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A letter to our readers concerning Marx's “labor theory of value” and the achievements of finance capital

[Translated from Gegenstandpunkt: Politische Vierteljahreszeitschrift 2-10, Gegenstandpunkt Verlag, Munich]

In our articles on the financial crisis[1] and the concept of finance capital,[2] we have written down a few basic determinations of the extensive business that finance capital undertakes beyond providing agriculture and industry with loan capital. We ourselves sorted out in our own minds, and challenged our readers with insights like the following: that the securities trade brings about a unique sort and magnitude of growth (that always but only gets called a “bubble” when something goes wrong); that, in the process, finance capital gains manifold responsibilities in the “real economy,” but its profits are not paid out of surplus value; that its economic position is the basis for its extraordinary power to decide with its own successes and failures the weal and woe of all the interests and efforts that make up the charm of the market economy, etc. The fact of the matter is that the finance trade accumulates securitized, tradable legal claims to proceeds that could never possibly be paid out of the production of surplus value — from which it obviously follows that this is not what securities are all about. It is also a fact that the widespread devaluation of such claims places the entire money economy in danger, which is therefore averted with massive guarantees of value by the political authorities on their own account, which even calls their own guarantee power into question — an all-too-obvious indication that these peculiar objects of value are not actually uncovered and “ultimately” no more than empty claims, but rather the “core” of wealth in a market economy, which cannot be allowed to suffer a “meltdown”[3] (as experts like to express it using terms from an ultimate ‘maximal credible accident’ in the nuclear industry). Finally, it is also a fact that, since the beginning of the crisis, economic experts have been bombarding the public with information about the design of securities, and assessments of the significance and dangers of repeatedly repackaging them, which doesn’t explain anything . So we have concluded that we should counter all this useless information with an explanation of the political economy of the financial sector.

It is not very surprising that our readers have had as tough a time understanding this explanation as the authors have had coming up with it. But our readers’ reactions are a different matter, indicating that they have had serious theoretical difficulties bringing our derivation of finance capital and its activities — derived from the principles of the political economy of capital explained by Marx — in line with these very principles. Some critics find what we say about the value of financial investments to be incompatible with what they have learned from Marx about “value-creating labor,” and contest such a revision of his theory. That certainly would not bother us if Marx had been wrong. But because, quite on the contrary, we have found the basis for our critique of finance capital in his critique of capital, we are sure that our critics’ conception of value is wrong. And we are also sure that their great problems reconciling our explanations of finance capital with Marx’s theory of value are due to a lack of clarity in their understanding of that “theory.” So here is an attempt at clarification.


Maybe our readers just haven’t understood very well what is really intended by the analysis of the commodity in Marx’s critique of political economy, with its conclusion that exchange-value derives from value and that labor is the source and measure of value.


The fact that the wealth of goods on which people live nowadays is produced within a division of labor, and that every product therefore contains a bit of socially performed labor, is banal and doesn’t require any proof or explanation. Marx doesn’t make a fuss about it either. What is interesting is the question of which purposes and necessities are obeyed by a division of labor in which no planning authority divides up the labor, no product specification or scope of labor performed is established or even investigated according to what is needed, in which instead goods are produced for the purpose of acquiring money, and their distribution is carried out via money. The first thing to stress is that the producers’ right of disposal comes before any appropriate use of products: their property right to exclude all those who need the product from using it comes first. The precondition, starting point, and permanent basis of the prevailing social division of labor is the opposition between production and need — an absurdity taken for granted in the market economy — established by the property right of producers. (One may well recall that in this society, whoever owns the production process is regarded as the producer: the manufacturer is not the person who actually sets to work, but the juridical person, usually a company, that has the product produced and is thus its rightful and legal owner.) This fundamental antagonism between production and use is resolved in the act of purchase, through the money that compensates the property owner for his productive effort, his share of social labor. Conventional free-market wisdom, in agreeing with this transaction, is satisfied with the reminder that the one who receives the money can, on his part, buy essential goods with the proceeds — and economic experts also have nothing more to offer in explanation of money’s good purpose. The matter is considered entirely from the side of concrete, useful goods, while money is reduced to a mere mediator of a felicitous division of labor — even though at the same time everybody knows what really matters in the market economy: money, the quantitatively measured power of access to every kind of good. The one good that really matters in production for sale, that actually constitutes the intended compensation for work performed, is the quantity of property in anything at all represented by money, a piece of the excluding power to own and dispose, separated from the product with which it was created. This really existing abstraction, a product’s interchangeability realized in a sum of money, is termed — not just by Marx — value.

From this, one sees that it is basically wrong to want to explain the exchange value of commodities, i.e., their economic purpose of securing a price through sale, with the obvious fact that a certain quantity of labor has been used up for its production, instead of with the social relations of power under which alone labor produces exchange value. In and of itself, human labor produces some concrete benefit. If it creates exchange value, it is already defined in every regard by the fact that its product becomes money. And this is how:

— Labor counts only as a source of property, not ownership of something, but property as such. It’s first attribute, therefore, is that it is private, which expresses the fact that its purpose is not the satisfaction of a social need with the use value of its product as part of social production, but rather the power of the producer to withhold his product from those having a need for it — not in order to use it himself, but to hand it over in return for a piece of universal power of disposal. The benefit created by his labor consists not in its benefit for the user of its product, but in the quantity of private power of access represented by the product that, through sale, remains with the producer in a generalized form, separated from the product, in the form of money.

— The second economic attribute of value-creating labor is, consequently, that it is abstract, which expresses the fact that this labor counts as part of total social labor, i.e., counts of all things as a particular contribution to a social production process, only inasmuch as its product proves to be exchangeable, equal to others, i.e., only insofar as it performs the same service as all other parts of social labor. What makes labor value-creating is what it has in common with any productive activity at all, and that is something purely negative: the exhaustion of vital time and energy in the service of property.[4] Value-creating labor does not attain its economic purpose through the concrete, useful effect it creates — with a rise in the productivity of labor, that effect would be had with a decreasing expenditure of time and energy — but only through its amount, i.e., the duration of the employment of labor-power in general. In combination with the first characteristic of value-creating labor, this already results in a complete paradox: as something private, labor is determined as being useful by the fact that its benefit remains entirely with the producer, while the benefit it produces as abstract labor lies in the sheer expenditure of labor-power. This is enough to make clear that the entire economy of market-divided labor can only be based on such a paradoxical relation because its two elements actually exist separated from each other, as a clash of interests between private owners as beneficiaries of the social production process, and labor-power as its expendable part. But for the moment, we only wish to emphasize what element of value-creating labor the attribute ‘abstract’ refers to: the absurdity that the wealth of goods this labor creates only counts economically to the extent that labor-time is expended and labor-power is worn out for its production. In this purely negative sense, the wealth that really matters in a market economy — property measured in money — has its measure in a quantity of labor.

How much of such abstract wealth labor actually manages to bring about, though, certainly doesn’t depend on labor — anyway not on what it concretely does and its concrete toil, but also not on its actual quantity measured in units of time. The binding and only valid way to quantify the abstract benefit of labor, to figure the quantity of property produced, is the act of sale, in which the product loses its use-value and realizes its “nature” as value. It is here, in the price that a good has to secure, that the concrete connection based on the division of labor in which produced goods contribute to the life process of society — namely, the connection between the need for the produced good and the technical level of its production — asserts itself as determining factor of the amount of produced wealth. Of course, this connection, the side of labor involving use-value, comes into its own according to the laws of property: as a conflict of interests put into practice between the various suppliers of goods, as well as between producers and consumers in the competition over price. It is here that labor must prove that it deserves the attribute socially necessary. This attribute, therefore, does not express the obvious truth that even a society producing for the market, with its absurd and mean concept of wealth, ultimately lives on the material benefits of the goods thrown on the market: it stands instead for the circumstance that in the market economy, all concrete social needs and all the technical qualities of labor turn into necessities of money. Social need counts according to the quantity of access-power in the shape of money at the disposal of each individual need; the productive force of labor comes into its own, in competition with other manufacturers, as a means for taking advantage of the various needs and getting one’s hands on the available ability to pay for them. Hence the working hours actually used up do not even determine what they contribute to the property of the juridical private producer. On the contrary, the monetary proceeds realized in competition determine how much socially average necessary labor each individual act of labor represents, hence to what extent the expended quantity of labor time has acted as a source of value — if at all.


The production of goods in the market economy is determined by the interest in money. As a determining principle of social labor, this interest is as abstract as its object: it aims at a sheer quantity of economic power of disposal. There is no sense in which this interest could ever be finally satisfied. Its criterion for success is to gain as much as possible, i.e., more and more of the same. Wealth that has its measure in money is, just for that reason, beyond all measure, boundless. Its economic nature is never to be enough.

This wealth is hostile to the concrete labor that creates the social wealth of useful goods, and that includes the actors that perform it. After all, it defines as the real economic benefit of productive labor a kind of success that consists of nothing other than that it goes at the expense of productive workers and is not under their control. In a market economy, labor is “productive” just by the sheer expenditure of labor-power and labor-time creating property to the extent that the competition for customers’ money confirms this expenditure as being necessary in practice. This form of wealth does not allow for a comfortable livelihood and free time for those who work: on the contrary, value-creating labor means the maximum consumption of labor power.

The fact that this kind of labor is the economic norm is based on a necessity owing to the sort of wealth this labor serves. Social labor power is utilized and worn out for the production of more and more money because labor power has no possibility of using the power of property for itself; workers serve property because they have none of their own, being separated instead by the power of property from everything they need, from the means of subsistence and production. Workers who create value with their work do it because they are not in a position of their own accord to provide for themselves in the social division of labor; instead, they depend on being taken into service by, and for, the power of property.

Property, on its part, takes labor into its service according to the rules of the market economy. “Money,” or specifically the moneyed elite, buys up the labor-power and lifetime of propertyless people. In this way, it transforms their ability to work into its own power to create value through the expenditure of a quantity of labor. Only as the vested right of the buyer, only as a part of the power of property, does social labor-power perform the service that matters economically. That is why this labor doesn’t create property for those who actually perform it, but rather for the juridical person, the legal entity, that brings their labor power under its command by purchasing it and has disposal over it as its own property: value-creating labor produces the power that employs it. And — again — conversely, labor develops this abstract productive force only because the private power of money has taken possession of it — otherwise, propertyless workers don’t get around to any socially productive activity at all, and their productive activity doesn’t include the economic service of increasing property. For it is not because of labor that only the exchangeability of the product matters, only the ownership of it, i.e., the power of disposal established by the right of ownership and economically objectified in money. Rather, this is due to labor being incorporated by purchase into the power of property, and being ascribed to the legal entity that commands the labor process as its performance. So it is actually money’s power of command that makes itself productive with the value-creating labor of its purchased servants: it is money that produces new property.

Even so, the mass of mobilized labor hours and the monetary proceeds successfully contended for on the market do not yet decide whether the power of the money applied to the labor process is at all up to fulfilling its own purpose, the interest in accumulating money. What is required is not simply lots of property in the form of money, but its increase, i.e., the growth for which market economy experts don’t have to specify what is supposed to be growing all the time because it is so systemically obvious. This success requires a surplus of the money taken in over the cost of having disposal over employed labor and using means of production. Money must act as the source of its own accumulation; only then does it prove itself as capital: as a “principal sum” with the power to generate growth.

Marx denotes the role assigned to labor for this purpose with a lowercase “v”. The symbol is meant to express the fact that labor’s capacity to create value is in truth the capacity of the price that has to be paid to have disposal over labor-power. Productive labor is a part of the capital at work in this process, and in fact the part of capital that, with its command over a piece of social labor, proves itself as variable, i.e., to be capable of self-expansion.[5] This power is all the greater the less that labor-power costs and the more its employment generates monetary proceeds. That is why workers can only successfully struggle for enough money to pay the expenses for their property, the labor-power needed by capital; hence they remain at the disposal of money owners. Moreover, they get stuck with the toil that is the source of the private benefit of their labor for the exchange-value of the product. What is exploited from the process — created, abstract wealth — belongs to the owners, the legal masters of the labor process, which Marx therefore criticizes with complete, scientific objectivity as exploitation.

The production of value takes place, therefore, through the use of money as capital, and as its power: as the process of its expansion. Owners measure the result in the surplus their invested money achieves over the invested money determined by wage costs and a calculated depreciation of the means of production employed: as a rate of profit. This method of calculation not only establishes what matters in the market economy, but also that the source of the growth of value is value itself.


The expansion process serves no purpose beyond its own, sole purpose of increasing the power of disposal realized in money, with which this process inexorably always begins anew: the accumulation of capital. This endless cycle does not parallel an increase of useful goods; it does not reflect growing concrete wealth in its abstract figures. On the contrary, capital accumulation is the entire economic substance of the market economy. The requirements of capital growth, which appear to owners and trustees of capital as necessities of successful competition, define the material requirements of society and the conditions under which they can be exploited through the production of goods for sale — Marx illustrates the subsumption of the social division of labor under the requirements of accumulation in his notorious reproduction schemes.

The essential means for increasing capital, the decisive weapon in practice in the competition of capitalists, is in turn — how could it be otherwise in this endless cycle of expansion — the success of accumulation: the size of invested capital. In a world where virtually everything is for sale, the ability of a company to improve the conditions under its control for increasing its rate of profit is proportionate to the amount of money it has at its disposal. Every conceivable measure and technology is employed to reduce the price paid for labor-power, to reduce, therefore, above all the quantity of labor needed to produce goods for sale. Capital perfects its means of production; it constantly “reinvents” the technical productive force of labor and imposes it on the workforce; this is a practical assertion of the fact that the capacities of labor have become the property of its employer. In the process of production, the abstract character of labor, which capital makes use of for the production of exchange value, takes effect in a correspondingly concrete manner: all the mental capacities of labor — technical knowledge, the planning of work, etc. — exist separated from the working personnel, confronting the workforce as capacities of capital, materialized in machines or personified in functionaries, acting as forces of production in accordance with capital’s needs and decisions. The paid workforce doesn’t really apply even its own professional skills at its discretion, not even at the higher levels of the occupational hierarchy, rather only if — and only as long as — the company deems it expedient. In an advanced market economy, concrete, productive activity itself is a very abstract service to others’ private property: it consists in carrying out prescribed and predefined suboperations; organizing and connecting them lies entirely in the hands of the firm.

It goes without saying that the enormous technical progress with which capital reduces the labor costs needed to produce goods spares the workforce nothing. Advanced technology in no way modifies the basic economic law according to which the only thing that counts in the free market is what is indifferently exchangeable in the various suboperations, and only insofar as the proceeds of labor stand in a profitable ratio to the price of labor power; working hours remain long and the demands for efficiency remain flexible; the workforce pays the price for savings on labor costs by getting laid off.

This gives rise to a somewhat ambivalent consequence for the organizers and beneficiaries of value-creating labor. By reducing the expense of their labor cost factor and increasing the effectiveness of their labor production factor, companies succeed in competition against other producers because they can then offer their goods at a better price, and so increase their profits. They do not thereby bring about a corresponding increase in the amount of abstract capitalistic wealth tallied up in money. To the extent that their competitors close the price advantage that they use to increase their sales, the ratio of proceeds to total expenditures — i.e., the rate of profit, which is what really matters — tends to worsen overall.

The fact that in this manner — as Marx puts it — the methods of profit-making can get in the way of the intended effect has been understood by Marx experts as showing that the equation according to which value has its measure in a quantity of productive labor time ends up being right and against the exploitation of social value-creation through capitalist profit-making. This is wrong, and betrays the same misinterpretation of Marx’s “value theory” that we would like to correct here. So one more time: the “law of value” consists in the degradation of productive labor to a merely quantitatively effective tool for the creation of money, i.e., of quantity units of private property separated from the ownership of anything particular and concretized as so much abstract power of disposal. And the only reason there is such a law at all as the prevailing economic principle is that all productive labor of society has been monopolized by the power of property and employed as a tool for the limitless increase of property, i.e., for the accumulation of capital. The fact that productive labor only counts as abstract, value-creating labor is not an ability proper to labor that has been occupied by capital: it is capitalistic property that, in purchasing labor-power, appropriating its productive capacities, and legally transforming them into its own capacities, really turns its own economic determinations — its power over work and wealth — into the economic content that matters in the production of useful goods, and thus into the defining economic determinations of labor: abstract, private, and as far as socially necessary value-creating. If the methods by which capital increases its growth tend to give rise to a counteracting effect, then the power of money is not colliding there with a law it presupposes; nor is profit-making in the least foundering on an autonomous law of labor that is exploited for it. Instead, capital itself produces a contradiction between the capacity for growth it has incorporated into itself — lowercase “v” — and the effort it expends for increasing this, its own, capacity; it demonstrates that it alone defines the social necessity that determines the quantity of value won from abstract labor. And it accordingly overcomes the slowing down of its growth for which it is itself responsible; it carries on in exactly the same way, relentlessly pressing ahead with labor cost savings through ever more perfect, technologically ever more advanced, and thus tending toward ever more expensive methods of exploitation. Those who are harmed by this progress, who fail because of it, can be seen in the unemployment figures that inevitably accompany capitalist competition.


The purpose of producing goods in a market economy, the accumulation of capital, receives a substantial boost through the development of subfunctions of the expansion process as independent operations in their own field of business. The most important of these subareas, the merchandise trade, plays a special role within the market-economy division of labor. Provided one excludes all necessary transportation services, it doesn’t contribute anything to the production of wealth in goods. It is necessary as an indispensable stage in realizing the capitalistic purpose of goods production: it systematically organizes — on a large scale and over a wide area down to the last act of sale — the separation of the value of produced goods from the material wealth that merely serves as a vehicle for abstract wealth. The merchandise trade constitutes, therefore, the only part of the expansion process that really decides on the quantity in which new property has been created, if at all; logically, it gets a share of this wealth. And, of course, here we find capitalists who have the work necessary for the capitalistic form of the production process — buying and selling — performed by poorly paid and heavily exploited service workers, capitalists who in return get as much of the value of the marketed goods as they can wring out of their suppliers and their customers.

Another type of contribution to the accumulation of capital is made by the financial sector. It is not part of the expansion process, but rather makes a business item out of the process as a whole: it separates off the disposal over money from its creation process, making it available to itself and its customers in the emancipated form of credit. With its access to both the held and circulating money of society, as well as by virtue of government license and authorization, the financial industry goes so far as to let its promises of payment circulate as society’s means of payment and its liabilities act as money-capital, all on a rather large scale. What we have written down in the three chapters published up to now on finance capital will certainly not become easier to understand by repeating it in an abridged version. But in view of the doubts about whether we have not actually revised Marx’s theory of value, a comment may perhaps be of some use.

With its lending business, the financial industry brings into circulation the means of payment it creates. They represent power of disposal measured in monetary units; and there is nothing at all to distinguish them from the money that capital active elsewhere creates and increases by producing goods for exchange, separating property as such from its object through the act of sale, and making it independent of the object. The one money constitutes a legal relation between property owners as much as the other: a legal relation of exclusion and power of access in the irrational form of a thing that gives property’s power of disposal a quantitative measure — a form scorned by Marx as “fetish-like.” These are not two different types of value, but one and the same abstract wealth, put to different use but on the same capitalist mission of increasing. The power to do so functions in both cases for the same reason, namely, only because the state-enforced regime of property governs the entire social life process. Nor do productive and finance capital differ at all when, using money as a source of money, they turn the whole of society into pawns to be pushed around by the power of their growth-programmed property, and make society responsible for their calculations working out. How they differ in this from each other, and how their differing business activities are connected, is dealt with in our three articles.

To put the matter differently: the captains of the social labor process attribute value to the wealth of goods they have had produced as its true economic nature and make it in a totalitarian way the dominant purpose and practical necessity of production. Even if someone has understood what an absurdity abstract wealth is, the only wealth that counts when useful goods are produced solely to be exchanged for money — the reminders in the above three points address that — he still hasn’t explained everything finance capital does with this abstraction, how its creation of credit gives self-expanding value an independent form, multiplies it, and how it earns money on it. But in any event, he won’t take the abstraction of property as such to be more real, more tangible, or in any way more substantial than the economic power that finance capitalists possess with their securitized debts and exercise with their speculative transactions, and that increases by being used without a single, additional commodity needing to have been produced and sold. What functions in the hands of finance capitalists as capital — as opposed to the means of production and labor-power that the other capitalists take possession of as their property and degrade to capacities of the power of disposal of their money — Marx terms “fictitious.” He intends the term as a reminder that a world without the riches of finance capital would not be a bit poorer in terms of use values, nothing of concrete benefit would be lacking — incidentally, just as little as without the “fetish” of money. Marx does not intend that to mean, however, that the power accruing to this legally feigned capital within the system of the political economy of property rights is a mere fantasy or any bit less real than what other capitalists — those who earn money on the material needs of mankind and their commercial exploitation — write down in their balance sheets. On the contrary, these productive capitalists themselves only view their wealth as really real, and of course also only really freely useable for capitalistic purposes, once it has taken the form of a figure in their bank account. In this crazy system, it is in fact the contractual obligations produced and marketed by the financial industry that represent the whole power of value and make it universally useable. It is “fictitious” capital that enables its producers to finance, direct, launch, or choke off all other capitalistic business operations — and to endanger them as a whole when speculation no longer succeeds according to its own criteria.

That, incidentally, is why it is also such transactions — with credit risks, with the speculative valuation of securities, with speculative instruments to protect against losses arising from speculative investments, ultimately with the separation of such speculative instruments from their insurance purposes and the marketing of pure financial bets — on which the most money can be made in the global market economy. In this world, the production and sale of the most absurd derivatives count simply as money-valued services, just like the production of watches and sales of nuts or news, only much, much more expensive. And if the dogma of market economy experts is right, if the level of remuneration — at least in principle — expresses the value of the remunerated service, then actually nobody achieves as much in terms of value creation as investment bankers who invent packaging for derivatives.



Our reflections on the power of the financial sector to create money, allocate credit, and accumulate money-capital with its own special techniques have been misunderstood by some skeptical readers; they think we are concerned with proving the independence of this sphere of business from the world of capitalist exploitation of labor, as if we wanted to virtually agree with the derivatives geniuses who view their activity, not as the lowly product of the system of wage labor, but as the true source of wealth in the modern global economy. This entirely overlooks the fact that our derivation of finance and its autonomy from the principles of the political economy of capital logically traces this sector and its distinctive position within and toward other capitalist companies back to these principles. Maybe a comment would be helpful in this regard, too:

We consider the liberties taken by the financial industry in matters of money creation and profit generation to be the state of affairs that demand explanation; to deny these liberties because they don’t go with an explanation of capital accumulation one has worked out is not good. These liberties represent the achievements of a power over society’s money transactions and the business use of money that have not fallen from the sky, but have their foundation in the political economy of money-making: the power of finance capital to make money by trading borrowed and loaned money is based on the fact that in a market economy, money functions in general as a source of money — the commercial customers of banks are, of course, after nothing else. The power of money to become more money through its use in business is not, on its part, a mysterious property of money, although it simply works that way in a market economy, like an objective fact. It is a consequence of the fact that in this system, a livelihood can only be obtained by acquiring money, but most people never have enough money to unleash its power to increase itself through a proper business use of it; they are instead compelled to work for money — that is, for the minority that has enough of it to “let their money work for them.” It doesn’t matter which jobs are sought and found by the majority of people dependent on earning money through work in the system of market economy freedom; nothing there is impossible; job-seeking people can find opportunities in every imaginable service. One difference, however, is readily overlooked, one that is crucial for the unconditional and universal necessity to earn money. Even the most advanced capitalistic society, in which industry is counted among the dying lines of business, lives off the material goods that must be produced with material means of production. Even if most wage-earners and smalltime self-exploiters are occupied with other tasks — such as those that, on a massive scale, have to do with the marketing of goods, the management of a society that runs on money, the financial constraints of the bourgeois mode of existence — society lives from the labor that produces the vitally necessary goods. The universal compulsion to work for money is ultimately based on the fact that the means for producing these goods belong to those who have invested their money in them, and who only allow production of something if it pays off for their interest in money. The necessity of earning money for a living defines a mode of production.

The liberties of finance capital are thus the product, inherent to the system, of the capitalist mode of production. The stuff of financial transactions attests to its being a consequence of the system of wage labor.


In our explanation of the financial sector, however, in which we argue the other way around, we attach great importance to the fact that this branch formally separates from the capitalistic production and expansion process, accumulates financial power with its own means and methods, and stands as the decisive initiator and overall beneficiary in relation to the business life that, in the jargon of the market economy, is called the “real economy.” There is no doubt that the theoretical necessity and objective importance of that has also not been properly understood; so here are two more comments, one methodological and one substantive.

In a derivation, such as the one Marx presented in textbook fashion for capital, and which we have sought to build upon, every important result — if it is correct — forms the starting point for consequences that follow their own “logic” and not the one that has led to this result. With Marx, it begins with the transition from the exchange value of commodities to money as the universal equivalent; the political economy of productive capital begins with the step forward from money as universal means of access to money as the purpose and means of command over its own source, etc. If — at a much later step — money dealers then make a business out of their service to the circulation of money by lending currently unused sums of money, i.e., increasing the size of others’ capital and in return sharing in the profits, then the nature of this business needs to be understood. Someone who only wants to notice that surplus value is redistributed, and that interest has its origin in the fruits of labor a commercial borrower exploitatively appropriates, who thus appears satisfied, methodologically speaking, with theoretically tracing a consequence back to its derivation, is missing the crucial point: that this business sphere relates to the expansion process of invested capital with new instruments for transferring ownership, reclaiming principal, and demanding interest, i.e., with the legally emancipated power of money-capital. Hence one has to develop the thought of emancipated money capital and interest as a step forward in what Marx called the “externalization of the relations of capital” (Capital III, chapter 24). Then we continued the derivation — which we wrestled with at the beginning of chapter 2 — from the use of money as loan capital to the capital market, where the credit relationship itself becomes a commodity. The “logic” of this trade in capital, the calculations that get their turn, the new economic category of valuation, the speculative derivation of a capital value from expected returns: all that is simply not understood if one only looks back on the endpoint of the previous step in the derivation and insists on maintaining that, “ultimately,” securities embody nothing but a piece of loan capital. For this is where finance-capitalistic legal relations become productive in a new way. And once the speculative nature of this peculiar productive force, the creation of value through valuation, becomes a business object of its own, then derivatives represent yet another — theoretically less important, but in practice rather more explosive — further step. In any case, this is the only way to trace the logic of the matter — ultimately, the logic of that very emancipation of finance capital that lends it its force in practice.

After all, the capacity of the financial sector to equip itself and the rest of the business world with means of payment on the basis of debts, thus emancipating the accumulation of its own money capital as well as the accumulation of capital in all other lines of business from the limits of money already earned, etc., in a word: its power, depends on its autonomy, its distinctive position within and toward the system, which it acquires with its services for the functioning of the system. Finance capital is the trade that faces and takes charge of the overall competition of capitalists as the emancipated centralization, the socialization, inherent to the system, of the private power of money. It is thus the national economic force driving the capitalist mode of production to take hold of all social resources and living conditions; driving capital as a whole to turn all the countries of the world into its investment spheres; driving it to develop, according to its needs, ever new demanding conditions of expansion, and to harness humans and nature alike for this, thus wearing them out. By virtue of its special position within and toward the system, the banking system is quite simply the “systemic” sector: by globally supplying businesses with means of business, using them exclusively for its business success, and making them dependent on its results, finance capital takes for granted the total and totalitarian power of money over the life process of mankind, and procures the means of domination. In this function, it is not restricted by the political power, but rather acknowledged, taken advantage of, and fostered; the last part of our essay deals with how the state makes use of this power of finance capital in its competition against its peers — and how financial capital even thereby gains in power.

By the way, all this leads to a political conclusion: the fight to restrict the liberties of the financial sector is, in its normal version, and even when it degenerates into open conflict in a crisis, a part of the indissoluble symbiosis of state power and the banking system. Even in its most radical variants, this fight has nothing to do with a struggle against the domination of capital, which can only be abolished by the termination of the command of money over work by those who do the work. This would also let the air out of the power of the financial world — and not only out of its bubbles.


1 Basically in every issue since volume 3-07.

2 In volumes 3-08, 2-09, 1-10, and 1-11 of this journal.

3 Everybody likes to see the matter the other way round: that with the crisis, it becomes clear that while the loans provided by the financial industry are important, productive, and absolutely indispensable, the higher-value credit-papers on which this industry earns the most money are actually mere bubble-builders, a total sham, in any case not real pecuniary wealth. But if that were true, what would be so bad about the “bubble bursting” in a crisis and the bogus values nullified?

If one wants to know about finance capital, one should first try to understand what it accomplishes and what is really happening when it’s calculations work out. Only then does one know what can cause it to fail and what happens when it does. It is wrong to explain financial products as being “actually” null and void just because they can lose their value, that is, to take their collapse as more or less their explanation. It is a way of sparing oneself the effort of thinking about them, and, moreover, disturbingly close to the bourgeois way of thinking that judges things according to their success.

4 Fans of the “labor theory of value” make the big mistake of not seeing that in value, social labor — this necessary “metabolism of man with nature” — is taken into service for an alien and hostile purpose. Instead, similar to bourgeois economists, they regard value as a useful abstraction, a way of equating various types of labor and products of labor in order to make their comparison and addition easier. They consider labor performed for property to be an entirely rational way of organizing the necessary labor of society. The only thing they find worthy of criticism is that the bourgeois world refuses to admit that their precious value derives entirely from labor. They take Marx's critique of value-creating labor as a vindication and appreciation of labor, and counter the bourgeois standpoint with the proletarian pride as the “source of all wealth and all culture” that their daily grind is the one and only source of wealth. From the service that the working class performs for society, their political-ideological advocates deduce that the “undiminished proceeds of labor,” to which they are entitled, are greater than the wage they are paid. Marx, however, was no lover of true value; he wouldn’t congratulate the workers for creating the entirety of value. In his Critique of the Gotha Programme (1875) he explicitly counters a corresponding praise of labor by the Social Democrats of that time: “Labor is not the source of all wealth” — in any case not if it’s a question of material wealth, not of value. Material wealth depends just as much on natural conditions and the state of science and technology. Marx adds, “The bourgeois have very good grounds for falsely ascribing supernatural creative power to labor”: they are the beneficiaries of the labor that creates value. A socialist program, however, would have to refrain from such “bourgeois phrases.”

5 Marx resorts to all kinds of bold images to make the subsumption of labor under capitalistically used property — the incorporation of its capacities by capital — so clear that even a mind accustomed to every single meanness of the market economy can see what is “peculiar to and characteristic of capitalist production, this complete inversion of the relation between dead and living labour” (Capital Vol. I, p. 310, International Publishers): “Capital is dead labour, that, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks.” (ibid, p. 233)