Flaws in the Marxian Explanations of the Great Recession

Ismael Hossein-zadeh
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Ismael Hossein-zadeh: Economics, Drake University, West Des Moines, IA, USA

Review of Radical Political Economics, 2014, vol. 46, issue 4, 473-480

Abstract: Marxist views of the relationship between financial and real cycles suffer from three major weaknesses: (a) financial developments are almost always reactions to real sector developments; (b) financial crises can trigger but not cause real sector crises; and (c) the 2008 financial crash played only a triggering, not causal, role in the ensuing Great Recession. I would argue, by contrast, that (a) in the era of big finance, finance capital does not necessarily shadow or merely react to industrial capital, it also behaves independently; (b) financial sector crises can be transmitted (through debt deflation) to the real sector; and (c) the 2008 financial crash played not only a triggering but also a causal role in the ensuing Great Recession.

Keywords: debt deflation; financial bubbles and bursts; Great Recession; crisis theories (search for similar items in EconPapers)
JEL-codes: E44 G01 (search for similar items in EconPapers)
Date: 2014
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