Wednesday, 20 April 2016

Capital III, Chapter 32 - Part 4

The accumulation of loanable money-capital is not the same, therefore, as an accumulation of productive-capital, and neither is a plethora of loanable money-capital the same thing as an indication of an overproduction of capital.

At certain stages, the production of surplus value may simply be so great that it is not practically possible to reconvert it quickly into new productive-capital. That may be the case in the Spring phase of the long wave cycle. By contrast, in the Winter phase, of the cycle, there may simply be insufficient new spheres of investment where to absorb the realised surplus value, and existing spheres may already have sufficient productive-capital to meet demand at prices that enable the capital to be reproduced. Its not that the surplus value could not be invested, therefore, in this case, but only that it could not be invested capitalistically, i.e. to expand profits.

“The subsequent credit swindle proves that no real obstacle stands in the way of the employment of this surplus-capital. However, an obstacle is indeed immanent in its laws of expansion, i.e., in the limits in which capital can realise itself as capital. A plethora of money-capital as such does not necessarily indicate over-production, not even a shortage of spheres of investment for capital.” (p 507)

That is a description also of current conditions, in some ways. That is that a great mass of realised surplus value has been dumped into money markets, and depressed interest rates. These low interest rates, together with massive injections of liquidity to prevent commodity price deflation, has caused the blowing up of massive asset price bubbles. These bubbles in the stock, bond and property markets, even where they do not involve actual Ponzi schemes, and other swindles, have that same characteristic. It is not that there are not many profitable spheres of investment that can absorb the mass of loanable money-capital, but the potential to make huge fictitious capital gains, by speculating in stock, bond and property markets, underpinned by central banks, make this a much more attractive investment for loanable money-capital.

Back To Part 3

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