 MARX S THEORY OF CRISIS IN THE CONTEXT OF FINANCIALIZATION ANALYTICAL INSIGHTS ON THE CURRENT CRISISJournal of Advanced Studies in Finance, 2012, vol. 3, issue 2, 171-183 Abstract: Lain by the fact that the present crisis was not preceded by a sharp decline in the rate of profit Marxist and heterodox economists investigate its causes in structural and institutional factors emerging in a new phase of capitalism dominated by financialization of capital In this paper we argue that in Marx a sharp decline in the rate of profit is not a prerequisite for a crisis to emerge if the rate of profit is already low We argue further that financialization of capital resulted following the great stagflation of the 70s from a strategy to battle low profitability by suppressing interest rates in order to increase the rate of profit of enterprise We show that this policy is in the end limited by the rate of profit and when the limit is reached the system collapses as it did in 2007 These analytical conclusions suggest that bank recapitalization will have restricted impact on output and employment because debts are already too high and profits too low for these funds to end up supporting corporate investment Alternative policies should be applied otherwise a long period of capital impairment and high unemployment lies ahead of us Date: 2012 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:srs:jasf00:v:3:y:2012:i:2:p:171-183 Access Statistics for this article Journal of Advanced Studies in Finance is currently edited by Laura GAVRILĂ (formerly Ştefănescu) More articles in Journal of Advanced Studies in Finance from ASERS Publishing |
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