Value and Crisis Theory in the 'Great Recession'

This is a prepublication version of an article which appeared in the World Review of Political Economy. Please cite as Desai, R. and A. Freeman. 2001. ‘Value and Crisis Theory in the “Great Recession”’. World Review of Political Economy. Vol 2 No. 1, Spring 2011. Pp 35-47. This article throws light on the current disarray among Marxist analyses of the present crisis. Focusing on recent discussions of “financialisation”, in particular a recent paper by Costas Lapavitsas, this article highlights a number of difficulties in these discussions and traces them to the absence of any theory of value. Marx’s distinction between productive and unproductive capital—which includes finance capital—provides a coherent framework to analyse such phenomena and obviates the need for the false polarisation between the falling rate of profit and financialisation as factors in the crisis. In value terms, financialisation is a withdrawal from the sphere of production into the sphere of circulation provoked by falling profit rates. A financial asset is a capitalised claim on a stream of income whether or not it produces value and is itself an unproductive asset which generates no additional value and serves only to equalise the general rate of profit as a parasitic deduction from value generated elsewhere. This deepens and exacerbates the long run tendency of profits to fall. Financialisation is thus an aspect, and a particular form, of this long-run historical tendency, not an independent phenomenon running counter to it.