, and
authoritarian character, is understood as the source of all evils, and ana-
lyzed in a dualistic way, as an institutional and normative framework
cleaved from the economy; this, whose foundation, engine, and purpose is
the tautological valorization of value, appears to be structured around the
satisfaction of individual needs and desires.
This is the crux, a highly speculative financial asset which guarantees

programmers and pioneer producers an exorbitant power and advantage,
whose production and management are heavily concentrated and oligopo-
lized, which is crossed by a strongly ideological conception, and which is
highly expensive in energy terms, is presented by apologists as being at the
same time a mere currency and as a prodigy of technology, politically and
ideologically “neutral”, a bulwark of economic rationality and free compe-
tition, and, therefore, an instrument of individual freedom, the founda-
tion of all freedom (Varoufakis 2013; Dodd 2017).
From what we have seen, at first glance, any crypto-currency could become
a new national currency and even replace the dollar and other currencies
as world money. However, the role played by the dollar as the main world
money stems fundamentally from the power of the US economy. But no
longer as money, but as money-capital. Strictly speaking, there is no
impediment to the substitution of national currencies and world money
for any virtual private currency in the dynamics of reproduction and
expansion of capital provided they meet the requirements of the general
laws of money circulation under the determinations of capital and the gen-
eral laws of the capitalist accumulation.
But the conclusion that cannot be avoided is that the full and complete
domination of fetishism over the production, circulation, and appropria-
tion of capitalist wealth has reached unimaginable limits. Contemporary
capitalism is solving the craziest dreams of the alchemists, of producing
wealth, even if fictitious and at the same time real, through the gigantic
social retort that allows us to create money from the air and turn paper into
gold. These are the great fetishes of our time, far beyond the golden calf.
In criticizing the fetishism of money, Marx also managed to grasp ele-
ments that counter-indicate the possibility of building social relationships
that are uncensored and not demeaned by the steamroller of capital, in
which everything seeks to subject itself to the tautological movement of
expanded reproduction. In his words:
[G]old and silver do not possess only the negative character of superfluous
objects, with no practical use; their aesthetic qualities make them the natural
matter of luxury, adornment, sumptuousness, Sunday clothing, in short, the
positive form of superabundance and wealth. In our eyes they appear as the
virginal light torn from the bowels of the earth: the silver reflecting all the
luminous rays in their original mixture, the gold reflecting only the highest
power of the colour, the red. Now the sense of colours is the most popular
form of the general aesthetic sense. The etymological connection of the
names of precious metals with the names of colours in the different Indo-
Germanic languages was demonstrated by Jacob Grimm. (See his History of
the German Language). (Marx 1994, p. 211, modified translation based on
Romano 2004, p. 16)30
Not even this can be said of the fetishism proper to crypto-currencies,

which restores the fetishism of gold as a mere simulacrum. Its potential
technological and technical innovations are necessarily subsumed to specu-
lative fever, felt particularly acutely in contexts such as the present one,
marked, on a global scale, by immense quantities of overaccumulated capital
and by a lurching enlarged reproduction. Far from being an outlet for the
contradictions of contemporary capitalism, crypto-currencies are, at one
and the same time, their product and sustenance. More frightening than the
Sphinx, it is not enough to decipher the riddle of these stunted social forms;
until we overcome its foundations, we will continue to be devoured.31
Notes
1. Gold? Yellow, glittering, precious? ...
Thus much of this, will make black, white; foul, fair;
Wrong, right; base, noble; old, young; coward, valiant.
… What this, you gods? Why this
Will lug your priests and servants from your sides,
Pluck stout men’s pillows from below their heads;
This yellow slave
Will knit and break religions; bless the accursed;
Make the hoar lebrosy adored; place thieves,
And give them title, knee and approbation,
With senators on the bench; this is it,
That makes the wappen’d widow wed again:
… Come damned earth,
Thou common whore of mankind
(SHAKESPEARE, Timon of Athens apud Marx, 1990, pp. 229–230).
“Gold is a wonderful thing! Its owner is master of all desires. Gold can
even enable souls to enter Paradise”. (Columbus, in his letter from
Jamaica, 1503, apud Marx 1990, p. 229)
2. Agreeing with Marx, we consider money as an abstract category and coins as

forms of the existence of money that have arisen historically in different
kingdoms and territories and which were later centralized by kingdoms, rul-
ers, and nation-states. “Money takes the shape of coin because of its function
as the circulating medium. […] The business of coining, like the establishing
of a standard measure of prices, is an attribute proper to the state. The dif-
ferent national uniforms worn at home by gold and silver as coins, but taken
off again when they appear on the world market, demonstrate the separation
between the internal or national spheres of commodity circulation and its
universal sphere, the world market” (Marx 1990, pp. 221–222).
3. These certificates were debt securities that became a means of circulation
and a means of payment, as if they were money. Whenever the certificates
were redeemed for gold on deposit, initially with goldsmiths and/or
money traders, they were cancelled.
4. This is also the origin of what Marx called fictitious banking capital.
Nowadays, an analogy can be made between gold deposits and cash depos-
its in banks. “In as much as the Bank issues notes that are not backed by
the metal reserve in its vaults, it creates tokens of value that are not only
means of circulation, but also form additional – even if fictitious – capital
for it, to the nominal value of these fiduciary notes. And this extra capital
yields an extra profit” (Marx 1991, p. 675). Regarding the concept of
Fictitious Capital, cf. Chaps. 5 and 6 of this book.
5. The Riksbank of Sweden, founded in 1668, and the Bank of London,
founded in 1694, are considered the first Central Banks. The latter, whose
origin is private, gradually began to exercise, through regulatory laws, the
functions of financier of the government, monetary issuer and guardian of
reserves, and later of rediscount and lender of last resort. In 1946 it was
nationalized. Most capitalist countries created their Central Banks in the
first half of the twentieth century (Freitas 2000).
6. Thus, notwithstanding its private nature, the constitution of money and its
specifically capitalist forms of manifestation are inseparable from the mod-
ern State. As Marx demonstrates in his earlier account of the concept of
money in the first chapters of Capital, therefore, before its subsumption to
the concept of capital, the State already plays a decisive role in the constitu-
tion of money as currency, as regards the definition of the price pattern and
the unit of account, as well as the minting of coins (Marx 1990, p. 222),
which presupposes the construction of a legal, technical, and institutional
framework.
7. It is, according to Prado (Prado 2016, p. 139), “a form of value that “does
not have value, because it only represents it”; when presenting this cate-
gory, the author establishes an analogy with the concept of fictitious capital,
“a nominal representation of non-existent capital”, because “even though
it is not really real, the fictitious capital is negotiable as if it were, that is, it
usually circulates as capital-value” (Prado 2016, p. 148). Its fictitious

nature, its historical process of production and generalization, and the fact
that this money is unconvertable (it does not give right to any type of ran-
som) and does not yield interest, evidences that it is not simply credit
money, but a specific social form that justifies a particular categorical treat-
ment, which is not explicit in the expository structure of Capital.
8. Cf. Chap. 7, of this book.
9. Cf. Chap. 1 of this book.
10. The great difficulty, perhaps even the impossibility, of counterfeiting bit-
coin has, in a free market, led to the creation of other virtual currencies, in
a process like that in the US, in the period referred to in the following
note, where, in counterfeiting of existing dollars, counterfeiters started to
create their own dollars on behalf of phantom companies. Currently, any-
one with the proper equipment and knowledge of software development
can create their own crypto-currency and multiply it through “mining” or
other mechanisms.
11. Cf. https://coinmarketcap. com/all/views/all/. This accelerated spread
of crypto-currencies resembles the uncontrolled creation of US dollars in
the nineteenth century, where each bank could print and issue its own dol-
lar bills, as well as large companies such as railways and mines.
See: https://www.mdig.com.br/?itemid=10519
12. Nick Szabo is frequently referred to as the progenitor of crypto-currencies,
having launched the idea of “bit gold”, seeking to “mimic in cyberspace, as
faithfully as possible, the security and confidence characteristic of gold, and
especially the fact that it does not depend of confidence in a central author-
ity” (Szabo apud Pech, 2012). Orlieb (2017) also has Marx’s critique of
political economy as a reference and analyzes crypto-currencies in the light
of the fetishism of commodity and money, maintaining important points of
convergence with this text.
13. “Bitcoin mining is very much like a giant lottery in which you compete,
through your mining hardware, with everyone on the net, aiming to earn
bitcoins. Faster mining hardware is able to perform more attempts per
second to win this lottery, while the bitcoin network adjusts itself every
two weeks or so to maintain the hash rate of one winning block in ten
minutes” (Estevão 2017). The advantages of using more powerful and
sophisticated machines reveal that this lottery is flawed. It should be added,
however, that not all crypto-currencies are liable to be mined, that is, they
must be created and put into circulation by a specific agent.
14. “The public can see that someone is sending an amount [of bitcoins] to
someone else, but without the information linking that transaction to
someone else” (Nakamoto 2008). According to Bonneau (2014), this
confidentiality is fragile, since the crossing of a set of information can lead
to the revelation of the identity of a good part of those who engage in
negotiations with bitcoins. Nevertheless, it is known that crypto-currencies

were catapulted when used in the transactions of Silk Road, a virtual space
outside any State regulation, which became known as an instrument for
the commercialization of drugs, weapons, and all kinds of illicit activities
(Christin 2012).
15. That is designed to have a maximum size of 1 megabyte, which is equivalent
to about seven transactions per second. This limitation serves to prevent the
proliferation of false transactions (spam) and to allow verification by home
computers, in order to preserve the decentralization of the system.
16. Despite the sophistication of the system, it is far from being impregnable.
On the contrary, a series of frauds have already been reported: to cite just
a few: (a) the disappearance, on 21th November 2017, of US$31 million
from Tether, the company that manages the virtual currency USDT; (b)
the theft, in April 2017, of more than R$15 million in crypto-currency
and, in December 2017, of 17% of its digital currencies, from Youbit, a
South Korean company that bought and sold crypto-currencies and that
led to its failure and which had repercussions for prices of other crypto-
currencies on the Asian markets (the Bitcoin, for example, fell 15%; see
https://brasil.elpais.com/brasil/2017/12/20/internacio-
nal/1513760990_056377.html); (c) the theft, on 6th December 2017, of
US$60 million from the mining platform NiceHash; (d) in July 2017,
US$32 million in Ethereum was stolen from the company Parity; (e) the
theft, in August 2016, of 120,000 bitcoins, worth US$72 million, from
the exchange house Bitfinex; (f) the theft, in January 2015, of 19,000
bitcoins, worth US$5.1 million, from Bitstamp, a type of crypto-currency
share; (g) the theft, in March 2014, of US$473 million in bitcoins from
MtGox, who at the time processed more than 70% of world bitcoin trans-
actions; (h) in August 2010, still in its infancy, Bitcoin Core developer Jeff
Garzik realized that a hacker had made a transaction of 184 billion bitcoins
in just one block.
Worth mentioning is the US$101 million Ethereum theft in June 2016,
which caused Ethereum creator and CEO Vitalik Buterin (who was only
19 when he created the crypto-currency in 2015) to reboot the system,
going back in time to the moment before the robbery. With this change
in the blockchain itself, which until then had been understood as defini-
tive and impregnable, the notion that crypto-coins are immune to the
designs of any kind of monetary authority has been shaken. For these
and other robberies, see, for example, https://portaldobitcoin.com/
os-maiores-roubos-de-criptomoedas/
17. Incidentally, one of the alleged advantages of crypto-currencies, a sup-
posed lowering of transaction costs, thanks to its decentralized character,
does not seem to hold up, at least in the short term. According to Malmo
estimates (2015), in 2015, a bitcoin transaction consumed 5000 times
more electricity than a credit card transaction, and the electricity equiva-
lent spent daily, on average, for one and a half US households. According
to Roberts (2017), “bitcoin mining is already consuming more comput-
ing power than Ireland’s annual electricity consumption”. With current
technology, this expense will tend to increase strongly with the passage
of time. By mid-November 2018, total energy consumption in the pro-
duction and circulation of bitcoins exceeded 73 terawatt-hours (by com-
parison, total electricity consumption in Brazil in 2017 was 467
terawatt-hours, according to the Statistical Yearbook 2018), which cor-
responds to the emission of more than 36 megatons of CO2 (see https://
digiconomist.net/bitcoin-energy-consumption). Still regarding energy
expenditure, a single bitcoin transaction is equivalent to almost 270,000
transactions made through the Visa network, and the way it is configured
the bitcoin system can perform at the most the derisory number of seven
transactions per second, while the Visa system can reach 56,000 transac-
tions per second.
18. The first deal involving bitcoin took place in the second half of 2009, at a
rate of 1 BTC = 0.0007 US$, which would be its estimated cost of produc-
tion when the computational capacity and energy then required for both
are taken into consideration.
19. If, for example, the cost of printing a $100 bill was $1.00, seignorage
would be $99.00 because the issuing agent could buy goods and services
or pay off debts and loans at the nominal value of the printed note.
Presently, seignorage is estimated through an average interest rate on pub-
lic debt securities, as the creation of money around the world is basically
performed through the records of accounting operations between the
banking system and the rest of the economy.
20. The list of persons and companies that accept bitcoin as a means of
circulation or payment can be seen at: https://coinmap.org/#/
world/29.53522956/-19.33593750/2. For example, recently, a Brazilian
construction company, Valor Real Empreendimentos Imobiliários started
accepting payment in crypto-currency in real estate of the “Minha Casa,
Minha Vida” Programme. See: https://infomoney.com.br/mercados/
bitcoin/noticias/7144657/construtora-brasleira-aceita-pagamento-crip-
tomoedas-imoveis-minha-casa-minha-vida
21. The modern credit system was able to overcome all these demands of the
movement of commodity-capital.
22. Hoarding in the form of metallic money or banknotes, besides serving as a
form of accumulation of wealth, also played an important role in regulat-
ing the necessary amount of money to establish the value of commodities
in the process of capital circulation. Each time money circulation demanded
more money, a portion of the treasured money was discharged into the
process of conversion of wealth. All excess money, unnecessary for circula-

tion, returned to the particular treasuries of wealth owners, banks, busi-
nesses, or families.
23. “Money as such is already potentially self-valorising value, and it is as such
that it is lent, this being the form of sale for this particular commodity.
Thus, it becomes as completely the property of money to create value, to
yield interest, as it is the property of a pear tree to bear pears. And it is as
this interest-bearing thing that the money-lender sells his money. Nor is
that all. The actually functioning capital, as we have seen, presents itself in
such a way that it yields interest not as functioning capital, but rather as
capital in itself, as money-capital” (Marx 1991. p. 516).
24. See Paulo Nakatani (2017).
25. Cf, https://www.blockchain.com/pools
26. See: https://bravenewcoin.com/insights/numbers-that-count-debunking-
the-fundamentals-of-btc-money-flow
27. In this respect, it is worth remembering Hebert Marcuse (1998, p. 132):
“the concept of technical reason is perhaps in itself ideology. Not only its
application, but already the technique itself is methodical, scientific, calcu-
lated and calculating domination (about nature and about man). Certain
ends and interests of domination are not granted to technique only ‘subse-
quently’ and from outside – they are inserted already in the very construc-
tion of the technical apparatus”.
28. After hayek gold, another company launched bitgold. See: https://www.
anthemvault.com/;https://bitcoinmagazine.com/articles/hayekgold-
anthem-vault-represents-physical-gold-bitcoin-blockchain-1433455153/
and https://www.bitcoinmining.com/bitgold-goldmoney-review/
29. Recently, China announced that its payments on the oil account would be
in renminbi convertible into gold, in a complex piece of financial engineer-
ing. See: http://resistir.info/eua/roberts_18out17.html
30. As Romano (2004, p. 16) commented: “Under the merciless mechanism
and intellect, there are living bodies, souls that feel and vibrate with the
beautiful and the true. Bodies that, if they could, would wear luxurious
cosmetics with a lot of ornaments and sumptuous Sunday clothes, souls
that would unfold in the reverie of dreams awakened by the five senses in
all the arts, but capitalism prevents the somatic and soul-feast, and pro-
duces its opposite”.
31. As written elsewhere (Nakatani and Mello 2018), “the deification of gold,
which has led to extermination, slavery and to the torture of millions
throughout the history of capitalism, and which in some places continues
to catalyse military conflicts, genocide, and the subjection of multitudes to
degrading conditions of work, such deification, we said, reappears here as
a farce, a pseudo-nostalgia, an ode to fetishism, which assumes the most
unfortunate forms of manifestation”.
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CHAPTER 5
Financialization and the Contradictory Unity

Between the Real and Financial Dimensions
of Capital Accumulation
Paulo Nakatani, Adriano Lopes Almeida Teixeira,
and Helder Gomes
Introduction
Several scholars of the contemporary phenomenon conventionally known
as financialization have returned to Marx to seek elements that clarify the
causes that culminated in the economic crisis of 2008. This has inexorably
led them to the famous Section V of Volume III of Capital.
P. Nakatani (*)
A. L. A. Teixeira
H. Gomes

https://doi.org/10.1007/978-3-030-23360-0_5
88 P. NAKATANI ET AL.
From there, a series of new challenges arise. Volume III is organized in

a very different way from that in Volume I. After the treatment of the
production and circulation processes in Volumes I and II, respectively,
Volume III raises the expectation that it will function as a synthesis of the
preceding ones, “the actual production process, the unity of the immedi-
ate production process and the process of circulation” (Marx 1991,
p. 967). It tears down simplifications, introduces new variables and new
determinations, such as profit, interest, land rent, credit, competition, and
so on, and should contain a final and decisive treatment of the financial
aspects of capitalist production. But that’s not what we find. Despite the
importance of Section V, with rich digressions and insights from Marx,
those questions are dealt with in the form of a tangle of pointers, quota-
tions, statistical data, and general assumptions that are more effective in
creating new questions than in resolving those that were already under
investigation. These are issues that, as Heinrich (1989) points out, conflict
with Marx’s own analysis of the content of Volume III:
In presenting the reification of the relations of production and the auton-

omy they acquire vis-à-vis the agents of production, we shall not go into the
form and manner in which these connections appear to them as overwhelm-
ing natural laws, governing them irrespective of their will, in the form that
the world market and its conjunctures, the movement of market prices, the
cycles of industry and trade and the alternation of prosperity and crisis pre-
vails on them as blind necessity. This is because the actual movement of
competition lies outside our plan, and we are only out to present the inter-
nal organisation of the capitalist mode of production, its ideal average, as it
were. (Marx 1991, pp. 969–970)
However, a light must be seen in the shortcomings of the section, as

Marx did not write it for publication and there is no point in reproaching
Engels because he did no more than revise the manuscripts and publish
them. The inaccuracies of the text cannot be put down to the fact that the
text was not organized by Marx,1 but to the very complexity represented
by the real movement of capitalist society. By introducing competition
analysis, Volume III becomes an invaluable resource for those seeking to
understand the financial phenomena of today.
Indeed, if Marx’s pathway of studies was marked by disruptions, it is
still possible to see indications of answers that he found in the course of his
investigations, which, as something inherent in a research process, could
not follow an exact timeline. This can even be observed in the order in
which Marx produced Volumes II and III, since the latter was drawn from
5 FINANCIALIZATION AND THE CONTRADICTORY UNITY… 89
a manuscript written in 1864–1865, whilst the former was from texts writ-
ten between 1868 and 1881 (Heinrich 2014, pp. 19–20). Although he
had already dealt with capital in its diversity in the Manuscripts of
1864–1865, he understood that further studies on the process of circula-
tion of capital were necessary.
This chapter intends to show how we can use Marx’s Capital for the
understanding of contemporary capitalism, not only from Volume III but
from a perspective that reaffirms the importance of Volume II. First, let us
discuss the relationships between capital in general and individual or pri-
vate capital; capital in general as a totality in movement, at a higher level
of abstraction, and individual capitals as the forms of existence and mani-
festation of capital in general,2 at a more concrete level. We will start from
the functional forms of industrial capital, namely, monetary capital, com-
modity capital, and productive capital, in the cycle of capital and then seek
the links between the theoretical and historical by introducing the rela-
tionships between capital and the State in its historical and concrete move-
ment. Our reading has the process of circulation of capital as one of the
main foundations, as dealt with by Marx in the first four chapters of
Volume II, and particularly, the advances in the development of the mon-
etary form of capital and its unfolding into interest-bearing capital and its
fictitious forms of capital in Volume III. With this, we also seek to over-
come the critique of the dichotomy between real and monetary accumula-
tion, between what critics call industrial and financial capital, with which
we do not agree since they are not categories that Marx develops. Industrial
capital is capital in its entirety, and financial capital, mistakenly used in
some translations of Capital, is a category developed by Hilferding. The
concrete movement must show not only a link between the functional
forms of capital but its continuous metamorphosis from one form to
another, even though in their concrete manifestation, they appear to
be separate.
Many readings on Capital deal with the categories developed in
Volumes I and III as if they were a sequence moving from the more
abstract to the more concrete, our view is that this should is not be the
case and that the categories he develops are dealt with from more abstract
levels to more concrete levels throughout Capital. They continue to
receive new determinations in which the level of abstraction is modified.
In this process, for example, categories and determinations—which do not
appear and are not developed in Volume I—are already presupposed, and
their more concrete determinations are only considered later. As a more
precise example, in the study of money in the first three chapters, the con-
crete determinations of the credit system and credit money were not con-
sidered, although the existence of the latter was indicated by Marx. He
supposes that money is gold, but at that point, money in its concrete
forms as national currencies, as well as credit, was already fully developed.
Forced State paper, or unconvertible,3 currency already existed concretely,
though it was not yet dominant, which had already been pointed out by
Marx in Volume I of Capital:
One thing is necessary, however: the symbol of money must have its own
objective social validity. The paper acquires this by its forced currency. The
state’s compulsion can only be of any with that internal sphere of circulation
which circumscribe by the boundaries of a given community. (Marx
1990, p. 226)
By means of our proposed approach, we intend to highlight the limits

and misunderstandings of some relevant analyses on financialization, a term
that lacks conceptual density and has been misused in designating an exces-
sively wide and heterogeneous range of phenomena.4 It may be possible to
partially agree with some propositions of heterodox authors, who mobilize
the term, “to refer to the growing importance of financial activities as a
source of profits in the economy” (Krippner 2011, p. 27), or refer to the,
“increasing role of financial motives, financial markets, financial actors and
financial institutions in the operation of the domestic and international
economies” (Epstein 2005, p. 3), but it will become clear that financial
phenomena are incomprehensible without the Marxian critique of value
and the subsumption of labor to capital. It is necessary to consider finan-
cialization in the light of the global dynamics of capital accumulation as a
whole. In doing so, we can avoid the misunderstanding of Krippner’s well-
known definition, according to whom financialization is, “A pattern of
accumulation in which profits accrue primarily through financial channels
rather than through trade and commodity production” (Krippner 2005),
as well as the error of understanding the phenomenon exclusively from the
dynamics of class and class fractions and from the expressions in State
administration that they tend to sustain (Palley 2013) (Crotty 1993), and
within the critique of political economy (Duménil and Lévy 2010).5 In the
same way, interpretations of financialization as a historical aberration, or
financial markets as the, “locus of all deviations” (Duménil and Lévy 2010,
p. 281) will be banished, as well as the proposition that, “financialisation is
a historical outcome of the persistent malfunctioning of real accumulation

over the last four decades” (Lapavitsas and Mendieta-Muñoz 2016). On
the contrary, the prominence gained by interest-bearing capital and the
fictitious forms of capital will prove to be a necessary extension of the evo-
lution of capitalist social formations and an expression of their contradic-
tory character and of the structural crisis in which they find themselves.
Therefore, although it maintains some affinity with approaches, such as
Fine (2013), Sotiropoulos et al. (2013) and Chesnais (2016), among oth-
ers, this analysis intends to enrich the understanding of contemporary capi-
talism, and more specifically, of financialization, from the perspective of the
critique of political economy.
Capital in General and Individual or Private Capital

The first author to highlight the category of capital in general was
Rosdolsky in The Making of Marx’s Capital, first published in German in
1968 (Rosdolsky 1977). He pointed out that the category of capital in
general is at a level of abstraction that excludes competition between indi-
vidual capitals and the credit system, which Marx himself explains in
Grundrisse and elsewhere.6 Rosdolsky’s interpretation generated a contro-
versy between capital in general and competition (many capitals) in the
1970s and 1980s. For some, Marx seemed to abandon the category of
capital in general (Heinrich 1989); for others it was maintained (Moseley
1995) or reconfigured (Fineschi 2013).
Heinrich criticizes Rosdolsky and argues that the category of capital in
general can no longer be sustained by his interpretation of Marx’s texts,
“Capital can no longer be understood in terms of the previous distinction
between ‘capital in general’ and ‘competition’: the concept of ‘capital in
general’ is shattered” (Heinrich 1989, p. 75). For Moseley, Heinrich
makes a mistake in his interpretation of capital in general and proposes an
alternative, “I re-examine Heinrich’s arguments and conclude that they
are based on a mixed definition of capital in general and that Marx main-
tained the distinction between capital in general and competition in the
final version of Capital” (Moseley 1995, p. 16). Fineschi, for his part,
asserts that, “‘Capital in general’ should be the first part of the first book.
However, with the development of the theory the plan underwent signifi-
cant though not radical changes” (Fineschi 2013, p. 75).
We agree with Moseley’s interpretation, but we will not develop this
debate,7 not least because there are other philosophical and methodological
readings of the logical relations between categories in Marx and Hegel, as

detailed in (Dussel 2012) and Moseley and Smith 2014). What interests us
is to show capital as a totality, an abstraction in motion, and its concrete
manifestation. We will use as the main text Volume II of Capital. In this
volume, Marx refers to capital, in general, twice. First, when he is studying
the period of circulation and made a critical remark on the political econ-
omy, “But what political economy sees is only the appearance, i.e. the effect
of the circulation time on the accumulation process of capital in general. It
conceives this negative effect as positive, because its results are positive”
(Marx 1992, p. 204, our attribution), and second, when discussing Adam
Smith’s theories on fixed and circulating capital:
Here Adam Smith clearly asserts that the property of being capital cannot be
attributed to things as such and under all circumstances but is rather a func-
tion with which they are or are not endowed according to the given condi-
tions. But what is true of capital in general is also true of its subdivisions.
(Marx 1992, p. 281. Our attribution)
In Volume II, as Rosdolsky asserts in his analysis of Rosa Luxemburg’s

criticisms, that Marx is still analyzing within the limits of capital in general,
“The main difference is rather that the first two volumes do not go beyond
the analysis of ‘capital in general’ whereas the third volume does and
therefore represents the transition to the analysis of, ‘many capitals and
their interaction with one another’” (Rosdolsky 1977, pp. 65–66).
Volume II includes the category of social capital in the title of Section
III, the reproduction and circulation of total social capital. However, it
appears from Chapter 1, in the cycle of money capital, “M … M′ can be
the first circuit of the capital, it can be its last; it can be taken as the form
of the total social capital” (Marx 1992, p. 140, our attribution).8
According to Heinrich:
The methodical importance of this distinction between individual capital

and total social capital is systematically developed for the first time in manu-
script II, and later in a retrospective reference to volume I. Only on the basis
of this unity can we investigate the “total process” in Volume III of Capital:
not as a succession of categories, but as a reference of capital to oneself. But
in order to analyse the latter, capital must first be determined as a unit that
makes this self-reference in general possible. (Heinrich 2014, p. 18)
The Metamorphoses of Capital and Its Cycles

The interdependence of Volumes I and II is notorious. Volume I adopts
simplifications, for example, that the value produced will be realized, that
is, that all goods produced will be sold. Volume II sets out to incorporate
the difficulties of circulation but adopts the opposite simplification. In it,
the process of the production of surplus value happens smoothly. Capital,
which appeared in Volume I in essence, is now investigated by Marx as a
process in motion, with continuous change between its functional and
material forms.
After studying the process of capital production, Marx begins Volume II
by analyzing what he calls “cycles of capital”: that of money capital, of
productive capital and of commodity capital. The first three chapters ana-
lyze each cycle, and in the fourth, Marx analyzes them together in an
integrated way. The treatment of the issue is always restricted to the techni-
cal aspects of circulation, without discussing the division of specialized
functions that would take place among capitalists themselves in which
some would concentrate their activities in the monetary sphere and others
in the productive or commercial sphere. It always highlights, however, how
the movement of capital in general, as an abstraction, is concretely realized
through individual capitals.
Marx’s analysis focuses on the successive and continuous changes of
form that capital undergoes in its three consecutive phases,9 which in the
end will return to its primitive form. That is, it studies the cyclical move-
ment of social capital that occurs through metamorphoses. The only way
to understand the movement of social capital is through its continual
change of form. In each phase, capital value assumes a form which is
related to its function in the valuation process. Social capital does not, and
cannot, move, except through its change of form and each of the forms
must have the necessary properties to perform its respective function.
They are the functional and autonomous forms of capital, constituted by
the monetary, productive, and commodity forms of capital.
Here, unlike many interpretations, we consider these forms to be
autonomous, as abstractions at the level of capital in general. These three
forms constitute moments of the metamorphosis or the cycle of industrial
capital M ...C ... M′,10 and are, therefore, at the same level of abstraction.
Marx chose to begin with the analysis of the cycle of money capital,
although he could have taken any of them as a starting point, given the
cyclical nature of the valuation process. The above-mentioned cycles can
be illustrated as follows:
(I) Cycle of monetary capital: M−′C ... P ... C′−′M′

(II) Cycle of productive capital: P...C−′M′−′C ... P
(III) Cycle of commodity capital: C′−′M′−′C ... P ... C′
Together, the cycle of industrial capital in continuous movement can be

expressed in the following way:
mp mp
M − C  … P … C′ − M ′ … M − C  … P … C′ − M ′ … M − C
L L
mp
 … P … C′ − M ′ …
L
In the cycle of monetary capital, M–C...P...C′-M′, money is capital not

because it is money, but because it is inserted in the circulation process in
which specific goods will be purchased, aiming at a future accumulation of
value: “only in a different mode of existence, i.e. capital value in the state
or form of money – money capital” (Marx 1992, p. 112). In the func-
tional form of monetary capital, it fulfils the functions proper to money,
namely means of circulation and means of payment: “the capital value in
its monetary state can perform only monetary functions, and in others”
(Marx 1992, p. 112). In the first phase, M–C, the capitalist buys specific
commodities, the labor force (L) and the means of production (mp),
which will be used in the productive process P.
At that moment, capital assumes the functional form of productive
capital. In this phase, the material elements of capital will be consumed in
the process of creating new values of use, with an added value. It can be
seen that if there was no change in the magnitude11 of value during the
metamorphosis of money capital into productive capital, there will be a
shift from productive capital to commodity capital. So, we arrive at the last
phase, C−M′, in which capital takes the commodity form, which must be
sold to have its value realized. Therefore, there are three phases, of which
the first and the last, M−C and C′−M′ phases belong to circulation, and
the intermediate, C ... P ... C′, refers to production.
In the cycle of productive capital, P...C′-M′-C...P, the phases are
inverted and represent their continuous renewal. While in the cycle of
monetary capital, the phases corresponding to the circulation appeared at
the beginning and at the end M−C and C′−M′, in the cycle of productive
capital appears as intermediary phases. The capital P, made up of com-

modities, labor power, and means of production, takes on the functional
form of productive capital. “It signifies that the function of the industrial
capital that exists in its productive form does not take place once and for
all, but is periodically repeated, so that the new beginning is given by the
point of departure itself” (Marx 1992, p. 144). In the production cycle,
we can see what was not evident in the cycle of money capital, namely: (1)
the uninterrupted nature of the capitalist production process, since it does
not make sense to start at P, return to P and then stop, because capital only
comes into its productive form because its aim is to initiate another pro-
cess of accumulation, whereas, in the monetary capital cycle, the capitalist
could interrupt at M′and hoard it for some time; (2) the origin of capital
is evidenced, since the initial P is the result of the previous work carried
out by the working class, and the initial M could be considered a result of
the capitalist’s own work.
It should be noted, however, that the movement of social capital
undergoes continuous interruptions in each of its cyclical forms. In the
monetary form, the interruptions occur as hoarding, the productive
form interrupts the movement of the monetary form of capital.12 In
commodity form, interruptions in circulation occur either through capi-
tal stock in the productive form or in the form of finished goods. All
these disruptions mean that a portion of capital is accumulating as one or
other of these forms, but without functioning as capital. So, when we
consider the concrete movement of capital, the cycle M-C...P...C′-M′ is
occurring at the same time in the individual units of capital, in parallel
and superimposed.13
The last cycle, and we could say the last perspective, on the analysis of
the point of departure and arrival of capital in its process of movement is
the cycle of commodity capital, C′-M′-C...P...C′. The already valued com-
modity, including added value, is at the beginning of the cycle, which dif-
ferentiates it from the two previous cycles which started from M and P and
are still lacking in value.14 In this cycle, it becomes even more evident that
the origin of capital lies in the worker’s prior work. The sale of the goods
must take place at the beginning, as indicated by the first phase C′-M′.
Note that M and P as starting points cannot necessarily be considered
capital, since the material form in which they appear does not define their
nature, unless M becomes the commodity workforce and means of pro-
duction and P is in operation. C′, in turn, already appears at the beginning
as a result of an earlier valuation process:
C′ ... C′ is the only circuit in which the capital value originally advanced
forms only a part of the extreme that opens the movement, and in which the
movement in this way proclaims itself from the start as a total movement of
industrial capital; a movement both of the part of the product that replaces
the productive capital and of the part that forms surplus product and is on
average partly spent as revenue, and partly has to serve as an element of
accumulation. (Marx 1992, p. 177)
Therefore, the metamorphoses that capital goes through in these cycles

is what characterizes the process of accumulation in movement.15 Hence,
Marx will define capital as the dialectical unity of the three cycles. Monetary
capital, in its continuous movement, runs through the other two cycles, as
well as productive capital and commodity capital. Marx develops the
industrial capital category as follows:
The two forms that the capital value assumes within its circulation stages are
those of money capital and commodity capital; the form pertaining to the
production stage is that of productive capital. The capital that assumes these
forms in the course of its total circuit, discards them again and fulfils in each
of them its appropriate function, is industrial capital – industrial here in the
sense that it encompasses every branch of production that is pursued on a
capitalist basis. (Marx 1992 p. 133)
Social Capital and Individual Capitals

In fact, it is not true that a certain individual capital must altogether aban-
don a certain functional form, and from there, move to the other form. It
exists simultaneously in all three forms, “Thus industrial capital in the
continuity of its circuit is simultaneously in all its stages, and in the various
functional forms corresponding to them” (Marx 1992, p. 182). In the
same way, each part of the individual capitals is simultaneously in one of
these functional forms, “In reality, however, each individual industrial
capital is involved in all three at the same time. The three circuits, the
forms of reproduction of the three varieties of capital, are continuously
executed alongside one another” (Marx 1992, p. 181).
With the mode of production fully developed, the first metamorphosis
M-C represents the sale that one capitalist makes to another, from the
point of view of individual capitals. One is the seller and the other is the
buyer. At this point, the seller has one of the components of C and is com-
pleting its global cycle M-C...P...C′-M′, while the buyer is initiating its
cycle of the commodity form C′-M′-C...P…C′:
C-M on the part of the commodity possessor is M-C on the part of the pur-
chaser; the first metamorphosis of the commodity in C-M is the second
metamorphosis of the commodity which steps forth as M; conversely with
M-C. What was previously demonstrated, concerning the intertwining of the
metamorphoses of a commodity at one stage with those of another commod-
ity at another stage, therefore holds good for the circulation of capital, in so
far as the capitalist is buyer and seller of commodities, and his capital accord-
ingly functions as money towards others’ commodities, or as a commodity
towards others’ money. This intertwining, however, is not by this token alone
an entwining of the metamorphoses of capitals. (Marx 1992, p. 193)
Thus, total social capital, as an abstract, moves concretely through the

individual, or private, capitals that function in an intertwined way. From
this point of view, the multiple individual capitals are functionally depen-
dent. Each individual capital at the beginning of its cycle, M-C, depends
on a variety of other capitals. It needs to find in the market of means of
production all the raw materials and other materials for it to progress to
the second moment of the cycle. It also needs to find in the market the
commodity labor force appropriate to the concrete form that its capital
must assume as productive capital.16 The greater the magnitude of
individual capital and the more complex the commodity produced, the
greater the diversity and variety of suppliers it needs.17
If capital at its highest level of abstraction is described as a process in
continuous motion, then at the concrete level of individual capitals, it is
undergoing continual interruptions. Marx elaborates on this question in
the chapters on circulation period and the rotation of capital, but he is
already advancing this point in Chapter IV of Volume II:
The various stages here constitute an equal number of interruptions. […]

the total capital exists and functions simply as money capital. Once it is
transformed into productive capital, it functions neither as money capital
nor as commodity capital. Its entire circulation process is interrupted, just as
on the other hand its entire production process is interrupted as soon as it
functions in one of the two stages of circulation, whether as M or as C’.
Thus the circuit P ... P would present itself not only as a periodic renewal of
the productive capital, but equally as an interruption in its function, the
production process, until the circulation process had been completed;
instead of taking place continuously, production would be pursued only in
spasms and be repeated only after periods of time of accidental duration,
according to whether the two stages of the circulation process were accom-
plished quicker or more slowly. (Marx 1992, pp. 181–182)
And in the same vein;
This is in fact true for each individual portion of capital in motion, and all
portions of the capital go through this movement in succession. […] The
circuit of capital is a constant process of interruption; one stage is left
behind, the next stage embarked upon; one form is cast aside, and the capi-
tal exists in another; each of these stages not only conditions the other, but
at the same time excludes it. (Marx 1992, p. 182)
These interruptions during the cycle of industrial capital create quanti-

ties of capital that are not in motion, that is, they are not appreciating.
Each unit of capital needs a greater or lesser stock of raw materials and
other materials to maintain regular production. This stock is still in the
form of merchandise and does not contribute anything to the production
of surplus value. At the other end of the cycle, finished goods are held in
stock as required to meet the final demand for the product. If an individ-
ual producer does not have enough inventory to serve their customers,
they risk losing market share to their competitors. Moreover, he can
produce it but cannot sell it, which Marx called the mortal leap of the
commodity.
Each unit of capital must continuously carry out the cycle
M-C...P...C′-M′. Every day every capitalist receives a part of his capital-
value in the form of money and keeps it to meet his payment commit-
ments. Part of this capital value, if it is intended for expanded accumulation,
requires an amount that is necessary according to the concrete require-
ments of its production process, “The surplus-value thus builds up into a
hoard, and in this form it latent money capital. Latent, because as long as
it persists in the money form, it cannot function as capital” (Marx 1992,
p 158). On this question, Marx goes on to say;
Thus, the accumulation of money, the formation of a hoard, appears here as

a process that temporarily accompanies an extension of the scale on which
industrial capital operates. Temporarily, because as long as the hoard persists
in its state as a hoard, it does not function as capital, does not participate in
the accumulation process, but remains a sum of money that grows only
because money available to it without any effort on its part is cast into the
same coffer. (Marx 1992, p. 163).
He concludes this point on the accumulation of money as follows:

Here we take the accumulation of money in its original real form, as a real
hoard of money. It can also exist merely in the form of favourable balances,
of sums owed to the capitalist who has sold C′. As far as concerns the other
forms, in which this latent money capital may in the interval exist in the
actual shape of money which breeds money, e.g. as interest-bearing deposits
in a bank, bills of exchange or securities of one kind or other, these do not
belong here. In that case, the surplus-value realised in money performs par-
ticular capital functions outside the circuit of the industrial capital from
which it arose; functions which have nothing to do with that circuit as such,
and assume the existence of functions of capital distinct from the functions
of industrial capital, which have not yet been developed here (Marx
1992, p. 164).
Throughout Volume II, Marx is assuming that all money is metallic

money, he does not consider symbolic money or credit money, even
though he advanced this form in Chapter 3 of Volume I.18 He also does
not consider the existence of the credit system, which will only be studied
in Volume III with the most concrete determinations of the reproduction
of capital. But, as we have already mentioned, we must not forget that the
manuscript of Volume III predates Volume II.
Next, we set out to integrate these new determinations into the cycle of
capital, necessary for understanding the functioning of fully developed,
monopolized, and globalized capitalism in its contemporary phase. We
have explored the development of the credit system and the transforma-
tion of metallic money into credit money in the context of globalized capi-
talism and in the periodic crises of overaccumulation since the 1970s.
The Movement of Capital

in the Twenty-First Century
As it was in the nineteenth century, we can also represent the cyclical move-
mp
ment of capital in general through the sequence, M − C  … P … C′ − M′,
L
in its continuous metamorphoses, through the autonomous forms of
money capital (M), commodity capital (C), and productive capital (P). The
production of new wealth through the exploitation of the workforce
remains the same, although there have been profound changes resulting
from new inventions and technologies that have produced an enormous
increase in labor productivity.
The cycle of individual or private capitals also remains the same and can
be represented in the same way. However, the structuring of these indi-
vidual capitals has been profoundly modified and is extremely complex,
especially with the wholesale development of the credit system. The initial
advance of capital (M), in the form of a continuous action proper to the
process of capital appreciation since the dawn of capitalism, was modified
through the process of monopolization of the economy and the develop-
ment of credit. Thus, private capital units were developed not only by
small family groups of shareholders in Anonymous Societies but also by
thousands of individual shareholders in the same unit without excluding
other forms of organization of individual and family capitalist units.
Large corporate corporations now have cross, or reciprocal, participa-
tion and equity controls in the form of affiliated or controlled companies
forming giant conglomerates. A unit of this type of monopoly capital can
control dozens of others at the same time in the same branch of activity or
many different ones. These gigantic corporations have become globalized
and operate frequently on every continent. A few hundreds of them com-
mand most of the production in various economic sectors like aviation,
petroleum, chemistry, electronics, and computer science. Even without
acting directly, some of them can control production and marketing, par-
ticularly in agriculture, while controlling the supply of the means of pro-
duction and inputs and the purchase of the final product.
The development of investment funds, mutual funds, and pensions, as
well as the transformation of commercial banks into universal or multiple
banks,19 has further diversified and modified the origin of the initial
M. It has allowed the accumulation of huge amounts of interest-bearing
monetary capital. We are in a phase of capitalism where the cycle
mp
M − C  … P … C′ − M′ has not only been modified by the more con-
L
crete form that Marx presents with the introduction of the credit system,
“The movement is thus: M-M-C-M′-M′” (Marx 1991, p. 461), but with
the diversification and complexity of the enormous number of agents
that provide the initial capital M as credit or equity. The main modifica-
tion in this process, however, has been the emergence of private capital
units in the late nineteenth and twentieth centuries, which came to have
the participation and sometimes the control of investment funds, mutual
funds, pension funds, and banks.20
Volkswagen, for example, which operates in more than 150 countries
and competed for first place with Toyota as the largest automobile seller in
2016, controlled the following brands: Volkswagen, Audi, Seat, Skoda,

Bentley, Bugatti, Lamborghini, Porsche, Ducati, Scania, and MAN. For the
development of the individual cycles of this mass of capital, it also operates
in the financial and banking area.
The control of this corporation, that was almost a family affair, was
fought over by the entrance of new shareholders. But in this new phase of
capitalism, which we call speculative and parasitic, it became much more
than about control, the dispute moved into the field of stock value. Firstly,
a minimum requirement of a distribution of dividends at 15%21 and, sec-
ondly, a continuous increase in the price of shares in the stock exchange,
that is, the stock value.22 This dispute included the transfer of the specula-
tive, short-term, and highly alienated logic of the M-M′ cycle of interest-
bearing capital to the sphere of the productive form of capital, with
demands on the use of the labor force that had to become multipurpose,
available, and dispensable at the same time.
As for the autonomization of the forms of industrial capital, sectors
have also been developed specific to agriculture, commerce, industry, ser-
vices, banks, and finances. Many Marxist authors have associated these
sectors with fractions of the bourgeoisie with distinct or even opposed
interests as farmers, industrialists, merchants, or bankers, resulting from
competition for the appropriation of surplus value. If, from the point of
view of capital in general, we can affect this separation, we consider that
this is not possible at the more concrete level of individual capitals. Each
company, small, medium, or large, daily reproduces the cycle of capital,
mp
M − C  … P … C′ − M′. No single unit of capital, be it commercial, agri-
L
cultural, industrial, service, or financial, can move and reproduce with-
out the continuous metamorphosis of money into commodity, productive
capital, new commodity, and once again into the form of money. This
cyclical, continuous, day-to-day movement of individual units must take
place through a continuous interweaving between an individual capital
and a variety of others, as well as the ongoing relationship of its final
buyers, whether consumers, governments, or other units of capital. This
entanglement does not exclude the intense competition between multi-
ple capitals, either for the control of sources of raw materials, their
acquisition or financing, or in the competition for markets, price compe-
tition, or product diversification, always in search of greater participa-
tion in the value produced.
The production and appropriation of surplus value cannot be consid-

ered or explained only at the level of individual capitals.23 It occurs at the
level of global social capital, and at the same time, at the level of individual
capitals. The debate on the production and appropriation of surplus value,
considered solely at the level of individual capitals, for us, has become
sterile. In the current stage of global integration of production chains, it is
increasingly necessary to deepen the study on production and transfers of
surplus value between national states.
In contemporary capitalism, with the full integration of banking net-
works in mediating the form of money in its functions as means of circula-
tion and means of payment, most operations in the process of the
circulation of social capital must pass through the banks. Increasingly, the
concrete unconvertable State currency has lost its importance as a means
of circulation and means of payment, being replaced, even in the smallest
purchase and sale transactions, by debit or credit cards. The explosion of
virtual currencies24 and the integration of every individual directly into the
banking networks through microchips or smartphones has led many authors
to conclude the end of money.25 Here we must emphasize that technologi-
cal developments can surpass the concrete and historical forms of curren-
cies that we know. However, money as an abstract social form cannot
disappear if the mode of functioning of the production and circulation of
wealth is based on the commodity form. The movement of the c ommodity
form, within the cycle of capital in general, necessarily requires the exis-
tence of the money form, through which it effects its metamorphosis and
the dynamic movement of capital.
The State in the Dynamics of Capital

The question is how all these more recent transformations happened and
were possible in contemporary capitalism. As we have seen, the money
form is fundamental to the movement and dynamics of the circulation of
capital. Without it, continuous changes of form would be impossible. The
building of commodity and money as social forms was constituted
throughout the long historical process of humanity, thousands of years
old. Trade, as one of the foundations of capital form, is the starting point
for the understanding of, “antediluvian forms, merchants ‘capital and usu-
rers’ capital” (Marx 1990, p. 266).
In the period of transition from feudalism to capitalism, the minting of

coins in Western Europe was specifically assigned to the prince of the
region. According to Oresme, in a text from 1355:
It was formerly determined [...], to prevent fraud, that no one should be

permitted to manufacture money or to print a figure or image on the gold
and silver of his property; but, on the contrary, it was ordered ... to be done
by a public person, with the delegation of a large part of the community.
(Oresme 2004, p. 43)
So, since ancient times, coin minting was centralized by some type of
government, but the large number of small kingdoms made a large variety
of coins with different denominations and different weights. Since then,
money traders (originally goldsmiths) have emerged, as well as the
exchange houses that became banks. From the exchange business, “(...)
developed exchange banks, in which silver (or gold) functions as world
money26 – known as the bank or commercial money – as distinct from cur-
rency” (Marx 1991, pp. 433–434). In contemporary capitalism, the func-
tion of world money was exercised by the US dollar following the Bretton
Woods Agreement in 1944. With the end of the convertibility of the dol-
lar into gold, unilaterally decreed by President Richard Nixon, the dollar
became a fully fiduciary, non-convertible, State paper currency.
With the full development of capitalism, the regulatory and control
operations of the banking and financial system were concentrated in
central, state,27 or private banks. Many major private banks initially received
the prerogatives of a central bank and were later nationalized, such as the
Bank of England, or were created as private, as in the particular case of the
US Federal Reserve (FED) which was explicitly created with the function
of central bank at a stroke28 on December 23, 1913. In any case, central
banks operate at the level of the circulation of capital in general, guaran-
teeing the monetary and credit conditions for the effective circulation of
capital. The full restructuring or reorganization of the monetary and credit
systems was only consolidated with the generalization of the central banks
after the Second World War.
In addition to the primary creation of currency, central banks must be
active in regulating and controlling exchange rates, the base interest rate,
and the public debt. They must regulate, control, and oversee the entire
system of bank clearing, bank reserves, and the open market. The creation
of money and its circulation, as well as part of its transformation into
interest-bearing monetary capital, begins to circulate because of the daily

operations of the central banks of each nation State. At the global level,
these mechanisms are outside national laws and regulations, and the bank-
ing system can, through the same mechanisms, continue to create the
post-war world currency.
Central banks have also received the prerogatives of being the bankers
of governments, the custodian of their reserves,29 and of executing a mon-
etary policy whose purpose is the maintenance or stability of the value of
money by controlling the quantity in circulation, according to the princi-
ples of the quantitative theory of the currency, thoroughly criticized by
Marx. In this way, central banks are the main players in the foreign
exchange and money markets,30 as well as continuously executing the col-
lection operations and monetary payments of national treasuries.
Let us look at this in more detail:
(1) In central banks operations with the national treasures, they daily
and continuously receive all taxes, fees, contributions, and pay-
ments made by the population. They also make all payments for
purchases, wages, debts, investments, and other commitments of
the governments. In this market, all national treasury receipts con-
stitute a cancellation or destruction of the national currency and all
expenditure on primary money creation.
(2) In the currencies market, central banks buy all available foreign
currency, particularly the most important, at the same time as they
sell them.31 With each purchase, the central banks are creating new
currency, and at each sale, they are cancelling or destroying the
previously created currency.
(3) On the open market, where national treasury securities transactions
are carried out, every time central banks buy securities owned by
their holders, it is creating currency, and each time it sells, it is can-
celling or destroying currency. In this market, all the monetary
capital available in the form of money is converted into fictitious
capital, into public debt, with various interest rates according to
their maturity dates. A very important operation carried out daily
in this market is known as overnight in which daily securities are
bought and sold, either between the central bank and the banking
system, or between the banks themselves in repo operations. Such
operations were already being carried out in the nineteenth century.
Chapman says that the banks’ custom of investing their surplus money capi-
tal for a short term in the purchase of Consols and treasury bills has greatly
increased in recent times, since it became the custom to lend out this ‘money
at call’ (i.e. money whose repayment may be demanded at any time, from
one day to the next). (Marx 1991, p. 665)
In the same way that central banks, commercial banks, and multiples
also have the capacity to create money and credit as capital.32 This point
had already been explained by Marx:
In as much as the Bank issues notes that are not backed by the metal reserve
in its vaults, it creates tokens of value that are not only means of circulation,
but also form additional – even if fictitious – capital for it, to the nominal
value of these fiduciary notes. And this extra capital yields it an extra profit.
(Marx 1991, p. 675)
As we saw earlier, each unit of individual capital daily and constantly

mp
rotates through the cycle of its capital, in the form M − C  … P … C′ − M′.
L
At the end of the daily cycle of capital, these units of capital are relieved of
part of their capital in the form of money. This money is usually deposited
in some account in a bank, as if it were hoarded. The whole set of indi-
vidual capitals is in the same situation. The mass of latent monetary capi-
tal, to which we have already referred, is gathered in the banking system,
which, at the end of each day, performs the whole process of compensa-
tion between the multiple units of capital and between the multiple bank-
ing capitals. The whole mass of monetary capital, which Marx considered
to be hoarding, can be transformed into capital, a value that generates
more value. Furthermore, the amount of money required for the daily
circulation of capital is controlled through the operations of the central
bank’s effected with the National Treasury and the banking system.33
So, the banking system converts almost all surplus capital, in the form
of idle currency, into interest-bearing capital in the form of government
bonds34 and the next day returns the necessary portion of this global
amount in book-entry trust money, needed by the circulation of capital in
general as a means of circulation and means of payment. As such, the dif-
ferent national states are creating, reproducing, and expanding a growing
mass of public debt that starts to grow mainly through the payment of
interest. In this way, interest-bearing capital assumes one of its new forms:
that of fictitious capital:
The state has to pay its creditors a certain sum of interest each year for the
capital it borrows. In this case the creditor cannot recall his capital from the
debtor but can only sell the claim, his title of ownership. The capital itself
has been consumed, spent by the state. It no longer exists. […] But in all
these cases, the capital from which the state’s payment is taken as deriving,
as interest, is illusory and fictitious. (Marx 1991, p. 595)
The accumulation of capital in its money, commodity, and produc-

tive forms may not effectively mean capital accumulation because it may
be a technical moment within its own dynamics or of periodic crises
when portions of capital are stagnant in any of the autonomous forms.
But in the case of monetary capital, it can effectively constitute accumu-
lated capital. Not in its regular meaning of value that accumulates
through the process of production of surplus value in the industrial
cycle, but as part of social capital that receives interest, dividends, or
capital gains. In the case of a portion of the money capital, which
mp
finances the cycle M − C  … P … C′ − M′, in the form of interest-bear-
L
ing capital, there is an accumulation of real capital. Another portion,
which accumulates in forms derived from interest-bearing capital, in
fictitious forms such as equity capital or public debt, do not directly
participate in real accumulation, but can be continuously converted and
reconverted from the fictitious form into the form of money and inte-
grated into the cycle of industrial capital. Similarly, bank capital35 has a
part that also consists of real accumulation, that which enters the cycle
M-M-C-M′-M′. The banking system, like all private units of capital, has
a part of its capital, of its assets, in the form of fixed capital or real capital.
All capital that accumulates under fictitious forms, does not, strictly
speaking, from the point of view of capital in general, constitute an actual
accumulation of real capital. However, from the point of view of an indi-
vidual capital, a portion of each of these units may be in any fictitious form
and produce some form of income, especially that portion of dormant,
latent, monetary capital, which, given the specific conditions of the form
of individual capital, cannot be converted into productive capital. A large
conglomerate that controls several private units of capital in the form of a
Public Limited Company will, for example, disperse this among the share
assets of the controlled companies. These shares, in addition to contribut-
ing to shareholder control, also produce dividends and capital gains with
their appreciation on stock exchanges. To the extent that the company

holds in its own shares as an asset, it also has a portion of its assets in ficti-
tious form.
We must also consider that the forms of fictitious capital also participate
in parallel with the global circulation of social capital. Its movement is
identical, that is, it moves by changing its form, for example, from the
fictitious form to the industrial cycle, as industrial capital. To do so it must
necessarily go through the money form. The amount of fictitious capital,
by moving to the money form, does not disappear; it is transferred from
the hands of one owner to another, who makes available capital in the
form of money, the exchange for the fictitious form. The fictitious capital,
now in the form of money, is no longer fictitious, it has changed form into
money. To this end, specific markets have been developed for each of the
fictitious capital forms: stock exchanges for share capital, bonds and pri-
vate debts and the open market for public debt, and the interbank market
for banking capital. Some scholars are mistaken when they refer to the
dominance of financial capital over real accumulation; they do not take
into consideration that what has happened is a change of form and usually
present an opposition between industrial capital, as if it were real capital,
and financial capital.
From all this, we can claim that the functional forms of capital, namely
commodity capital, productive capital, and money capital, are not at all
constituted in specific spheres of capital accumulation. Likewise, we can-
not hypothesize the division of the bourgeoisie into a commercial,
industrial, and financial fraction, even though there may be fractions that
specialize in trade, industry, or finance. Both capital in general and indi-
vidual capitals move through autonomous forms, which Marx called “The
Metamorphoses of Capital and Their Circuit” (Marx 1992).
In this text we have studied capital in general, as a totality in movement,
and its forms of existence as individual or private capital. We have treated
the concrete reality of individual or private capital at different levels of
abstraction. We have included the State only at one of its points of contact
with the movement of capital in general, for that matter we have not
treated it as a State, but as a government, a form of State existence. We do
not yet consider the State as a part, and as an intrinsic necessity, of capital.
There remains, however, a gap, namely the historical constitution of

nation-states and the links in the global cycle of today’s globalized capital.
A gap that cannot be developed in this chapter.
We have tried to show that the dynamics of capital constitute a social
totality in movement. An abstract totality, but at the same time, concrete
and real. This totality moves, driven by its internal contradictions and ulti-
mately by the development of the productive forces and the respective
capitalist relations of production, in the process of the accumulation of
capital through the exploitation of the labor force. Naturally, this whole
process is found not only in the three volumes of Capital but in others of
Marx’s writings.
We would like to emphasize that the fundamental and principal contra-
diction is that which moves capital, along with the contradictory unity of
production, circulation, and appropriation of wealth under the aegis of
capital. The continuous production of new wealth occurs through pro-
ductive labor, a productivity that tends to reduce because of the acceler-
ated development of the productive forces of capital. Their concreteness
and their movement are manifested through the appearance of market
prices and the accounting profits of individual capitals. We do not address,
here, the different levels at which concrete reality appears to us. This is one
of the problems facing most historical and concrete studies, they only have
sources of information available to them from the business statistics col-
lated by various data collection and dissemination bodies.
Finally, we consider that the more concrete historical treatment of cat-
egories in motion and their specific moments throughout history are the
object of profound divergences between Marxists and Marxologists. Partly
because of the enormous difficulty in dealing with the links between and
the unity of the abstract and concrete in motion and partly because of the
difficulties of understanding the new concrete and historical determina-
tions that we find throughout the development of the specific forms of
capital. The intertwining of the functional forms of capital, as well as the
specific moving units affected by the other concrete and historical deter-
minations that we have not addressed, makes this question even more
complex.36 This means that the form, mode, and particularity of the con-
crete movement of capital in its various forms may be profoundly affected
by those determinations which are not considered when we treat its move-
ment at higher levels of abstraction.
Some of these inadequacies have been attenuated by the mass of
research, studies, and works carried out over more than a century by
scholars and theorists who place themselves in the field of Marxism.

Another part depends on new studies and research, in particular looking
at the publication of Marx’s unedited materials by MEGA 2, not only as a
field of inquiry as to what Marx meant and how we can interpret it, but
primarily as a source from which even with all the shortcomings and gaps,
we can approach a more precise understanding of contemporary capital-
ism and ways of overcoming it.
Notes
1. The recent publication of the Manuscripts of 1864–1865 by MEGA2 in the
original form as written by Marx, does not appear to be contributing to
clearing up doubts about the organization of the material. Although it is a
rich material, it will still take some time for scholars of Marx’s work to
establish a more conclusive judgment on the structuring Engels gave to the
Manuscripts in Volume III of Capital.
2. In the Grundrisse, Marx calls the existence of capital in general “many capi-
tals”; in this text, we prefer to use multiples: “Capital exists and can only exist
as many capitals, and its self-determination therefore appears as their recipro-
cal interaction with one another” (Marx 2015, p. 340). At other times, both
in the Grundrisse and in Capital, he calls it private or individual capital.
3. Concerning this, Engels makes an observation on Volume III: “(Marx is
not referring at all here to unconvertible paper money; unconvertible
banknotes can become general means of circulation only where they are in
actual fact supported by the state’s credit, as is the case today in Russia, for
example. These therefore fall under the laws of inconvertible state paper
money, as already developed: Volume 1, Chapter 3, 2, c: ‘Coin. The
Symbol of Value’. F. E.)” (Marx 1991, pp. 656–657).
4. Braga et al. (2017) cite authors who discuss the “financialisation of com-
modities”, of “housing”, “education”, “urban policy”, “consumption”,
“water”, “labour relations”, the “social financialisation”, and so on. With
this comprehensive and perhaps abusive use the category (financialisation)
tends to lose in heuristic power and analytical rigor.
5. “Capital, as self-accumulating value, does not just comprise class relations, a
definite social character that depends on the existence of labour as wage-
labour. It is a movement, a circulatory process through different stages,
which itself in turn includes three different forms of the circulatory process.
Hence it can only be grasped as a movement, and not as a static thing. Those
who consider the autonomisation [Verse/bststiindi- gung] of value as a mere
abstraction forget that the movement of industrial capital is this abstraction
in action. Here value passes through different forms, different movements in
which it is both preserved and increases, is valorised” (Marx 1992, p. 185).
6. Rosdolsky discusses the relationship between capital in general and the

multiplicity of capitals in Chap. 2 and cites Marx: “Capital in general, as
distinct from the particular capitals, does indeed appear (1) only as an
abstraction; not an arbitrary abstraction, but an abstraction which grasps
the specific characteristics which distinguish capital from all other forms of
wealth – or modes in which (social) production develops. These are the
aspects common to every capital as such, or which make every specific sum
of values into capital. And the distinctions within this abstraction are like-
wise abstract particularities which characterise every kind of capital, in that
it is their position [Position] or negation [Negation]; (2) however, capital
in general, as distinct from the particular real capitals, is itself a real exis-
tence” (Marx 2015, pp. 375–376).
7. Taking the concept of capital in general as a starting point and agreeing
that Marx developed his analysis both in Grundrisse and in the first two
volumes of Capital within the framework of that concept, the central argu-
ment of the present chapter is developed with emphasis on two levels of
abstraction, universality, and singularity. In future works, another way of
approaching the theme was an analysis of the financialization process in
contemporary capitalism at three levels of abstraction; first, that of capital
in general as a universality, the preponderant moment of Volume I; second,
that of the autonomous functional forms, particularly emphasizing on
Volume II; and finally, Volume III, as a singularity, a sphere of the forms of
existence of capital.
8. In the Introduction to Volume II, Mandel seems to draw an analogy
between capital in general and total social capital. “That is why the study of
‘capital in general’ – provisionally abstracted from competition and ‘many
capitals’ – encompasses the process of production and the process of circu-
lation both of commodities”, and in the following paragraph, “Marx intro-
duces a new and passionately interesting object of study: the reproduction
and (‘turnover’) circulation of the total social capital” (Mandel 1992,
p. 16). It is not our intention to study these two categories in this text.
9. “The real circuit of industrial capital in its continuity is therefore not only
a unified process of circulation and production, but also a unity of all its
three circuits. But it can only be such a unity in so far as each different part
of the capital runs in succession through the successive phases of the cir-
cuit, can pass over from one phase and one functional form into the other;
hence industrial capital, as the whole of these parts, exists simultaneously
in its various phases and functions, and thus describes all three circuits at
once” (Marx 1992, p. 183).
10. “Industrial capital is the only mode of existence of capital in which not only
the appropriation of surplus-value or surplus product, but also its creation,
is a function of capital. It thus requires production to be capitalist in char-
acter; its existence includes that of the class antagonism between capitalists
and wage-labourers” (Marx 1992, pp. 135–136).
11. Marx had already demonstrated in Volume I, Part two, “The transforma-
tion of Money in to Capital” that added value cannot arise in the circula-
tion. In Volume II he states that, “In order to grasp these forms in their
pure state, we must firstly abstract from all aspects that have nothing to do
with the change and constitution of the forms as such. We shall therefore
assume here, both that commodities are sold at their values, and that the
circumstances in which this takes place do not change. We shall also ignore
any changes of value that may occur in the course of the cyclical process”
(Marx 1992, p. 109).
12. “[I]ts whole movement within the circulation phase, merely forms an
interruption, and hence a mediation, between the productive capital that
opens the circuit as the first extreme and closes it in the same form as the
last extreme, i.e. in the form of its new beginning” (Marx 1992, p. 144).
13. “The general circulation includes the intertwining of the circuits of the
various independent fractions of the social capital, i.e. the totality of indi-
vidual capitals, as well as the circulation of those values that are not placed
on the market as capital, in other words those going into individual con-
sumption” (Marx 1992, p. 150).
14. “What differentiates the third form from the two earlier ones is that it is
only in this circuit that the accumulated capital value, and not the original
capital value that has still to be accumulated, appears as the starting-point
of its own accumulation” (Marx 1992, p. 173).
15. “Capital, as self-accumulating value, does not just comprise class relations,
a definite social character that depends on the existence of labour as wage-
labour. It is a movement, a circulatory process through different stages,
which itself in turn includes three different forms of the circulatory pro-
cess. Hence it can only be grasped as a movement, and not as a static
thing” (Marx 1992, p. 185).
16. “What makes this particular act of commodity circulation a part of the
whole process with a well-defined function in the independent circuit of an
individual capital is not primarily the form of the act, but rather its material
content, the specific use character of the commodities that change place
with money” (Marx 1992, p. 110).
17. In contemporary capitalism, this interlocking operation of multiple capitals
already occurs on a worldwide scale, with the production of parts and com-
ponents in one country and assembly in other countries. Here, we would
like to draw attention to the debate on capital in general and competition
within multiple capital cities. At the most concrete level, while the func-
tioning of private capital requires its intertwining and reciprocal needs, it
also requires sustained competition between them.
18. “In considering the general forms of the circuit, and throughout this sec-
ond volume in general, we take money to be metal money, excluding sym-
bolic money, mere tokens of value which are specific to particular countries,
as well as credit money, which we have not yet developed” (Marx 1992,
p. 192), and “the interest and credit categories still do not appear system-
atically developed (this only occurs in Volume III), which is why Marx
needs to presuppose the existence of treasures” (Heinrich 2014, p. 21).
19. The conversion of commercial banks to multiple banks was the result of
the Glass Steagall Act of 1933, which separated the functions of commer-
cial banks from investment banks. After its repeal in 1999, banks began to
integrate into their activities not only those of commercial banks, but all
other financial activities and this was becoming widespread for the whole
world. The most important issue in this transformation was the secondary
creation of the credit currency, which was totally unrelated to bank depos-
its and reserves.
20. The role played by these funds can be found in Chesnais (2005), in par-
ticular in the writings of Catherine Sauviat, Dominique Plihon, Luc
Manpaey, and Claude Serfati.
21. “This finding leads to a picture that this is due to the ‘demands of finance’
(the famous 15%)” (Husson 2010, p. 321).
22. One of the ways was, and still is, the famous agreement of corporations’
administrators with the stock-options clause. The contractor receives the
option to purchase shares of the company in the future at the price of the
contract day. Thus, the higher the shares price of that individual capital, the
greater the gain to be obtained. This option was disseminated to the level
of the company’s employees in order to obtain a greater mass of added
value, it also produced immense fraud.
23. “The collective worker in department I has sold his labour-power to the
collective capitalist (…); he receives this value paid in money in the form of
a wage” (Marx 1992, p. 516). And also, “we can see that each individual
capitalist, just like the totality of all capitalists in each particular sphere of
production, participates in the exploitation of the entire working class by
capital as a whole, and in the level of this exploitation” (Marx 1991, p. 298).
24. See Chap. 4 on virtual currencies.
25. A quarter of a century ago, Joel Kurtzman published a volume he called
“The death of money: how the electronic economy has destabilised world
markets and created financial chaos” (Kurtzman 1994).
26. The function of world money began to be exercised by the US dollar, con-
vertible into gold, after the Bretton Woods Agreement in 1944, and
became unconvertable from 1971.
27. We consider that the separation of public and private is misplaced for the
understanding of the movement of capital. In its metamorphosis, capital
moves continuously between the public and private spheres, between busi-
ness families and government, either through the credit system, through
financing mechanisms, or through government operational expenditures.
28. The story of the FED’s creation is often treated as a coup. Ultraliberals,
such as Murray Rothbard (Rothbard 1994) and Ron Paul (Paul 2009),
harshly criticize the symbiosis between bankers and the government.
29. Reserves generally consist of a small amount of gold and major currencies,
such as the dollar, euro, sterling, and yen. But currency reserves are usually
in debt securities denominated in their respective currencies, particularly
US Treasury in the case of the dollar. Thus, they are in the form of interest-
bearing capital in the fictitious form of public debt securities.
30. Central banks carry out other functions, one of these is as the lenders of
last resort, which we do not deal with in this text.
31. It should be noted that in each specific circumstance in which the laws
regulate a greater or lesser opening of the foreign exchange market, then a
greater or smaller part of these operations is carried out by the banking
system.
32. The whole technical process of monetary creation by the banking system is
called the fractional reserve system. Reserves, called compulsory reserves,
are usually a percentage of demand deposits set by central banks. According
to conventional monetary theory, this rate determines the magnitude of
the monetary multiplier, that is, how often each monetary unit created by
the central bank is secondarily multiplied by the commercial banks. If the
rate is 100%, the multiplier is zero and if it is 0%, the multiplier is infinite.
Currently, in several countries, central banks no longer require a compul-
sory reserve.
33. This mechanism worked in an analogous way in the nineteenth century,
but much less developed than in the contemporary world. “The amount of
notes in circulation is governed by the needs of commerce, and each super-
fluous note immediately finds its way back to its issuer” (Marx 1991,
p. 657).
34. Banks can also operate in other markets of the credit system, such as stock
exchanges.
35. “The greater part of banker’s capital is therefore purely fictitious” (Marx
1991, p. 600).
36. We refer here to the political, social, ideological, and even psychological or
psychoanalytic dimensions in the course of the class struggle and the accu-
mulation of capital in general and private capitals.
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Penguin Books.
Penguin Books.
Marx, K. (2015). Grundrisse. Foundations of the critique of political economy.
New York: Penguin Books.
Moseley, F. (1995). Capital in general and Marx’s logical method: A response to
Heinrich’s critique. Capital & Class, 19(2), 15–48.
Moseley, F., & Smith, T. (2014). Marx’s capital and Hegel’s logic. Leiden/
Boston: Brill.
Oresme, N. (2004). Pequeno tratado da primeira invenção das moedas (1355) (1st
ed.). Curitiba: Segesta.
Palley, T. I. (2013). Financialization: The economics of finance capital domination.
London: Palgrave Macmillan.
Paul, R. (2009). End the fed (Vol. 1). New York: Gran Central Publishing.
Rosdolsky, R. (1977). The making of Marx’s ‘capital’. London: Pluto Press.
Rothbard, M. N. (1994). The case against the fed (Vol. 1). Auburn: Ludwig von
Mises Institute.
Sotiropoulos, D. P., et al. (2013). A political economy of contemporary capitalism
and its crisis: Demystifying finance. London/New York: Routledge.
CHAPTER 6
Parasitic Speculative Capital: A Theoretical

Precision on Financial Capital, Characteristic
of Globalization
Reinaldo Antonio Carcanholo and Paulo Nakatani
Introduction
Discussions on the meaning of the process of globalization are currently
extremely important. Understanding what is new in capitalism allows us to
present it as a new phase of its development (Corazza 1997).
Most authors accept that the financialization or generalization of the
speculative movement of capital1 is one of the basic characteristics that
define contemporary capitalism.2
For this reason, the use of the term “money capital” has increased in
publications on the characterization and interpretation of contemporary
capitalism. The term has, at times, been presented, or at least been under-
This chapter was originally published in Portuguese with Ensaios FEE, 20(1),
in 1999, and was translated into English by Kenton James Keys.
R. A. Carcanholo (*) • P. Nakatani


https://doi.org/10.1007/978-3-030-23360-0_6
118 R. A. CARCANHOLO AND P. NAKATANI
stood, as being a concept or category of Marxist thinking and as having a

precise meaning.
Those who use the term should, however, feel uncomfortable with the
imprecision of its meaning. Although some may accept that, even if it lacks
precision, there is enough understanding of it to define it, our view is that
in Marxist theory we cannot accept closed definitions. The Marxist method
treats social phenomena as transformation processes driven by dynamics that
arise from their internal contradictions and that cannot be captured by defi-
nitions. These can only capture the static. More than that, the reality can be
reduced to the movements themselves, and although they can be described
and understood, they cannot be defined. Movement always implies meta-
morphoses. Reality is the movement itself and does not exist outside of it.
This work represents an effort aimed at those who, dissatisfied with the
imprecision of the term “money capital”, are not content with positivist
definitions, however complex or exhaustive they may be.
Starting from Marx’s concept of capital, through industrial capital,
functional forms, and the autonomation of functional forms and fictitious
capital, we will arrive at what we mean by speculative capital and parasitic
speculative capital. Clearly, this is not a question of defining them, but of
describing them. In the face of new elements in the logic of capital, we try
to identify phenomena and processes, characterize them, and finally select
terms for them. In this case we chose the terms speculative capital and
parasitic speculative capital.
Parasitic speculative capital results from the conversion of the autono-
mous form of capital into interest or interest-bearing capital, or more pre-
cisely to fictitious capital,3 when it exceeds the limits of what is necessary
for the normal functioning of industrial capital. The logic of parasitic
speculative capital contaminates even those companies or corporations
dedicated entirely to productive functions,4 and so industrial capital
becomes speculative capital. As a dialectical synthesis of the movements of
its functional forms this places parasitic speculative capital as the dom-
inant pole.
We emphasize that this is not about definitions, but about the identifi-
cation of phenomena and processes labeled with certain names. This iden-
tification was facilitated by previously constructed concepts that followed
the same logic and were never arbitrary definitions.
Nevertheless, it is possible that some categories addressed in this work
may appear to be definitions. This is because of the formal ease of positivist
discourse, which is widely used in Marx’s works, especially in Capital.
6 PARASITIC SPECULATIVE CAPITAL: A THEORETICAL PRECISION… 119
Our hypothesis is that globalization, with all its characteristics, is distin-

guishable from other eras in the history of capitalism by the dominance, at
a global scale,5 of parasitic speculative capital (a more concrete form of
interest-bearing capital) over productive capital. In this phase, industrial
capital has become speculative capital and its logic has been totally subor-
dinated by speculation and dominated by parasitism. It is the speculative
rational of the global circulation and reproduction of capital that has come
to define this new stage. This phenomenon is undoubtedly associated with
the collapse of the international monetary standard since the 1970s.
This means that even the interest-bearing capital necessary for the
reproduction of productive capital starts to act according to speculative
logic. Moreover, large productive enterprises increasingly combine their
normal activities with financial activities, subordinating their strategies to
speculative practices: productive capital has thereby had its dynamics sub-
ordinated by speculation.6
In our view, the current phase of the globalization of capitalism consti-
tutes a phase of the international predominance of speculative logic over
production and the consequent exacerbation of competition between
large productive capitals operating on the international stage. This exacer-
bation has, as its starting point, the enormous pressure that speculative
gains7 exert on the surplus value produced. Capitalist globalization is char-
acterized by an increase in the exploitation of wage earners throughout
capitalist space and, paradoxically, by excessive growth in the consumption
of non-durable products.
Finally, it is essential to emphasize that the analyses that favor our view-
point focus on the antagonism or antinomy between capital’s ability to
create wealth8 and speculative logic’s demand for accumulation.
From the Marxist Concept of Capital to That

of Parasitic Speculative Capital
On Capital
The concept of capital first appears with a high degree of abstraction.
Marx’s starting point, having developed the concept of value, is the empir-
ical observation that money circulates differently from what would be
expected from the simple circulation of the commodity. Money that circu-
lates in search of accumulation becomes capital. So too does the commod-
ity that serves as the intermediary between the start and end of this
circulation process.
The idea then appears that the true agent of the circulation process is
value rather than money. Hence, capital is value, only in a more developed
phase of mercantile social relationships, and it acquires new characteristics.
Money and commodity appear, then, as simple expressions or forms of
capital. Capital is a value that, through a given process of circulation, val-
ues itself through creation, production of surplus value.9 Capital is the
simplified name of capital value.
The new characteristics acquired by value, when it becomes capital
value, are the capacity to auto-appreciate and, less obviously, substantia-
tion. Value acquires the capacity to auto-appreciate precisely by converting
itself into capital. This means that capital is a value with more determi-
nants, that it is more developed, and that it corresponds to a society in
which mercantile relationships are more widespread and more developed.
Capital is a “mature” value that has outgrown its “youth” and is capable
of generating new value. In the era of developed capitalism, the existence
of value occurs through capital; it exists, fundamentally, as capital. In the
same way, commodity and money exist, fundamentally, as forms of the
existence of capital. Capital dominates everything, even the logic of society.
The Substantiation of Value in Capital

Another new feature of value converted into capital is what we call sub-
stantiation. It is, in our opinion, a fundamental and little-understood
aspect needed to properly understand Marx’s theory of value and to dif-
ferentiate it from other theories, especially that of Ricardo.
Value, as described by Marx in the first chapter of Capital, has a special
characteristic, a property of commodities. Just as they have color and
weight, they also have value. Value, like color, only exists in the commod-
ity and is, therefore, an adjective of it. Something different happens with
the capital value. Let us look at the cycle of capital:
D – M …( p )… M ′ − D ′.
Capital is a value that circulates and, through certain metamorphoses,

auto-appreciates. The agent, the subject of this circulation, is the value,
and as such, it ceases to be a mere characteristic of commodities and gains
the status of an object, with its own life.
We contend that the transformation of value into capital implies a huge
leap in its development. The era of the dominance of value and of the logic
of accumulation begins. Value becomes, in capital, a substantive social real-

ity, a societal object with its own life and movement. From the mere social
characteristics of commodities, that is, their appearance, they become an
independent reality. From a simple passive concept, subordinated to its
substantive forms (commodity and money), value becomes an autono-
mous social agent with a life of its own, perceptible through its movement
(circulation) and in relation to which the commodity and money become
subordinate manifestations:
In simple circulation, the value of commodities attained at the most a form

independent of their use-values, i.e. the form of money. But now, in the
circulation M-C-M, value suddenly presents itself as a self-moving substance
which passes through a process of its own, and for which commodities and
money are both mere forms. (Marx 1990, p. 256)
In this way, from a simple adjective of commodities, value becomes a

noun in the cycle of capital. When value is no longer simple value but capi-
tal value, we witness the substantiation of value. Marx devotes only a sin-
gle passage to the subject in chapter IV of Book I of Capital and some
others in the first chapter of Book II.
We believe that the subject is extremely relevant and deserves more
extensive and systematic treatment. The subject is almost totally ignored
by its readers and interpreters. It is described by Marx (1992, pp. 185–6)
in the following terms:
[C]apital […] is a movement, a circulatory process through different stages,

which itself in turn includes three different forms of the circulatory process.
who consider the autonomisation [Verselbstständigung] of value as a mere
in action. […] It is clear however that despite all revolutions in value, capital-
ist production can exist and continue to exist only so long as the capital value
is valorized, i.e. describes its circuit as value that has become independent,
and therefore so long as the revolutions in value are somehow or other mas-
tered and balanced out. […] The more acute and frequent these revolutions
in value become, the more the movement of the independent value, acting
with the force of an elemental natural process, prevails over the foresight and
calculation of the individual capitalist, the more the course of normal pro-
duction is subject to abnormal speculation, and the greater becomes the
danger to the existence of the individual capitals. These periodic revolutions
in value thus confirm what they ostensibly refute: the independence which
value acquires as capital, and which is maintained and intensified through its
movement. […] “Value”, says Bailey, opposing the autonomization of value
which characterizes the capitalist mode of production, and which he treats
as the illusion of certain economists, “value is a relation between contempo-
rary commodities, because such only admit of being exchanged with
each other”.
As such, the concept of capital expresses value at any given stage of its
development and consists of an expressed social relation that is substan-
tive. Moreover, it is a process, never static, as it is a linked and structured
sequence of metamorphoses in which the value agent assumes both the
form of money and the form of commodity.
Understood in this way, the concept of capital value has a very high
level of abstraction: the idea that an entrepreneur or a company, by itself
and without the collaboration of others (except the suppliers of inputs and
final customers of its product), performs all the operations necessary to
complete the entire cycle of capital rarely exists in concrete reality. To
account for this problem and to concretize the analysis, the concept of
industrial capital arises.
Industrial Capital and Its Functional Forms

Industrial capital appears to be equal to capital, but with a new name. It is,
however, a concept at a different level of abstraction, just as happens with
the concepts of value and social value which arises from the analysis of
extraordinary surplus value.
To describe the concept of industrial capital, Marx analyzes the com-
plete circulation of capital and the functions that its various existential
forms must fulfill. These are functions fulfilled by the forms into which
value metamorphoses throughout its complete cycle:
D – M …( p )… M ′ − D ′,
where (p) represents the productive process.

The observed forms came to be termed as follows: money capital (D),
productive capital (M), and commodity capital (M′). Productive capital
(M) consists of the means of production and the workforce. The capital
value takes the form of money capital to fulfill the functions of money, that
is, the general means of purchase and payment. After the purchase, it
becomes the material elements of productive capital. The expression D –
M indicates the metamorphosis of capital from money capital to produc-
tive capital.
In the form of means of production and workforce, capital must fulfill
productive functions, that is, the creation of value and surplus value.
Subsequently, capital value takes the form of commodity capital (already
imbued with surplus value) to fulfill the functions of merchandise, that is,
products to be sold. The simple commodity becomes commodity capital
at the moment it assumes the functional form through which capital value
has its existence. These are forms designed to fulfill specific functions in
the capital cycle. They are, then, functional forms.
Capital that, throughout its cycle, adopts and relinquishes these succes-
sive functional forms (money capital, productive capital, and commodity
capital) is called industrial capital. This concept counters commercial capi-
tal and interest-bearing capital but not agrarian capital. At first, the con-
cept is treated as if all the functions were fulfilled by the same entrepreneur,
and so the concept of capital is confused with that of industrial capital.
Marx goes on to explain that the various functional forms become autono-
mous due to the social division of tasks among capitalists. The functions of
money capital, productive capital, and commodity capital can each be
delivered by specialized firms. When a functional form of industrial capital
becomes autonomous, it becomes the functional form, autonomous capi-
tal. Commodity capital becomes commercial capital and money capital
becomes interest-bearing capital:
There are not two different kinds of capital – interest-bearing and profit-
yielding – but the selfsame capital which operates in the process of produc-
tion as capital, produces a profit which is divided between two different
capitalists – one standing outside the process, and, as owner, representing
capital as such (but it is an essential condition of this capital that it is repre-
sented by a private owner; without this it does not become capital as opposed
to wage-labour), and the other representing operating capital, capital which
takes part in the production process. (Marx 1971, p. 473)
Industrial capital, understood as a global and abstract synthesis of the

circulation of three autonomous forms of capital (interest-bearing capital,
productive capital, and commercial capital) is the same concept of capital,
but at a more concrete level of analysis. Even so, the concept of industrial
capital cannot account for all the complexity of concrete reality. A unit of
capital (under the control of a single entrepreneur or a single company or
corporation) does not exclusively fulfill the autonomous function of only
productive capital, or only that of commercial capital, or only of interest-
bearing capital. It is likely to perform a combination of functions. In gen-
eral, the operation of a unit of capital must be understood to be performing
partially or totally different functions and acting as an interlocking of the
circulation of more than one unit of industrial capital. In this way, we will
be very much closer to the complexity of reality.10
For the time being, let us consider industrial capital at a level of abstrac-
tion in which it represents a simplified synthesis of the cycle of three
autonomous capitals, in which each one exclusively fulfills one of the three
functions and which, in aggregate, deal with all the conversions required
by the cycle.
Of the three, the only autonomous capital capable of directly produc-
ing surplus value is productive capital. It must share this surplus value with
the other two autonomous functional forms: commercial capital and
interest-bearing capital. It does so, to some degree, willingly, to the extent
that they perform useful functions for the circulation of industrial capital.
Without the existence of these two, the magnitude of value constituted by
productive capital would not be able to produce surplus value to the same
extent. Marx shows that the division of tasks, by specializing each of them
on specific functions, makes them more “productive”, or rather, more
efficient. The total volume of value resulting from the sum of the three
autonomous capitals would not be capable of producing and accumulat-
ing the same amount of surplus value if they functioned without division
of labor, if each of the companies had to fulfill all the functions necessary
for industrial capital.
Although interest-bearing capital and commercial capital appropriate
part of the surplus value without producing it, they are not parasitic as
they contribute to productive capital. They allow capital to be more effi-
cient. Interest-bearing capital is subordinated to the logic of industrial
capital. During a given stage of the development of capital, productive
capital is dominant, subordinating both interest-bearing capital and com-
mercial capital to its logic. This is the stage of the existence and dominance
of industrial capital in which the dominant pole is productive capital.
From the logical point of view, interest-bearing capital is merely an
aspect of industrial capital, it is its subordinate. Historically, however,
interest-bearing capital and commercial capital pre-date industrial capital,
and there must be a process for its subordination:
[I]nterest-bearing capital appears on the scene as a historic form before

industrial capital and continues to exist alongside it in its old form and it is
only in the course of the development of industrial capital that the latter
subordinates it to capitalist production by turning it into a special form of
industrial capital. (Marx 1971, p. 493)
The commercial and interest-bearing forms of capital are older than indus-
trial capital, which, in the capitalist mode of production, is the basic form of
the capital relations dominating bourgeois society—and all other forms are
only derived from it or secondary […]. In the course of its evolution, indus-
trial capital must therefore subjugate these forms and transform them into
derived or special functions of itself. It encounters these older forms in the
epoch of its formation and development. […] Where capitalist production
has developed all its manifold forms and has become the dominant mode of
production, interest-bearing capital is dominated by industrial capital, and
commercial capital becomes merely a form of industrial capital, derived from
the circulation process. But both of them must first be destroyed as indepen-
dent forms and subordinated to industrial capital. Violence (the State) is
used against interest-bearing capital by means of compulsory reduction of
interest rates […]. But this is a method characteristic of the least developed
stages of capitalist production. The real way in which industrial capital sub-
jugates interest-bearing capital is the creation of a procedure specific to
itself—the credit system. (Marx 1971, p. 468)
Still referring to the seventeenth century, Marx (1971, p. 467) states:
Interest-bearing capital in this case is still an antediluvian form of capital

which has yet to be subordinated to industrial capital and to acquire the
dependent position which it must assume—theoretically and practically—on
the basis of capitalist production. The bourgeoisie did not hesitate to accept
State aid in this as in other cases, where it was a question of making the
traditional production relations which it found, adequate to its own.
Fictitious Capital
The simplest way to understand the meaning Marx assigns to the concept
of fictitious capital11 is to start from the question he poses in chapter XXX
of volume III of Capital: “Firstly, the accumulation of money capital as
such. How far is it, and how far is it not, an index of genuine capital accu-
mulation, i.e. of reproduction on an expanded scale?” (Marx 1990, p. 607).
The answer to this question must be sought in the concept of interest-
bearing capital as the bearer or producer of interest:
The form of interest-bearing capital makes any definite and regular mone-
tary revenue appear as the interest on a capital, whether it actually derives
from a capital or not. […] Yet this is and remains a purely illusory notion,
except in the case where the source […] is directly transferable, or assumes
a form in which it is transferable. (Marx 1991, p. 595)
And, referring more specifically to public debt:
But in all these cases, the capital from which the state’s payment is taken as
deriving, as interest, is illusory and fictitious. It is not only that the sum that
was lent to the state no longer has any kind of existence. It was never
designed to be spent as capital, to be invested, and yet only by being invested
as capital could it have been made into a self-maintaining value. […] Yet this
fictitious capital has its characteristic movement for all that, as we shall see
soon. (Marx 1992, pp. 595–6)
The development, expansion, and generalized existence of interest-

bearing capital in developed capitalism transforms all kinds of regular
income into a revenue that seems to come from interest-bearing capital.
For example, if one were granted the right to exploit, ad infinitum, the
services of an office of notes and trades, capital would be created, as if by
magic. Let us suppose that the expected annual revenue was constant over
the years; it would be enough to divide it by the interest rate and we
would have the amount of capital created.12
This “created capital” is, however, “purely illusory”. It ceases to be
illusory, however, if the right of accumulation of revenue or regular
income is transferable, that is, if it can be represented by title and can be
transferred commercially. Does this mean that capital, created in this way,
is truly capital? Regrettably, the answer is no: the title might appear to the
holder to be true capital, but for society, it is nothing more than illusory;
fictitious capital, nevertheless, it has its own movement and a certain
independence like real capital. From the individual’s point of view, it is
real capital; from the point of view of totality, of the global, it is ficti-
tious capital.
It should be emphasized that fictitious capital has real existence and its
logic interferes with the pathway and circumstances of valuation and accu-
mulation. Fictitious capital has its own movement.13 So, it is real in a cer-
tain way but at the same time it is not.
One of the typical forms of fictitious capital is public debt securities:
[T]he distortion involved in the credit system reach its culmination. These
promissory notes which were issued for a capital originally borrowed but
long since spent, these paper duplicates of annihilated capital, function for
their owners as capital in so far as they are saleable commodities and can
therefore be transformed back into capital. (Marx 1991, p. 608)
Even if it were initially treated as real money capital, from real interest-
bearing capital, when buying public debt securities, it becomes fictitious
capital if it becomes, in the public sphere, current expenditure. These
securities simply represent a right of appropriation over part of public rev-
enue, which comes largely from the taxes to be collected.
In addition to government bonds, a significant portion of fictitious
capital in developed capitalism is made up of private securities such as
shares, debentures, and bills of exchange:
As we have seen, the ownership titles to joint-stock companies, railways, mines,

etc. are genuinely titles to real capital. Yet they give no control over this capital.
The capital cannot be withdrawn. They give only a legal claim to a share of the
surplus-value that this capital is to produce. But these titles similarly become
paper duplicates of the real capital […]. They become nominal representatives
of non-existent capitals […]. In so far as the accumulation of these securities
expresses an accumulation of railways, mines, steamships, etc., it expresses an
expansion of the actual reproduction process […]. But as duplicates that can
themselves be exchanged as commodities, and hence circulate as capital values,
they are illusory, and their values can rise and fall quite independently of the
movement in value of the actual capital to which they are titles. Their values,
i.e. their listings on the stock exchange, have a necessary tendency to rise with
the fall in the rate of interest, in so far as this is a simple result of the tendential
fall in the rate of profit […]. [So] that this imaginary wealth […] expands for
this reason as capitalist production develops. (Marx 1991, pp. 608–9)
Although they constitute fictitious capital, these securities correspond,

to a certain extent, to real capital. They differ, in part, from the previous
form constituted by public bonds. Within certain limits, its value has a real
link.14 Often their value may be less than the actual capital they represent.
We can say that at least part of the fictitious capital corresponds to the
magnitude of real capital.15 The problem is that its value grows or dimin-
ishes for independent reasons, so that part of it can have a purely illusory
existence. In addition, it can be duplicated, triplicated, etc. and may appear
to exist alongside real capital as another capital that adds to it. To that
extent, it is also, typically and entirely, fictitious capital.
It is necessary to emphasize that, in the present day, there are many

forms of fictitious capital. Harvey says the following on fictitious capital:
Property rights come in many forms. In principle, bonds of any kind can be
bought and sold. Governments can sell settlement rights on instalments of
their revenue with future taxes. Commodity securities can be sold without
them changing hands or, as in future markets, even before actual production
of them. Land titles, buildings and natural resources (oil field drilling rights,
mineral exploration rights, etc.) can also be sold and purchased. Under capi-
talism, there appear to be as many types of fictitious capital markets as dif-
ferent forms of property. (Harvey 1990, p. 280)
Finally, it is necessary to point out that, although part of fictitious capi-

tal remuneration consists of interest, it must not be confused with interest-
bearing capital, the latter understood as an autonomous functional form
of industrial capital. These are two different concepts.16
Money Capital
The term “money capital” has been widely used to describe one of the
most striking features of our time. There is a consensus that one of the
most significant aspects of globalization is the expansion and dominance
of “money capital”. By this, they mean that capital whose remuneration
consists basically of the speculative gains obtained in financial operations
of the most diverse types, in addition to that derived from interest.
We are accustomed to the widespread use of poorly defined expressions
and are not concerned with the imprecision of the said “concept”. Often,
however, the term money capital is used as if it were a theoretical concept.
We consider it a theoretically empty “concept” because it refers to a set of
undefined forms of capital whose links with the functional forms of indus-
trial capital are indeterminate.17 According to Harvey, the expression was
never used by Marx18:
The concept of money capital has a history within Marxist thought. Marx
himself never used this expression but left to posterity a series of not very
articulate writings on the process of circulation of different types of money-
capital. The definition of money capital that would derive from Marx’s per-
spective relates to the type of capital-circulation process that is based on the
credit system. Later writers tended to abandon this view of the process and
began to treat the concept by referring to a configuration of alliances within

the bourgeoisie, a block of power that exerts immense influence on the pro-
cesses of accumulation in general. (Harvey 1990, p. 287)
Hilferding and Lenin use the expression as a more concrete and institu-
tional concept, in the sense of describing the historical fact of the unifica-
tion of productive capital with banking capital, under the hegemony of
the latter.19
Parasitic Speculative Capital

The remuneration of fictitious capital consists of interest earned and capi-
tal gains in speculative markets. Fictitious capital obtains such remunera-
tions through transfer of surplus value produced by other capitals or by
non-capital. This means that fictitious capital is non-productive capital in
the same way as interest-bearing capital. Interest-bearing capital, however,
performs a useful and indispensable function in the circulation of industrial
capital and to that extent, although unproductive, cannot be considered
parasitic, fictitious capital is totally parasitic. It does not fulfill any necessary
function within the logic of industrial capital, its remuneration being
purely a burden. However, its fictitious characteristic allows it to accept,
within certain limits, a partly fictitious remuneration; in this measure, and
only within it, does it not present itself as an immediate cost.20
Fictitious capital, as we have seen, moves independently from industrial
capital and its growth is explained by different circumstances. Within cer-
tain limits, the volume of fictitious capital does not substantially compro-
mise the logic of the accumulation of industrial capital or its trajectory.
Once these limits are exceeded, however, there is the possibility of los-
ing control:
Money capital is equally indifferent to its uses, since it generally goes to places
where there is adequate remuneration without regard to the type of use. …
there is nothing to stop the speculative investment directed towards the
appropriation of revenues becoming completely out of control. Worse still, an
accumulation of rights (titles) may appear as if it were an accumulation of real
money capital, and titles may continue to circulate although they are not
backed up and do not correspond to actual production. (Harvey 1990, p. 291)
In another part:
If the central bank does its job, it must prevent fictitious values from being
too far apart from the values of real commodities. The bank cannot impose
strict proportionality – even if it has the power to do so – as this would deny
the free movement of money capital to force new forms of accumulation,
but it cannot allow credit-money creation to exceed certain limits. (Harvey
1990, p. 284)
An explosion in the volume of fictitious capital may occur at various

junctures, making it capable of altering the logic of industrial capital. This
explosion may be the result of accelerated growth in the public debt of
nation-states, high trade deficit, or current account deficits, circumstances
in which interest rates increase substantially, or if there is instability in
exchange markets due to difficulties in the monetary standard. The issue
of the explosion of fictitious capital becomes a problem for capitalism:
The “absurd” forms of fictitious capital are brought to the forefront and
allow for extreme distortion within the credit system. What began as a sim-
ple solution to the contradictions of capitalism becomes a problem to be
solved. (Harvey 1990, p. 292)
Consider, for example, what happens when credit money and “fictitious
forms of value” usurp the place of commodity money. If the pace of credit
creation agrees with the pace of socially necessary work performed in soci-
ety, then the effects of credit are beneficial rather than detrimental to the
movement of capital. However, much cannot be done to prevent credit
creation from getting out of control altogether, and on the other hand, the
problem of over-accumulation lurks forever on the horizon. If it happens
that the fictitious values are not backed by the products of social work, or if,
for whatever reason, faith in the credit system weakens, then capital must
find some way to re-establish its base of operations in the world of socially
necessary work. (Harvey 1990, p. 297)
In this way, parasitic speculative capital is fictitious capital when it

exceeds in volume the limits normally borne by the reproduction of indus-
trial capital. Its basic character lies in the fact that it fulfills no function in
the logic of industrial capital. It is a capital that does not produce surplus
value or value-added and neither favors nor contributes to its production.
It appropriates surplus, however, and demands it in increasing amounts. Its
logic is the unbridled appropriation of surplus value or profit (speculative
profit). It does so, or at least sets out to do so, impelled by the very nature
of parasitic speculative capital itself; auto-appreciation and no commitment

to use-value.21 It drives the value/use-value contradiction to the extreme
of its development, that is, to the theoretical destruction of use-value.
In achieving its impelling, and somewhat secretive, goals and by pre-
senting itself as independent from the logic of industrial capital, parasitic
speculative capital contaminates all existing capital to which it relates.
Through this, productive capital is dominated and concrete individual
capital that performs the functions of productive capital becomes ever
more subject to parasitic logic and operates increasingly speculatively.22
What was once industrial capital, a synthesis of the autonomous forms of
productive, commercial, and interest-bearing capital, under the hegemony
of the former and dominant over fictitious capital, becomes speculative
capital, a synthesis of the same functional forms, but antinomic and domi-
nated by parasitic speculative capital. Industrial capital, whose logic is accu-
mulation based on the production of surplus value, becomes not parasitic
capital but speculative capital because it has become the dominant aspect of
the contradiction. In fact, while parasitic speculative capital is a synthesis,
the dimension that is remunerated parasitically is found outside of it. It is,
therefore, parasitic and comes to dominate the whole logic of capitalist
society. It should be noted that, even if it has dominance, parasitic specula-
tive capital is not a functional form of speculative capital because, funda-
mentally, it plays no useful role alongside productive capital. It is something
external to the latter and taken with it forms another contradiction.23
Like industrial capital, speculative capital is a substantive but much
more complex value. At the same time, parasitic speculative capital,
although fictitious wealth, is also substantive; it becomes an agent capable
of economic and even political dominance. It has a contradictory exis-
tence. Although real, it is at the same time fictitious. From the individual’s
point of view, and therefore in perception, it is real, but from the global
point of view, it is fictitious and lacks substance. Even when viewed as ficti-
tious, the fact that it requires remuneration, and therefore is at least, in
part, real means that it must be considered as real. In summary, from the
perspective of its appearance, speculative capital is real; from the perspec-
tive of its essence it is both fictitious and real at the same time.24
We claim that speculative capital is not capable of sustaining a new era in
capitalism, which has been maintained for decades and which has histori-
cally reorganized the world according to its interests, which has established
a new international division of sustainable labor which guarantees levels of

growth and acceptable economic conditions and has allowed minimally
acceptable living conditions for a reasonable contingent of the world’s
population. The era of the predominance of speculative parasitic capital
can only prevail during a period marked by deep and recurring financial
crises and by polarization never seen before in the history of capitalism;
magnificent material wealth, on the one hand, and deep and growing mis-
ery in much of the world on the other.
While the misery of large parts of an overexploited population functions
as a financing mechanism for an increasing share of speculative profit, cri-
ses operate as a moderating mechanism on the growing volume of p arasitic
speculative capital, relative to the productive base. Speculation and parasit-
ism grow uncontrollably; misery too. Crises slow the growth of this capi-
tal, destroying a part of it,25 but accelerate that of poverty. Speculative and
parasitic capitalism is the tragedy of our time. It is true that, for a time,
speculative capital can be satisfied with a fictitious remuneration which
implies nothing more than an increase in fictitious capital without acutely
pressuring the actual surplus produced. This, however, only postpones the
problem by amplifying the contradiction and antagonism.
The crises are recurrent; their depth and periodicity can be large or
small. The longer the time between one crisis and another,26 the more
violent the readjustments need to be. Everything operates as a seismic
shock mechanism. Geological tensions are accumulating, and frequent,
small tremors are the mechanisms for relieving tensions. The fewer the
number of them and the less frequent they are, the more likely the tragedy
of the “big one” becomes.
Although the end of speculative and parasitic capitalism is inevitable,
humanity will survive it. This is a historic bet worth playing. This game is
the only game in town.27
Notes
1. See, for example, “When discussing the dynamics of the contemporary
international economy – including discussions on economic growth – glo-
balisation is often mentioned as being a central factor. The trans-
nationalisation of production that has been taking place for more than
100 years – particularly, post-war, under the command of American trans-
national corporations, with the corresponding oligopolistic reaction of
large European and Asian companies – is confused with a more recent sce-
nario caused by the policies of financial globalisation” (Tavares and Melin

1997, p. 73). Or “Two basic, though tentative, conclusions follow. Firstly,
if we are to look for something truly peculiar (as opposed to ‘ever-present
capitalism’) in the present situation we should focus our attention on the
financial aspects of capitalist organisation and the role of credit” (Harvey
1992, p. 184). See also Chesnais (1996), Braga (1993), Coutinho (1996),
Harvey (1990).
2. Such as the change of industrial production patterns and/or the globaliza-
tion of production.
3. Text in quotation marks is not consistent with the original version of this
text. This version contains some refinements that attempt to overcome dif-
ficulties that appeared in the original.
4. The original version read “it even contaminates the productive functions,
autonomic or not, and so”.
5. “at a global scale”, does not appear in the original version.
6. The original version reads “productive capital is contaminated by specula-
tion”. It should be noted, “Financial dominance – financialisation – is a
general expression of the contemporary means of defining, managing and
realising wealth in capitalism. Dominance is understood, conceptually,
because all corporations – even those typically industrial, such as those in
the steel production sector – have in their financial investments, retained
earnings or cash, a central element in the process of global accumulation of
wealth”, (Braga 1993, p. 26) and “finally, it is understood that in the face
of all-pervasive financialisation, and the corresponding internationalised
macrostructure, the core of capitalism is no longer ‘industrial capitalism’ in
which, in the absence of crisis, the innovative entrepreneur, with a view to
production, raises credit, advances productive expenditures, buys labour,
sells production, makes profits and then starts the process again … but, on
the contrary, in current capitalism, particularly since the end of the 1960s,
different realities, corporate groups – true capitalist corporations – act
simultaneously, through financial wealth and production, intermittently
engendering the instabilities arising from the contradiction between
income (product) and money capitalisation and, in addition, leave the sys-
tem permanently in crisis, or rather, on the brink of crisis” (Braga 1993,
p. 47). See other parts of this chapter.
7. For us, speculative logic and the exorbitant remuneration of speculative
capital are what lead to the exacerbation of competition and to technologi-
cal change, until they reach the current standards of flexible technology. “I
am, therefore, tempted to see the flexibility achieved in production, labour
markets and past consumption as the results of the search for financial solu-
tions to the tendency for crises of capitalism rather than the reverse. This
implies that the financial system has achieved a degree of autonomy, in the
face of real production, unprecedented in the history of capitalism, leading

capital into an era of equally unprecedented financial risk” (Harvey 1990,
p. 181).
8. For Marx, it is capital that produces wealth and, therefore, surplus (surplus
value). It does so through work, the consumption of the workforce, which
is one of its aspects. This idea is sustained by the logical structure of its
theory regardless of how technology develops or how much the organic
composition of capital is extended (a process that is very prominent and
the starting point for understanding the trend to decreasing rates of profit).
9. We insist once again that this is not a definition. On these ideas regarding
capital, see Marx (1990, chapter 4).
10. Chapters 1 to 4 of Volume II of Capital portray, in a profound way, the
complexity of capitalist circulation. Unfortunately, little attention is paid to
them.
11. The most significant sections in Capital on this theme appear in Volume III,
chapters XXIX and XXX (the first six paragraphs).
12. “What establishes the price of property titles are generally the presumed
present and future revenues, to which the owner of the title is entitled,
updated through the current interest rate … (thus) prices can vary in a
totally independently from the variations in forecasted revenue. There are
other considerations that further change the price, such as ease of sale in
the market, security, maturity, taxes etc. It is not necessary to worry about
these details here, since what interests us is the relationship between prices
in general and the real values that should finally be represented. This rela-
tionship gives us something important to try to explain, how and why the
fictitious values (prices) achieved through the credit system can be so far
removed from the values expressed by the ‘monetary base’” (Harvey 1990,
pp. 280–281).
13. “The independent movement of these ownership titles’ values, not only
those of government bonds, but also of shares, strengthens the illusion
that they constitute real capital besides the capital or claim to which they
may give title. They become commodities, their prices having a specific
movement and being specifically set. Their market values receive a determi-
nation differing from their nominal values, without any change in the value
of the actual capital” (Marx 1991, p. 598).
14. In this case it is confused with interest-bearing capital.
15. “This capital (the fictitious capital) is defined as capital that has a nominal
monetary value and existence as paper, but which, at a given point in time,
has no bearing on real productive activity or physical assets. Fictitious capi-
tal is converted into real capital to the extent that investments are made
that lead to an appropriate increase in useful assets (e.g. facilities and
equipment that may be gainfully employed) or useful goods (goods or
services that can be sold for profit)” (Harvey 1992, p. 171).
16. In the original version, this paragraph was entirely different: “Finally, an
apparently obvious but very significant finding: not all interest-bearing
capital should be considered as fictitious capital. In contrast, not all ficti-
tious capital can be considered as interest-bearing capital as we have
explained, that is, as an aspect of industrial capital. Thus, for example, the
fictitious capital represented by public debt securities cannot be considered
as the functional form of industrial capital”.
17. In an excellent article by Alves Pinto (1997), a position appeared that was
different from ours.
18. It was used inappropriately in one of the translations of Capital into
Portuguese and this is well explained by Klagsbrunn: “In the Editora
Civilização Brasileira edition of ‘Capital’, this specific function was trans-
lated as ‘money capital’, an expression that has little to do with the original
geldhandlungskapital, both in literal terms and in content and which pres-
ents the exasperation of advancing theoretical developments of another
author – Hilferding –, which refer to more specific aspects. The later
Brazilian edition of The Capital, by Editora Abril Cultural, was, in this
matter, much more precise and correct. It seems that the origin of the
error is in the French translation of Editions Sociales, Paris, 1976 (transla-
tion by M. Cohen-Solal and M. Gilbert Badia), in which the title of ch. 19
p. 301 appears as ‘Le capital financier’ (capital marchant)”. This led to
innocuous undertakings, such as Brunhoff’s (1978, p. 103 et seq.), coun-
tering “the notion of money capital presented by Marx” with that of
Hilferding, cf. Klagsbrunn (1992, p. 603). On the non-existence of the
expression “money capital” in Marx, we thank the collaborations of
Klagsbrunn, Etelberto Ortiz and Francisco P. Cipolla, through the SEP
mailing list on the Internet.
19. Cf. Harvey (1990, p. 292 and following) and Hilferding (1985).
20. In the original version the following did not appear: “However, his ficti-
tious characteristic allows it to accept, within certain limits, a partly ficti-
tious remuneration; in this measure, and only within it, does it not present
itself as an immediate cost”.
21. In another circumstance and on another completely different level of
abstraction, Marx, referring to the cycle of money capital and its difference
to the others, states: “It further expresses the fact that it is the exchange-
value, not the use-value, that is the decisive inherent purpose of the move-
ment. It is precisely because the money form of value is its independent
and palpable form of appearance that the circulation form M...M’, which
starts and finishes with actual money, expresses money-making, the driving
motive of capitalist production, most palpably. The production process
appears simply as an unavoidable middle term, a necessary evil for the pur-
pose of money-making” (Marx 1992, p. 137).
22. In the original version: “Thus, productive capital itself becomes contami-
nated and individual capital that fulfils the autonomic functions of produc-
tive capital is increasingly subjected to parasitic logic and begins to operate
more and more with speculative logic”.
23. The previous version had a substantial difference in this paragraph. It then
read: “What used to be industrial capital, a synthesis of the autonomic
forms of productive capital, commercial capital and interest capital and
under the hegemony of the former (productive capital), becomes
speculative capital, a synthesis of various forms of capital, one of which is
the hegemonic, parasitic speculative capital already described. Industrial
capital, whose logic is accumulation based on the production of surplus
value, becomes, not in parasitic capital, but in speculative capital. In fact,
while this is a synthesis, the parasitic speculative capital within it is the
dimension of the parasitic remuneration; is therefore its parasitic aspect and
dominates all its logic (the logic of speculative capital, as a synthesis)”.
24. May the positivists forgive us! The part of this paragraph “We saw that […]
real at the same time” was not in the original version.
25. “Marx often claims that in the course of a crisis, capitalism is obliged to
abandon financial fictions and return to the world of real money, to the
eternal truths of the monetary base” (Harvey 1990, p. 296).
26. State intervention, contrary to neoliberal proposals, can alter the cyclical
mechanism of the crisis. Particular attention is being paid to creating new
regulations on parasitic speculative capital aimed at the destructive poten-
tial of crises arising from their accelerated growth.
27. According to Bensaid (1996).
References
Alves Pinto, N. P. (1997). O capitalismo financeiro. Crítica Marxista, 5, 9–26.
Bensaid, D. (1996). Trabalhar para a incerteza. Em Tempo, 291, 9–12.
Braga, J. C. d. S. (1993). A financeirização da riqueza: a macroestrutura financeira
e a nova dinâmica dos capitalismos centrais. Economia e Sociedade, 2, 25–57.
Brunhoff, S. d. (1978). A política monetária. Rio de Janeiro: Paz e Terra.
Chesnais, F. (1996). A mundialização do capital. São Paulo: Xamã.
Corazza, G. (1997). Globalização: realidade e utopia. Análise Econômica,
15, 16–27.
Coutinho, L. (1996). A fragilidade do Brasil em face da globalização. In
R. Baumann (Ed.), O Brasil e a economia global (pp. 219–237). São
Paulo: Campus.
Harvey, D. (1990). Los límites del capitalismo y la teoría marxista. México: Fondo
de Cultura Económica.
Harvey, D. (1992). Condição pós-moderna. São Paulo: Edições Loyola.
Hilferding, R. (1985). O capital financeiro. São Paulo: Nova Cultural.

Klagsbrunn, V. H. (1992). Considerações sobre a categoria dinheiro de crédito.
Ensaios FEE, 13(2), 592–615.
Marx, K. (1971). Theories of surplus-value (Vol. III). Moscow: Progress Publishers.
Marx, K. (1990). Capital: critique of political economy (Vol. I). London:
Penguin Books.
Marx, K. (1991). Capital: Critique of political economy (Vol. III). London:
Penguin Books.
Marx, K. (1992). Capital: critique of political economy (Vol. II). London:
Penguin Books.
Tavares, M. d. C., & Melin, L. E. (1997). Pós-escrito 1997: a reafirmação da
hegemonia norte-americana. In M. d. C. Tavares & J. L. Fiori (Eds.), Poder e
dinheiro: uma economia política da globalização (pp. 55–86). Rio de
Janeiro: Vozes.
CHAPTER 7
Profit, Interest, Rent, and Fictitious Profit
and Mauricio de Souza Sabadini
The Vicissitudes of Contemporary Capitalism

and So-Called Financialization
Just over ten years ago the world was shaken by one of the most violent
economic crises in the history of capitalism. Despite the social tensions and
popular clashes that ensued from the devastation it provoked (Harvey et al.
2012), and to the frustration of hard-line Reformers with their cries for a
new Keynesian New Deal, what was seen was a powerful reaffirmation of
the neoliberal formula and ideology. In the midst of cynical insults, morally
condemning the social climbing of speculators and recognizing the techni-
cal failures of financial market regulations and the econometric models that
asserted that everything was well with the world economy, it was not long
before apologetic efforts turned to propagating the idea that the root cause
of the turbulence lay in the actions of the State and their mitigation of the
self-regulating mechanisms of the market. This was all happening at the same
G. M. de C. Mello (*) • M. de S. Sabadini


https://doi.org/10.1007/978-3-030-23360-0_7
140 G. M. DE C. MELLO AND M. DE S. SABADINI
time that the state was injecting multiple trillions of dollars into the world
economy with its rescue policies for the “too big to fail” and successive
rounds of quantitative easing, revealing its key importance not only as a
“lender of last resort”, but as “creator of the market of last resort” (Braga
et al. 2017, p. 838). Once again it was concluded that the foundations of
the crisis should not be sought in the determinations and trends inherent
in capital accumulation, but in supposedly exogenous factors and a lack of
capitalism.
From all sides the incantation of the choir could be heard, in favor of
privatizations, of “austerity policies” (which can be translated as the cut-
ting of direct expenditure and the destruction of social policies by the
same steamroller that crushes labor and social security rights), cutting
taxes for the wealthiest sections of the population and the deification of
the “market”, the mantra in defense of the ideology of entrepreneurship,
competition, meritocracy, and individualism. Despite this hegemony, the
promises of prosperity and “balanced” and “sustainable” economic growth
were repeatedly broken. On the contrary, the world economy continued
to collapse, with weak growth rates (a measly 2.4% between 2008 and
2017, according to World Bank estimates1), very low rates of gross fixed
capital formation (1.18%2), reduced rates of growth in productivity
(Mckinsey 2018), historically low average rates of profit, as will be seen
below, and galloping State and private indebtedness, accounting for more
than 300% of global GDP (IFF 2018; BIS 2018).
Despite the lack of quality of much of this aggregated data and some
methodological issues that will be raised, these figures indicate some phe-
nomena worthy of consideration and which receive different interpreta-
tions, even within the critique of political economy. Is there a divide
between the real and financial dimensions of accumulation, or is one of
them somehow privileged in understanding contemporary capitalism? Are
we facing “rentier capitalism”? How can we correctly understand finan-
cialization? What is the nature of the economic crises that have swept over
us in the last decades? This text sets out to provide conceptual contributions
to answer such questions and has, as its mainstay, the Marxian critique of
political economy and dialogically criticizes some contemporary Marxist
authors. To this end, our attention will be specifically focused on the cat-
egories of interest-bearing capital (M-M-C-M'-M') and fictitious capital
(M-M'), and with particularly to the latter, which we will refer to as ficti-
tious profit. This choice is justified by the fact that the first two categories,
which are fundamental to understanding the global dynamics of capital
accumulation, continue to be commonly vulgarized or sub-theorized and
7 PROFIT, INTEREST, RENT, AND FICTITIOUS PROFIT 141
that the mobilization of the category of fictitious profits derives from the
analysis of fictitious capital and sheds light on important dimensions of
this concept. Another contribution that we judge to be important here is,
following Paulani’s (2016) footsteps, the relevance of Marxian analysis of
ground rent to the understanding of the phenomenon of financialization,
and, more broadly, of contemporary capitalism.
Capital as a Contradictory Totality

Most Marxist theorists affirm the need to understand financial phenomena
in their autonomy and singularity and as part of the global dynamics of
capital accumulation, in its contradiction to “real” production and circula-
tion. This is only possible when one rigorously and articulately considers
some often-neglected elements, namely:
(a) “Capital is the all-dominating economic power of bourgeois soci-

ety. It must form the starting point as well as the finishing point”
(Marx 1993, p. 106). Capital possesses a powerful thirst for
surplus-value, and it exists only when it extensively reproduces the
“bad infinity” of its self-appreciation, which is the foundation, the
driver and the purpose of all the production that takes place under
its aegis. It tends to subsume everything that exists in this process,
controlling ever more fully the conditions for this reproduction
and elevating itself to the condition of formal totality (Grespan
2002) which, as we will see, is a fragmented and contradictory
totality. In this movement it tends as much to dominate as to
autonomize itself in relation to its substance, the abstract work,
which is necessarily external to it (Grespan 2008). In other words,
this tendency toward the autonomization and subjectivation of cap-
ital—the fetishism of capital—is expressed both in the real subsump-
tion of labor to capital and in the tendency to increase organic
composition, in the process of extracting surplus value, and which
will, in turn, lead to a downward trend in the rate of profit and to
crises of overaccumulation. So, the fundamental contradiction of
capital which marks each step of its constitution, limits it to the
condition of a “blind” and “automatic” subject, a false subject, and
therefore, a “contradiction in process” (Marx 1993, p. 706), and
“self-limiting” (Marx 1991, p. 358). It is, therefore, a transient
plexus of social relations, which opens up routes to revolutionary
political practice. In this sense, when one follows each step of the
concept, the crisis is the negative of capital (Grespan 2008), which
is already appearing, as a formal possibility in the separation between
the acts of purchase and sale, and even as a necessity, in the form of
a crisis of overaccumulation (Grespan 2008).
(b) The totalitarian nature of capital manifests itself in ways which it is
necessary to distinguish and deepen. As for immediate production,
the vampiresque impulse for living labor implies growth in the
mass of workers formally subsumed into capital, as well as the
expansion and intensification of the working day (in search of the
extraction of absolute surplus-value). At the same time, there is a
downward trend in the value of the workforce (in pursuit of the
extraction of relative surplus-value), and even the reduction in the
price of labor below its value, a form of extortion of the working
population. Both tendencies are engender and propelled by the
real subsumption of labor to capital and by the process of automa-
tion of production, which reduces the workers to being an append-
age of the machine system, as the productive base appropriate to
capital—which is thus emancipated in relation to the physical and
mental limits of the workers—and which distinguishes, “the spe-
cifically capitalist mode of production” (Marx 1990, Ch. 13).
According to the “general law of capital accumulation” (Marx
1990, Ch. 23), in addition to the aforementioned “multiplication
of the proletariat” (Marx 1990, p. 764) the increased reproduction
of capital thus effects the concentration and centralization of capi-
tal, which engenders the formation of large business conglomerates
as well as the creation of relative overpopulation. So, the tendency
toward the widening of income and property inequality can be
seen as inherent to capitalist social formations.
It has already been said that capitalist subsumption is extensive, spread-

ing in time and space to produce a specifically capitalist (abstract) time and
space.3 In this sense, there is the drive toward the “annihilation of space by
time” (Marx 1993, p. 206), with improvements to transport and commu-
nication systems and a tendency to reduce the period of the cycle of capi-
tal. It also, however, has the impetus to suppress time through space, with
the spatial concentration of production and consumption in urban space
(whose production is a central moment of capitalist reproduction)
(Lefebvre 1991).
So, the territory of capitalist reproduction is the world market, “the

tendency to create the world market is directly given in the concept of
capital itself ” (Marx 1993, p. 408). Or even,
abstract wealth, value, money, hence abstract labour, develop in the measure
that concrete labour becomes a totality of different modes of labour embrac-
ing the world market. Capitalist production rests on the value or the trans-
formation of the labour embodied in the product into social labour. But this
is only [possible] on the basis of foreign trade and of the world market. This
is at once the pre-condition and the result of capitalist production. (Marx
1971, p. 253)
Even the most elementary categories are only effectively built with ref-
erence to the world market, “the very basis and living atmosphere of the
capitalist mode of production” (Marx 1990, p. 205). So, “the world mar-
ket itself forms the basis for this mode of production” (Marx 1990,
p. 451). That is, capitalism came into the world as a global system, and it
is not surprising that colonialism constitutes a fundamental moment for
the original accumulation of capital (Marx 1990, Ch. 24). The impetus for
the real subsumption of labor to capital, as well as the destruction and
subsumption of non-capitalist social formations and forms of production,
is constantly renewed, as it is inherent to the concept of capital:
(c) Capital possesses distinct levels of existence, corresponding to dif-

ferent levels of conceptual abstraction.4 Throughout the exposition
of the concept of capital, which gradually encompassed concrete
reality as concrete thought in a “synthesis of multiple determina-
tions”, such categories acquired new determinations, and the more
concrete determinations fed back and gave new meaning to the
more abstract. In this movement we must distinguish between the
planes of “essence” and “appearance”, the latter emerging as a nec-
essary manifestation of the former, in a relationship in which they
both constitute and deny each other. Here the distinction between
capital in general and competition between capitals is key: the for-
mer understands the movement and the fundamental determina-
tions of capital, as a concrete universal, a social form that exists
above and alongside the particular forms of capital, which is consti-
tuted by them but not as a simple aggregation; it has a nature,
characteristics and tendencies that condition the different forms of
capital.5 Thanks to its contradictory character, its determinations

are manifested in the “real” reality—on the plane of competition,
in which the multiplicity of capital is confronted—in an inverted,
contradictory, mystifying but no less real way. Thus, “under free
competition, the immanent laws of capitalist production confront
the individual capitalist as a coercive force external to him” (Marx
1990, p. 381; 1991, p. 311). Those who fail to revolutionize their
means of production, reduce their costs, create new goods and new
necessities, and so on are swallowed up by more successful capitals.
At this level of analysis, the thirst for absolute and relative surplus
value (and extra surplus value—Carcanholo 2000) manifests as a
thirst for profits (and surpluses especially) which imposes an inces-
sant quest for productivity gains, and the differentials between
capital, both in the same branch of production and in different
branches of production, and from a local to a world scale (which is
one of the bases of the hierarchy between nation states and
imperialism).
In addition, capital only exists in movement, undertaking continuous

metamorphoses, through the interweaving and repetition, simultaneous
and successive, of infinite reproductive cycles, in which capital assumes the
commodity-capital, money-capital, productive-capital forms, seeking to
eliminate any interruption and to shorten the cycle time.6 Again, in the
words of Marx (1992, p. 185):
[C]apital, as self-appreciating value, does not just comprise class relations, a

definite social character that depends on the existence of labour as wage-
labour. It is a movement, a circulatory process through different stages [...].
who consider the autonomisation [Verselbstständigung] of value as a mere
in action. Here value passes through different forms, different movements
in which it is both preserved and increases and appreciates.
In the midst of this process, there is a tendency toward the autonomiza-

tion and specialization of industrial capital, giving rise to the trading capi-
tal of merchandise and money, related to the formal changes inherent to
circulation, legal transfer of property, balance-sheet actions and compen-
sation, collection, payments, accounting, custody of assets, organization
of the processes of hoarding and dispersal—in order to make money avail-

able as a means of circulation or means of payment—and so on. In this
sense, although not participating directly in the extraction of surplus labor,
such specialization propel accumulation—by reducing the period of capi-
tal rotation, by rationalizing and increasing the security of transactions and
by saving the “false costs of production”—which would be much greater
if individual capital had to carry out the activities that are to be carried out
by commercial capital—it requires only the average profit as its minimum
remuneration and participates in the equalization of the profit rate, since
the capital invested therein is considered as part of total capital. This raises
the denominator of the equation (given by the sum of the variable capital
and the constant invested capital) and adds nothing to the numerator
(which corresponds to the mass of value-added), making the average rate
of profit settle at a lower level.7
Another fundamental result of this tendency toward the autonomiza-
tion of capital is the building of the modern credit system. Later, we will
carefully consider interest-bearing capital and fictitious capital, but it is not
too soon note that, from the beginning, the production of capitalists and
money traders was gradually concentrating money and capital as society’s
savings in the form of deposits and to monopolize lending activities, with
a view to appropriating abstract wealth in the form of interest. Credit can
be seen as, “a terrible weapon in the battle of competition and is finally
transformed into an enormous social mechanism for the centralisation of
capitals” (Marx 1990, p. 778), that is both the expression of, and the fuel
for, the immanent tendencies of accumulation8: it allows growth in the
scale of production and accelerates new investments, thus mitigating the
need to tie up capital in treasury reserves; drastically reduces cycle time
and capital costs; increases the mobility of capital; reinforces the tendency
toward the equalization of the rate of profit, and so on. Nonetheless,
“banking and credit, however, is also the most powerful means for driving
capitalist production beyond its own barriers and one of the most effective
vehicles for crisis and swindling” (Marx 1991, p. 742). The other lever in
the process of the concentration and centralization of capital is the forma-
tion of joint-stock companies, titles of property that, in general, allow
their owners to appropriate a portion of the profits produced by the com-
pany in the form of dividends.
Finally, the global production of capital also includes the struggle for the
drive for surplus-value in the form of absolute rent, differential rent, and
monopoly rent in the strictest sense. As is known, if not from contingent
and ephemeral circumstances, the surplus sought by every individual capi-

talist corresponds to the, “difference between the individual price of pro-
duction of these favoured producers and the general social price of
production in the sphere of production as a whole, which is what governs
the market” (Marx 1991, p. 780). It happens that the use of resources that
are non-reproducible and that can be monopolized can cause this excess
profit to persist and is appropriated by the owners of these resources in the
form of rent. In dealing specifically with ground rent, whose analysis will
be developed later, Marx firstly analyzes the conversion of excess profit into
land rent when it comes from differences in fertility and land location—
relative to the transportation system, access to consumer inputs and mar-
kets, the type of built environment etc.—either natural (differential rent I)
or derived from land-based investments (differential rent II). Secondly, he
deals with absolute rent, which can be appropriated even from the worst-
quality land. From the analyses of the equalization of profit rates, it has
been shown that competition between capital causes the total added value
to be distributed among individual capitals according to their size, irre-
spective of their organic composition, and hence how much surplus value
they effectively create. However, land ownership exempts agricultural pro-
duction from entering this process. Presupposing that agricultural produc-
tion has a lower organic composition and tends to produce a greater mass
of surplus value than the same magnitude of capital invested in another
productive branch, there arises a surplus that will be appropriated in the
form of rent (absolute), even if its market price is below its value (but above
its price of production). Finally, in the case of an “authentic monopoly
price”, the market price has nothing to do with the value or the price of
production of the commodity in question, there is an absolute separation
between them.
From the above, it is not only evident that “the capitalist production
process, taken as a whole, is the unity of the production and circulation
processes” (Marx 1991, p. 117), but that, in the context of competition
between capitals, the extraction of surplus value appears only as one of
several means of appropriating surplus value (in the form of profit, inter-
est, dividends, differential rent, etc.). This is the true target of individual
capital within the framework of the competitive process but manifests
itself in a mystifying way. If salary is a transformed form of variable capital,
here the profit, interest, dividends, and the different forms of rent are
transformed forms of surplus value. It will be seen more clearly later that
the fictitious forms of capital which have existed since the earliest days of
production, as expounded by Marx, for example, in the seminal chapter

on the original accumulation of capital, are not a deviation but a necessary
moment for accumulation, and also that fictitious capital will appear as
capital par excellence, and as the primary form of abstract wealth, reigning
over other forms.
In short, this fragmented totality must be understood as a process, as a
strictly dialectic movement of the subsumption, differentiation, and
autonomization of co-pertinent moments, and from this perspective, the
understanding of bourgeois society as a whole must be made through the
development of its contradictory foundation, a process in which the differ-
ent categories are revealed as forms of manifestation of the constitutive
contradiction of capital. Thus, the various categories of Marx’s critique of
political economy are moments of the constitution of capital (which, of
course, includes interest-bearing capital and fictitious capital, as well as
absolute, differential and monopoly forms of rent). An articulated under-
standing of Books I, II, and III of Capital is therefore necessary for the
critical understanding of the global dynamics of accumulation and their
particularities.
In order not to cloud the explanatory logic, one must recognize (and
theorize about) both the non-identical (Adorno 2009), that which escapes
the totalitarian impulses of capital, and the fact that the historic evolution
of capital introduces the determinations and forms within its concept,
without which capitalist social formations remain incomprehensible.
Before considering it, however, it is convenient to deal with the concepts
of interest-bearing capital and fictitious capital, essential for theorization
about contemporary financialization.
Interest-Bearing Capital, Fictitious Capital

and Fictitious Profits
As mentioned, and presuming its power of self-appreciation, capital can be

temporarily sold through productive investments under the conditions
imposed by competition, conditional on the lender being guaranteed
interest subject to terms previously defined between lender and borrower.
This capital can be in the form of a commodity, such as a machine, but
most of the time it takes the form of money. If, at a more abstract level of
analysis, commodity and money appear as forms of capital in a movement
of continuous transformation, then at this point of the explanation capital
is capital that takes the form of commodity, which has as its value-of-use
the power to generate profit. It is interest-bearing capital, the foundation
of the credit system, which gives the capitalists who use capital produc-
tively, the possibility of employing the capital of others to exploit the work
of others. In logical terms, the emergence of interest-bearing capital pre-
supposes the appreciation process is only a matter of the lender receiving
what has been formally or informally determined, being indifferent as to
how the borrowed capital will be used. Gains appear as arising from the
mere ownership of capital and not from the appreciation process itself. In
this sense, “in interest-bearing capital, the capital relationship reaches its
most superficial and fetishised form. Here we have M-M', money that
produces more money, self-appreciating value, without the process that
mediates the two extremes” (Marx 1991, p. 515). The nature of capital is
even more mysterious, and its substance concealed. The autonomization
and subjectivation of capital correspond to a process of the concealment
and mystification of its own essence, which can only be understood
through dialectical criticism: “in this way, all connection with the actual
process of capital’s appreciation is lost, right down to the last trace, con-
firming the notion that capital is automatically valued by its own powers”
(Marx 1991, p. 597).
With the process of the concentration and centralization of capital,
access to the credit system becomes more and more imperious and univer-
sal, which in turn further reinforces this concentration and centralization.
With this generalization of credit operations, and by seeming “palpable”
and firmly defined, interest appears to individual capitalists as the form of
remuneration of capital par excellence, instead of a deduction from profits.
All capital, whether loaned or borrowed, seems to yield interest, and the
difference between this interest and the total gain of the enterprise appears
as the “profit of enterprise”, derived not from the extraction of surplus
value but from the labor of the managers (see Marx 1991, p. 968). But the
inversions and mystifications do not stop here.
In the case of interest-bearing capital, it is assumed that a capital
amount, through a legal transaction, permits the channeling of a flow of
income in the form of interest, as if it were a natural product of capital and
as if everything took place within the sphere of circulation, without any
connection with the sphere of production. From this form of capital, in
addition to all capital appearing as an interest source, every potential
income stream starts to give rise, through the process of capitalization, to
a specific type of capital, devoid of value.9 When it becomes formalized,
giving rise to a legal title, this capital becomes tradable in specific markets.
These, and other determinations that will be presented in the sequence,
make up fictitious capital, a form that originates and develops from
interest-bearing capital, which shares with it some determinations, but
denies it in others.10
It may be said here in passing, as pointed out in the first chapter of
Capital, that price form not only enables the, “quantitative incongruity
between price and magnitude of value” (Marx 1990, p. 196), which is
inherent to it but, “may also harbour a qualitative contradiction, with the
result that price ceases altogether to express value, despite the fact that
money is nothing but the value-form of commodities” (Marx 1990,
p. 197), as happens in the formation of capital or in land pricing, algo-
rithms, and so on.
The elementary form of fictitious capital, analyzed by Marx, are shares,
a large portion of banking capital, and state bonds.11 On shares, to addi-
tion to what has been said previously, it is possible to say that these titles
operate as a paper duplication of the capital effectively invested in compa-
nies; are, “nominal representatives of non-existent capitals” (Marx 1991,
p. 608). The buying and selling of shares on stock exchanges or over-the-
counter markets—where all kinds of state or private debt securities are also
transacted—involves a formal legal transaction that does not change fixed
capital and working capital. In a sense, the shares result from the capital-
ization of the expected profits of the company and its price varies continu-
ously according to the conditions of competition in the financial markets,
and therefore as a function of the demand and the offer of this title which
becomes autonomous in relation to the effective value of the capital objec-
tified in said company.
Banking capital is characterized by the issuing of money to an amount
much greater than its own capital and the deposits it brings together and
thus, “the greater part of this money capital is purely fictitious” (Marx
1991, p. 601). This flood of credit money fueled the specter of panic and
runs on banks, which then further boosted the creation and nationaliza-
tion of central banks, distinguished by their role as lenders of last resort,
the primary creators of money and the guarantors of its quality, controllers
of the exchange rate, determiners of the basic interest rate and the regula-
tors and supervisors of bank reserves and the bank clearing system.12
State bonds, on the other hand, have the tax system as their mainstay,
and support the appropriation of surplus value in the form of taxes, and
their issuance is remote from the immediate target of productive employment.
That is, the interest paid on state debt is based on real wealth, produced by
the workers and transferred to the capitalists, who are creditors of the State.
A part of abstract wealth absorbed in unproductive forms of income is
hoarded by capitalists and can drive capital accumulation. In addition,
although it appears as the loan to the State, as Marx reminds us, the creditor
here yields nothing, since the title of state debt represents wealth and can
be traded at any time in the so-called open market (Marx 1990, p. 919). It
should be added that operations in the open market have become the fun-
damental means of state control of the monetary base (constituted by “ficti-
tious money”13). In this way, both the overlaps between the elementary
forms of fictitious capital and the fact that it functions across the most
diverse dimensions of capital accumulation become evident. Finally, as ana-
lyzed in Chap. 5, either directly or indirectly, every everyday transformation
of capital, every act of buying and selling, by companies, individuals and
State, is completed in the form of money on the daily balance sheets of the
banks and is inserted into the credit system, which has its mainstay and
motor in the public debt system. So, the fictitious forms of capital forcibly
go through the metamorphoses of their other forms of existence.
It is worth mentioning another mode of fictitious capital that develops
from those analyzed by Marx, derivatives. Derivatives have gained enor-
mous importance, linked to so-called securitization, the transformation of
debts into negotiable securities through capitalization. These are financial
assets, referenced to exchange rates, interest rates, mortgages, stock
indexes, student loans, futures securities and commodities prices, climate
events, other derivatives (such as collateralized obligations, referenced in
bonds, loans, mortgages, debits, etc.), and the estimated risk of investments
in these assets (with emphasis on credit default swaps [CDS]), which have
reached a monumental volume in recent decades.14
Despite their fictitious character, according to Norfield (2012),
[d]erivatives can help promote capital-accumulation by saving companies

transaction-costs, by giving the impression that risks are lower than in
reality, by appearing to represent wealth that can be used as collateral
for loans and by generating recorded profits based on speculation-driven
prices. (p. 117)
The first of these means, concerning the reduction of faux frais, seems
to be correct. Regarding the other aspects, which would compete to
increase willingness to invest, it should be noted that this would only hap-
pen if the individual capitalist recognized opportunities for productive

capital employment that were better than those of the fictitious capital
markets. Moreover, between the identification of these opportunities and
their realization there is a gap that may prove to be an insurmountable
abyss, and there would be real capital available that would remain fallow
or be dissipated in an unproductive mode without the impulse given by
derivatives.15
More importantly, insofar as these financial securities enable investors
to negotiate expected price changes of financial assets (Braga et al. 2017),
derivatives permit, in a sense, the estimating, pricing, and transacting of
the expected gains of any type of application—real or fictitious—taking
the risk of failure into consideration.16 In this sense, they decisively inter-
fere with capitalist calculations and strongly increase the mobility of capital
(Sotiropoulos et al. 2013, p. 166), as well as propelling the process of
capital centralization, having a decisive impact on the primary markets,
impacting prices, and investment decisions. These fictitious forms of capi-
tal, in short, become central to investment decisions and to the allocation
of capital on a global scale.17
Moreover, if interest-bearing capital casts its shadow over all kinds of
capital which seem to yield interest, “as is the property of a pear tree to
bear pears” (Marx 1991, p. 516), fictitious capital, in particular each indi-
vidual company, state, individual and worker, is viewed as a potential gen-
erator of income streams and is assigned a certain specific and concrete
risk, which will interfere, for example, in their access to the system
(Sotiropoulos and Lapatsioras 2014). In addition to this tendency of uni-
versalization of fictitious capital, which tends to be projected on e verything
and everyone, this dynamic becomes a powerful mechanism for social con-
trol and management, conditioning behaviors and decisions, which has to
do with what Sotiropoulos and Lapatsioras (2014, p. 94) consider to be
financialization as a “technology of power”, referring to Foucault’s analy-
ses of “governmentality”. In short, the fetishism of capital never ceases
to deepen.
A point should still be emphasized, as Paulani (2016) asserts, “fictitious
capital, then, is everything that isn’t capital, wasn’t capital and never will
be capital, but works as such. It works as such because of the capitalisation
principle” (p. 791). It may be convenient to add that it operates in the
sense that it represents and permits the drive for abstract wealth and can
be exchanged for other forms of wealth, should it encounter a demand.
So, from the perspective of the totality of the global accumulation process,
capital is strictly fictitious—it is not and cannot be engaged in the direct

creation of surplus value—from the individual’s perspective it represents
wealth and is a prime part of the capitalist’s patrimony. In this sense, ficti-
tious capital is, and is not, capital (Carcanholo and Sabadini 2015, p. 157).
From the above, one can see the misunderstanding of several interpre-
tations that these categories have acquired within Marxism. To take just
two of them, proposed by eminent and rigorous Marxist theorists, who
contributed much to the critique of contemporary capitalism. In Foley’s
words (1991, p. 116),
The price of shares will be established to make them attractive as invest-

ments, in competition with loans, given the higher risk attached to the flow
of residual profit relative to the flow of interest. But this price of shares may
exceed the value of the capital actually invested in the firm’s operations.
Marx calls this excess fictitious capital, since it is part of the price of shares
which does not correspond to the capital value actually participating in the
firm’s production.
Harvey (1989), in turn, asserts that “credit is, according to Marx,

always to be accounted for the ‘fictitious capital’” (Harvey 1989, p. 107),
and that “fictitious capital is converted into real capital to the extent that
investments are made that lead to an increase in useful assets [...] or com-
modities” (Harvey 1989, p. 182).
In these passages one can see the confusion between interest-bearing
capital and fictitious capital, as well as the notion that fictitious capital
emerges from unproductively employed loans or failed investments. In
addition, the “fictitious” nature of capital is attributed to a possible dis-
crepancy between its value and the value of the capital that serves as its
reference. In relation to what has already been put forward, it must be
remembered that commodities acquire value in their productive process,
as a function of the abstract work objectified in them, although the realiza-
tion of this value is realized in circulation, post festum. Changes in the
number of producers, in the scale of production, in the technologies
employed and in the conditions of demand, among others, can cause a
given investment to be frustrated and the capital employed does not
increase in value and is therefore wasted. As value is determined, at the
individual and social level, in a turbulent and uncontrolled competitive
process, as a unit of the production and circulation of capital through
countless cycles under ever-changing and anarchic conditions, capital
accumulation has an inescapable speculative component.18 Beyond

interest-bearing capital and fictitious capital forms, this speculative com-
ponent is particularly notorious according to the analysis of fixed capital,
as the longer that fixed capital remains obsolescent, the more it commits
the present to the future extraction of surplus value.19 This is not the hall-
mark of so-called financial markets. However, this speculative dimension
of capital should in no way be confused with the concept of fictitious capi-
tal, which has several determinations and functions that distinguish it, as
has been seen.
It is worth repeating that, unlike interest-bearing capital, which arises
when a mass of capital is not directly invested by its owner but borrowed
in exchange for its repayment plus interest, fictitious capital does not and
never has possessed any value, it is a legal title which assumes an expecta-
tion of future income streams and variations in the prices of financial assets
themselves, based on the conditions of competition in the markets in
which they circulate. As explained above, it has its own origin and move-
ment and constitutes a sui generis form of capital.20
Having pondered the conditions for the emergence and the fundamen-
tal determinations of fictitious capital, it is a good time to consider, still
from the perspective of its logic of reproduction and at a relatively high
level of abstraction, its mechanisms of expansion and retraction. We have
seen that, due to the autonomy of fictitious forms of capital, which do not
have an iota of objective value or participate directly in the process of the
accumulation of value, its price being determined in specific markets, the
fluctuations of that price can occur independent of the conditions and real
movements of capital accumulation, simply from the competitive
conditions of those markets. In addition to the creation of fictitious capital
through new capitalization processes (IPOs, public debt issuance, debt
securitization and all sorts of financial innovations that will be considered
later), the influx of capital into financial markets, or even acquisitions and
intra-market securities, may lead to significant increases in the prices of
these securities, as has been seen in the so-called financial bubbles. This
increase in the magnitude of fictitious capital represents gains for the indi-
vidual capitalist, but one must ask: what is the nature of these gains?
At this point, it is convenient to present and discuss the category of
fictitious profits, originally introduced by Carcanholo (2003), appearing
again in Nakatani and Carcanholo (2007), and developed in works such as
Carcanholo and Sabadini (2015), originally published in 2008. This is the
form of income derived from fictitious capital, the expression of fictitious
capital on corporate balance sheets, and the variation of individual capital-

ist’s assets, stemming from state indebtedness and speculative movements
in asset prices. In order to emphasize its specificities, attention should be
paid to the way in which the category of fictitious profits appears in the
work of some important Marxist theorists. To begin with, Carchedi (2011)
hypothesizes that the exponential growth of fictitious capital in recent
decades was a reaction to overaccumulation of capital due to the fall in the
average rate of profit and the consequent deterioration of the conditions
for the realization of productive investments, and argues the need to
mobilize this category as follows:
If loan capital is fictitious, its profits are fictitious too. They are fictitious not
because they do not exist (as in some fraudulent accounting practices). They
are the appropriation of a representation of value (money), and in this sense
they are real. But they are fictitious because this appropriation springs from
a relationship of debt/credit rather than production. Financial capital sells
titles of debt with no intrinsic value for a representation of value, money. It
appropriates value” (p. 5). [And even,] as we have seen, as profitability falls
in the productive sectors, productive capital migrates to the fictitious sphere
where it becomes fictitious capital. The greater the influx of capital, the
higher the price of the titles of debt that form this fictitious capital. The
same applies to stocks. As more capital expecting further price rises is drawn
in, the price of the titles dealt with on the financial markets rises and the
process becomes self-reinforcing. Fictitious profits rise. A speculative bubble
is in the making. (p. 9)
Smith et al. (2014) also address the category of fictitious profits in their
empirical investigations. After noting a statistically significant increase in
the rates of profit in the United States in the 2000s, the authors character-
ize it as, “anomalous and based to a considerable extent on ‘fictitious
profits’ booked in the finance, insurance, and real-estate sectors, and per-
haps by many firms operating in the productive economy also” (Smith
et al. 2014, p. 69). In turn, Duman (2014) places fictitious profits at the
heart of his analysis of the global economic crisis that erupted in 2007–8.
He states:
The economic crisis occurred as the result of the excessive growth of the
financial market over the real economy and of fictitious profits over real
profits. The gap between fictitious profits and real profits widened with the
dual effect of both the financial market and the real economy. The rate of
fictitious profits increased with over-financialisation, whereas the rate of real

profits decreased due to the law of the tendency for the rate of profit to fall
in the capitalist mode of production. (Duman 2014, p. 248)
In general, fictitious profits are under-theorized and unconnected from a

more conceptual discussion about fictitious capital and its place in the con-
cept of capital. Duman (2014) only states that it is a profit derived from,
“credit, mortgage, social insurance funds, bonds and stock markets” (p. 247).
To empirically verify the monumental magnitude of fictitious profits does
not, however, exhaust the subject, from the perspective of the critique of the
political economy. As will be argued below, it is necessary to understand that
fictitious capital appears to individual capitalists as the primary form of wealth,
and that the fictitious profits that correspond to it become a fundamental
reference for business actions in the most disparate sectors of the economy,
influencing the flows and capital applications on a global scale.
Even in the case of Carchedi, whose analysis of fictitious profits has
conceptual gravitas, it should be pointed out, first of all, that the category
“financial capital”—which did not exist in Marx’s work, and is the object
of diverse interpretations based on the pioneering proposition of
Hilferding (1981)—lies at a level of abstraction distinct from the category
of fictitious capital and which cannot be simply identified with the ques-
tion of the distinct segments of the capitalist class. Moreover, fictitious
profits do not originate from an appropriation of value provided by the
usual channels of production, transference and appropriation within the
cycle of capital. Their fictitious nature lies precisely in the fact that they are
profits that do not correspond to a fraction of the surplus value generated
in the productive process. Hence, its maximum incomprehensibility and
its role as a potential multiplier of capitalist crises that have manifested
themselves in the last decades as financial crises. The emergence of ficti-
tious profits does not negate the foundations of Marx’s theory of value; on
the contrary, fictitious profits point precisely to the fact that capitalism
cannot sustain itself without extracting surplus value, so that “the continu-
ity of stage of speculative capitalism can only be sustained by the further
increase in the exploitation of labour throughout the world and by the
intensification of value transfers from the periphery to the central coun-
tries” (Carcanholo and Sabadini 2015, p. 152).
Attention should also be paid to authors who deny this category
entirely. According to Lapavitsas and Mendieta-Muñoz (2016), “financial
profits are thus a highly complex economic category; one notion that
could be immediately dispensed with, however, is that they are somehow

‘fictitious’” (pp. 3–4). This understanding comes from the authors’ own
understanding of fictitious capital, which would have been employed by
Marx to describe phenomena, particularly that of, “discounting of future
returns which would result in completely fictitious prices for financial
assets-i.e., net present value” (Lapavitsas and Mendieta-Muñoz 2016,
p. 4). Here again lies the mistaken notion that a characteristic of fictitious
capital would be to show a present value superior to that of the real capital
which supposedly serves as its base. Nevertheless, according to the authors,
when selling a financial asset, “the sum of the profits would be either a
share of the money advanced, or a share of the future returns (surplus
value, or even wages and salaries). There would be nothing fictitious about
that sum of money profit, irrespective of how fictitious the asset prices
might be” (Lapavitsas and Mendieta-Muñoz 2016, p. 4).
Durand (2017), in his turn, in assessing the so-called capital gains aris-
ing from the repurchase of shares and other speculative movements in the
stock market, argues:
In short, even though capital gains are real, they result from variations in the
value of fictitious capital. Whatever the type of assets under consideration,
capital gains result from a zero-sum game among the various participants on
the market: the fictitious capital accumulated through price rises becomes a
reality for a given vendor when a buyer on the market himself takes over this
fiction. (p. 173)
There is a limit to Durand’s approach (2017), which disregards the

contradiction between the manifestation of the individual capitalist’s view-
point and the overall reproduction of capital, as well as the distinction
between value and price. Like Lapavitsas and Mendieta-Muñoz (2016), he
simply denies the fictitious character of profits from fictitious capital21 and
views the stock market as a zero-sum game.22 Hilferding also considers the
result of the transactions to be a null total, when it signals the existence of
so-called differential profits (Sabadini 2015).23 However, this is at odds
with the interpretation that “the speculative valuation of the assets, while
they remain, constitutes a profit that does not correspond to any loss”
(Carcanholo and Sabadini 2015, p. 140), which is precisely the phenom-
enon that is understood as fictitious profits.
On the contrary, by converting fictitious capital into any form of real
capital, fictitious capital changes hands and does not cease to exist. What
matters is, that without value and without participating in its creation,
fictitious capital tends to demand a growing draw on value, putting great

pressure on real accumulation. If it is the result of the capitalization of a
future income stream, then it requires the realization of those incomes,
which may have no effective basis. In this sense, “fictitious capital origi-
nates from three sources: (a) the transformation of illusory capital into
marketable securities, (b) the apparent duplication of the value of interest-
bearing capital (as in the case of public stocks and bonds) and (c) specula-
tive valuation of the different assets” (Carcanholo and Sabadini 2015,
p. 131). Thus, it pays interest, dividends, and so on, arising from surplus
value, and in this case is a transfer of value between the fractions of capital
and in the form of fictitious profits.
Still on Rent and Its Source

These accumulation tendencies, in particular, those of the autonomization
and subjectivation of capital, the concentration and centralization of capi-
tal, the development of the world market, the formal and real subsump-
tion of labor to capital, and the reduction of time and the cost of rotation
of capital, all come together to produce processes that are often pointed
out as being distinctive of contemporary capitalism.24 Following the mul-
tinationalization of capital in the years following World War II, recent
decades have seen the fragmentation of the production process being
potentiated by different countries, so that a commodity can be assembled
in any given country from components produced in different countries or
continents (thus constituting so-called global value chains). This is not
only an expression of the expansionary impulse of capital, but also as a way
of reducing production costs, especially through fiscal incentives and state
subsidies, the absence or laxity of environmental legislation and the cheap-
ening of productive inputs, and the workforce in particular. This produc-
tive transnationalization becomes even more imperative in a context
characterized by low average rates of profit and by an increasing overac-
cumulation of capital. Incidentally, the collapse of the Soviet bloc and the
surge of capitalist development in countries such as India and, above all,
China, gave great impetus to this trend, and with it, following extensive
waves of expropriation and an intensive expansion of the number of work-
ers subsumed, formally and actually, to capital.
This productive transnationalization25 was made feasible and fed—but
not finding its roots there, it should be emphasized—partly by technologies
and techniques specific to information technology, telematics, microelec-
tronics, robotics, nano and biotechnology, among others, called the Third
Industrial Revolution. Thus, with specificities in each one of the branches
of production, these innovations in general competed to perfect the mech-
anisms of control of the work process and of production, and therefore of
extraction of surplus value26; to rationalize the relationship between suppli-
ers and final consumers, reducing inventories and waste; to expand the real
subsumption of labor to capital in various productive branches that hith-
erto imposed resistance on it, particularly those that developed from het-
erogeneous manufacturing (Marx 1990, Ch. 12), and various service sector
activities, such as transport, especially those resulting from “non-material
production”, in the Marxian sense (Marx 1993, pp. 451–2).27
These different processes, variously referred to as productive restruc-
turing, flexible accumulation, Toyotism, among other terms, but which
are understood here as another stage in the universalization of big indus-
try and in the development of the world market, could not have developed
without the corresponding evolution of the banking and credit system.
Along with the transnationalization of production, there has been a trend
toward the transnationalization of financial institutions, both to enable the
necessary concentration of capital to finance productive transnationaliza-
tion,28 and to guarantee capital the mobility it seeks, as opposed to its
tendency to settle in productive enterprises, infrastructure networks, and
so on, and to provide worldwide flows of income. In its early episodes, this
tendency was marked by the establishment of overseas headquarters by
large commercial banks, especially North American banks; and by the
exponential development of the Euromarkets and later the Petro-markets,
offshore markets that largely escaped the control of monetary authorities,
particularly the Federal Reserve. In addition, it has been notable for an
increasing competition around financial and institutional innovations,
which has given rise to a number of new financial institutions—investment
funds, pension funds, hedge funds, insurance companies, mutual funds,
private equity funds, asset managers, venture capital, and so on, which
would eventually be termed the “shadow banking system”—in a contra-
dictory process of fierce competition, in which commercial banks were
initially left behind, and of conglomeration and financial “disintermedia-
tion” (Chesnais 2016).
As is well known, this development, of fictitious forms of capital and the
markets by which they were launched, exploded the banking and financial
system control mechanisms à la Glass-Steagall Act, which sought to seg-
ment the financial system into distinct functions, defined ceiling rates of
interest and taxed international flows of capital, among other things. To

mention just a few factors; the exchange rate instability that has appeared
since the collapse of the Bretton Woods system, the huge fluctuations in
commodity and oil prices (with the shocks of 1973 and 1979 as emblem-
atic episodes), the vicissitudes of interest rates (especially the interest
shock promoted by Paul Volcker between 1979 and 1981), increasing
global financial turmoil, including the peripheral countries’ debt crisis in
the 1980s that resulted from the opening of the door to the neoliberal
Trojan Horse, and the strengthened trend toward securitization of state
and private debts, all these vicissitudes cast even more fuel on the fire of
financial innovations and propelled financial assets.
It is in this context that the derivatives explosion took place, as analyzed
empirically and conceptually in Chap. 8 of this book. Despite the expan-
sion of hedge and secondary markets in general, far from increasing finan-
cial stability, as promised by economic orthodoxy, what has been witnessed
in recent decades is the multiplication of financial crises and speculative
attacks.29 It is well to insist that it is precisely at this moment that its ficti-
tious character is fully revealed, when large volumes of fictitious capital
turned to dust.30 The crisis that began in 2007–2008, with the United
States as its epicenter, is a good example. After the dot-com crisis in 2001,
when trillions of dollars disappeared overnight from the world’s financial
markets and state “to big to fail” rescue policies were heavily employed in
the central capitalist countries, together with the reduction of interest
rates and various types of state financial stimuli, there was a frenzied wave
of production of financial assets derived from the packaging of all kinds of
debt securities, insistently offered to all types of “investors” independent
of their degree of solvency and always very well evaluated by the impreg-
nable institutions of risk assessment.
It is no coincidence that the break-up of the world economic crisis was
the bursting of the real estate bubble; a significant part of the fictitious
capital created was linked to mortgages and the speculative run that had
real estate markets at its epicenter. As is well recorded, house construction
and the production of space in general is a productive branch of major
importance, it is large-scale and tends to have a relatively low organic com-
position (producing relatively great surplus value), it also strongly involves
the credit system in both production and consumption and is directly
linked to rent extraction. In addition, the price of land itself is the result of
a capitalization process, and real estate assets as well as real estate loans
serve as a mainstay for numerous financial assets. Marx has long drawn
attention to the “tremendous power” that guarantees the link between
land ownership and the ownership of the means of production, in which

the capitalist brings together the status of landlord and functioning capi-
talist.31 What is there to say about this power when it is added to that of
appropriating interest, dividends, capital gains, to be arbitrated by the
prices of all kinds of real or fictitious assets, including derivatives?
In the case of the US housing bubble, a good part of the financial assets
which supposedly had solid foundations, were castles in the air and pre-
cipitated real devastation on the world economy.32 It is possible to refer
here to the Marxian understanding of the phenomenon of economic crises
in its most elementary moment, one in which the concept of crisis, the
“negative of capital”, makes its first appearance as a theoretical possibility
in Capital (Grespan 2008), more precisely within the analysis of the pro-
cess of movement of goods in Chap. 3, in which Marx observes that the
position of money allows the acts of buying and selling to become autono-
mous until they seem unconnected to each other; but only to a certain
extent, from which its unity reveals itself in an explosive way in the crisis
(Marx 1990, p. 209). By this time, Marx had already exposed the general
movement of contradiction, which preserves and reiterates the immanent
negativity, temporarily overcoming it only to replace it at a more acute and
universal scale. In the process of financialization something similar occurs;
fictitious forms of capital become autonomous until they seem u nconnected
to the process of value appreciation, as in the formation of financial bub-
bles. Nevertheless, the co-pertinence of these processes is evident when
these bubbles burst. To establish only one of these moments—that of
autonomization or that of co-pertinence—means to produce a limited and
ideological analysis of the phenomenon.
In any case, it should be emphasized, taking up the argument, that the
international credit system is mobilized not only for the achievement of
gigantic productive investments, but also for the surplus value extracted in
its various transfigured forms. Even if the transnationalization of capital
implies an “outsourcing” of production, the loss of direct access to
surplus-value in the form of profit is more than compensated for by the
abstract transference of wealth that follows: (a) intellectual property guar-
anteed by patents and copyrights (absolute and differential rent); (b)
brand ownership and branding and marketing strategies (monopoly rent);
(c) interest arising from loans and negotiations with all kinds of securities,
boosted by differential access to the selective international credit system;
(d) dividends, a portion of the corporate profits received as a result of the
ownership of certain types of shares; and, possibly, (e) in the same way as
with average profit, when the producing company depends on commercial
activities developed by the corporation. For this reason, there is a ten-
dency for large corporations to specialize in R&D, branding, marketing,
and financial machinations of all kinds, including their own actions and
those of competing corporations. Therefore, the basis of the production
of abstract wealth has been broadened, which to a largely tends to be
appropriated by the large economic conglomerates with headquarters in
the central capitalist countries, especially in the form of interest, dividends
and rent.33 With this, the international division of labor changes and the
dynamics of imperialism are renewed.
By way of illustration, we should remind ourselves that at the beginning
of February 2019, the ten largest companies in the world in terms of mar-
ket capitalization were all North American. Of these, the top three in the
list, Apple, Alphabet (Google), and Microsoft, and the sixth-positioned
Facebook are all producers of technology (and the sale of user’s data of
their services and products). This is also the specialty of the fourth placed,
Amazon, but it also operates in the retail sector. Berkshire Hathaway,
Warren Buffett’s holding company, is principally engaged in the purchase
and sale of shares of a diverse portfolio of companies, as well as being the
“lender of last resort” for companies at risk of bankruptcy. The seventh
and eighth comes from the banking sector, JPMorgan Chase and Bank of
America, respectively. Johnson & Johnson ranks ninth, primarily operat-
ing in the pharmaceuticals sector, and Exxon Mobil Corp., the energy
giant, ranks tenth34 (see https://www.investopedia.com/articles/active-
trading/111115/why-all-worlds-top-10-companies-are-american.asp).
Certainly, they are large conglomerates, and their role cannot be fully
understood from this classification by main activities alone. It is not for
this reason, however, that they become any less significant; on the con-
trary, all these companies are engaged in rentier activities!
With the analysis of fictitious capital and modes of rent,
[t]he form of mutual alienation and ossification of the various portions of

surplus-value is complete, the inner connection definitively torn asunder,
and its source completely buried, precisely through the assertion of their
autonomy vis-à-vis each other by the various relations of production which
are bound up with the different material elements of the production pro-
cess. (Marx 1991, p. 968)
On the Nature of Financialization
and Rentier Capitalism
The elements have now been gathered to permit us to consider some impor-
tant issues that have absorbed the attention of theorists in the fields of criti-
cism of political economy and economic heterodoxy. Over the last few
decades the tendency has been to an increasing proportion of income of
financial companies as part of total corporate profits. Considering central
capitalist countries, Duman notes that “the rate of financial sector profits to
total profits escalated from 25% in the 1980s to 40% before the global eco-
nomic crisis” (Duman 2018, p. 216). According to Krippner’s estimate
(2011), in the immediate aftermath of World War II the profits of US finan-
cial corporations were between 10% and 15% of total US profits, a share that
rose to 30% in the 1980s and reaches 40% at the start of the 2000s. This
process is even more significant in the case of large financial conglomerates,
according to Levina (2012), analyzing US banking holding companies
(BHC), “if by 2005 the financial sector profits rose to 28 multiples of their
1970 level, and commercial bank profits closely followed this trend, the
BHC profits peaked at 47 multiples of their 1970 level” (Levina 2012, p. 229).
However, for an adequate understanding of the phenomena that these
figures describe, some factors must be considered. Firstly, by ignoring the
nature of the form of value, and hence of the capital form, and by wrongly
distinguishing between productive and unproductive activities, an impor-
tant part of what conventional economics understands as profit is not
profit itself, but, in some cases, forms of transference of surplus value and
in others its transfigured forms. It is not abstract creation of wealth, of
surplus value, but of unproductive activities that permit its appropriation.
A portion of these alleged profits is purely illusory, strictly fictitious. If
these unproductive activities and these fictitious profits are not eliminated
from the calculation of the profit rate, attempts to grasp it empirically will
be compromised. That is why many writers attest to a recovery in profit
rates in the US economy, between the dot.com crisis and the subprime
crisis, ignoring that
[t]his recovery in profits was due to the biggest speculative bubble in US

history. Much of the recorded extra profit will either have been a result of
the credit-fuelled spending of the time or will have reflected transient gains
in financial market-values that companies reported as income. Not surpris-
ingly, the profit-rate fell back quickly after 2006 when the bubble burst.
(Norfield 2012, p. 115)
Moreover, besides the difficulty in collecting data, a series of account-

ing maneuvers (not to mention straightforward fraud) hinder empirical
analysis. In fact, through market-to-market, mark-to-model, and so on, or
the sale of credit default swaps (CDS), it has become customary to present
highly speculative future income (as being current, which guarantees
abundant bonuses to the managers of these companies).
Finally, when it comes to the global production of capital, we are neces-
sarily talking about the production and circulation of capital on a world
scale. Much of the statistics for national states tend to conceal the phe-
nomenon in its entirety. After all, from the perspective of the global repro-
duction of capital, the displacement of productive investments from one
country to another does nothing to cool accumulation. If, for example, we
take the US economy alone, as many contemporary analyses do (because
of the US hegemonic position in the world market and the better quality
of the available data), some issues are cut short. What appears on the sur-
face as a turn toward fictitious forms of accumulation reveals itself as a
strategic repositioning in the process of appropriating globally produced
surplus value. In this sense, as early as 1985, Tavares (1997) recognized
the rationale of the US strategy of raffle off its traditional industry in favor
of financial prominence, the maintenance of the dollar as a world currency
and control of productive activities that guarantee the extraction of rent,
such as branding and R&D. A key part of this strategy was Volcker’s inter-
est shock, which repositioned the United States as a global financial cen-
ter, attracting overaccumulated capital in the form of money from all parts
of the world, used to finance not only the Treasury, but also consumption
and investment, focused primarily on the service sector and state-of-the-
art technologies.35 Still in this text, Tavares (1997) notes that the growing
US deficit, until now commonly denounced as an aberration, has, since
the beginning of the 1980s become, “in practice the only element of tem-
porary stabilisation of the money market and international credit” (p. 35),
a process intrinsically linked to renewed US imperialism.36
Therefore, as has been stressed throughout the text, it is necessary at
this point to consider in an articulated way the productive transnation-
alization and the geographical extension of the formal and real sub-
sumption of labor to capital and the growing importance acquired by
fictitious forms of capital and by the appropriation of surplus value in the
form of interest, dividends, differential and absolute rent, and monopoly
rent. Because of this, the importance of the centralization of capital in
its contemporary manifestations must be emphasized. Despite genuine
conceptual divergences, recent empirical studies corroborate this propo-

sition.37 To cite just a few, Grullon et al. (2017) argue that “firms in
industries with the largest increases in product market concentration
have enjoyed higher profit margins, positive abnormal stock returns, and
more profitable M & A deals, an important source of value” (p. 1).38
Milberg and Winkler (2010) seek to grasp the links between financial-
ization and the phenomenon of offshoring, noting that non-financial
companies that adopted this internationalization strategy, seeking to
reduce costs and risks, tended to, “behave increasingly like the financial
sector, purchasing more financial assets and raising dividends and execu-
tive compensation rather than investing in the real economy” (Milberg
and Winkler 2010, p. 290). Also working at the microeconomic level
and having the US economy as the focus, Auvray and Rabinovich
(2019) find that
[t]he negative correlation between payouts and investment in capital expen-

ditures underlined by the literature is valid mainly for firms belonging to
industries with high offshoring in non-core non-energy activities. Moreover,
investment of firms in low-offshoring sectors is not significantly correlated
to their financial payouts. (p. 3)39
In his turn, Orhangazi (2018) suggests that “the increased use of intan-
gible assets by NFCs should be considered as another layer in explaining
the investment-profit puzzle, in conjunction with financialisation and glo-
balisation hypotheses” (p. 27).40
From a Marxist perspective Durand and Gueuder (2016) analyze “three
narratives” on financialization, which help explain the supposed diver-
gence between investments and profits characteristic of contemporary
capitalism: first the “financial accumulation turn narrative,41 according to
which the deterioration of productive investment conditions would have
led to the surge of financial accumulation. This thesis has also been devel-
oped in the field of heterodox economics, particularly in the post-
Keynesian perspective (e.g. Crotty 1993; Stockhammer 2004). However,
even in the field of heterodoxy, authors such as Krippner (2005) did not
find the roots of financialization in the dynamics of accumulation, but
rather in institutional and conjunctural changes that would have opened
new fields for the development of finance. This perspective is in line with
the microeconomic analysis that underpins financialization in changes in
the corporate management standard—crudely and capriciously called
“corporate governance”—that has short-term increases in stock prices and

the search for financial gains as its goal, to the detriment of medium and
long-term strategies focused on real accumulation. These analyses form a
second narrative analyzed by Durand and Gueuder (2016), that of the,
“revenge of the rentiers”, which shows a constraint of profits due to finan-
cial payments. Finally, the authors analyze a third hypothesis, that of “glo-
balization”, according to which non-financial corporations would receive
large financial gains from investments abroad, to the detriment of domes-
tic ones, which are concealed in the relative statistics, for example, interest
and dividends. Having submitted the three “narratives” to econometric
analysis, Durand and Gueuder (2016) only find consistent results that cor-
roborate the “globalization” narrative.42 For this reason, in another paper,
Durand (2017) concludes that “the financialisation of non-financial busi-
nesses seems to be an optical illusion” (p. 271).
Roberts (2019), in commenting on a study produced by Goldman
Sachs, finds that
[t]he only place where corporate earnings have expanded is in the US. And
this, according to Goldman’s is entirely down to those super-tech compa-
nies. Global profits, ex-technology, are only moderately higher than they
were prior to the financial crisis, while technology profits have moved sharply
upwards [...] Only the huge tech companies in the US have bucked this
trend, helped by a recent profits bonanza from the Trump tax “reforms”.
It is of no interest to discuss the methodologies employed in these

studies here, only to highlight the meaning of these investigations, which,
each in its own way, seeks to overcome a single reading of financialization.
To advance in the analysis, one of the most important analyses of the
financialization from a Marxist perspective, that of Costas Lapavitsas,
developed by him, as in Lapavitsas (2013a), and with collaborators,
should be critically considered. Lapavitsas and Mendieta-Muñoz (2016)
propose, for example, that “financialisation is a historical outcome of the
persistent malfunctioning of real accumulation during the last four
decades” (Lapavitsas and Mendieta-Muñoz 2016, p. 1). At the same
time, they consider that “the most striking aspect of financialisation, and
the feature that truly defines it as a historical phenomenon, is the tremen-
dous growth of financial profit” (Lapavitsas and Mendieta-Muñoz 2016,
p. 2) and, despite recognizing the so-called financialization of nonfinan-
cial corporations and the domestic economy of households, consider the
phenomenon empirically, defining “financial profit” as “profit earned by

financial institutions alone”.
In relation to the first observation, it argument was that the dynamics
of accumulation are inherently contradictory; in this sense, it is not a
mechanism that works well or badly, especially if we analyze the move-
ments of capital in its totality, observing the phases and the different forms
of capital, both in production and in circulation. Moreover, whether in
times of expansion or crisis, accumulation of capital always means the
accumulation of barbarism. However, any attempt at empirical description
proves fragile when not conceptually grounded. As has been seen, depend-
ing on the function they perform, financial institutions participate in the
appropriation of surplus value in its various forms, and each requires a
specific approach. Moreover, this definition proposed by the authors
restricts the analysis of the phenomenon of financialization, which is at the
very core of accumulation.
To understand the limits of Lapavitsas’ approach, it is appropriate,
according to Prado (2018), to critically appraise the methodological
foundations of his analysis which, although sophisticated, is marked by an
adherence to methodological individualism and historicism. This is
because, in Lapavitsas’ words (2013b), “financialisation does not readily
lend itself to abstract theorisation because it represents epochal change
resting on financial phenomena that are inherently institution-specific”
(p. 799), and that “its roots must therefore be sought within the funda-
mental relations of non-financial enterprises, financial enterprises and
workers” (Lapavitsas 2013b, p. 798). Furthermore, despite wanting to
present a comprehensive and integrated analysis of the phenomenon, it
ends up promoting a split between the productive and financial dimen-
sions of accumulation.43 As Prado (2018, p. 6) argues, there is an essential
element missing from Lapavitsas’ approach: a critique of capital as an auto-
matic subject. For this reason, he dismisses the analysis of several funda-
mental trends of capital accumulation.
Nonetheless, Lapavitsas and his collaborators have drawn attention to
an issue: “financialisation presents the peculiar and interesting problem:
financial profit rose strongly as a proportion of total profit at precisely the
time when average profitability was broadly flat” (Lapavitsas and
Mendieta-Muñoz 2016, p. 7). To resolve it, according to the authors, it
would have to be considered that “financial profits were boosted by finan-
cial expropriation, which has directly transferred the income and wealth
of transacting counterparties to financial institutions” (Lapavitsas and
Mendieta-Muñoz 2016, p. 7). This financial expropriation, which is a,

“transfer of value to financial institutions from various money incomes or
money stocks”, occurs when loans or financial transactions are made to
non-capitalists or even when the industrial or commercial capitalist fails to
appropriate the amount of surplus value from the investment for which
the financial transaction was carried out.44
In the case of workers who are the victims of financial expropriation,
either to guarantee their access to the means of production or to finance
their consumption, there is a type of, “secondary exploitation” (Marx
1991, p. 754), where, “profits upon alienation correspond to direct
deduction from personal household incomes” (Durand 2017, p. 158),
which is also highlighted by Chesnais (2016, p. 76–7). According to
Durand’s (2017) estimates, “households pay a very significant amount of
their income to financial institutions because they are in debt: 5 to 8 per
cent of their disposable income, depending on the country concerned”
(p. 161). As Norfield (2014) points out, it remains to be seen whether this
secondary exploitation causes the labor force to be paid below its value, or
whether credit, upon which an important proportion of workers increas-
ingly depends, has become part of its value. In the first case, there would
be a spoliation, and the banking and financial institutions would be
advancing on the basic reproduction of the workers; as time goes on, how-
ever, the value of the labor force would thus tend to settle down to a new,
lower level, and that spoliation would cease.45 In the second case, such
institutions would be advancing, ultimately, on surplus value, or on capi-
talists’ incomes. Both seem to occur, the conversion of credit to part of the
regular costs of reproduction of workers and the establishment of waves of
spoliation that have, as one of their vehicles, the direct placing of workers
into the whirlwind of interest-bearing capital and fictitious capital.
Finally, several linked processes, which contradict and feed-back but
which can be briefly linked, for “didactic” purposes, are presented as fol-
lows: on the one hand, in a context of a high organic composition of capi-
tal, the validity of low rates of profit competes for the low rates of
accumulation and these in turn explain, in part, the cooling of labor pro-
ductivity rates. On the other, increasingly overaccumulated capital, con-
trolled by ever more concentrated and transnational conglomerates, tends
to focus on the search for interest, dividends, absolute rent, differential,
and monopoly, as well as for fictitious profits. Thus, performance within
the credit system and financial markets acquires prominence within the
strategy of large conglomerates, as well as R&D activities, monitoring,
capture, and marketing of individuals’ information (as well as the condi-

tioning of their behaviors), marketing, branding, and so on. These rentier
and oligopolistic powers allow these conglomerates to appropriate the
wealth of myriads of less competitive companies and consumers on a world
scale. These strategies go hand in hand with rising rates of exploitation,
wage repression, intensification of work, the regression of social policies,
militarism, privatization of public services such as health, security, educa-
tion, among others, and the intensification of environmental degradation.
The thirst for surplus value, in a context of limp accumulation and with a
working class in tatters, manifests its crudeness even more acutely in the
case of non-conglomerate companies with a lower organic composition,
especially in peripheral countries, where domestic enterprises are subordi-
nate and financially and technologically dependent.46
Contemporary capitalism is characterized by a strong concentration of
overaccumulated capital in the form of money, and, as Marx asserts, “an
accumulation of money means more than an accumulation of these claims
to production, and an accumulation of the market price of these claims, of
their illusory capital value” (Marx 1991, p. 599). The prominence of ficti-
tious forms of capital is a necessary product of accumulation and may favor
it in certain circumstances and to a certain extent, but it is also a flight
forward in the face of falling rates of profit and may cause capital to be
directed into financial markets to the detriment of productive activities.47
Marx (1991) says:
If this new accumulation comes up against difficulties of application, against

a lack of spheres of investment, i.e. if branches of production are saturated
and loan capital is over-supplied, this plethora of loanable money capital
proves nothing more than the barriers of capitalist production. (p. 639)
From a different viewpoint this explosion of the fictitious forms of capi-

tal interferes with the very logic of working functioning capital. So, there
is a nugget of truth in Marx’s (1991) assertion, according to which
[t]he credit system, which has its focal point in the allegedly national banks
and the big money-lenders and usurers that surround them, is one enor-
mous centralisation and gives' this class of parasites a fabulous power not
only to decimate the industrial capitalists periodically but also to interfere in

actual production in the most dangerous manner—and this crew know
nothing of production and have nothing at all to do with it. (pp. 678–9)
The error would be to hypostasize from this a supposed cleavage

between “good”, productive, and other “evil” capital, disconnected from
supposed “social needs”. This reformist reverie so often denounced and
criticized by Marx, particularly in his quarrels against Proudhonism (e.g.
Marx 1993, Ch. 1), tends to obscure the fact that capital, grounded, as it
is, in the extraction of surplus work, is extremely parasitic. What is impor-
tant is to understand the specific forms of manifestation of this parasitism,
which rules out propositions such as the Proudhonist bonuses or the con-
trol of finances through their nationalization, as Lapavitsas would have it
(2013a, Ch. 10), or, the surprising “transformation of finance into a
potentially progressive force” (Guttman 2016).
In this sense, any criticism that ignores the movement of accumulation
as a whole and takes account of the sphere of circulation and distribution,
blaming what they call “financial capital”, ends up uncritically accepting
the mystique of interest-bearing capital and fictitious capital, which appear
to accumulate autonomously, usurping and sucking dry the laboring
classes.48 Once again in the words of Marx (1971):
It is thus clear why superficial criticism—in exactly the same way as it wants
to maintain commodities and combats money— now turns its wisdom and
reforming zeal against interest-bearing capital without touching upon real
capitalist production, but merely attacking one of its consequences.
(p. 456)49
Braga et al. (2017) are partly correct in arguing that “in contemporary
capitalism, from the point of view of large corporations, there is no reason
for the split between productive and non-productive ones”, since, “finan-
cialisation—as a systemic pattern of wealth—means the consolidation of
different forms of capital under financial dominance” (p. 837). However,
they are mistaken when they disregard the nature of this wealth, which is
based on the extraction of surplus value.50 Again, following the critique of
Prado (2014), in dealing with financial domination as a central character-
istic of contemporary capitalism, Braga suppresses the centrality of the
formation of value—and thus of fetishism and exploitation. In his words,
quoted by Prado (2014, p. 31), “I understand the process of capital as
accumulation of value, in which labour ceases to be the great source of

wealth and working time ceases to be its measure” (Braga 1997, p. 88),
and with it tendencies such as the tendency of the rate of profit to fall
would cease to operate (Braga 1997, p. 89).
These analyses and conclusions are, therefore, contrary to those pre-
sented in this text, as the argued autonomization and subjectification of
capital correspond to the process of the mystification of its own essence,
which can only be thus understood through dialectical criticism; after all,
in the appearance of capitalist social formations, “all connection with the
actual process of capital’s accumulation is lost, right down to the last trace,
confirming the notion that capital is automatically valued by its own pow-
ers” (Marx 1991, p. 597).51
We have tried, here, to outline some categories that we believe impor-
tant in answering the questions posed at the beginning of the chapter,
categories that require a broad reading of the three books of Capital. In
our view, the understanding of the theory of labor-value, the various forms
that capital assumes including in its most glorified manifestation as ficti-
tious capital, is laid bare in fictitious profits, a category that supports us in
understanding some of the transformations of contemporary capitalism.
Notes
1. Available at https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG
2. Cf. https://data.worldbank.org/indicator/NE.GDI.FTOT.KD.ZG
3. There will be no discussion here of a third dimension of capital subsump-
tion, which, in its totalitarian impetus, is to advance the various dimensions
of social life. In this, cultural industry can be considered as the cultural
form of capital (Adorno and Horkheimer 2002), and the modern state as
its political form (Pashukanis 2003).
4. For the theme of this item, cf. Chap. 5 of this book.
5. “Capital in general, as distinct from individual capitals, does indeed appear
(1) only as an abstraction; not an arbitrary abstraction but one which
grasps the specific differences which distinguish capital from all other forms
of wealth or modes in which (social) production develops. These are deter-
minations which are common to every capital as such, or which make any
specific sum of values into capital [...]. But (2) capital in general is itself a
real existence distinct from individual real capitals [...]. While on the one
hand the general is therefore only a set of specific differences in thought, it
is at the same time a particular real form alongside the form of the particu-
lar and individual” (Marx 1993, p. 449). Furthermore, “we can see that
each individual capitalist, just like the totality of all capitalists in each par-
ticular sphere of production, participates in the exploitation of the entire
working class by capital as a whole, and in the level of this exploitation”
(Marx 1991, p. 298).
6. On the importance of the circulation of total social capital to the under-
standing of the process of autonomization of the functional forms of capi-
tal and for the analysis of financialization, cf. Chap. 5 of this book.
7. As explained in Chap. 5, despite this autonomization, at a concrete level,
individual capitals represent the most distinct functions related to the pro-
duction and circulation of capital, especially in a context of the intense
centralization of capital and the intensification of competition for the
appropriation of abstract wealth in the form of interest, dividends and rent,
as will be seen below.
8. “Did not the introduction of our present banks, in its day, revolutionise the
conditions of production? Would large-scale modern industry have become
possible without this new financial institution, without the concentration of
credit which it created, without the state revenues which it created in
antithesis to ground rent, without finance in antithesis to landed property,
without the moneyed interest in antithesis to the landed interest; without
these things could there have been stock companies etc., and the thousand
forms of circulating paper which are as much the preconditions as the prod-
uct of modern commerce and modern industry?” (Marx 1993, p. 122).
9. “The form of interest-bearing capital makes any definite and regular mon-
etary revenue appear as the interest on a capital, whether it actually derives
from a capital or not. Money income is first transformed into interest, and
with the interest we then have the capital from which it derives” (Marx
1991, p. 595). Or even, “any regular periodic income can be capitalised by,
reckoning it up, on the basis of the average rate of interest, as the sum that
a capital lent out at this interest rate would yield” (Marx 1991, p. 597).
10. In our view, Sotiropoulos and Lapatsioras (2014, p. 91) are mistaken in
considering that, “interest-bearing capital is fictitious capital”.
11. Cf. Chap. 8 of this book.
12. Another of these impulses was the gradual monopolization of the task of
providing credit to government by large banking institutions, fuelling pub-
lic debt, a powerful lever for capital accumulation, under which the mod-
ern credit system was built (Marx 1990, Ch. 24).
13. Cf. Prado (2016) and Chap. 4 of this book.
14. For a detailed analysis of the recent evolution of derivatives and the differ-
ent forms of fictitious capital, cf. Chap. 8 of this book. By way of illustra-
tion, it should be noted that the sum of banking assets and other financial
institutions reached approximately US$ 84.8 trillion in 2017, according to
BIS estimates, and that in the same year the global stock market exceeded
US$ 79.2 trillion, with world GDP of US$ 80.7 trillion, according to
World Bank estimates (cf. https://data.worldbank.org/indicator/NY.
GDP.MKTP.CD)
15. Incidentally, secondary markets give rise to vigorous arbitrage and leverage
operations, since the initial margins required for such transactions are
rather low. Thus, such markets have an extreme speculative character. The
competition there is so fierce that it is heavily invested in fiber optic net-
works and in the automation of operations, since the window of time to
arbitrate with the prices of financial assets tends to reduce each time smaller
fractions of a second (Paraná 2019).
16. “In other words, capitalisation is not possible unless there is some specifi-
cation of risk, that is to say, unless specific events are objectified, accessed,
and estimated as risks” (Sotiropoulos and Lapatsioras 2014, p. 93).
17. In a sense Braga et al. (2017) have a point when they see a contemporary
process of financialization, understood as, “a systemic pattern of wealth
that has a distinctive feature relative to previous stages of capitalism: the
increasing share of financial assets in contemporary wealth. To be more
specific: financialization, as a systemic pattern of wealth, establishes new
ways of defining, managing and realising the wealth, which affects the
spending decisions of the main economic actors, impacts economic policies
and thus the ups and downs of business cycles, as well as leading to crises”
(Braga et al. 2017, p. 830). Further on there some divergences in relation
to this approach will be explained.
18. As Marx exemplifies in the first chapter of Capital (1990, p. 202), if, for
instance, one branch of production receives many investments, even if
under adequate technical and organizational conditions, so that total out-
put exceeds demand, there is a waste of resources, and it is as if more work
had been mobilized than socially necessary.
19. “This much is clear, then, which already follows from the difference intro-
duced by fixed capital into the industrial cycle, namely that it engages the
production of subsequent years, and just as it contributes to the creation of
a large revenue, it anticipates future labour as a counter-value. The antici-
pation of future fruits of labour is therefore in no way a consequence of
state debt, etc., in short, not an invention of the credit system. It has its
roots in the specific mode of realisation, mode of turnover, mode of repro-
duction of fixed capital” (Marx 1992, p. 731–2).
20. This does not mean, as has already been pointed out, that fictitious forms
of capital are absolutely autonomous in relation to the effective value accu-
mulation process, but this point will be duly considered in the next item of
the text.
21. “The counterpart to the growth of fictitious capital relative to wealth pro-
duced is financial profits’ increasing share of overall profits. But these
financial profits are not themselves fictitious. Paid in hard cash, they have
all the attributes of monetary power, firstly in terms of what is usually
called purchasing power – the immediate drawing rights on wealth pro-
duced” (Durand 2017, p. 155).
22. “Financial profits give life to value but do not result from value produc-
tion. We should thus conceive of them as transfers of income away from
those activities that do produce value – that is, the revenues that come
from labour and/or profits drawn from the production of goods and ser-
vices” (Durand 2017, p. 156).
23. In this text, fictitious capital is discussed as forms of founder’s profits, dif-
ferential and fictitious, and presents the similarities and differences between
the last two.
24. Comprehensive empirical studies by authors such as Maito (2016), Roberts
(2016), Jones (2014), and those of Kliman (2012) and Choonara (2018),
specifically on the American economy, to name but a few, state that since
the end of the 1960s there has been a significant tendency to increase capi-
tal appreciation (or exploitation) rates, to increase the organic composition
of capital, to accelerate capital turnover and to lower average rates of profit,
the sting in the tail of capitalist production. We will return to this.
25. That occurs by “outsourcing” business activities, in which a given com-
pany starts to contract other independent companies for the supply of
goods and the provision of services, and for the establishment of produc-
tive units of the company itself in other countries.
26. That process thus contributes to the spread of piece-work wages (Marx
1990, Ch. 21) and the elimination of formal and stable labour ties. This is
particularly true in the case of “uberization”, the profusion of applications
that leave workers available virtually full-time for bosses and customers,
while serving as efficient mechanisms for controlling the work done.
27. The so-called immaterial theorists, like André Gorz and Antônio Negri,
besides confusing the category of service with that of immaterial labor,
improperly amplifying the scope of the latter, falling back on the fetishistic
illusion of confusing the nature of social relations with its material sub-
strates (Prado 2005). It is the “fetishistic notion, peculiar to the capitalist
mode of production and its derivation from its essence, that the formal
economic determinations, such as that of being a commodity, or being
productive labour, etc., are qualities belonging to the material repositories
of these formal determinations or categories in and for themselves” (Marx
1993, p. 450). These misconceptions allow such authors to propose that
capitalism would have surpassed abstract labour as the substance of value,
precisely the opposite of what happens with the even greater universaliza-
tion of the real subsumption of labour to capital. The indistinction between
production and appropriation of surplus value, between value and exchange
value, and the absence of an analysis of the Marxian ground rent catego-
ries, among others, charge a high price in these “theories”.
28. Durand (2017) notes that, “the spectacular boom in credit to the non-
financial private sector has been a general phenomenon since the 1970’s. If
at that time it amounted to 72 per cent of the average GDP, this figure had
risen to 174 per cent by 2007” (p. 115).
29. To cite just a few: the New York Stock Exchange crisis in 1987, the pound
crisis in 1992, the Mexican peso crisis in 1995, the Asian Tigers crisis in
1997, the Rubel crisis in 1998, the Real crisis in 1999, the Argentine peso
crisis in 2001, the dot.com crisis in 2001, the 2007–8 subprime crisis, as
well as the European sovereign debt crisis that followed. Despite specula-
tive attacks and bubble bursting, such crises have had devastating economic
and social impacts, which again points to the imbrication between the ficti-
tious and real dimensions of accumulation.
30. “This fictitious money capital is enormously reduced during crises, and
with it the power of its owners to use it to borrow money in the market.
The reduction in the money value of these securities on the stock exchange
has, however, nothing to do with the real capital that they represent. As
against this, it has a lot to do with the solvency of their owners” (Marx
1991, p. 625).
31. In his words, “Finally, by the prevalence of a monopoly price in many
cases, and particularly the most shameless exploitation of poverty (for pov-
erty is a more fruitful source for house-rent than the mines of Potosi were
for Spain), the tremendous power this gives landed property when it is
combined together with industrial capital in the same hands enables capital
practically to exclude workers engaged in a struggle over wages from the
very earth itself as their habitat” (Marx 1991, p. 908).
32. Here too, cf. Chap. 8 of this book.
33. Without neglecting the long history of the process of business conglom-
eration, Chesnais (2016) analyzes in detail this contemporary process of
concentration and centralization of capital, forming what he calls financial
capital, bringing together the giants of industry, retail and wholesale, and
of finance. According to Durand (2017), “we can observe that, on the eve
of the current crisis, just 147 companies concentrated some 40% of the
value of all multinationals, and even these were themselves dominated by a
core of eighteen financial entities” (p. 170).
34. In addition to the extraordinary magnitude reached by these conglomer-
ates, attention must be paid to the fact that they are linked through com-
plex financing and investment strategies, including cross-ownership.
Incidentally, sometimes the purchase of shares does not matter as an invest-
ment per se, but rather assures the buyer of information about specific
markets and the strategies of their current and potential competitors.
35. “By maintaining a tight monetary policy and forcing an overvaluation of

the dollar, the Fed has in practice retaken control of its own banks and the
rest of the international private banking system and linked the interests of
the herd to its advantage. Interest rate and exchange rate fluctuations were
again tied to the dollar, and through them the international liquidity
movement was put at the service of American fiscal policy” (Tavares 1997,
p. 34). In addition, “The ‘macroeconomic equilibrium’ of the world econ-
omy, given the generalised ‘dollarisation’ of the credit system, obliges most
countries to practice restrictive monetary and fiscal policies and to obtain
increasing trade surpluses to compensate for the global deficit situation of
the hegemonic power” (Tavares 1997, p. 36).
36. “The policy-decisions of the US and UK governments to liberalise finan-
cial markets were based upon them seeing the financial sector as a key area
of the global economy in which they had a competitive advantage. This
advantage is based upon the British and US imperialist role in the world-
economy, and it was an important option for them, especially given how
difficult it was to try and regain industrial competitiveness” (Norfield
2012, p. 112).
37. For a bibliographic review of these studies, cf. Auvray e Rabinovich (2019).
38. In a recent report by The Economist on the process of the concentration
and centralization of capital in various branches of production, one con-
cludes that, “the American economy has become a capitalist dystopia, a
system of extraction by ingrained giants. The increasing protectionism and
increased digitisation are likely to make things worse. The stakes are high”
(The Economist 2018). Contrary to what the report implies, as we have
seen, it is not about aberrations or deviations, but about necessary expres-
sions of the dynamic contradiction of capital accumulation. The expanded
reproduction of capital engenders barbarism, violence, and destruction on
a magnified and intensified scale; it is its own sickness.
39. “Our results confirm the nexus as the financial payouts variables were sig-
nificant for firms belonging to industries with the highest level of offshor-
ing only. For corporations that distribute financial payouts at the expense
of their capital accumulation, the real source of the cash distributed to
shareholders should be found in GVCs” (Auvray and Rabinovich 2019,
p. 33).
40. Some of his discoveries around the north-American economy are synthe-
sized by him as follows: “(i) The ratio of intangible assets to the capital
stock increased in general. This increase is highest for firms in high-technol-
ogy, healthcare, nondurables and telecommunications, (ii) Industries with
higher intangible asset ratios have lower investment to profit ratios, (iii)
Industries with higher intangible asset ratios have higher mark-ups and
profitability. [...] Yet, intangible-intensive industries’ profitability has
increased faster than their share of investment or total assets. All in all, these
findings are in line with the suggestion that the increased use of intangible
assets enables firms to have high profitability without a corresponding
increase in investment” (Orhangazi 2018, p. 1).
41. This has its origins in the Monthly Review school, that includes the great
reference the work of Paul Sweezy and the durable Braudelian world-sys-
tem perspective, emphasizing Giovanni Arrighi (to which one could add
other, fairly heterogeneous, currents of Marxism from theoretical figures as
different as François Chesnais, Robert Brenner, Robert Kurz, among
others).
42. “It suggests that non-financial corporations of rich economies have been
able to capture gains from the dynamism of developing economies and, at
the same time, that investment opportunities in the developing world have
discouraged domestic investment. The econometric results are consistent
with this thesis” (Durand and Gueuder 2016, p. 24).
43. “The interaction between finance and the rest of the economy is mediated
by a complex set of institutional structures that often reflect historical,
political, customary and even cultural factors” (Lapavitsas 2013a, b,
p. 799).
44. The authors point out, that to understand the growth of financial profits it
is necessary to consider the role of the state, particularly with regard to the
deregulation of financial markets the provision of abundant “liquidity” in
financial markets and the maintenance of low interest rates, especially in
the context of economic crises, which is, to a large extent, made possible
by, “monopoly command over the final means of payment, which is no
longer convertible by law into anything of produced value” (p. 8). It is not
possible to discuss this important phenomenon here, which is an expres-
sion of the process of the autonomization of capital, but it is considered in
Chap. 5, and especially in Chap. 8 of this book.
45. This form of spoliation could compete to raise the average rate of profit by
reducing the magnitude of variable capital and channeling that mass of
value thus released to the process of accumulation (CARCHEDI 2011).
46. If the channeling of capital to the financial markets occurs, to the detri-
ment of their productive use, a counter to the fall in the rate of profits
would emerge because this channeling, “prevents an increase in the organic
composition of capital, and hence, a decrease in the rate of profit for a
limited time. Put plainly, financialisation postpones the tendency for the
rate of profit to fall” (Duman 2014, p. 244).
47. Resulting from the tendency to a fall in the rate of profit, Marx says, “the
mass of small fragmented capitals are thereby forced onto adventurous
paths: speculation, credit swindles, share swindles, crises” (Marx 1991,
p. 359).
48. According to Lapatsioras et al. (2010), a “basic weakness” of this type of

critique is that, “it is at the same time the link that holds them together – is
that they represent the neoliberal formula for securing profitability of capital
not as a question of producing surplus value but as a question of income redis-
tribution pertaining essentially to the sphere of circulation. It thus appears
that the developmental “ineptitude” and the instability of present-day
capitalism are the result of a certain ‘insatiability’, or at any rate of bad
regulation, in the relations governing income. Are we in the final analysis
all Keynesians?” (Lapatsioras et al. 2010, p. 3). In a similar vein, Norfield
(2012), propounds that, “simply to oppose finance, banks or derivatives is
to miss the point that this is a single, integrated system of exploitation”
(p. 129).
49. As Roberts (2018) sardonically recalls, if they do not want to listen to
Marx, the reformist critics of financialization should at least listen to Joan
Robinson, when she said that, “any government which had both the power
and will to remedy the major defects of the capitalist system would have the
will and power to abolish it altogether”.
50. It should be remembered that José Carlos Braga employs the notion of
financial dominance in a pioneering way; in 1985, he had already said that,
“Accumulation and competition operate under the dominance of the
financial logic [...]. [No] it is more a question of capitalists using financial
intermediation for a production process that is the means of accumulation
[and seek to] simultaneously value themselves through the process of
income (linked directly to production) and the capitalisation process”
(Braga 1985, pp. 374–5). More recently, he argues that, “in contemporary
capitalism, according to our hypothesis, financialisation is the systemic pat-
tern of wealth” (Braga 1997, p. 195).
51. Paulani (2016), whose effort to mobilize Marxian rent analyses to under-
stand contemporaneity, rightly concludes, concludes that, “the impor-
tance of rescuing Marx’s rent theory lies in showing that the foundation of
several of the phenomena that have characterised the current stage of
capitalism, and which we have tried to articulate in the summary of the
regime of accumulation we have just presented, are in the same place
where they have always been: the old and well-known unpaid labour, how-
ever much knowledge has actually grown in the productive process, no
matter how brands and patents come to pontificate against conventional
assets, even though finance seems to dispense with effective production”
(p. 24).
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CHAPTER 8
The Nature and the Contradictions

of the Capitalist Crisis
Paulo Nakatani and Helder Gomes
Introduction
The world economy continues under the effects of yet another great
depression. A moment that reaffirms the need to resolve the internal con-
tradictions of the movement of capital, in a much deeper way than that of
the periodic adjustments required to resolve traditional short-term cyclical
crises. The contradictions that are made explicit today result from the
extrapolation of the most elementary nature of capitalist accumulation,
the incessant quest for production and differentiated appropriation of sur-
This chapter was originally published in Portuguese with Políticas Públicas, in

2014, and was translated into English by Kenton James Keys.
P. Nakatani (*)
H. Gomes

https://doi.org/10.1007/978-3-030-23360-0_8
184 P. NAKATANI AND H. GOMES
plus real wealth. They are based on the production and appropriation, on
an unprecedented scale, of fictitious wealth of various kinds and in the
dominance of the logic of speculative and parasitic capital over other func-
tional forms of capital. It is a moment in which value, fictitiously expressed
in the most sophisticated forms of speculation, betting on positions in the
future, contradicts the entirety of the current social relations of produc-
tion. For this reason, this crisis, because of its magnitude, depth and dura-
tion, can be considered as a structural crisis, whose alternatives, if put into
practice, indicate a way out that may be increasingly painful for the work-
ing class worldwide.
Some authors have stated that the current crisis of capitalism is not only
an economic crisis, but a multiplicity of crises “because it is financial, eco-
nomic, food, energy and environmental. It is a systemic crisis of capital-
ism… that questions the social order of contemporary civilization”
(Gambina 2012, p. 34).1 Even before the collapse of Lehman Brothers in
2008, Samir Amin had already argued that the capitalist world had entered
a stage of senility. “So, this aging implies the installation of permanent
chaos in the system which will lead it to – at best – overcoming it by open-
ing a long period of transition to socialism, or – at worst – to catastrophe
and suicide of humanity” (Amin 2002, p. 101). So far, as a result of the
deepening of the crisis after 2002, the world system has been driven far
more to the second option than to the first, whether in “cold” or ongoing
wars in Afghanistan and Iraq, in situations of serious conflict (particularly
in Libya and Egypt) and in the Middle East (Syria, Lebanon, etc.).
In addition, the current crisis with its multiple dimensions is also calling
into question the dominant orthodox economic theory,2 whose proposals
are producing an increasing deepening of its ills in some countries, especially
in Portugal, Ireland, Italy, Greece and Spain.3 The measures imposed by the
Troika (The European Commission, European Central Bank [ECB] and
International Monetary Fund) on these countries, rather than leading to the
solution of their problems, have increasingly deepening the crisis, with neg-
ative GDP growth rates, mass unemployment, public deficits and almost
incomprehensible levels of sovereign debt. This questioning of the method
does not mean, however, the end of neoliberalism and its dominant ideol-
ogy in the system today, because, despite the deep crisis, it is capitalists and
their organic intellectuals who continue to run international and state insti-
tutions and who put forward the political forms of public intervention.
In this chapter, we study the development of fictitious capital (Marques
and Nakatani 2009, 2013) and its implications within the international
credit system. We intend to show that the dominance of speculative and
8 THE NATURE AND THE CONTRADICTIONS OF THE CAPITALIST CRISIS 185
parasitic capital, widely spread across the various forms of fictitious capital,
has managed to practically resolve the crisis for this form of capital through
the intervention of the State. State intervention in the so-called financial
crisis, which exploded the American credit system and caused enormous
damage all over the world, has recovered and even increased all inventories
of fictitious wealth to pre-2007 levels. It should be emphasized that the
recovery of fictitious capital stock has put in place the potential of a new
crisis that could be even more serious and profound.
Overaccumulation of Capital, Fictitious Capital,

and Parasitic Speculative Capital
Background
In the 1970s, following the unilateral breaking of the Bretton Woods
agreement by the United States, the international credit system entered an
era of increasing instability and volatility. This was followed, in the early
1980s, by a debt crisis in those countries whose foreign debt policy was
subject to the rules of the international credit system, a system rich with
dollars4 chasing opportunities. The economic policy of the Reagan admin-
istration, which was applied by the banks of developed countries, pro-
duced a huge mass of monetary capital from foreign debt interest
payments, further increasing the mass of available currency.
A considerable portion of this gigantic volume of dollars became real
capital, producing remarkable expansion of the American economy and
the Asian tigers and dragons. In other developing countries, the opposite
occurred: a decade of economic stagnation, a large-scale reduction of the
wealth produced and a worsening distribution of income and wealth.
Another portion of the surplus dollars came together in the form of new
loans, Central Bank reserves of all countries and in speculative applications
of all kinds. This process was greatly facilitated by the deregulation of
markets and by the rapid development of media and computer networks,
which allowed the interconnection of markets around the world.
In the second half of the 1980s, a new expression began to spread
throughout the world: globalization. According to the ideologues of the
system, this word intended to express the new world reality: the end of his-
tory with the final victory of capitalism and the end of national states with
the removal of national borders. As an economic policy, globalization pro-
posed and brought about the opening and deregulation of markets in

goods, services, credit and speculation, the privatization of state-owned
enterprises, the deepening of the internationalization of the economy by
increasing the advantages for foreign capital and market-led economic
regulation. Strictly speaking, this regulation is carried out by the large
monopolistic, commercial, industrial and financial corporations that com-
mand the entire world system. However, the free mobility of the work-
force has always been impeded by various means. Barriers of various kinds,
both physical and bureaucratic, have been built to prevent workers from
poor countries from gaining access to labor markets in developed countries.
In recent years, localized wars in Africa and the Middle East, religious
persecution and poverty, among other factors, have produced mass migra-
tion and refugees have flooded into Western Europe, peaking in 2015 and
causing a serious crisis. In 2018, large numbers of migrants from Central
America, mainly traveling from Honduras to the United States, were
camped in Tijuana on the Mexican border. The dispute between President
Donald Trump and the House of Representatives for resources to expand
the wall on the border with Mexico virtually paralyzed the government for
about a month. One of the reasons can be attributed to the enormous
concentration of wealth and income among an extremely restricted group
of international multibillionaires.5
International trade fundamentally depends on a sophisticated financing
system and developing countries, at a time when they had to produce
huge trade surpluses to pay interest on foreign debt, found wholehearted
support from the international credit system to finance their exports. This
meant that these countries started exporting and receiving dollars, but
most of these dollars, accumulated in trade balances, were then returned,
in the form of interest and debt charges,6 without any foreign exchange.
In this way, the wealth produced domestically by these indebted nations
began to be transferred, in value form and value of use form, to the center
of the system.7 There remained an internal income in pursuit of usage
values that no longer existed internally, and this accelerated inflation
growth to hyperinflation.
The consequence for the international credit system was the accelera-
tion of international capital movements in the form of money, or money
capital, in a continuous search for appreciation. The integration of stock
exchanges with foreign exchange markets along with the flow of bets on
the exchange rates of currencies and future interest rates allowed even
economists to defend the idea of globalization. The volume of interna-
tional credit and stock transactions reached very high levels. At the same
time, the international currency and derivatives8 market had grown explo-
sively since the first half of the 1990s.9 This trend continued throughout
the decade and carried on into the first decade of the twenty-first century,
even allowing for the normal cycles of expansion and contraction of the
system that had occurred over the years.10
Real Capital, Fictitious Capital and Parasitic

Speculative Capital11
The accumulation of real capital is mainly expressed through the expan-
sion of productive, commercial and non-productive services (banks, rents,
etc.). Growth in developing and Asian countries since the 1980s was
achieved through new productive investments and the growth of interna-
tional trade. This demanded increasing amounts of money and monetary
capital for their financing, which was generated within the very process of
the increased reproduction of capital. In this process, there are idle
amounts of money, accumulated value from the point of view of the indus-
trial, commercial or other wealthy capitalist, which are channeled into the
credit system and meet the reproductive needs of that capital.12 The very
growth of intra-firm international trade dispenses with the need for capital
in the form of money to the extent that credits within firms can be can-
celed among themselves. They are recorded in the balance of payments as
the entry and exit of currency and include the payment of interest as their
remuneration. The increase in capital across varied currencies (dollar,
Pound, Yen, Euro) beyond the requirements of expanded reproduction,
due to the overaccumulation of capital, has generated increasing amounts
of this mode of available resources, making it unnecessary for the accumu-
lation of productive capital. Thus, what appears as lack of money in the
market, better known as insufficient liquidity, is its opposite, an excess of
capital in the sphere of industrial capital, a crisis of overaccumulation.
The acceleration of capital centralization since the 1980s has also
reduced the need for new sources of finance and increased the amount of
money available to the international credit system. The activities of invest-
ment fund managers, institutional investors, mutual funds, pension funds,
insurance companies and holders of large fortunes have expanded. This
new volume of available money has added to the Eurodollars and petro-
dollars accumulated in previous decades. This surfeit of sources of finance
produced an unprecedented growth of capital in the form of money,

detached from direct real accumulation, which sought to be valued in a
specific form of the development of the logic of interest capital: fictitious
capital.13 This form of capital demonstrates speculative behavior, as its
fundamental characteristic, and has the objective of obtaining income
without the production of material wealth and this characterizes it as
parasitic.
This excess mass of capital, then, circulated throughout the world in
search of every and any form of appreciation. These funds were invested
primarily in public securities, private securities and stock exchanges which
are characteristic of the paper market that represents fictitious capital. But
the growth of instability in world capitalism, due to the sharpness of its
contradictions, generated within it a search for security (hedging) for capi-
tal in the form of money, so derivatives were created that gave security to
the holders. These rapidly multiplied fictitious capital from an initial oper-
ation, either as a result of real productive accumulation or a fictitious paper
accumulation.14 These are known as hedge or swap contracts. This search
for security further sharpened instability in the international credit system
and was reflected in the continuous variation of stock prices (stocks,
debentures, derivatives, etc.) on commodities and futures exchanges, prin-
cipally in interest and exchange derivatives.
The Recovery of Fictitious Capital After the Crisis of 2007 15

As we have already highlighted, one form of fictitious capital is banking
assets. We are also including here the assets of non-banking institutions
compiled by the Bank for International Settlements (BIS). According to
BIS data, total assets of banks and financial institutions in 30 countries,16
including the world’s largest economies but excluding mainland China,
totaled US$37.4 trillion in 2007. In 2008, even with the impact of the
crisis, this amount dropped to US$35.3 trillion, a reduction of only 5.8%.
The continuing of the crisis and mainly its impacts on the Eurozone coun-
tries, led to further reductions in this total, which fell to US$33.6 trillion,
a reduction of 10.1% compared to 2007, but still higher than the total for
2006, which was US$29.5 trillion.17 Virtually all this gigantic quantity of
banking capital is, according to Marx, fictitious capital.18
Thus, the impact of the crisis on the devaluation of this form of capital
was insignificant, both for banking capital and for the capital of non-
banking financial institutions, both in their domestic and international
applications. By comparison, world GDP at current prices, estimated by

the World Bank,19 was US$51.45 trillion in 2006, at US$74.99 trillion in
2012, and reached US$80.74 trillion, in 2017.
Between 2012 and 2013, BIS, since it depends on the reports of each
country team, promoted methodological changes in the handling of the
data of these banking and non-banking assets to allow for the difficulties
of collecting and handling the data.20 Nevertheless, the data in Table 8.1
confirms that the positions of these assets continued to expand in the
period after 2012.
Total assets as of 2013 presented a huge balance, almost doubled com-
pared to 2012, due to the inclusion of domestic assets. Total assets went
from US$64.4 trillion in 2013 to US$84.8 trillion in 2017, domestic
assets increased from US$42.9 trillion to US$58.1 trillion. By 2017, total
assets exceeded total world GDP.
The data presented illustrates the amount of fictitious capital in the form
of bank capital. We do not want to detail here the complexities in compil-
ing and aggregating this data but just to give a flavor, national bank data is
counted in their national currencies and all must be converted to the US
dollar. Banks in each country have their domestic and foreign assets
recorded in their respective currencies or in dollars, according to contrac-
tual interests. They may also have domestic assets in foreign currency or
Table 8.1 Total assets of banks and other financial institutions (US$ billions)
Years Total assets Domestic Foreign International Local positions
claims claims claims in local currencies
2005 – – 18,947 11,947 6999

2006 – – 24,023 15,367 8657
2007 – – 30,030 19,012 11,018
2008 – – 26,550 16,361 10,189
2009 – – 27,010 16,353 10,657
2010 – – 26,787 16,168 10,620
2011 – – 27,062 15,762 11,300
2012 – – 27,767 16,386 11,381
2013 64,389 42,867 28,103 16,704 11,378
2014 76,339 49,832 27,412 16,309 11,084
2015 73,849 48,636 25,785 15,376 10,393
2016 74,636 50,321 25,885 15,467 10,405
2017 84,777 58,079 28,516 16,884 11,619
Source: BIS. https://stats.bis.org/statx/srs/table/b1?m=S. (Our own production)

foreign assets in local currency. For each asset of an institution, the liability
of another national or foreign institution and in local or foreign currency
must correspond. So, aggregation and consolidation of data does not
always allow totals to be exactly the sum of the variables.
Another form of fictitious capital, according to Marx, is made up of
what today is called the market value or stock value of a company orga-
nized in the form of a corporation or public company. This market value
is obtained by multiplying the number of shares issued by corporations by
the stock price, which varies daily and throughout the day, as quoted on
stock exchanges. As a company increases its profits and dividends the stock
price increases. The quotation of the shares on the stock exchange is deter-
mined principally by the capitalization of dividends at the current rate of
interest and then speculation in the stock market adds other determinants.
Betting that dividends may be higher than expected, raises the price of
shares and increasing their prices leads to bets that prices will be even
higher in the future. Finally, the market price ceases to represent the value
of the original capital, or the nominal price of the share, and, in the same
way, no longer represents the present value of the equity, by fictitiously
inflating the capital. This process is known as a financial bubble. The wide-
spread practice since the 1990s of partially compensating corporate man-
agers with stock options has also greatly inflated the market value of these
corporations, which have used all possible forms of fraud, falsification and
crime. The documentary “Enron, the Smartest Guys in the Room” by
Alex Gibney, illustrates this process very well.
The magnitude of this fictitious capital can be seen in Table 8.2, devel-
oped from data collected and aggregated by the World Bank. In the
upswing of the cycle, the market value of companies rose from US$50.0
trillion in 2006 to US$60.3 trillion in 2007, a growth of 20.6%. In the
same period world GDP at current prices went from US$51.4 trillion to
US$57.9 trillion, that is, it grew much less (12.6%) than fictitious capital
on stock exchanges. When making the same comparison, this relationship
between market values and world GDP is reflected across the various
regions aggregated by the World Bank, that is, market values grew more
than GDP in the upswing of the cycle and could not repeat this in the
years following 2007.
With the outbreak of the crisis, the market value of corporations on
stock exchanges depreciated by 46.5%, falling to US$32.3 trillion between
2007 and 2008. Since then, the value has gradually increased and reached
Table 8.2 Market value of companies in stock exchanges (US$ billions)
Country name 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
World 49,994 60,305 32,269 44,608 51,470 44,384 51,133 60,240 63,428 61,895 64,998 79,225
OECD members 42,567 45,880 25,532 31,325 35,370 31,011 35,945 44,281 45,405 43,056 45,815 55,399
North America 21,272 22,112 12,626 16,756 19,456 17,555 20,730 26,150 28,428 26,663 29,348 34,491
European Union 12,454 14,358 7059 6900 6705 5602 6332 7954 7205 – – –
Euro area 8373 10,062 4990 6671 6440 5400 6134 7708 7001 6121 6172 7945
Europe and Central Asia 14,160 16,331 8239 9221 9550 7943 8973 10,748 9545 – 8817 11,065
Latin America and 1390 2218 1132 2187 2734 2259 2479 2161 1857 1295 1591 2017
Caribbean
Middle East and North – – – 895 1062 901 921 1568 1436 1315 1337 1371
Africa
Source: https://data.worldbank.org/indicator/cm.mkt.lcap.cd. (Our own production)

8 THE NATURE AND THE CONTRADICTIONS OF THE CAPITALIST CRISIS
191
US$51.1 trillion in 2012, but still well below world GDP, which reached
US$74.99 trillion in 2012 and US$80.7 million in 2017. After 2012,
market value continued to grow reaching US$79.2 trillion in 2017,
approaching the total for global GDP.
In regional terms, North America, mainly the United States and
Canada, regained the market value of its companies in 2013, when they
surpassed the 2007 value. OECD member countries took longer to
recover market value, only surpassing the 2007 value in 2017. But these
figures are underestimates, as the UK has not had its data calculated since
2009 and the European Union not since 2015. Those that we may con-
sider to be more advanced capitalist countries have demonstrated a full
recovery of the market value of their companies and have quickly over-
come the impacts of the crisis, even if the available statistical data does not
fully confirm this.
Table 8.3 shows the statistical data on debt securities compiled by BIS,
which has been regularly updated since 2012. This table brings together
data on securities issued by financial corporations, non-financial corpora-
tions and governments in domestic and international markets.21 We have
selected countries that have full data sets on all titles issued in the domestic
and international markets. For our purposes only complete information is
of interest. We have aggregated the two markets for countries who had
not themselves combined them. The database contains information from
almost 60 countries, but not all of them have data on government debt
securities.
The data presented in Table 8.3 shows that, in most of the selected
countries, debt has grown continuously, accelerating after 2007–2008 cri-
sis. However, European countries that have suffered most from the sover-
eign debt crisis have shown less accelerated growth, or even a fall, in
indebtedness, as in the case of Greece. The five largest debtors in 2017
were the United States, Japan, the United Kingdom, Italy and France.
Among the ten most indebted governments, the first two accounted for
68.7% of the total in 2017. Between the end of 2007 and 2017, the debt
of these ten countries rose by 138.1% with the largest increases in the
United Kingdom, 160.4%, Spain, 138.4%, and the United States, 100.2%.
It is possible that an important mass of fictitious capital in the form of
shareholder value has become public debt.
Finally, derivatives are another important form of fictitious capital
today. They did not exist in any significant amount in Marx’s time, as they
Table 8.3 Selected government debt securities (US$ billions)
Years Brazil Germany Spain France United Greece Italy Japan Portugal United
Kingdom States
2005 600 1273 408 1141 801 207 1469 5830 100 6849
2006 703 1494 452 1301 964 244 1690 5833 118 7123
2007 952 1717 498 1514 1070 299 1928 6315 136 7487
2008 804 1663 543 1563 990 340 1920 8125 142 8789
2009 1221 1870 746 1843 1428 408 2114 8315 170 10,402
2010 1442 2040 796 1838 1674 383 2069 10,173 187 12,072
2011 1409 2079 871 1926 2094 357 2078 11,361 168 13,107
2012 1431 2178 973 2064 2338 141 2183 10,694 173 14,222
2013 1322 2255 1135 2262 2419 128 2392 9123 178 14,808
2014 1303 2000 1057 2084 2696 100 2181 8324 156 15,593
2015 1042 1779 998 1935 2617 82 1985 8418 150 16,291
2016 1437 1715 993 1921 2504 76 1975 9013 157 17,036
2017 1588 1939 1186 2258 2785 78 2292 9477 190 17,592
Source: http://stats.bis.org:8089/statx/srs/table/. (Our own production)

8 THE NATURE AND THE CONTRADICTIONS OF THE CAPITALIST CRISIS
193
have only developed more vigorously since the changes that occurred with
the end of the system of fixed exchange rates, maintained by the Bretton
Woods agreement until 1971; the year in which President Richard Nixon
decreed the end of convertibility of the dollar into gold which had been in
effect since the end of World War II. This system, which provided some
stability to international interest rates, also maintained these rates at rela-
tively low and stable levels. Thus, under the Bretton Woods agreement,
the world credit system was associated with the dollar, which assumed the
role of world money and was anchored to gold at the rate of US$35.00
per ounce. After the end of the agreement, the dollar became disassociated
from gold but continued to play the role of world money in the form of
fictitious money,22 even though in appearance, in orthodox economy text-
books and system records, the dollar turned into forced paper currency of
no intrinsic value.
Table 8.4 shows the annual balances of derivatives registered by BIS
for the period 2005–2017. Total securities went from US$292.9 trillion
in 2005 to US$709.3 trillion in 2013, in notional values,23 even though
they showed a significant reduction in the growth rates of these securities
in 2007 and 2008. The data also shows that in 2014 the volume of deriv-
atives started to retract and resumed growth only in 2017, when securi-
ties totaled US$531.6 trillion. This amount, in notional values, does not
Table 8.4 Global OTC derivatives market (US$ trillions)

Years Interest rate Foreign Equity Commodities Credit Total
exchange derivatives
2005 229.4 37.5 6.6 5.5 13.9 292.9

2006 315.9 48.8 8.6 7.3 28.7 409.3
2007 432.4 66.6 9.5 9.2 61.2 579
2008 472.7 60.6 7.6 5.2 44.9 591.1
2009 490.3 59.8 7 3.8 35.8 596.8
2010 492.3 67.9 6.3 3.4 30.7 600.6
2011 533.3 74.3 6.7 3.6 29.5 647.3
2012 521.3 78.1 6.9 3 25.9 635.2
2013 600.8 78.5 6.7 2.5 21.1 709.6
2014 519.6 82.1 7.1 2.1 16.5 627.4
2015 395.1 76 7.2 1.5 12.4 492.2
2016 385.5 78.8 6.3 1.7 9.9 482.1
2017 426.6 87.1 6.6 1.9 9.4 531.6
Source: BIS. https://stats.bis.org/statx/srs/table/d5.1?p=20152&c=. (Our own production)

accurately reflect turnover, since these are futures contracts, that may
contain options which may or may not be exercised, forward contracts
and swap contracts. Furthermore, derivative contracts are settled only at
maturity with the result of changes in the interest rate, exchange rate or
commodity prices. Table 8.4 shows that interest rate derivatives are the
most important, since they represent more than 80% of the total, from
2008 to 2017. Whilst, derivatives created from commodity prices repre-
sent a very small portion, falling from 1.6% of the total in 2007 to only
0.35% in 2017.
Currency speculation in the monetary and exchange sphere is carried
out within a specific market, the currency market. This market mainly buys
and sells in dollars, euros, yens and pound sterling. The goal is to buy in
markets where the currency is cheaper and sell in markets where it is more
expensive. Economists call this arbitrage. Another objective is to bet on
currency quotations in the future, these bets are made through the
exchange swap contracts. Global turnover in the foreign exchange market
was not affected by the deep crisis that began in 2007. The daily average
of business, estimated in April annually and every three years by BIS, was
US$1.9 trillion, in 2004 and went from US$3.3 trillion in 2007 to US$3.9
trillion in 2010 and to US$5.30 trillion in 2013, decreasing slightly to
US$5.1 trillion in 2016 (BIS 2013, p. 9; BIS 2016). Of this total about
80% was in two types of transactions, US$1.7 trillion in cash transactions
and US$2.4 trillion in foreign exchange swaps; the remaining 20% were in
other operations. Considering a month with twenty business days, the
monthly volume of business in this market would be US$101.3 trillion,
much more than the entire global GDP for 2017.
The data in Tables 8.1, 8.2, 8.3 and 8.4 presents forms of fictitious
capital that demand remuneration without directly participating in the
production of wealth, except for the portion of banking assets and finan-
cial institutions that may be financing productive capital. In this activity, it
may be the counterpart of public debt securities that are currently growing
only through interest capitalized on new debt. The actions constitute
duplications of real capital accumulated in corporations, in the form of
fictitious capital, and serve to maintain the speculative bets on price varia-
tions. So, a large part of this capital is remunerated without any contribu-
tion to the production of wealth. As betting gains and losses occur among
the speculators in the market, this share also constitutes transfers between
the capitalists themselves and speculators.
The Effects of Parasitic Speculation

on a World Scale
Monetary Impacts of the 2007–2008 Crisis

During downturns, governments often take countercyclical measures to
stimulate production and alleviate unemployment. Currently, a part of
accumulated capital, the less efficient and less productive part, usually
devalues to zero. Public intervention at these times aims to prevent this
inefficient portion from disappearing and to incorporate it into other
more advanced fractions of capital in their respective sectors of activity.
Between 2007 and 2008, we saw accumulated stocks of capital in the
financial sphere reach their highest levels. This total, demanding
remunerations that the productive sphere could no longer afford, led the
circulation of capital to break the cycle of continuous metamorphoses
between commodity and money.
As was widely publicized in 2008, the main anti-crisis measure taken by
the United States government sought to save the big banks, insurers and
other financial institutions involved in the crisis. This did not include
industrial corporations like General Motors,24 for example. We can observe
this movement, between 2007 and 2008, in Fig. 8.1.
4,500 3,934 3,851

4,000
3,500
2,676 3,599
3,000
2,500 2,940
1,655
2,000 1,375 2,461
1,500 1,375
1,000
500 787 825
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Base Money M1
Fig. 8.1 Monetary base and means of payments USA (US$ billions). (Source:
Federal Reserve: http://www.federalreserve.gov/releases/H3/default.htm. Our
own production)
From 2000 to 2007, the Federal Reserve (Fed), the US Central Bank,
maintained a steady growth of the monetary base in a practically linear
trend. The monetary base (dotted line) expanded from US$585 billion in
2000 to US$825 billion in 2007, an increase of 41%, or a 5.8% annual
average. In the same period, the M1 variable went from US$1089 billion
to US$1375 billion. But in 2008, the monetary base experienced an enor-
mous jump to US$1655 billion, a 100% increase in just one year and
exceeding M1. The Fed continued with the same policy of expanding the
base over the following years, which increased to US$2010 billion in 2010
and reached US$2611 billion in December 2012. This expansion of the
monetary base was maintained for another two years and reached its high-
est level of US$3934 billion in 2014. It then reduced until 2016 and
increased again in 2017 to US$3081 billion. Since 2008 US payments
have been below the monetary base.
This increase in the volume of primary issues was carried out by means
of three anti-crisis monetary measures: quantitative easings 1, 2 and 3,
called monetary loosening. The first was launched in 2008 and triggered
the first jump in the base, the second began in November 2010 and the
third was announced in September 2012. Even with the supposed total
application of this policy, with the reduction in the rate of primary mone-
tary expansion and the resumption of increases in the interest rate, we can
see in Fig. 8.1 that M1 had still not returned to the behaviors suggested
by textbooks on macroeconomics.
In the first quantitative easing package, the Fed bought US$600 bil-
lion in real estate derivatives, in the second, US$600 billion in Treasury
bonds and in the third, started buying US$40 billion a month in real
estate or mortgage-backed securities, increasing this to US$85 billion a
month as of December 2012. At the same time, the Fed had maintained
the domestic interest rate, the prime rate, between 0% and 0.25%
per annum since the end of 2008 and promised to maintain it at this level
until 2015, when it started rising as we can see in Fig. 8.2. We will not
develop the issue of the impacts of the rise in interest rates observable
from 2015.
Before moving on regarding these observations on the dollar we pres-
ent Fig. 8.3, with the same variables as shown in Fig. 8.1. This refers to the
countries of the European Union that make up the Eurozone. You could
be said that this graph is a supported version of the primary and secondary
currency creation mechanism described in the economics manuals. In this,
the European Central Bank (ECB) carried out the primary creation, along
2.00
5.00
0.00
1.00
3.00
4.00
6.00
1,000
3,000
5,000
7,000
9,000
2,000
4,000
6,000
8,000
0
198
2005-12-30
2006-05-31
2005 746 3,423 2006-10-31
production)
2007-03-30
2006 821 3,697 2007-08-31
2008-01-31
2008-06-30
2007 890 3,840
2008-11-28
2009-04-30
2008 1,102 3,993 2009-09-30
2010-02-26
2010-07-30
P. NAKATANI AND H. GOMES
2009 1,258 4,501

2010-12-31
2011-05-31
2010 1,087 4,710
2011-10-31
Base money
2012-03-30
2011 1,775 4,804 2012-08-31
2013-01-31
2012 1,288 5,102 2013-06-28
2013-11-29
M1
2013 1,196 5,385 2014-04-30
2014-09-30
2015-02-27
2014 1,671 5,945
2015-07-31
2015-12-31
2015 2,259 6,612 2016-05-31
H.15 Selected Interest Rates for Sep 25, 2018. Our own production)
2016-10-31
2016 3,044 7,158 2017-03-31
2017-08-31
2018-01-31
2017 3,139 7,749
2018-06-29
Fig. 8.3 Monetary base and means of payments in the Eurozone (€ bil-
lions). (Source: http://sdw.ecb.europa.eu/browse.do?node=bbn27. Our own
Fig. 8.2 USA: Short-term interest rates—2005–2018. (Source: Federal Reserve:
with the money-creating banks, multiplying it within the system made up

of the Euro Community countries. But even so, such statistical information
is insufficient to explain the global currency markets and capital flows
between countries.
We must point out that there is a profound difference between these
two Central Banks and their monetary policies. The Fed is a private insti-
tution that was given a civic function in the early twentieth century and
the ECB is a public institution set up by the countries that make up the
European Union and has the status of an independent Central Bank. The
Fed usually creates money by buying US Treasury debt securities and
reselling them to banks, companies, households and other government
bodies on the open market, the equivalent of the open market in Brazil, or
repurchases such securities and makes payments on behalf of the Treasury.
Thus, US Treasury funding is provided directly by the Fed. The ECB cre-
ates currency through the purchase of private bank debt securities; these
banks buy the debt securities of National Treasuries, thereby becoming
responsible for the financing of the Treasury of the Eurozone countries,
and the central banks of each country have lost their sovereignty for the
execution of monetary policy. In the first case, the interest rate that the US
Treasury pays on its bonds is fixed by the Federal Open Market Committee,
a Fed body. In the second, it is the private banks that pay the interest rate
set by the ECB and charge the National Treasuries a rate that is deter-
mined by the market.
The Spread of the Dollar in the Global Credit System

The apparent incongruity we find in the data shown in Fig. 8.1 can be
explained by the outflow of US dollars to the rest of the world. But not
dollars as money, but as interest-bearing capital in the specific form of ficti-
tious capital.25 Thus, the monetization of public and private debt in the
United States carried out by the Fed finds as an alternative means for
accumulation in countries where speculative and parasitic capital, recorded
in the balance of payments as portfolio investment, finds remunerations as
dividends, interest, or capital gains higher than in the United States. But
even direct foreign investments, considered good investments [sic], whose
criterion for inclusion in the balance of payments is the acquisition of at
least 10% of the shares of a company, still contain a speculative and short-
term potential. The speculative and parasitic dimension of the resources
recorded in these two balance-of-payments items can be met with the
remittance of profits, interest and capital gains that grew rapidly after the
financial crisis.
Figure 8.4 shows the accumulated total in the balance of current
account payment balance of selected countries between 2006 and 2017.
As can be seen, the countries with the largest negative balances are the
United States, the United Kingdom, Spain, Australia and Turkey. This
balance, according to the economic, represents the inflow (negative bal-
ance) or the sending (positive balance) of the savings to or from overseas.
Thus, during this period the United States received US$5878 billion from
the rest of the world, most of it to finance the deficit in the commodities
balance. Just three countries, Japan, Germany and China were responsible
for US$7504 billion or 127.7% of the funds to finance this deficit.26 If we
include the deficits of the other European countries the total amount
reaches US$8864 billion of negative balance in the balance of payments
current account. These numbers indicate a huge asymmetry in the
world system.
To further clarify the basic operating mechanism of this system we must
consider that the dollar, along with some other currencies, functions as the
world currency. That is why the United States can maintain recurring
trade deficits without any problem, provided the dollar continues to be
accepted in international transactions and as a reserve currency. Thus, we
can say that the United States imports goods from the rest of the world
and pays with fictitious money, which becomes fictitious capital in the
international credit system. The same can be said for the Euro and Pound
Sterling, currencies which are widely traded on the world exchange market
and are part of the international reserves of various countries.
The counterpart of the current account deficit of developed countries
appears, in part, in the data in Fig. 8.5. Countries that obtain positive
trade balances accumulate these balances in their reserves, in dollars, those
that do not have to further open up their economies and offer more ben-
efits to international capital to attract direct foreign or portfolio invest-
ment. China is the champion in accumulated reserves, US$3236 billion at
the end of 2017, with about 60% of that total in dollars, followed by
Japan, US$1264 billion, Switzerland, US$811 billion, and Saudi Arabia,
US$509 billion.
This asymmetry in the world system has been building since the intro-
duction of neoliberal policies to open up and deregulate national econo-
mies, privatize state enterprises and reduce the role of the state in regulating
economic activities. If before this period, countries had to maintain
4,000
2,917
2,894
3,000
1,694
2,000
879
789
771
721
595
581
499
1,000
0
Spain
Italy
China
Japan
-506 Turkey
Norway
Kuwait
-240 Greece
Poland
-590 Australia
Portugal
Romania
Germany
Singapore
Switzerland
Saudi Arabia
Netherlands
United States
-1,309 United Kingdom
Russian Federation
-1,000
-2,000
-478
-124
-3,000
-140
-112
-190
-4,000
-5,000
-6,000
-5,878
-7,000
Fig. 8.4 Balance of payments balance in current account accumulated between

2006 and 2017 (US$ trillions). (Source: World Bank: http://data.worldbank.
org/indicator/bn.cab.xoka.cd)
3,236
3,500
3,000
2,500
2,000
1,264
1,500
811
1,000
509
451
433
413
389
374
285
203
200
500
175
156
151
151
148
130
113
113
0
Korea, Rep.
Brazil
China
Switzerland
Singapore
Thailand
Poland
France
Czech Republic
Japan
Germany
Italy
Saudi Arabia
Russian Federation
India
Indonesia
Israel
Mexico
United Kingdom
United States
Fig. 8.5 International Reserves 2017—Selected countries with the largest

reserves (US$ billions). (Source: World Bank: http://data.worldbank.org/indica-
tor/fi.res.totl.cd. Our own production)
reserves to secure imports, after this period countries, especially the most
fragile ones, accumulate reserves when they can to confront specula-
tive attacks.
Brazil, for example, has accumulated US$374 billion in international
reserves. This represents the value of almost 30 months of imports, based
on the 2017 monthly average of US$12.5 billion. In the past, reserves
necessary for the payment of two or three months of imports was consid-
ered acceptable. The current need to maintain a large and expensive
reserve is due to the risk of speculative attacks and the need to guarantee
financial speculation.
In March 2018, Brazil had liabilities of US$825 billion in the foreign
direct investment account and US$577.8 billion of foreign capital in the
portfolio investment account; these balances were US$721.4 billion and
US$459.2 billion, respectively, in September 2018 (BCB 2019a). This
data records liabilities in Real converted into dollars, so a part of this
apparent capital outflow is due to the brutal devaluation of about 20% of
the Real between the end of March and September 2018.
Meanwhile, balance of payments records show significant outflows in
2018. In the first three quarters of the year, gross capital outflows in the
portfolio investment account of fixed income securities in the domestic
market totaled US$70.5 billion. In the same period, the outflow of direct
foreign investment, intercompany operations, totaled US$38.3 billion
(BCB 2019b). This does not necessarily represent a capital flight as the
inflow into fixed income applications was US$70.8 billion. Finally, if we
consider speculative movements in the portfolio investment account, total
business volume in 2018 was US$467.9 billion, a daily average of US$1.9
billion in inflows and outflows.
The results we have seen so far demonstrate that the crisis which began in
2007 continues to develop internal contradictions in the dynamics of capi-
tal and to pressure the transfer of value and added value from the weakest
countries to the strongest within the system, from workers to capitalists
and between nation states and social classes.
The enormous asymmetry we observe in the global capitalist system
does not signify a downward trend or collapse of the US economy, but
rather shows the strength of the hegemonic position won and consoli-
dated by the United States after World War II. There is, to date, no mon-
etary system that can play the role of substitute for the dollar, nor a strong
tendency toward new economic regulation that will lead to the replace-
ment of dollar-denominated speculative and parasitic capital. Some
attempts to reorganize the international payment system, for example,
China’s agreements with several countries to eliminate the dollar in its
bilateral transactions, are still not enough to do so, and this is without
considering that countries that have a some trillions of dollars in their
reserves, such as China and Japan, remain in effect trapped, as a sudden
and abrupt devaluation of the dollar would produce brutal losses for them.
Moreover, the United States finds itself in a similar position to that of
the early and late 1970s, when it transferred to the rest of the world the
losses incurred with the end of the convertibility of the dollar in September
1971 and obtained great benefits from the policy of increasing interest
rates in the early 1980s. Under current conditions, a further increase in
the US prime rate would produce rapid capital flight from all countries in
which the stock of portfolio investment is important, in an accelerated
exchange rate devaluation.27
Contrary to what might be expected, the crisis has not become a driv-
ing factor for wholesale development of the subjective conditions of the
organization and pressure for anticapitalist changes, although we must
acknowledge that there has been a relative rise in social struggles through-
out the world during this period of crisis. However, it is possible that an
element of these political trends, involving some Social Movements, also
reflects the difficulty in understanding these contemporaneous phenom-
ena of fictitious capital, either due to alienation or because of the system-
atic campaign of bourgeois organic intellectuals through their means and
instruments of production and ideological diffusion. Hence the percep-
tion in recent years of the rise of right-wing political parties, groups and
movements around the world that have produced electoral victories for
the extreme right, for example, in the United States, in 2016, and in
Brazil, in 2018. If this is correct, it is necessary to carry out a deepening,
detailing and advancement by studies on fictitious capital and speculative
and parasitic capital and their reflections and impacts in the political sphere
and to disseminate these studies to broader levels of society.
Notes
1. See also Dierckxsens (2009, pp. 13–16).
2. In 2016 Paul M. Romer, then chief economist at the World Bank, pub-
lished the article “The Trouble With Macroeconomics” for The American
Economist (see Romer, 2016), with a devastating critique of orthodox eco-
nomic theory that leads to the idea that adopted models of economic pol-
icy must all be abandoned. Despite its importance, his criticism was largely
ignored. Nonetheless, he received the Nobel Prize in Economics in 2018,
along with William D. Nordhaus.
3. See Gontijo and Oliveira (2012) and Varela (2012).
4. “From a modest start in 1964, at about US$11 billion, the system had
grown to US$40 billion in 1969—and these are conservative numbers. I
say conservative numbers because there are several different estimates of
the volume of Eurodollars that existed in 1969: the numbers range from
US$40 billion to US$85 billion” (Wachtel 1988, p. 98). Then, with the oil
crises in 1973 and 1979, this volume of money became predominantly
petrodollars, which grew rapidly. “From the first oil price increase in 1973
to the end of the decade price increase, OPEC surplus totalled US$357
billion” (Wachtel 1988, p. 104).
5. “The top 1% of global wealth holders started the millennium with 47.1%
of all household wealth. This share changed little between 2000 and 2005,
but then fell to 42.6% by 2008. Our latest estimates suggest that the share
of the top percentile continued downward until 2011, but then rose
sharply from 42.1% in 2011 to a peak of 47.5% in 2016, before edging
back to 47.2% in mid-2018” (Credit Suisse 2018, p. 16).
6. In December 1981, total Brazilian foreign debt, public and private, was
US$61.4 billion and by December 1995, this had jumped to US$129.3
billion (Cerqueira 1997, p. 144). The accumulated balance of the trade
balance between 1982 and 1995 was US$144.5 billion and total net inter-
est paid was US$114.2 plus US$183.4 billion of amortisations (BCB
2013). Thus, almost 80% of the balance of trade was used to pay interest
on foreign debt and although the amortisations in the period corresponded
to almost three times the initial debt balance Brazil ended the period with
a debt that was two and a half times the initial amount.
7. Exports of goods and services constitute the transfer of use values abroad
in exchange for value represented by dollars that, through imports, could
restore internal use values. The return of dollars obtained from exports as
interest, amortization, profits or capital gains prevents this kind of conver-
sion from occurring and the result is the transfer of material wealth pro-
duced domestically without any return.
8. Derivatives are denominated, high risk speculative (on currency exchange
rates and interest rate futures) bonds that derive from (or are backed by)
primary securities such as corporate stocks, government bonds, mortgages,
and so on.
9. “In the last ten years the volume of resources (bonuses, euronotes, bank
loans and stock issuance) has quadrupled, from US$395 billion in 1987 to
US$1597 billion in 1996; and “the daily volume of transactions in the cur-
rency market increased from US$ 718 billion in 1989 to US$ 1572 billion
in 1995”. In the derivatives market, “while the total value of transactions
increased from US$618 billion in 1986 to US$9.185 billion in 1995, the
number of contracts traded increased from 315 million to 1210 million in
1995” (Gonçalves 1997, p. 314, 316 and 318).
10. According to BIS (2007a, p. 12), the global derivatives market, according
to notional amounts, reached US$297,670 billion in December 2005 and
reached US$414,290 billion a year later. Meanwhile, the international cur-
rency market, which traded US$880 billion a day in April 1995, rose to
US$1.2 billion a day in April 2001 (BIS 2007b, p. 5).
11. See: Carcanholo and Nakatani (1999).
12. “Here we have firstly the section of profit that is not spent as revenue,
being rather designed for accumulation, but which the industrial capitalists
concerned do not have any immediate employment for in their own
businesses. […] The part to be spent as revenue is gradually consumed, but
in the meantime, it constitutes loan capital as a deposit with the banker.
[…] With the development of the credit system and its organisation, the
rise in revenue, i.e. in the consumption of the industrial and commercial
capitalists, is thus itself expressed as an accumulation of loan capital. And
this holds good of all revenues, in so far as they are only gradually con-
sumed—i.e. ground-rent, the higher forms of salary, the incomes of the
unproductive classes etc.” (Marx 1991, pp. 635–636).
13. For Marx, public bonds and shares traded on the Stock Exchange repre-
sent specific forms of fictitious capital. But not only that; other types of
securities are also fictitious capital, “Even when the promissory note—the
security—does not represent purely illusory capital, as it does in the case of
national debts, the capital value of this security is still pure illusion” (Marx
1991, p. 597). Between 1980 and 1992 the stock of so-called financial
assets went from US$10.7 trillion to US$35.5 trillion. The composition of
these assets in 1991/1992 was as follows: foreign exchange, 32%, interna-
tional bonds, 4%, government bonds, 25%, corporate bonds, 10%, shares,
29% (Chesnais 1998, p. 27). According to the McKinsey Global Institute
data released in October 2008, this stock of financial assets reached
US$117 trillion in 2003, US$142 trillion in 2005, US$167 trillion in
2006, and US$196 trillion in 2007 (McKinsey 2008, p. 9).
14. “With the development of interest-bearing capital and the credit system, all
capital seems to be duplicated, and at some points triplicated, by the vari-
ous ways in which the same capital or even the same claim, appears in vari-
ous hands in different guises. The greater part of this ‘money capital’ is
purely fictitious” (Marx 1991, p. 601).
15. The data in the tables are illustrative only due to the variety of sources
and methods of acquisition and aggregation. Therefore, they should not
be considered absolutely and should not be aggregated.
16. Australia, Germany, Norway, Austria, Greece, Panama, Belgium, Hong
Kong SAR, Portugal, Brazil, India, Singapore, Canada, Ireland, Chile, Italy,
Sweden, Taiwan, Japan, Switzerland, Denmark, Turkey, Finland, Mexico,
United Kingdom, France, Netherlands, United States (BIS 2012a, p. A5).
17. This data was extracted from various editions of the BIS Quarterly Review
(https://www.bis.org/quarterlyreviews/).
18. “The greater part of banker’s capital is therefore purely fictitious and con-
sists of claims (bills of exchange) and shares (drafts on future revenues). It
should not be forgotten here that this capital’s money value, as represented
by these papers in the banker’s safe, is completely fictitious even in so far as
they are drafts on certain assured revenues (as with government securities)
or ownership titles to real capital (as with shares), their money value being
determined differently from the value of the actual capital that they at least
partially represent; or, where they represent only a claim to revenue and
not capital at all, the claim to the same revenue is expressed in a constantly
changing fictitious money capital. Added to this is the fact that this ficti-
tious capital of the banker represents to a large extent not his own capital
but rather that of the public who deposit with him, whether with interest
or without” (Marx 1991, p. 600).
19. Data obtained from the website of the World Bank (2019).
20. With the difficulties in collecting and compiling the information from the
periodic declarations offered by each country, especially on positions in the
domestic banking institutions and non-banking assets of foreign origin,
BIS changed the system for calculating Locational Banking Statistics
(LBS), the nationality of the reporting bank or the country of residence of
its counterpart, giving preference to consolidated data collected by the
Consolidated Banking Statistics (CBS) system, reporting country, as of
June 2012. See: BIS (Dec. BIS 2012a, b).
21. For more details on relevant methodological issues see Gruić and
Wooldridge (2012).
22. This term was first used by Eleutério Prado and stems from the Brazilian
debate on the Marxist theory of money in analogy with the Marxist con-
cept of fictitious capital (Prado 2013).
23. The derivatives market registers the total amount of contracts over the
future values that are the object of the bet. For example, a future exchange
rate contract records the buying and selling bet of billions of dollars at a
certain rate expected today and what the future rate will be. A buyer agrees
to buy these billions at the exchange rate that he bets on in the future and
the seller sells betting that the rate will be lower. The buyer must pay a
premium, which consists of a small percentage of the total amount of the
contract. Anyone who succeeds wins the difference between the stake rate
and the effective rate at the end of the contract. The record is about the
total of the contract, but the effect is on the ratio between the differences
in betting rates and the total contract.
24. The US Treasury has put US$50 billion in stock to save General Motors,
according to Folha de S. Paulo, and lost US$11 billion in five years (FSP
2013).
25. A necessary theoretical question for the grounds of this process is the
transformation of the convertible dollar into the world currency both
under the Bretton Woods Agreement, and its continuation after 1971,
without such convertibility, as a purely forced currency, as fictitious money.
26. There are, of course, innumerable mediations and this direct relationship is
just a device we are using.
27. This is the situation in which Brazil finds itself, as we have seen. Most seri-
ous is that the BCB’s orthodox economists are trying to keep the exchange
rate stable through fictitious dollar creation by increasing speculation in
the market. These are the foreign exchange swap operations, in which the
capitalist buys a bond with the exchange rate plus a currency coupon (dif-
ference between the basic interest rate and the exchange devaluation rate)
and pays the central bank the basic interest rate. In December 2018, the
notional value of the foreign exchange swaps was US$259.9 billion and the
total cash flow, which the central bank had to pay, was US$15.1 billion
(BCB 2019c).
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ODE. https://paulromer.net/wp-content/uploads/2016/09/WP-Trouble.
pdf. Accessed 1 Feb 2019.
The World Bank. GDP. https://data.worldbank.org/indicator/NY. Accessed
7 Feb 2019.
Varela, R. (Ed.). (2012). Quem paga o Estado social em Portugal? Lisboa:
Bertand Editora.
Wachtel, H. M. (1988). Os mandarins do dinheiro. Rio de Janeiro: Nova Fronteira.
Final Words
It is not intended to revisit the main conclusions and discussions made

throughout this book. Any effort to synthesize the chapters at this point
could compromise a necessary understanding of the theoretical founda-
tions and the contradictory process of the building of the categories that
support the decisive transformations of contemporary capitalism, espe-
cially those linked to the recent capitalist crises that manifest themselves
more intensely in the form of a plethora of fictitious capitals and finan-
cial crises.
The book sought to demonstrate that capitalism remains a mode of
production in the continuous process of transformation, always shot
through by Sisyphus’ work on accumulating abstract wealth. This dynamic,
presided over by a blind, automatic, unbridled, and insatiable subject,
which, at the same time, tends to become autonomous in relation to its
substance, abstract work, only increases the imperative of the real sub-
sumption of work to the capital on a larger—and world—scale. This fetish-
ist tendency to autonomize capital, which comes to prominence in its
fictitious forms and in its search for fictitious profits, magnifies the turbu-
lent, oppressive, and potentially genocidal character of accumulation.
Moving from this fundamental contradiction and repeatedly rebound-
ing in a more universal and explosive way, in recent decades the predatory
and voracious character of capital has been revealed in all its rawness, in
the form of a intense concentration of income and property; mass impov-
erishment; rapine wars; the militarization of societies and the development

https://doi.org/10.1007/978-3-030-23360-0
212 FINAL WORDS
of “Wellesian” mechanisms of surveillance and social control; environ-

mental destruction; the exploitation and degradation of the working pop-
ulation; the most diverse forms of intolerance and authoritarianism,
holding hands with individualism and generalized competition, feeding a
real war of all against all. This is to mention just some of the manifesta-
tions of capitalist barbarity.
The old motto of capital—Aprés moi, le deluge [after me, the deluge]—
is more topical than ever: the deluge—the crisis—has become the rule,
accompanying the destructive march of capital. The clouds in the sky of
history seem ever more charged and threatening. It is to be hoped that the
discussions here, in their inextricably linked theoretical and empirical
dimensions, have contributed to the updating and development of the
critique of political economy, demonstrating its potential for the criticism
of a society that is moving at a rapid pace toward the production of unprec-
edented catastrophes.
The authors
Vitória, Brazil
Index1
C Crisis, x–xii, 9, 30, 56, 76, 88, 91,

Capital 132, 133n6, 136n25, 136n26,
accumulation, 2, 36, 90, 106, 107, 139–166, 183–203, 212
125, 140–142, 150, 152, 153, 2007–2008 crisis, 1, 2, 154, 159,
166, 171n12, 175n38, 175n39 174n29, 188–199
circulation, 73, 75, 82n22 Crypto-currencies, 5, 63–78
reproduction, 2, 3, 72, 99, 119,
142, 156, 163, 175n38, 187
Capitalist crisis, 3, 6, 60n22 D
Commodity-capital, 50, 82n21, 122, Dematerialisation of money, 43–57
123, 144 Derivatives, x, 4, 6, 49, 50, 74,
Contemporary capitalism, 2, 5, 6, 46, 150, 151, 159, 160, 171n14,
65, 77, 78, 89, 91, 102, 103, 177n48, 187, 188, 192, 194,
109, 110n7, 111n17, 117, 140, 195, 197, 204n8, 205n9,
141, 152, 157, 164, 168–170, 205n10
177n50, 211
Credit money, 48–52, 56, 57, 58n5,
59n8, 60n17, 60n18, 65, 66, E
70–73, 80n7, 90, 99, 112n18, Economic crisis, ix, xi, 1–4, 12, 15,
130, 149 87, 154, 159, 162, 184
Note: Page numbers followed by ‘n’ refer to notes.

1

https://doi.org/10.1007/978-3-030-23360-0
214 INDEX
F M
Fetishism, 5, 11, 23, 35, 63–78, 141, Marx, Karl, vii–viii, 1–7, 9–36, 43–57,
151, 169 63–78, 87–109, 117–132,
Fictitious capital, 2–4, 6, 21, 36, 139–170, 188, 190, 192,
44–47, 58n1, 65, 73, 79n7, 104, 205n12, 205n13, 205n14,
105, 107, 118–132, 140–170, 206n18
184–195, 199, 200, 203, Marxists, xi, 2, 3, 5, 7, 35, 37n6, 43,
205n13, 206n18, 206n22, 211 46–49, 57, 58n1, 58n5, 101,
Fictitious money, 65, 70, 150, 174n30, 108, 118–131, 140, 141, 152,
194, 200, 206n18, 207n25 154, 164, 165, 206n22
Fictitious profit, ix, 2, 6, 140, 141, Money, x, 5, 7, 9–36, 63–78,
153–157, 162, 167, 211 87–109, 117–130, 143–170,
Fictitious wealth, 2–4, 6, 72, 131, 186–200
184, 185 Money-capital, 3, 5, 43–57, 66, 71,
Financialization, 9, 87–109, 117, 73, 77, 128, 144
133n6, 139–170, 172n17
Functional forms, 5, 6, 36, 45, 58n2,
89, 94–96, 107, 108, 110n7, O
110n9, 118, 123, 184 Overaccumulation of capital, 5, 47,
autonomization of, 36, 45, 93, 101, 58n4, 65, 154, 157, 185–195
106, 107, 109n5, 110n7, 118,
171n6
P
Parasitic speculative capital, 6, 44–48,
I 51, 57, 58n4, 118–119,
Industrial capital, 6, 44, 45, 58n2, 130–132, 185–202
58n4, 89, 93–96, 98, 99, 101, Productive-capital, x, 36, 44, 45, 47,
106, 107, 109n5, 110n9, 58n2, 58n4, 72, 119–131, 144,
110n10, 118–132, 144, 169, 187, 195
174n31, 187 Profit, ix, xi, xii, 6, 22, 44, 47,
Interest, viii, xi, 2, 3, 6, 9, 12, 15, 31, 60n20, 70, 79n4, 88, 90,
64, 65, 72–74, 76, 80n7, 82n19, 105, 108, 123, 127, 130,
83n23, 83n27, 88, 92, 101, 132, 133n6, 134n8, 134n15,
103–106, 112n18, 118–132, 139–170, 190, 200, 204n7,
139–170, 185–203 205n12
Interest-bearing capital, 6, 21, 36, 64,
71, 72, 89, 91, 99–101,
104–106, 113n29, 118, 119, R
123–129, 131, 134n14, 135n16, Reification, 7, 88
140, 145, 147–149, 151–153, Rent, 6, 88, 141, 145–147, 159–161,
157, 167, 169, 171n9, 171n10, 163, 167, 171n7, 171n8,
199, 205n14 174n27, 177n51, 187
INDEX 215
S 136n23, 141, 142, 144–146,

State, 4, 7, 10, 11, 29, 39n24, 45, 148, 149, 152, 153, 155–163,
50, 52, 59n8, 65, 70, 73, 75, 166–169, 173n27, 177n48
76, 79n2, 79n6, 81n14, 89, 90,
94, 98, 102–107, 109n3,
111n11, 125, 126, 135n21, V
136n26, 139, 140, 149–151, Value, x, xi, xiin1, 3, 4, 14–36, 43–57,
154, 157, 159, 170n3, 171n8, 64–78, 90–109, 119–131,
173n24, 176n44, 184, 185, 139–170, 183–203
200, 202
Surplus value, xiin1, 1, 19–21, 31, 33,
34, 39n24, 44, 66, 72, 93, 98, W
99, 101, 102, 106, 110n10, 120, World market, 20, 73, 79n2, 88,
122–124, 127, 130, 131, 134n8, 112n25, 143–144, 157, 158, 163

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MARX, ENGELS, AND MARXISMS

More information about this series at

ISSN 2524-7123 ISSN 2524-7131 (electronic)

Cover illustration: Craig Stennett / Alamy Stock Photo

This study was written by some members of CAPES-PRINT Inter-­

The Marx Revival

Studies on Marx and Engels

Critical Studies on Marxisms

Reception Studies and Marxist National Traditions

University of Bristol Terrell Carver

This book, authored by Gustavo Mello and Mauricio Sabadini, is impor-

On the theme of Marxism, he is the author of Sur la Valeur (Ed. Maspero), in

cost.1 Therefore, the development of finance and the growth of sophisti-

ated a significant portion of their profits to compensate for the lack of

Paris XIII University Pierre Salama

1. Terrell Carver and Daniel Blank, A Political History of the Editions

Michael Brie, Rediscovering Lenin: Dialectics of Revolution and Metaphysics

“This book offers a wide-ranging critique of contemporary political economy

“This collection of essays is a timely intervention at this contemporary stage of

“The distinguishing feature of today’s post-industrial evolution into finance capi-

“The destructive march of capital makes it imperative to systematically study the

2 The Place of Money in Marx’s Theory of Capital 9

3 Speculative Capital and the Dematerialization of Money 43

4 Crypto-Currencies: From the Fetishism of Gold to Hayek

5 Financialization and the Contradictory Unity Between the

6 Parasitic Speculative Capital: A Theoretical Precision on

7 Profit, Interest, Rent, and Fictitious Profit139

8 The Nature and the Contradictions of the Capitalist Crisis183

Final Words 211

Reinaldo Antonio Carcanholo (in memoriam) was a professor at the

and President of the Brazilian Society of Economic Policy (SEP)

Fig. 2.1 Ordering of categories in diverse works 17

Table 2.1 London notebooks (1850–1853) 13

The recurrent and devastating economic crises, the widened reproduction

© The Author(s) 2019 1

Marx’s thinking was revived, leading to a proliferation of efforts to mobi-

and Reinaldo A. Carcanholo, Professors at the Federal University of

Along the same line of investigation, we attempt to make explicit the

In the second chapter, “The Place of Money in Marx’s Theory of

cept of interest-bearing capital and their fictitious forms. Under such a

In short, the texts gathered here are intended to contribute to the

The Place of Money in Marx’s

© The Author(s) 2019 9

sliced form, trying to isolate in his work a theory of money independent

Money in Marx’s Intellectual Pathway to Capital

To develop a theoretical concept of money itself, Marx would still need

Source: Musto (2010, pp. 81–88)

Table 2.2 Grundrisse (1857–1858)

M 23 August 1857 to the middle of September Introduction of

Source: Marx (2007, pp. 02, 36, 176)

levels. Later, in his investigation of the genesis of money, he moderated his

Table 2.3 From money to capital

● Paris Manuscripts (1844)

Source: Our own production

The Saga of Chapter Three: Money

Marx was never an economist strictu sensu. Analyzing economic categories

some as a Ricardian socialist—who saw capital as much as the means of

GRUNDRISSE URTEXT CCEP * MANUSCRITOS CAPITAL

Money as Commodity Transformation of

Form of Exchange Absolute

Fig. 2.1 Ordering of categories in diverse works

“the manifestations of the law of appropriation in simple circulation,”

The whole movement that money performs to be converted into capital

As Dussel (2008, p. 73) points out, Marx, in Grundrisse, had advanced

This study was written by some members of CAPES-PRINT Inter-

University of Bristol Terrell Carver

Paris XIII University Pierre Salama

2 The Place of Money in Marx’s Theory of Capital 9

3 Speculative Capital and the Dematerialization of Money 43

4 Crypto-Currencies: From the Fetishism of Gold to Hayek

5 Financialization and the Contradictory Unity Between the

6 Parasitic Speculative Capital: A Theoretical Precision on

7 Profit, Interest, Rent, and Fictitious Profit139

8 The Nature and the Contradictions of the Capitalist Crisis183

Final Words 211

Fig. 2.1 Ordering of categories in diverse works 17

Table 2.1 London notebooks (1850–1853) 13