IDEAS home Printed from https://ideas.repec.org/a/sae/ecolab/v25y2014i2p240-252.html
   My bibliography  Save this article

A theoretical framework for the analysis of the current global economic crisis: The financial market and the real economy

Author

Listed:
  • Özgün Sarımehmet Duman

Abstract

This article argues that the current global economic crisis is an outcome of the excessive growth of the financial market over the real economy, and hence, of fictitious profits over real profits. In investigating the interrelation between the financial market and the real economy, it makes a comparative inquiry into two key assertions regarding economic crisis within Marxism: the tendency for the rate of profit to fall and overaccumulation of capital. Accepting the claim that economic crisis is inherent to capitalism, this article probes the role of countervailing tendencies in battling the tendency for the rate of profit to fall. While crisis is an outcome of both the extensive growth of fictitious profits and the tendency for the rate of profit to fall, the latter is identified as the fundamental reason for the current crisis. Labour market reforms that were implemented following the emergence of the economic crisis represent the resurgence of countervailing tendencies and are the most explicit evidence that the fundamental reason for the crisis resides in the real economy.

Suggested Citation

  • Özgün Sarımehmet Duman, 2014. "A theoretical framework for the analysis of the current global economic crisis: The financial market and the real economy," The Economic and Labour Relations Review, , vol. 25(2), pages 240-252, June.
    • Handle: RePEc:sae:ecolab:v:25:y:2014:i:2:p:240-252
    DOI: 10.1177/1035304614520669
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1035304614520669
    Download Restriction: no
    File URL: https://libkey.io/10.1177/1035304614520669?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Werner Bonefeld & John Holloway, 1996. "Conclusion: Money and Class Struggle," Palgrave Macmillan Books, in: Werner Bonefeld & John Holloway (ed.), Global Capital, National State and the Politics of Money, chapter 9, pages 210-227, Palgrave Macmillan.
    2. Werner Bonefeld, 1996. "Monetarism and Crisis," Palgrave Macmillan Books, in: Werner Bonefeld & John Holloway (ed.), Global Capital, National State and the Politics of Money, chapter 3, pages 35-68, Palgrave Macmillan.
    3. repec:srs:journl:jasf:v:3:y:2012:i:2:p:171-183 is not listed on IDEAS
    4. Pasquale Tridico, 2012. "Financial crisis and global imbalances: its labour market origins and the aftermath," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 36(1), pages 17-42.
    5. John Holloway, 1996. "Global Capital and the National State," Palgrave Macmillan Books, in: Werner Bonefeld & John Holloway (ed.), Global Capital, National State and the Politics of Money, chapter 6, pages 116-140, Palgrave Macmillan.
    6. José A. Tapia Granados, 2012. "Statistical Evidence of Falling Profits as Cause of Recession," Review of Radical Political Economics, Union for Radical Political Economics, vol. 44(4), pages 484-493, December.
    7. Nikos STRAVELAKIS, 2012. "Marx S Theory Of Crisis In The Context Of Financialization Analytical Insights On The Current Crisis," Journal of Advanced Studies in Finance, ASERS Publishing, vol. 3(2), pages 171-183.
    8. Vladimiro Giacché, 2011. "Marx, the Falling Rate of Profit, Financialization, and the Current Crisis," International Journal of Political Economy, Taylor & Francis Journals, vol. 40(3), pages 18-32.
    9. Simon Mohun, 2009. "Aggregate capital productivity in the US economy, 1964--2001," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 33(5), pages 1023-1046, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Iderley Colombini, 2020. "Form and Essence of Precarization by Work: From Alienation to the Industrial Reserve Army at the Turn of the Twenty-First Century," Review of Radical Political Economics, Union for Radical Political Economics, vol. 52(3), pages 409-426, September.
    2. Xinhua Gu & Yang Zhang & Xiao Chang, 2017. "The role of financial systems for cross-country differences in the link between income and consumption inequality," Applied Economics, Taylor & Francis Journals, vol. 49(24), pages 2365-2378, May.
    3. Stefano Di Bucchianico, 2020. "A note on financialization from a Classical-Keynesian standpoint," Department of Economics University of Siena 824, Department of Economics, University of Siena.
    4. Domonkos, Tomas & Fisera, Boris & Siranova, Maria, 2023. "Income inequality as long-term conditioning factor of monetary transmission to bank rates," Economic Modelling, Elsevier, vol. 128(C).
    5. Rémi Bazillier & Jérôme Héricourt & Samuel Ligonnière, 2017. "Structure of Income Inequality and Household Leverage: Theory and Cross-Country Evidence," Working Papers 2017-01, CEPII research center.
    6. Rémi Bazillier & Jérôme Hericourt, 2017. "The Circular Relationship Between Inequality, Leverage, And Financial Crises," Journal of Economic Surveys, Wiley Blackwell, vol. 31(2), pages 463-496, April.
    7. Mariolis Theodore & Konstantakis Konstantinos N. & Michaelides Panayotis G. & Tsionas Efthymios G., 2019. "A non-linear Keynesian Goodwin-type endogenous model of the cycle: Bayesian evidence for the USA," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 23(1), pages 1-16, February.
    8. Berardi, Simone & Tedeschi, Gabriele, 2017. "From banks' strategies to financial (in)stability," International Review of Economics & Finance, Elsevier, vol. 47(C), pages 255-272.
    9. Di Bucchianico, Stefano, 2019. "The Impact of Financialization on the Rate of Profit: A Discussion," Centro Sraffa Working Papers CSWP36, Centro di Ricerche e Documentazione "Piero Sraffa".
    10. Pasquale Tridico, 2014. "Welfare models, inequality and economic performance during globalisation," Departmental Working Papers of Economics - University 'Roma Tre' 0191, Department of Economics - University Roma Tre.
    11. Gaetano Perone, 2018. "Produttività del lavoro, dinamica salariale e squilibri commerciali nei Paesi dell'Eurozona: un'analisi empirica," Economia & lavoro, Carocci editore, issue 3, pages 61-98.
    12. Duman, Özgün Sarımehmet, 2019. "Class struggle over absolute surplus value strategies in Greece: initial response to the post-2008 economic crisis," LSE Research Online Documents on Economics 102651, London School of Economics and Political Science, LSE Library.
    13. Michael A. Sartor & Paul W. Beamish, 2020. "Private Sector Corruption, Public Sector Corruption and the Organizational Structure of Foreign Subsidiaries," Journal of Business Ethics, Springer, vol. 167(4), pages 725-744, December.
    14. Bazillier, Rémi & Héricourt, Jérôme & Ligonnière, Samuel, 2021. "Structure of income inequality and household leverage: Cross-country causal evidence," European Economic Review, Elsevier, vol. 132(C).
    15. Özgün Sarimehmet Duman, 2019. "What is the Investment Loss due to Uncertainty?," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 140, Hellenic Observatory, LSE.
    16. Sangjun Jeong, 2017. "Biased Technical Change and Economic Growth: The Case of Korea, 1970–2013," Research in Political Economy, in: Return of Marxian Macro-Dynamics in East Asia, volume 32, pages 81-103, Emerald Group Publishing Limited.
    17. Trofimov, Ivan D., 2017. "Capital productivity in industrialized economies: evidence from error-correction model and Lagrange Multiplier tests," MPRA Paper 81655, University Library of Munich, Germany.
    18. Young Soo Lee & Han Sung Kim & Seo Hwan Joo, 2020. "Financialization and Innovation Short-termism in OECD Countries," Review of Radical Political Economics, Union for Radical Political Economics, vol. 52(2), pages 259-286, June.
    19. Duque Garcia, Carlos Alberto, 2022. "Ciclos económicos, inversión y rentabilidad del capital en Colombia: un análisis de series de tiempo [Economic cycles, investment and profits in Colombia: a time-series analysis]," MPRA Paper 113272, University Library of Munich, Germany.
    20. Valentini, Enzo & Arlotti, Marco & Compagnucci, Fabiano & Gentili, Andrea & Muratore, Fabrizio & Gallegati, Mauro, 2017. "Technical change, sectoral dislocation and barriers to labor mobility: Factors behind the great recession," Journal of Economic Dynamics and Control, Elsevier, vol. 81(C), pages 187-215.

    More about this item

    Keywords

    Current global economic crisis; fictitious profit; financial market; labour market reform; Marxist theories of crisis; overaccumulation; rate of profit; real economy; real profit;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:ecolab:v:25:y:2014:i:2:p:240-252. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.