Financialization and Financial Crisis: Looking through the Lens of Commodity Fetishism

ABSTRACT

In this 150th year of the publication of Capital, vol. 1, it is time that we reread the connotations of the rich archive of concepts in Capital to see the insights that they can provide into the modern world. We intend to revaluate his critique of commodity fetishism (CF) and read the mutation of this critique in the era of financialization and see what insights it can provide into this phenomenon and into financial crisis. In the first part, we construct a narrative of the changes in the post-Fordist era, laying particular emphasis on what has been called financialization. In this section we tell a story about the financial crisis that started in 2006, leading to what has been called The Great Recession. In the next part, we elaborate the concept and critique of CF and see how it grounds a radically different way of looking at the capitalist order compared to the mainstream or neoclassical narrative. In the last part, we examine how, in the process of understanding the changes of the post-Fordist era the critique of CF has to mutate. We examine the changes and try to understand the crisis by deploying the mutated critique of CF.

KEYWORDS:

• Commodity fetish
• financialization
• financial crisis
• fictitious commodities
• autonomization

Acknowledgements

I am deeply indebted to the late Pradip Bannerjee, who died while writing his PhD dissertation. He first pointed out to me the significance of the simultaneous existence of the concrete and the abstract in Marx’s method. Hope someday I can manage to edit and publish his unfinished thesis.

Disclosure Statement

No potential conflict of interest was reported by the author.

Notes on Contributor

Pranab Kanti Basu has taught at Asutosh College, Kolkata, India. He is currently Professor at the Department of Economics and Politics, Visva-Bharati, India. His latest book includes Globalisation: An Anti-text (Aakar Books, 2008). His recent publication includes “World of the Third” (Economic & Political Weekly, August 1, 2015), and “‘Inclusive Growth’—A Lacanian Reading” (Rethinking Marxism, vol. 28, no. 2, 2016). His areas of interest include Marxism, community, and critical thought. He teaches International Economics and Marxian Political Economy.

Notes

1. Home equity is the excess of the rate of inflation of home price over the rate of interest being already paid against the mortgage that funded the purchase of the home and represents an increase in net worth of the loanee house owner.

2. These are broadly forwards, options, futures and swaps.

3. From 2000 to 2007, Moody’s rated nearly 45,000 mortgage-related securities as triple-A. This compares with six private-sector companies in the United States that carried this coveted rating in early 2010. In 2006 alone, Moody’s put its triple-A stamp of approval on 30 mortgage-related securities every working day. The results were disastrous: 83% of the mortgage securities rated triple-A that year ultimately were downgraded (FCIC 2011).

4. In the sequence of presentation in Capital the starting point is exchange by petty producers. Labour power has not yet become a commodity. However, as we will show, in the same volume Marx says that capitalist order is necessary for production to be dominated by the motive of commodity exchange.

5. See: Outward and visible existence, as definite, is essentially existence for another thing. … But property is also a manifestation of will, and the other, for which it exists, is the will of another person. This reference of will to will is the true and peculiar ground on which freedom is realized. The means by which I hold property, not by virtue of the relation of an object to my subjective will, but by virtue of another will, and hence share in a common will, is contract. (Hegel 2001, 76, paragraph 71)

6. In his exposition of the method of enquiry and presentation/analysis in Grundrisse Marx (1973) says that first the simple or elementary aspects or “simplest determinations” of a complex whole are discovered then starting from the simple determinants the complex totality is constructed in thought “as a rich totality of many determinations and relations.”

7. The point that PA is no longer accepted as merely primitive and hence the term has been substituted with Harvey’s coinage—accumulation by dispossession—is not relevant to the current discussion.

8. Elsewhere (Basu forthcoming) some have tried to understand this fragility in terms of Baudrillard’s (1988) “hyperreality.”

9. Rate of profit (if commodities sell at values) = S/(C + V) = (S/V) / (1 + C/V), where C, V, S stand for constant capital, variable capital and surplus value, respectively. C/V and S/V are, respectively named organic composition of capital and rate of exploitation by Marx (1887).

10. This fear has been interpreted as the Lacanian (Felluga 2002; Homer 2005) unease with the knowledge that there is a Real that cannot be symbolised.

11. This is a bit of a naïve statement. Actually the question of subjectivity formation cannot be addressed without consideration of the psychic effect of economic activities, which is beyond the scope of the present essay.

12. In a sense reality or the object “a” of Lacan is missing. This could be “use value” or concrete labour in the previous age. All that is now available is an unsymbolisable real with no reality to stabilize the psyche. The real exist only as a threat. To go further would need venturing seriously into psychology which is beyond our limited scope here. The terms “real,” “reality” and “symbolic” are used in a Lacanian sense. For elaboration one may refer to various Readers on Lacan. I am citing two for facility: Felluga (2002) and Homer (2005).