mo nt hlyreview.o rg http://monthlyreview.org/2010/02/01/the-age-of-monopoly-finance-capital

John Bellamy Foster

The Age of Monopoly-Finance Capital :: Monthly Review

This article was written f or presentation in a panel on Capitalism in Crisis at the Workshop on MarxistTheory and Practice in the World Today, Ho Chi Minh Academy of Polit ics and Public Administration, Hanoi,Vietnam, December 15, 2009.

Three years ago, in December 2006, I wrote an article f or Monthly Review entit led Monopoly-FinanceCapital. The occasion was the anniversary of Paul Baran and Paul Sweezys Monopoly Capital, publishedf our decades earlier in 1966. The most important question to address on the f ortieth anniversary of Baranand Sweezys book, I wrote, is:

Has capitalism changed, evolving still f urther within or even beyond the monopoly stage as they describedit? There is of course no easy answer to this question. As in the case of all major historical developmentswhat is most evident in retrospect is the contradictory nature of the changes that have taken place sincethe mid-1960s. On the one hand, it is clear that the system has not yet f ound a way to move f orward withrespect to its driving f orce: the process of capital accumulation. The stagnation impasse described inMonopoly Capital has worsened: the underlying disease has spread and deepened while new corrosivesymptoms have come into being. On the other hand, the system has f ound new ways of reproducing itself ,and capital has paradoxically even prospered within this impasse, through the explosive growth off inance.I will provisionally call this new hybrid phase of the system monopoly-f inance capital.

The article went on to discuss the dual reality of stagnant growth (or stagnation) and f inancialization,characterizing the advanced economies in this phase of capitalism. I concluded that this pointed to twopossibilit ies: (1) a major f inancial and economic crisis in the f orm of global debt meltdown and debt-def lation, and (2) a prolongation of the symbiotic stagnation-f inancialization relationship of monopoly-f inance capital.1 In f act, what we have experienced in the last two years, I would argue, is each of thesesequentially: the worst f inancial-economic crisis since the 1930s, and then the system endeavoring to rightitself by returning to f inancialization as its normal means of countering stagnation.2 It is thus doubly cleartoday that we are in a new phase of capitalism. In what f ollows, I shall attempt to outline the logic of thisargument, as it evolved out of the work of Baran, Sweezy, and Harry Magdof f in particular, and how itrelates to our present economic and social predicament.

The Monopoly Stage

In Monopoly Capital, Baran and Sweezy described advanced capitalism, exemplif ied by the United States, asan economic and social order dominated by giant, monopolistic (or oligopolistic) corporationsthe productof the concentration and centralization of production described by Marx in Capital. The central trait of thesystem was a tendency f or surplus (value) to risea phenomenon made possible by the ef f ective banningof genuine price competit ion in mature, monopolistic industries, together with continually rising productivity.Under these conditions, the main economic constraint was no longer the generation of surplus, but ratherits absorption, i.e., a chronic lack of ef f ective demand.3

In the usual analysis of capitalist spending, surplus can be absorbed in two ways: (1) capitalistconsumption, and (2) investment. Capitalist consumption runs up against the inner dynamic of capital itself(Accumulate! Accumulate! That is Moses and the Prophets!), while corporations normally ref rain f romcarrying out net investment if expected prof its on new investment are weak. Such expectations areaf f ected by the existing level of capacity utilization in industry; the presence of idle plant and equipmentdeters business f rom investing in still more capacity. Since a rising surplus tendency, moreover, generallymeans that real wages are rising less than productivity (i.e., workers are more exploited), wage-basedconsumption is chronically weak relative to societys capacity to produce, result ing in increasing excesscapacity, and the atrophy of net investment. Under monopoly capital the long-term growth trend is

theref ore sluggish, characterized by a wide, and even widening, underemployment gap. The economy, inother words, f alls f ar short of its potential growth rate, with underutilization of labor and capital goods.Hence, the normal state of the monopoly capitalist economy, Baran and Sweezy argued, was stagnation oran underlying trend of slow growth.

Economic stagnation, in this sense, should not be conf used with technological or consumer-productstagnation. Indeed, the constant development of the technology of production that characterizescapitalism in general (including its monopoly stage) only increases the productive potential of the system,intensif ying its overaccumulation tendencies. The system could conceivably be rescued f rom its economicdoldrums under these circumstances by the appearance of an epoch-making innovation on the scale of thesteam engine, the railroad, and the automobile, in terms of total economic-geographical ef f ectsgenerating a vast demand f or new investment, independent of existing income constraints. Yet no suchepoch-making innovation, Baran and Sweezy argued, was on the horizon.

It was true that monopoly capital had proven extremely innovative in generating mountains of newconsumer productsthe result, in numerous cases, not of the satisf action of genuine needs but of theartif icial manuf acture of wants. But, despite its f abled creative destruction and the prolif eration of waste,the system was unable to overcome a chronic tendency to market saturation.4

Monopoly Capital was published at the end point of the post-Second World War economic golden ageaperiod seemingly f ar removed f rom stagnation. This was a time when mainstream economists (not f or thelast t ime) were proclaiming the end of the business cycle. But the prosperity of the system in the mid-1960s, Baran and Sweezy insisted, was attributable to a number of special stimuli outside the normaleconomic process that acted as countervailing f actors to stagnation. Some of these were temporary,others more or less permanent. Of the more or less permanent f actors, they pointed to a massive salesef f ort, which had penetrated the production process itself , together with the growth of FIRE (f inance,insurance, and real estate). Militarism and imperialism, in the f orm of the Cold War and the wars in Koreaand Vietnam, had also boosted the monopoly capitalist economy by soaking up unused productive capacity.In contrast, civilian government spending, as a share of GDP in the United States, they argued, had alreadyreached its outer limits in the late 1930s, thereby limiting its stimulative role. (This has remained true up tothe present day, with civilian government consumption and investment as a percentage of GDP over thelast f our decades staying at approximately the same level as in the late 1930s.)5 The overall analysispointed to a system in which various countervailing f actors were insuf f icient in the long run to keep it f romsinking back into stagnation.

Stagnation and the Financial Explosion

Capitalism f ell into a severe crisis in the early to mid-1970s. But rather than a straightf orward phenomenonof stagnation, what emerged was stagf lation (i.e., a sluggish economy plus inf lation). The dominantinterpretation was that inf lation was the real culprit, and hence the main strategy became one of economicrestructuring in its various rubrics: monetarism, supply-side economics, neoliberalism. The Age of Hayekreplaced the Age of Keynes. Federal Reserve Board Chairman Paul Volcker s interest rate shock in the late1970s, which ushered in the third world debt crisis, was part of this whole repressive shif t. In the UnitedStates, a new wave of military spending and imperial interventionism was coupled with ef f orts to curtail theincome of the working class, redistributing income and wealth f rom the poor to the rich. Internationally, thistook the f orm of global restructuring with third world debt as its leverage, ushering in a period of neoliberalglobalization.

Sweezy and Magdof f (who joined the f ormer as coeditor of Monthly Review in 1969) continued to arguethroughout this period that stagnation constituted the underlying tendency of the monopoly capitalisteconomy and that the growing weaknesses in production or the real economy were papered over by themassive increase of f inance. In the 1970s and 1980s, they published The End of Prosperity (1977),Stagnation and the Financial Explosion (1987), and other works, f ocusing on the constant expansion of thef inancial superstructure of the capitalist economy on top of a productive base that increasingly showedsigns of structural weakness. Among the f orces countering the tendency to stagnation, they observed in

the latter work, none has been more important or less understood by economic analysts than the growth,beginning in the 1960s and rapidly gaining momentum af ter the severe recession of the mid-1970s, of thecountrys debt structure (government, corporate, and individual) at a pace f ar exceeding the sluggishexpansion of the underlying real economy. The result has been the emergence of an unprecedentedly hugeand f ragile f inancial superstructure subject to stresses and strains that increasingly threaten the stabilityof the economy as a whole.6

The trends in the speculative growth of the credit-debt system identif ied by Magdof f and Sweezy onlyaccelerated over the succeeding decades. Total private debt in the U.S. economy rose f rom 110 percent ofGDP in 1970 to 293 percent of in 2007. (Aggregate debt, including government debt held by the public, rosef rom 150 percent of GDP in 1970 to 346 percent in 2007.) Financial instability was increasingly evident inrecurrent credit crunches. The growth of debt, Monthly Review argued, was like a drug addiction, in thesense that more and more of the drug was necessary to get the same stimulating ef f ect, along with theslow deterioration of the morphological condition of the subject. In the 1970s, the increase in U.S. GDP wasabout sixty cents f or every new dollar of debt. By the early 2000s, this had declined to about 20 cents f orevery new dollar of debt.

During the last f orty years (1970-2010), the U.S. economy, and the world economy as a wholedespiterapid growth in parts of Asiahas experienced a secular slowdown. The rate of growth (adjusted f orinf lation) of the U.S. economy has slowly subsided, decade by decade: it was lower in the 1970s than in the1960s; lower in the 1980s and 90s than in the 1970s; and lower in 2000-09 than in the 1980s and 90s. Netnon-residential investment declined f rom 4.8 percent of GDP in 1965-1966 to 2.6 percent in 2005-2006.Real hourly wages of nonagricultural workers peaked in 1972, and, by 2006, had f allen back to their 1967level. While wage and salary disbursements as a percentage of GDP dropped f rom 53 percent in 1970 to 46percent in 2006. The same general tendency to stagnation af f ected Europe and Japan as well.7

Financialization

By the late 1980s (f ollowing the 1987 stock market crash) and continuing into the late 1990s, Sweezy waswrestling with the notion of f inancialization as a more or less permanent tendency of advanced monopolycapitalismthe other side of the stagnationist coin. In 1997 he wrote: the three most important underlyingtrends in the recent history of capitalism, the period beginning with the recession of 1974-75 [are]: (1) theslowing down of the overall rate of growth; (2) the worldwide prolif eration of monopolistic (or oligopolistic)multinational corporations; and (3) what may be called the f inancialization of the capital accumulationprocess. (Globalization, a f ourth trend, he argued, was a much longer, more complex, variegatedphenomenon, ref lecting the growth of imperialism, and going back to the very beginnings of the capitalistworld economy.)8

Financialization can be def ined as the shif t in the center of gravity of the capitalist economy, f romproduction to f inance. Financial crisis and instability, Sweezy observed, had always been an element at thepeak of the business cycle. But how did one explain the expansion of f inancialization as a long-term trend?Was it possible that f inancial speculation now managed to f eed not on rapid growth, but on slow growthinverting past historical experience? It was obvious that corporations and wealthy investors that hadsurplus at their disposal sought to preserve and expand their money capital in the f ace of vanishinginvestment opportunit ies by pouring it into speculation in a variety of assets. Financial institutions, it wasno less apparent, were able to provide a seemingly inf inite supply of exotic and opaque f inancialinstruments: all sorts of f utures, options, and derivatives. But the continuation of such a casino economyover decadesalbeit interrupted by credit crunches, with the central banks intervening as lenders of lastresort to keep the whole game goingrepresented nothing less than a qualitative transf ormation in thecapitalist economy.

As Sweezy posed the problem in a twenty-f ive year retrospective on Monopoly Capital: In the establishedtradit ion of both mainstream and Marxian economies, we [had] treated capital accumulation as beingessentially a matter of adding to the stock of existing capital goods. But, in reality, this is only one aspectof the process. Accumulation is also a matter of adding to the stock of f inancial assets. The two aspects

are, of course, interrelated, but the nature of this interrelation is problematic to say the least.9 Still, anumber of aspects of this interrelation were increasingly evident:

Financialization could help lif t a stagnant economy, through the employment created in the FIREsector and all sorts of wealth ef f ects that translated increased asset prices into new demand.Financialization was unable to alter the underlying problem of stagnation within production, and, insome ways, even aggravated it.Growth of f inance relative to the real economy also meant the appearance of f inancial bubbles thatthreatened to burst.The monopoly capitalist economy was increasingly dependent on the central banks as lenders of lastresort to provide liquidity and capital in the event of a f inancial crisis.The more the central banks were ef f ective at preventing the f inancial system f rom collapsing; themore they set things up f or bigger crises down the line.If f inancial bubbles got big enough, they could overwhelm the capacity of central banks and thetreasury departments of states to cope with the situation, in which case a serious debt def lationwas conceivable.Economic power was shif t ing f rom corporate boardrooms to f inancial institutions and markets,af f ecting the entire capitalist world economy in complex ways, through a process of f inancialglobalization.The growing role of f inance was evident not just in the expansion of f inancial corporations but alsoin the growth of the f inancial subsidiaries and activit ies of non-f inancial corporations, so that thedistinction between the f inancial and non-f inancial corporations, while still signif icant, becameincreasingly blurred.Financialization in the 1980s and 90s was the main new f orce in the much longer-term globalizationprocess, and was the def ining element in the whole era of neoliberal economic policy.Financialization was increasingly interconnected in complex ways with government debt, transf ormingthe role of def icits, particularly in the United States, the center of global f inancialization.Given deep-seated stagnation tendencies, there was no alternative f or the capitalist economy butcontinuing f inancialization.10

The Great Financial Crisis and the Second Contraction

Building on this general model, we f irst mentioned the bursting of the real estate/housing bubble in MonthlyReview as a potential destabilizing f orce in the U.S economyin an article that I wrote together with HarryMagdof f and Robert McChesneyin November 2002. This was f ollowed up with an article the f ollowingspring entit led What Recovery? in which we contended: The housing bubble may well be stretched aboutas thin as it can get without bursting. As the problem became still more crit ical, I wrote The HouseholdDebt Bubble f or the May 2006 issue of Monthly Reviewpointing to the unsustainable borrowing on homemortgages (with the greatest burdens f alling on workers), and the possibility of a bursting of the bubblewith economy-wide ef f ects. This was f ollowed by Fred Magdof f s November 2006 article on the TheExplosion of Debt and Speculation. So, while some specif ic aspects of the f irst onset of the crisis in thelate summer of 2007 came as a surprise to us, the general development did not.11

As Carmen Reinhart and Kenneth Rogof f have indicated in This Time Is Different: Eight Centuries ofFinancial Folly: Financial crises seldom occur in a vacuum. More of ten than not, a f inancial crisis beginsonly af ter a real shock slows the pace of the economy; thus it serves as an amplif ying mechanism ratherthan a trigger. What these same authors call the Second Contraction (the Great Depression was the FirstContraction) can thus be interpretedin the logic of our analysis hereas arising f rom stagnationaryf orces leading to the bursting of the f inancial bubble, which then acted as an amplif ying mechanism.12

The Great Financial Crisis itself can be seen as kind of mean reversion of f inancial prof its back to the

underlying stagnant growth trend in the real economy, resulting in trillions of dollars in losses. This, then,constituted a crisis of financializationof the main means of countering stagnation in production. Ineighteen months, between September 2007 and March 2009, $50 trillion in global assets were erased,including $7 trillion in U.S. stock market wealth and $6 trillion in U.S. housing wealth. By early March 2009, theDow Jones Industrial Average, adjusted f or inf lation, had fallen back to its 1966 leveli.e., to the point thatit was at when Baran and Sweezy published Monopoly Capital more than f our decades earlier.13

Today, in what appears to be a major reversala mere year and a f ew months af ter the collapse of LehmanBrothers in late 2008, which generated f ears of a complete meltdown of the f inancial systemwe areseeing the beginnings of an historically unprecedented asset price driven recovery.14 The main strategyof the advanced capitalist states has evolved f rom an immediate f inancial bailout, involving tens of trillionsof dollars, to a much more concerted attempt, f or which there are no real historical analogies, to reinstatef inancialization as the motor f orce of the system. This, however, carries obvious dangers. In earlyNovember 2009, New York University economist Nouriel Roubini warned that asset prices have gonethrough the roof since March in a major and synchronized rally, f eeding what could turn out to be themother of all highly leveraged global asset bubbles, encompassing a new US asset bubble. Later thatmonth, Federal Reserve Board Chairman Ben Bernanke cautiously responded to Wall Street concerns thatthe f inance-driven recovery posed the threat of a massive, soon-to-burst, asset bubble, by simply stating(in a kind of non-denial denial): It s extraordinarily dif f icult to tell, but it s not obvious to me[that] thereare any large misalignments currently in the U.S. f inancial system. The Wall Street Journal ran this under theheading: Bernanke: No Obvious Asset Bubbles in the US Now.15

Wall Streets jit ters, evident in late 2009, ref lect the f act that f inancial markets have ballooned, withextraordinary rapidity, on top of a real economy in shambles. This has raised f ears, not so much of anotherbubble, but of a bubble that is inf lating too f ast and too massively, threatening to burst just as quickly andwith devastating ef f ect. Andrew Haldane, executive director f or f inancial stability at the Bank of England,speaks ominously of a doom loop. He estimates that the support that the United States and Britain havegiven to their banks in the current crisis amounts to nearly three-quarters of the GDP of these countries.This massive government support to f inancial institutions, he argues, is encouraging money managers totake on even greater speculative risks, setting the stage f or the next crash.16

Bubble driven economic growth, as Lawrence Summers, Obamas leading economic advisor (director ofthe National Economic Council), observed in March 2009,

is problematic because of disruption and dislocationaf f ecting those who took part in the bubblesexcesses and those who did not. And, it is not entirely healthy even while it lasts. Between 2000 and 2007a period of solid aggregate economic growththe typical working-age household saw their income declineby nearly $2000. The decline in middle-class incomes even as the incomes of the top 1% skyrocketed has anumber of causes, but one of them is surely rising asset prices and the f act that f inancial sector prof itsexploded to the point where they represented 40% of all corporate prof its in 2006.

Summers, in issuing this statement, was well aware that there was no other recourse f or monopoly-f inancecapital, and that the asset price inf lation path to economic recovery, based on the f inancial bailout, carriedthis very danger. He thus sought to reassure his audience by declaring: of f undamental importance isensuring that we do not exchange a painf ul recession f or another unsustainable expansion. The of f icialposit ion of the Obama administration is that another f inancial crash can be avoided by putting in place newf inancial regulations.17 In reality, this f ails to acknowledge both the structural relation between stagnationand f inance, and the growing economic and polit ical power of f inance.

Ef f ective regulation of a f inancializing economy f or any length of t ime is impossible f or reasons that wereexplained two decades ago by Harry Magdof f : The more the debt-cum-speculation balloon is inf lated, themore threatening does interf erence by government regulators become, lest the balloon burst. Not only arecentral bankers and other of f icials restrained f rom interf ering (except to rescue near-bankrupt large banksand giant corporations), they are impelled to deregulate f urther in order to ease strains and overcomepotential breaking points associated with f inancial excesses. On top of this, the growth of international

capital markets limits the power of states to regulate them, f orcing them to give way to f inancial marketf orces.18 Hence, although new regulations may be put in place, they will not, in the end, constitute ef f ectiverestraints.

The speed with which f inancialization was reinstated in the U.S. economy over the last year ref lected theshif t in power ref erred to above f rom boardrooms of non-f inancial corporations to f inancial institutionsand markets, which has increased even in the context of the f inancial crisis. In 1990 the ten largest f inancialinstitutions in the United States accounted f or 10 percent of total U.S. f inancial industry assets. In 2008this rose to over 60 percent. The same phenomenon is true globally with the ten largest banks in 2009accounting f or 70 percent of global banking assets, compared with 59 percent in 2006. Under thesecircumstances, the f act that the top economic of f icials in the Obama administration all have direct t ies toWall Street is scarcely surprising.19

Although the U.S. economy is now exhibit ing signs of an economic recovery, it is what leading f inancialanalyst David Rosenberg has called a Houdini Recovery. Fully 80 percent of the total rise in prof its in theUnited States in the third quarter of 2009 was accounted f or by the f inancial sector (which represents onlya quarter of the economy). Gross-value added in the non-f inancial corporate sector f ell in the third quarter,f or the f ourth quarter in a row. Consumers are holding back on spending. Investment is still weak. Theincreased prof its in this putative recovery are a product of the weak dollar (which increases f oreign-derived earnings), stagnant or f alling unit labor costs (which ref lect the f act that unemployment is at thedouble digit level), and a decline in non-wage expenses in the f orm of lower taxes, lower interest payments,etc. (due to state interventions).20

A New Stage of Accumulation?

The question I raised at the beginning of this article is: Has capitalism entered a new stage? In the 2006article on Monopoly-Finance Capital I ref erred to monopoly-f inance capital as a new phase of themonopoly stage of capitalism. If we see the stages of capitalismsay, nineteenth-century competit ivecapitalism and the twentieth-century monopoly capitalismas dynamic periods in which economictransf ormation creates the basis of a whole new means of advance in accumulation, then the period ofmonopoly-f inance capital does not seem to merit such a designation. Rather, the accumulation of capitalhas remained stagnant in the center of the system, while it has become increasingly dependent onspeculative f inance to maintain what lit t le growth there is. What we may be witnessing in the present phaseis the weakening of capitalist production at the advanced capitalist core as a result of a process ofmaturation of the accumulation process in these societies: hence, the stagnation-f inancialization trap.Financialization, however, has, paradoxically, helped to promote wealth and power in this context, creating acomplex, contradictory reality in the age of monopoly-f inance capital. There can be litt le doubt that this isan unstable situation, and that capital accumulation at the core of the system is, in many ways, running upagainst its historic limits.

The most complex issues f acing us today, with respect to the economic workings of the system, are themost global ones. How is monopoly-f inance capital related to imperialism, globalization, and f inancializationin the periphery of the world capitalist economy? This includes the question of the signif icance of the riseof the emerging capitalist economies in Asia, particularly China and India today, but also South East Asia.There is no doubt that stagnation and f inancialization at the center of the capitalist world economy arestructurally related to new openings f or export-driven industrialization in the low-wage periphery. At thesame time, the whole era of neoliberal f inancialization has been tied to the third world debt crisis and toattempts to create a new f inancial architecture in underdeveloped economies, leading to new f inancialdependencies. Even China and India, despite their huge economic advances, have not been able to breakout of the imperial systems of f oreign exchange and f inancial control, which leave them of ten passivelyresponding to init iatives determined primarily within the triad of the United States, Europe, and Japan.Emerging economies are now massive dollar creditors, yet the U.S. economy lies outside their control andcontinues to dictate the terms, reinf orcing their reliance on external exportstogether with external outlets(and saf e havens) f or the resulting surplus. Financialization, with its attendant problems, is growing apacein Asia as well. The World Bank, as reported by the Wall Street Journal, has recently raised concerns about

asset price bubbles f orming in Asia, particularly in real estate in China, Hong Kong, Singapore andVietnam.21

According to Samir Amin, the dominant f orce in todays f inancialized globalization is the imperialistcapitalism of oligopolies, of which f inancial oligopolies now constitute the headquarters, backed up by thepower of the states of the triad and the so-called international economic organizations that primarily servetheir interests (such as the World Bank and the IMF). This system can allow some degree ofindustrialization in the periphery, but continues to seek to hold onto the reins of power through monopoliesin f oreign exchange, f inance, technology, communications, strategic natural resources, and militarypower.22

Worsening f inancial crises and the slowdown in the advanced capitalist economies show how arthrit ic theoverall system has become. The reality is that U.S. hegemony, the geopolit ical lynchpin of the empire ofmonopoly-f inance capital, is in crisis. The hegemony of the dollar, around which the whole world economyis organized, f irst came into question due to the vast export of dollars abroad at the time of the VietnamWar, causing Nixon to end the dollar s conversion into gold. The dollar now appears to be resuming itssecular decline, which could, at some point, usher in a global meltdown.23

Where all of this is leading us historically is, of course, dif f icult to say since the economic crisis tendenciesof capitalism cannot be separated f rom larger social and environmental transf ormations operative on aglobal scale. World-system theorist Immanuel Wallerstein argues that we are currently in a transit ionaryphase between the contemporary capitalist system and something else.24 In f act, the planetary ecologicalcrisis suggests that capitalist civilization may be generating a terminal crisis f or the entire anthropocene erain earth history, which would inevitably spell, not only the demise of capitalism, butif we do not changecoursecivilization as a whole.25

In the new speculative era, all that is solid is melting in air. In these dif f icult and dangerous times, there is noalternative to the development of socialist strategies of sustainable human developmenton which all ourhopes, at every level, must now rest.

Notes

1. John Bellamy Foster, Monopoly-Finance Capital, Monthly Review 58, no. 7 (December 2006): 1-14.This was included as a chapter in John Bellamy Foster and Fred Magdof f , The Great Financial Crisis(New York: Monthly Review Press, 2009). See also Paul A. Baran and Paul M. Sweezy, MonopolyCapital (New York: Monthly Review Press, 1966).

2. The current recourse to f inance and the rise of monopoly-f inance capital should not be simplyconf used with what Rudolf Hilf erding was ref erring to in his classic work Finance Capital (1910), inwhich he def ined f inance capital as capital controlled by banks and utilized by the industrialists.Rather, today the issue is one of the speculative employment of money capital in global f inancialmarkets as part of a secular f inancialization. Although this process has enormously increased thepower of f inancial institutions and markets, it is f ar removed f rom the much simpler era of the rise ofinvestment banking, which was the f ocus of Hilf erdings analysis. See Doug Henwood interviewed byGeert Lovink, Finance and Economics af ter the Dotcom Crash, December 20, 2001,http://www.nettime.org. See also Paul M. Sweezy, The Theory of Capitalist Development (New York:Monthly Review Press, 1942), 266.

3. The theory of accumulation presented in Monopoly Capital was built on the earlier economic worksof Michael Kalecki and Josef Steindl. See Michael Kalecki, Theory of Economic Dynamics (New York:Monthly Review Press, 1965); Josef Steindl, Maturity and Stagnation in American Capitalism (NewYork: Monthly Review Press, 1976).

4. The concept of creative destruction was Schumpeter s term f or the innovation, of ten involvingthe destruction of previous capital, that characterized capitalist production. Yet the innovation hecelebrated has just as of ten been a kind of destructive creativity, generating economic waste, asemphasized in Baran and Sweezys analysis. See Joseph Schumpeter, Capitalism, Socialism and

Democracy (New York: HarperCollins, 1942), 81-86.5. On Baran and Sweezys thesis on the outer limits of civilian government spending as a percent

of GDP, and its empirical conf irmation f rom the 1930s to the present, along with the signif icance ofthis, see John Bellamy Foster and Robert W. McChesney, A New New Deal Under Obama, MonthlyReview 60, no. 9 (February 2009): 1-11.

6. Harry Magdof f and Paul M. Sweezy, Stagnation and the Financial Explosion (New York: MonthlyReview Press, 1987), 13.

7. Foster and Magdof f , The Great Financial Crisis, 49, 121, 129.8. Paul M. Sweezy, More or Less on Globalization, Monthly Review 49, no. 4 (September 1997): 3-4.

The term f inancialization f irst made its appearance in Monthly Review in 1995 in a review thataddressed Kevin Phillipss book Arrogant Capital, which had made use of the concept. See BertramGross, The Reserve Armies of the Insecure, Monthly Review 47, no. 1 (May 1995): 43.

9. Paul M. Sweezy, Monopoly Capital Af ter Twenty-Five Years, Monthly Review 43, no. 7 (December1991): 56.

10. All of these theses can be f ound in Magdof f and Sweezys writ ing. See, f or example, HarryMagdof f and Paul M. Sweezy, The Irreversible Crisis (New York: Monthly Review Press, 1988), andPaul M. Sweezy, The Triumph of Financial Capital, Monthly Review 46, no. 2 (June 1994): 1-11. AlsoFoster and Magdof f , The Great Financial Crisis.

11. John Bellamy Foster, Harry Magdof f , and Robert W. McChesney, Crises: One Af ter Another f or theLif e of the System, Monthly Review 54, no. 6 (November 2002), and What Recovery? MonthlyReview 54, no. 11 (April 2003): 5-6; John Bellamy Foster, The Household Debt Bubble, MonthlyReview 58, no. 1 (May 2006): 1-11; Fred Magdof f , The Explosion of Debt and Speculation, MonthlyReview 58, no. 6 (November 2006): 1-23. These last two articles were later incorporated as chapters1 and 2, respectively, of Foster and Magdof f , The Great Financial Crisis.

12. Carmen M. Reinhart and Kenneth S. Rogof f , This Time Is Different: Eight Centuries of Financial Folly(Princeton, New Jersey: Princeton University Press, 2009), 219, 240-47.

13. Jim Reid, A Trillion Dollar Mean Reversion? Deutsche Bank, July 15, 2008,http://www.nuclearphynance.com/User%20Files/85/thought_of _jim_14july.pdf ; Lawrence H. Summers,Responding to an Historic Economic Crisis: The Obama Program, Brookings Institution,Washington, D.C., March 13, 2009.

14. See Larry Elliott, Comic Book Economics and the Markets, The Guardian (July 6, 2009); SteveHansen, Asset Price Driven Economic Recovery Underway, Financial Times blog, Seeking Alpha(August 30, 2009), http://www.seekingalpha.com; John Bellamy Foster and Robert W. McChesney,Monopoly-Finance Capital and the Paradox of Accumulation, Monthly Review 61, no. 5 (October2009): 1-3.

15. Nouriel Roubini, Mother of All Carry Trades Faces an Inevitable Burst, Ft.com (Financial Timesblog), November 1, 2009; Bernanke: No Obvious Asset Bubbles in US Now, Wall Street Journal,November 16, 2009.

16. Economic Crisis Ebbs, Systematic Risks Dont, Wall Street Journal, December 7, 2009.17. Summers, Responding to an Historic Economic Crisis. It is noteworthy, in this context, that

Federal Reserve Board Chairman Ben Bernanke has long taken the posit ion that the job ofpreventing asset bubbles resides primarily with the regulatory f unction of the f ederal governmentand not with the Federal Reserve Board and monetary policy. Reinhart and Rogof f , This Time IsDifferent, 212-14.

18. Harry Magdof f , A New State of Capitalism Ahead? in Arthur MacEwan and William K. Tabb,Instability and Change in the World Economy (New York: Monthly Review Press, 1989), 350.

19. Economic Crisis Ebbs, Systematic Risks Dont; Floyd Norris, To Rein in Pay, Rein in Wall Street,New York Times, October 30, 2009; Henry Kauf mann, The Road to Financial Reformation (Hoboken,

New Jersey: John Wiley and Sons, 2009), 99-101; Glenn Greenwald, Larry Summers, Tim Geithnerand Wall Streets Ownership of Government, Salon.com, April 4, 2009.

20. David Rosenberg, Market Musings and Data Deciphering (November 25, 2009),http://www.glushkinshef f .com.

21. Fears of a New Bubble as Cash Pours In, Wall Street Journal, November 4, 2009.22. Samir Amin, Seize the Crisis! Monthly Review 61, no. 7 (December 2009): 1-16, and Capitalism in

the Age of Globalization (London: Zed Books, 1997), 4-5.23. See Winners and Losers as the Dollar Falls, New York Times, December 6, 2009.24. Immanuel Wallerstein, The Decline of American Power (New York: New Press, 2003), 249-72, and

The Crisis of the Capitalist System (November 12, 2009), MRzine, http://www.mrzine.org.25. John Bellamy Foster, Why Ecological Revolution? Monthly Review 61, no. 8 (January 2010): 1-18.

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