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The Tendency of the Non-Bank Financial Sector to Rise: A Materialist Account of the Growth of Market-Based Finance

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Listed:
  • Bruno Höfig
  • Leonardo Paes Müller
  • Iderley Colombini

Abstract

This article introduces the distinction between money-as-money dealing capital (MMDC) and money-as-capital dealing capital (MCDC), laying the foundations for new developments in the field of Marxian political economy. First, it explains why banks, which manage the circulation of money-as-money, are able to issue instruments that perform monetary functions, and also why non-bank financial intermediaries, which manage the circulation of money-as-capital, tend to become increasingly important as the capitalist mode of production evolves. The distinction between MMDC and MCDC also allows for a more thorough understanding of the nature of Marx’s category of interest-bearing capital (IBC), explaining when and why a capital’s net income takes the form of profit and interest, unveiling the mechanisms that produce the (socially valid) illusion that every capital bears interest. JEL Classification: B14, B26, E11, E43, E44

Suggested Citation

  • Bruno Höfig & Leonardo Paes Müller & Iderley Colombini, 2024. "The Tendency of the Non-Bank Financial Sector to Rise: A Materialist Account of the Growth of Market-Based Finance," Review of Radical Political Economics, Union for Radical Political Economics, vol. 56(3), pages 355-379, September.
    • Handle: RePEc:sae:reorpe:v:56:y:2024:i:3:p:355-379
    DOI: 10.1177/04866134241239694
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    References listed on IDEAS

    as
    1. Makoto Itoh & Costas Lapavitsas, 1999. "Political Economy of Money and Finance," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-37578-9, December.
    2. Ben Fine, 2013. "Financialization from a Marxist Perspective," International Journal of Political Economy, Taylor & Francis Journals, vol. 42(4), pages 47-66.
    3. Costas Lapavitsas, 1997. "Two Approaches to the Concept of Interest-Bearing Capital," International Journal of Political Economy, Taylor & Francis Journals, vol. 27(1), pages 85-106, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Marx; credit; banks; non-bank financial intermediaries; interest-bearing capital;
    All these keywords.

    JEL classification:

    • B14 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Socialist; Marxist
    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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