Financial Profit: Profit from Production and Profit upon Alienation

Costas Lapavitsas and Iren Levina

Discussion Papers from Research on Money and Finance

Abstract: Financial profit is prevalent in contemporary capitalist economies, yet its nature and sources remain unclear. In classical political economy, and for Marx, profit is conceptualised either as a fresh flow of value (profit from production) or as a share of existing flows of value (profit upon alienation or expropriation). This distinction is of critical importance in analysing financial profit, since the latter originates in both fresh and existing flows of value. The most complex form of financial profit relates to trading financial assets, and has a dual nature. In immediate terms, it arises from redistributing loanable capital; when mediated, it represents the accrual of future surplus value. If the mediation is incomplete, however, financial profit remains redistributed loanable capital, hence, a part of the existing flows of value. Thus, it is normally profit from production, but retains elements of profit upon alienation or expropriation.

Date: 2010
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