The Bifurcation of Marxist Economic Analysis

Jack Rasmus

Research output: Contribution to journalArticle

Abstract

"Contemporary mainstream economics, in both its Keynesian and New Classicalist
perspectives, failed to predict not only the eruption of the recent economic crisis circa 2007–08,
but also the historically weak and uneven recovery of the global economy, 2008–12. The article
argues the basic reason for the failure is a deficient conceptual apparatus that fails to account
for the role of credit, debt, asset prices, the growing weight of speculative investment, and
financial variables in general. Leaving this theme for subsequent further development, the
article maintains that a similar conceptual deficiency has prevented Marxist economists in
recent years from adequately understanding and predicting the continuing global economic
crisis. By focusing primarily on Marx’s triad of production of value concepts (rate of exploitation,
organic composition of capital, and falling rate of profit) as the core conceptual apparatus
for explaining the crisis, Marxist economists have been unable to adequately account for the
destabilizing role of finance capital in the 21st century. Financial instability is viewed as a second
derivative of real economic instability—the latter represented and measured quantitatively by
the tendency of the overall rate of profit to fall. The disruptive impact of finance capital on the
realization of value, the full circuit of capital, and capital accumulation is largely de-emphasized.
In contrast, the article argues that changes in global financial structure, financial institutions,
and financial markets in 21st-century global Capitalism have rendered Marx’s 19th-century view
of money, credit and banking insufficient. Marxist economic analysis thus needs to develop a
more complete conceptual apparatus, beyond the production of value conceptual “triad” and
addressing more directly the realization of value processes, if it is to more adequately account
for the disruptive role of finance capital in the 21st century. Only by so doing can Marxist
analysis de-emphasize its excessive and misdirected reliance on the falling rate of profit as the
key predictive variable for understanding the current crisis of Capital. Suggestions for a new conceptual apparatus focusing on value realization, the full circuit of Capital, and thus finance
capital, are offered."
Original languageEnglish
Pages (from-to)410-443
Number of pages34
JournalWorld Review of Political Economy
Volume3
Issue number4
Publication statusPublished - 2012
Externally publishedYes

Fingerprint

Bifurcation
Economic analysis
Marxist economics
Rate of profit
Finance
Economists
Credit
Triad
Global economy
Economic crisis
Economics
Financial instability
Banking
Capital accumulation
Financial institutions
Financial structure
Debt
Asset prices
Exploitation
Mainstream economics

Keywords

  • Hybrid Keynesians
  • Retro-Classicalists
  • Marxist economics
  • falling rate of profit
  • value

Cite this

The Bifurcation of Marxist Economic Analysis. / Rasmus, Jack .

In: World Review of Political Economy, Vol. 3, No. 4, 2012, p. 410-443.

Research output: Contribution to journalArticle

Rasmus, Jack . / The Bifurcation of Marxist Economic Analysis. In: World Review of Political Economy. 2012 ; Vol. 3, No. 4. pp. 410-443.
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