The future of capitalism I

labour lying idle so that its form (gold) can symbolically play the role of the equivalent form of value. Distinctly capitalist commodity money would be a living part of accumulation, not a congealed, dormant, labour numeraire! How is this problem to be framed within Marxist theory? As well as money being a produced commodity like other commodities, it has to be a commodity that can guarantee value, but without reliance on the imprimatur of the state. This money commodity has to resolve temporal and spatial variability in value: it has to, in itself, resolve the problem of conventional state money, that a process of exchange of equivalent values is always expressed at a given time and in a given monetary unit. For conventional state money, this means that there are volatile exchange rates and a range of interest rate regimes for each currency: the equivalence of exchange cannot be verified. There is, in Marxist terms, a spatial and temporal problem in the commensuration of value: there is a discontinuity in the measured value of capital in different forms and at different locations, and this discontinuity needs to be reconciled.23 The new commodity money has to have the capacity to absorb that discontinuity into itself as (one of) its defining characteristics, so that money can, indeed, secure equivalence (commensurate value) across time and space. This process of commensuration is what Marx attached to the function of money: money is the means by which ‘[different] commodities become magnitudes of the same kind, of the same unit, i.e. commensurable’ (Marx 1939: 143). But how different moneys are commensurated within a theory of value, and what it means to commensurate packages of financial assets whose underlying value is not itself being exchanged were questions not posed by Marx, nor since Marx. It is this issue that brings financial derivatives to the centre of a Marxist theory of capitalist money. Marx’s theory of money: its link to financial derivatives The investigation of the rudiments of a theory of money consistent with financial derivatives must look beyond the form of gold. It is to Marx’s earlier writings, particularly on alienation, that we look for conceptual propositions about the nature of money and finance.24 For example, reviewing James Mill’s Elements of Political Economy, Marx (1844) emphasised the importance of contingency in relation to ‘laws’ about money and the essential role of money as a mediating process. Here Marx goes on to explain the basic characteristics of capitalist money, and it warrants citing at some length: The essence of money is not, in the first place, the property alienated in it, but that the mediating or movement ... is estranged from man and becomes the attribute of money. ... The personal mode of existence of money as money – and not only as the inner, implicit, hidden social relationship or class relationship between New, Global, Capitalist Money 159 23 The concept of discontinuities is explored in detail in Chapter 7. 24 Marx’s writing at this time, being strongly influenced by Feuerbach, is drawing on parallels between money and religion and both as alienated forms of social relations. commodities – this mode of existence corresponds the more to the essence of money, the more abstract it is, the less it has a natural relationship to the other commodities, the more it appears as the product and yet as the non-product of man, the less primitive its sphere of existence, the more it is created by man or, in economic terms, the greater the inverse relationship of its value as money to the exchange value or money value of the material in which it exists. Hence paper money and the whole number of paper representatives of money (such as bills of exchange, mandates, promissory notes, etc.) are the more perfect mode of existence of money as money and a necessary factor in the progressive development of the money system. In the credit system, of which banking is the perfect expression, it appears as if the power of the alien, material force were broken, the relationship of self-estrangement abolished and man had once more human relations to man. The important point Marx was contending above is that the more money is ‘lifted above’ direct commodity relations by ‘losing’ the characteristics of other commodities, the more ‘perfect its mode of existence’ because the social relations of capital, expressed in commodity production, are not being contaminated by the particularities of the chosen money commodity.25 Gold is, in this regard, an extremely primitive form of capitalist money: indeed, we know it historically as pre-capitalist money. Financial derivatives, on the other hand, as advances beyond promissory notes and bills of exchange – contracts that are man-made and having no ‘natural relationship’ to the products from which they derive, appear as a highly advanced form of money. Nonetheless, the requirement for a global monetary system is precisely as Marx conceived of it in the abstract – a role for commodities that are both part of other commodities, but also discrete commodities in themselves. But gold is a single (or at best dual) dimensional commodity.26 There are too many types of discontinuities in the global financial system to be reconciled by a single commodity in the role of money. The multiple forms of risk-exposure, reflecting the range of possible inter-temporal, inter-spatial, inter-financial-instrument price relativities requires intermediation in a form that is itself flexible and able to reflect the range of possibilities in these relativities. Gold does not meet this requirement, especially in an era when money capital increasingly takes the form of different types of credit money and other financial assets. Derivatives, on the other hand are commodities produced and traded for precisely this purpose. Derivatives: commodities commensurating monetary discontinuities We have seen that, in terms of Marx’s benchmark of the ‘progressive development of the money system’, derivatives meet the requirement of a more ‘perfect mode 160 Capitalism with Derivatives 25 Notice also that Marx could contemplate an association of ‘perfect money’ with something as basic as the credit system and paper representations of money. That now seems a rather low bar for depicting perfection. 26 The duality relates to Marx’s emphasis that gold never traded at its costs of production. of existence’ by being abstracted from ‘a natural relationship’ with other commodities. But are derivatives themselves commodities, and how can Marx’s conception of money reconcile the need for commodity money, yet for commodity money to appear as ‘not the product of man’? Marx’s conception of commodity money was both advanced and constrained by the Gold Standard within which it was conceived. It was advanced by recognition that money must have a commodity basis if it is to be an integral component of capital accumulation and not just a numeraire. But Marx’s conception was also constrained by the then widely held belief that one commodity, gold, could act as a universal equivalent form of value and furthermore, that the robustness of its status resided in its defined and finite quantity. In Marx’s time, the expectation was that one particular commodity (gold) could traverse and reconcile all the discontinuities within the money system. Derivatives, however, confront that image. Any single unit of measure such as gold can represent only a balance of multiple processes of commensuration, and thereby actually reconcile perhaps none at all. Derivatives, on the other hand, are literally thousands of types of commodities whose specific characteristics are designed to secure commensurability between different forms of capital and their spatial and temporal characteristics. If money is defined by its role in the process of commensuration (or, as Marx also put, it in the ‘mediating’ process), there is no logical preclusion that a range of ‘commodities’ could not fulfil the function of the equivalent form of value when there are clearly articulated mechanisms of commensuration between the various monetary commodities. New, Global, Capitalist Money 161

Capitalism with Derivatives: A Political Economy of Financial Derivatives, Capital and Class

This paper analyses the recent changes in financial practices and relations in emerging capitalist economies (ECEs) using the example of Brazil. It argues that in ECEs these financial transformations, akin to the financialisation phenomena observed in Core Capitalist Economies (CCEs), are fundamentally shaped by their subordinated integration into a financialised and structured world economy. To analyse this subordinated financialisation, the paper draws on the framework of international currency hierarchies. It shows by means of two specific processes how the existence of a hierarchic international monetary system has changed the financial behaviour of domestic economic agents, and with it the structure of the financial system. The first process highlights the phenomenon of reserve accumulation and the changing behaviour of domestic banks. The second points to ECEs’ sustained external vulnerability and its impact on the operations of Brazilian non-financial corporations. The paper also shows that...

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Subordinated Financial Integration and Financialisation in Emerging Capitalist Economies: The Brazilian Experience

As emerging economies experience a boom in capital inflows, governments are increasingly concerned about their downsides. Even the IMF (International Monetary Fund), long a stalwart proponent of financial liberalization, has engaged in a new debate on capital flow management. Drawing lessons from empirical case studies on Brazil and South Korea, this paper finds that the new IMF framework remains insufficient in two main aspects. First, by defining ‘capital flow management measures’ (CFMs) as a temporary instrument embedded in an overall strategy of financial opening, the organization insists on the general advantages of financial liberalization, which poses serious limits to emerging economies’ policy space. Second, the Fund keeps on stressing a separation of prudential financial regulation, which should be permanent, and temporary CFMs. Yet, the case studies presented here show that, especially for emerging markets with rather open and sophisticated domestic financial markets, both types of measures are interdependent and overlapping. Additionally, we demonstrate the relevance of a third type of regulation, lying on foreign exchange (FX) derivatives instruments, which may also be required to effectively manage foreign investors’ portfolio reallocations and their impact.

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The new IMF approach to capital account management and its blind spots

https://online.unisc.br/seer/index.php/redes/article/download/10661/pdf

A mundialização do capital

A obra de Ricardo Carneiro faz uma detalhada análise da economia brasileira nos últimos 25 anos do século passado. Para interpretar esse período histórico, ele a divide em três partes que, embora estejam em seqüência cronológicas, sua divisão se dá por características de desempenho bastante diferentes da economia brasileira: os últimos cinco anos dos anos de 1970, a década de 1980 e a década de 1990. Como primeira parte de sua análise e abrangendo os dois capítulos iniciais o autor estuda a segunda metade da década de 1970, quando por reflexos da crise dos acordos de Breton Woods e da primeira crise do petróleo, o governo brasileiro lança o II Plano Nacional de Desenvolvimento (II PND) como uma reação à crise que se prenunciava. Sendo este plano o último suspiro do desenvolvimentismo nacional, pois a produção destinada à exportação pressupunha o crescimento com endividamento externo. A segunda parte refletida por Carneiro, trata dos anos de 1980, a chamada década perdida, como reflexo da crise econômica mundial, ocorre uma repentina elevação da taxa de juros fazendo com que houvesse nos países periféricos, como o Brasil, a crise da dívida externa, que representou uma sangria econômica sem precedentes das divisas nacionais para que se pagassem somente os juros da dívida externa. No que se refere à economi,a interna causou estagnação econômica e hiperinflação. A terceira e última parte, abrangendo do sétimo ao décimo capítulo, o autor estuda os anos de 1990 que mantêm algumas características do período anterior como: baixa dinâmica industrial nacional e pagamento da dívida externa, porém com novos condicionantes como planos recessivos de ordem neoliberal (Collor e Real), que frearam a inflação via paridade artificial do câmbio, liberalização da economia e elevação da taxa de juros, tornando a Bovespa um paraíso dos especuladores e a economia brasileira um porto seguro para os capitais especulativos de curto prazo.

Desenvolvimento em crise : a economia brasileira no último quarto do século XX

In the second half of the 2000s, there was renewed growth and income distribution in both Brazil specifically and South America in general. This growth followed the failure of neoliberalism (and also of its lighter cousin, the Washington Consensus) to promote economic growth, and more significantly, to reduce social inequality in the region. This all contributed to the rise and reformation of old paradigms of economic policies. The global financial crisis and the challenges to development in the core economies have given strength, at least in the peripheral countries, to the quest for and the consolidation of these new kinds of economic policies. This article aims to examine how these changes have influenced developmentalist thinking in Brazil, and how they have recently given rise to new schools of thought regarding Brazil's development. It also examines the relationship between these schools of thought and the new development strategy that is currently in place.

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Velhos e novos desenvolvimentismos

A critique to the proposal of making the real convertible. The convertibility does not eliminate the hierarchy of currencies in the global space and risk premium paid by the non-convertible currencies.
JEL Classification: E50.

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O Mito da conversibilidade

The central hypothesis of this article is that in the context of globalization, monetary inconvertibility is a crucial problem of peripheral countries. It begins with a brief review of the debate from a historical point of view and then stresses the contemporary opposite's views on the fragility of financial system of emerging countries: the original sin and the debt intolerance hypothesis. Despite of supporting the first one, the article goes further and explores the domestic implication of inconvertibility. It criticizes the jurisdicional uncertainty proposition showing that an inherent flaw in the store of value of emerging market currencies, derived from original sin is the main reason for de facto inconvertibility and underdevelopment of domestic financial system of these countries.

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Globalização e inconversibilidade monetária

O texto propoe-se a examinar as principais caracteristicas do processo de globalizacao e suas implicacoes sobre a integracao dos paises perifericos Para isto parte da hipotese de que a globalizacao e a resultante da interacao de dois movimentos basicos: no plano domestico da progressiva liberalizacao financeira e no plano internacional da crescente mobilidade dos capitais. Inicialmente procura-se discutir a influencia da progressiva liberalizacao financeira sobre o processo de acumulacao de capital e a globalizacao. No exame desta ultima foram considerados aspectos que definem o nucleo do Sistema Monetario Internacional tais como: o grau de mobilidade dos capitais, regime cambial predominante, e a hierarquia entre as moedas. Avalia-se as principais formas que assumem os fluxos de capitais para em seguida analisar a insercao diferenciada da periferia asiatica e latino-americana. Ao final do trabalho discute-se as crises recentes dos paises perifericos e suas implicacoes para a integracao desses paises.Abstract The paper intends to analyze aspects of international economic order that are relevant to understand the integration of underdeveloped countries. Its main hypothesis is that globalization is the result of financial liberalization at the domestic level and of progressive capital mobility in the international field. To characterize globalization different aspects are examined, such as the influence of financial liberalization on capital accumulation; the hard core of International Monetary system (capital mobility; exchange rate regime; and currency hierarchy). In addition, the main characteristics of capital flows and the different ways of integration of underdeveloped areas – Asia and Latin America, are studied. Finally, a prospective session discusses implications of the recent crisis of the emerging markets and the consequences for their integration.Key words: Financial liberalization. Globalization. International Monetary System. Capital flows. Emerging markets. Underdeveloped countries

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Ricardo Carneiro

Papers

Desenvolvimento em crise : a economia brasileira no último quarto do século XX

Velhos e novos desenvolvimentismos

O Mito da conversibilidade

Globalização e inconversibilidade monetária

Globalização financeira e inserção periférica