5the April 2023
1] CAPITAL ACCUMULATION
Capitalism is a system that pursues accumulation and growth for its own sake, whatever the consequences. It is driven by the focused goal of business corporate capital accumulation strategies. Capitalism dictates how much production to appropriate, which capital might generate less incentives for production and which capital accumulation approach to undertake for ever-greater accumulation of capital.
By accumulation, we shall refer broadly to the process of wealth creation through productive or unproductive investments in productive or unproductive sectors. The accumulation of capital, we mean an increase in assets from investments or profits. The goal is to increase the value of an initial investment to a return on that investment, whether through appreciation, rent, capital gains, interest or under-the-table money.
Rentier capitalism – so enduring in the country with entrenched oligarchy monopolies -incorporates those aspects of capital and its accumulation process, including increasingly the spectres and spread of financialization capitalism. With globalisation, rentier capitalism attaches to the neo-imperial monopoly capitalism and its link to the global commodity chain dimension because of the multiple roles of rent intermediaries between capital and its accumulation.
2] IMF and GEF
It is expressed that trade deepening – fragmentation in global trade through geoeconomic instability – has helped catalyze catch-up in per capita incomes across countries and a large reduction in global poverty, while in advanced economies, low-income
consumers have benefited disproportionately through lower prices. Conversely, the unraveling of trade links have most adversely impact low-income countries and less well-off consumers in the advanced economies. IMF and neoliberal promoters have the audacity to say that if there are controls and or restrictions on cross-border migration, more likely than not, these actions would deprive host economies of “valuable” (even if low-level?) skills while reducing remittances to migrant-sending economies. Rather, the reduced capital flows would limit financial gouging in
destination countries, and exploitation of labour – home-based and migrant serfs.
As Baran and Sweezy observed: “One can only conclude that foreign investment, far from being an outlet for domestically generated surplus, is a most efficient device for transferring surplus generated abroad to the investing country.”
Could the decoupling assist the capitalist system or that the geoeconomic fragmentation (GEF) suggests that by deepening the fragmentation process, the deeper the costs to capital? That even the technological decoupling may have significantly amplifies losses from such trade restrictions or trade sanctions to the technological metropolitan centres in the Global North than that in the emerging market economies and low-income countries.
According to IMF, the cost to global output from trade fragmentation could range from 0.2 percent (in a limited fragmentation / low-cost adjustment scenario) to up to 7 percent of GDP (in a severe fragmentation / high-cost
adjustment scenario); with the addition of technological decoupling, the loss in output could reach 8 to 12 percent in most advance economies.
Therefore, GEF is straining the Washington Consensus monetary system and even their global financial safety net (GFSN).
The entrenched financial
globalization could possibly and eventually give way to “financial regionalization” and a fragmented global payment system, not only impacting upon the big monetary barons, but with probably less
international risk-sharing, GEF could lead to higher macroeconomic volatility, more severe crises, and greater pressures on national buffers among western-dominated financial centres, including the diversifying away from traditional reserve assets like the US dollar — a process that could be accelerated by the digitalization of China’s Yuan.
Indeed, by hampering international cooperation, GEF could also weaken the capacity of the GFSN to support crisis countries and complicate the depth of capitalism in crisis: existing, emerging and future sovereign debt crises that the capitalist system resides therein.
3] Financialisation of the Capitalist Economy
Writing in 2013 on the financialization of the capitalist economy in his book Profiting Without Production, economist Costas Lapavitsas of the University of London observed that, “Close association of financialization with Marxism goes back at least to the insights advanced by the current of Monthly Review,” as exemplified by the work of MR editors Harry Magdoff and Paul M. Sweezy. Decades before the question of the explosive growth of finance in the capitalist economy was taken seriously by the economic establishment, Magdoff and Sweezy argued that the secular stagnation of production under monopoly capital and the financial explosion were connected in a symbiotic relationship from which there was no visible escape within the system. This was succinctly expressed in their 1983 MR article, “Production and Finance.”
In the present article, originally published as the October 1993 “Notes from the Editors” in MR, Magdoff and Sweezy argued that while both the long-term slowdown of the capitalist economy and the growth of finance relative to production were sometimes recognized in the economic and business literature, the connection between the two processes was largely ignored. Four years later, in “More (or Less) on Globalization” in the September 1997 issue of MR, Sweezy referred to “the financialization of the capital accumulation process.” Today, the stagnation-financialization problem remains the main economic contradiction in the capitalist core — a specter that continues to haunt Wall Street.
Related Readings
Benjamin Selwyn, Limits to Supply Chain Resilience: A Monopoly Capital Critique, Monthly Review, March 01 2023.
csloh, Concentration of Capital
STORM, Capitalism, Capital Accumulation and Clientele Capitalism
Towards The Malaysia Narrative 