François Chesnais, is an eminent, longstanding French Marxist economist who has made an important contribution to our understanding of the growth of finance capital, imperialism and globalisation over the last 40 years – well before others with perhaps bigger names and greater following in Marxist economic circles. See his pioneering work, The Globalisation of Capital, written as early as 1994.
In his new book, Finance Capital Today, Chesnais brings us up to date with the growing power of financial capital and how the components of finance and industry have merged into a connected and global form. But Chesnais does not fall into the trap of arguing - as many on the left do - that the only enemies of labour in the modern capitalist world are the banks, finance houses and hedge funds. On the contrary, the merger of finance and industry means that 21st century corporations are engaged both in making things, providing services and in financial activity in order to make profits. The likes of Apple, Microsoft and Google have huge cash reserves and issue billions of dollars in bonds to raise more. Large corporations try to make money out of mergers and acquisitions and buying back their own share issues, rather than just through investment in factories, technology and skilled labour. Thus the enemy of labour is not finance as such but capitalism as a whole.
Also Chesnais, like Marx before him, looks at capitalism from a world perspective, not just in the US. He considers closely the role of other financial centres like the City of London and the growing competitive powers of China, Russia and India.
In an easy style, Chesnais takes the reader, chapter by chapter, through the changes in finance capital since Marx first published his view of capitalism in the mid-19th century. In so doing, he improves on the perspective provided by Rudolph Hilferding in his book written one hundred years ago after the last burst of globalisation, also named Finance Capital. While Hilferding saw finance as just the banks accruing interest, Chesnais shows that it is now a much wider sector, accruing profits from speculation in government and corporate bonds and the stock market – what Marx called ‘fictitious capital’ and Warren Buffett, the American stock market billionaire, called ‘financial weapons of mass destruction’.
Why has finance capital expanded into the form of global oligopolies? Chesnais answers that it is due to the lack of profitable opportunities in productive sectors of the major economies after the profitability crisis of the 1970s. Financial speculation and globalisation became key ‘counteracting factors’ to this fall in the profitability of productive capital. Production went ‘south’ to China, Brazil, India, etc., and finance followed it, as the companies of the ‘north’ globalised and their nations became increasingly ‘rentier’ (interest-based) economies.
This process led to a massive loss of manufacturing jobs in America and Europe. Now capitalism is reaping the whirlwind with the rise of ‘populist’ movements, such as Brexit and Trump, demanding the end of globalisation and immigration, and control of the banks. The irony is that, as Chesnais points out, financial profits have become much harder to obtain after the global financial crash of 2008-9. So banking and finance remain unstable and liable to further collapse.
Chesnais tells us that since the end of the Great Recession there has been a continuous drive by capital to raise the rate of exploitation, yet the conditions of profitability and new investment have not been restored. There is still a “dearth of actual surplus value”. The two previous long depressions in the history of modern capitalism in the late 19th century and the 1930s were ended by a new bout of globalisation in the first case and in the second by a terrible world war. In each case, the crisis had to play the function of destroying existing productive and fictitious capital, of clearing the deck for new investment. But since 2009, this has not happened yet. Debts remain high and borrowing and speculation continues, while the productive sectors of capitalism remain locked in a depression or stagnation.
Chesnais’ book is easily readable by anybody in the labour movement with a smattering of interest in the economic processes of modern capitalism. It’s expensive - but a paperback version is on its way.
works in the City of London as an economist.