Crises of overproduction/underproduction arise from the anarchic nature of capitalism, and are often called crises of the business cycle.  Overproduction results in unsold inventory; this results in disruption of production, unemployment, and ultimately deflation.  Crises of overproduction have been mitigated to some degree by capital planning by major banks through controlling credit and by countercyclical fiscal policy (increasing aggregate demand).[i]  That such crises continue to arise regularly are a result of the underlying anarchic structure of capitalism.  However, the evidence since the collapse of the housing bubble in 2008 suggests that countercyclical policy's stimulus spending has been considerably less effective in increasing employment and easing the suffering of working people, even controlling for the fact that the portion of stimulus allocated to tax reductions notoriously lags behind direct transfers in stimulating demand.  The likely reason for this troubling phenomenon is that the nature of capitalist crisis has changed as monopoly capitalism has become increasingly hyperfinancialized.[ii]

It is reasonably certain that what capitalism faces today is not, as some academic Marxists claim, a crisis of overaccumulation[iii] (Kliman, 2012: 48ff), although a longterm overaccumulation problem almost certainly explains the phenomenon of hyperfinancialization: the financial sector provided a profitable area of investment, providing opportunities to obtain reasonable rates of return on the reinvestment of capital which were otherwise in short supply.  That the problem is not overaccumulation is suggested by the fact that there appears to be a falling rather than a rising organic composition of capital[iv] in the current period - in the ten years prior to the collapse, as Table 1 shows, the proportion of capitalist investment in constant capital tended to decline, while investment in variable capital tended to increase.  Since 2009 investment in both constant and variable capital in the U.S. has tended to decline. These data suggest that intervening variables have reversed the organic composition predicted by Marx's law of the tendential fall in the rate of profit[v] for nearly fifteen years.

Table  1

Organic Composition of U.S. Capital, 1998-2012

_______________________________________________________________________

                                                    1998_______1999_______2000______2001______2002____

Ratio of Constant Capital

to Variable Capital (c/v)      0.3677______0.3736______0.3713____0.3990____0.3317____

Percent Change (c/v)                                  ____ 1.6-% _____ -0.61%____ -8.69%         -2.17%____

_______________________________________________________________________

                                                     2003_______2004_______2005______2006______2007____

Ratio of Constant Capital

to Variable Capital (c/v)       0.3351______0.3364______0.3800____0.3838____0.3595___

Percent Change (c/v)       ___1.03%______ 8.63% _____    4.41%    ___-0.99%          -6.34%__

________________________________________________________________________

                                                      2009_______2010_______ 2011______2012_____________

Ratio of Constant Capital

to Variable Capital (c/v)       0.3091______0.3179______0.2998____0.3102___________

Percent Change (c/v)      ___ -6.31%    _____2.85%   _____ -5.69%  ____3.47%      

There are several things which could, at least in part, account for this reversal of the predicted organic composition of capital.  For example, since 2000 service industries account for 80% of American employment; traditional manufacturing accounts for less than 20% (AFL-CIO 2002).   It could be argued that the service sector represents unproductive production and should not be counted in measuring the organic composition of capital.  There are, however, excellent theoretical and empirical reasons for regarding this as nonsense (viz. Poynter 2000).  Furthermore, even if fast-food restaurants or Starbucks coffeeshops don't manufacture commodities of precisely the same sort and in the same way that industrial manufacturing does, they still have constant and variable capital costs and patently labor adds value to the commodities they produce. Enterprises which do not produce surplus-value generally do not survive under capitalism.  The offshoring of industrial production for retail giants like Walmart simply transfers the problem to the national accounts of the Peoples Republic of China.  However, closer examination of the data suggests that the reversal of the predicted organic composition does not result from these factors: for example, when industrial manufacturing is segregated from other sectors, the same general constant capital-to-variable capital ratios still obtain which occur in the national aggregate data.  This suggests that a deeper structural explanation is at work here.

There is evidence for the dominance of a rentier[vi] sector in contemporary monopoly capitalism. Economic rent is the ability to extract money by virtue of owning a property right.  Land rent and interest are the principal forms of rents today; we frequently see them instantiated in such things as property rent, mortgages, monopoly rights, patent rights, credit card debt, student debt, bonds and other interest-bearing instruments (interest is also called "debt service").

Both Marx and Lenin assumed that banking and finance capital would evolve from usurious concentration on fictitious capital as German banking did in the late nineteenth and early twentieth centuries, producing efficiencies and a certain degree of economic planning of productive investment based on central banks and major banking interests.  They believed that the long-term profitability of commodity production would temper the role of rent seeking in banking and focus wealth into productive investment.  However, the German model did not prevail in the wake of two lost world wars.  The Anglo-American model of banking with its emphasis on short-term profit-taking and rent seeking has become dominant: the usurer's capital model of compound interest.  Note also that U.S. public policy favors no tax on interest, so that more of the economy is available to pay interest; this is also accomplished by shifting the tax burden off of real property and onto consumers - recall the bank-driven property-tax rebellions of the Reagan era and the continuing mania of the Republican Party and the right wing of the Democrats for tax cuts, even at the price of losing vital infrastructure and necessary state-provided services: every cent shifted from taxes becomes available to pay interest to the financial sector.

 Marx identified the basis for the problem in the third volume of Capital:

Capital appears as a mysterious and self-creating source of interest, of its own increase.  The thing (money, commodity value) is now already capital simply as a thing; the result of the overall reduction process appears as a property devolving on a thing in itself.... In interest-bearing capital, therefore, this automatic fetish is elaborated into its pure form, self-valorizing value, money breeding money, and in its form it no longer bears any marks of its origin.  The social relationship is consummated in the relationship of a thing, money, to itself.... There is still a further distortion.  While interest is simply one part of profit... it now appears conversely as if interest is the specific fruit of capital, the original thing, while profit now transformed into the form of profit of enterprise, appears as a mere accessory and trimming added in the reproduction process.  The fetish character of capital and the representation of this capital fetish is now complete.  In M - M' we have the irrational form of capital, the misrepresentation and objectification of the relations of production, in its highest power; the interest-bearing form, the simpler form of capital, in which it is taken as logically anterior to its own reproduction process; the ability of money or a commodity to valorize its own value independent of reproduction - the capital mystification in the most flagrant form [emphasis added] (Marx 1998: 255-56).

Fictitious capital, a phenomenon Marx characterizes as "usurer's capital" elsewhere, comes to predominate as what is merely a stage of capital reproduction becomes fetishized into money creating its own value independent of production. This fetishization[vii] can happen because of the dual nature of money.  On the one hand, money is transformed into capital when it is directly spent in acquiring the means of production and the labor power necessary to produce commodities (M-C-M'); on the other hand, money is capital in the form of credit, transformed into a special kind of commodity with a price, interest, on financial markets, and from the perspective of interest-yielding capital, appears to create it own value (M-M').   Marx describes this phenomenon in the following way:

The characteristic movement of capital in general, the return of the money to the capitalist, i.e., the return of capital to its point of departure, assumes in the case of interest-bearing capital a wholly external appearance, separated from the actual movement, of which it is a form. A gives away his money not as money, but as capital. No transformation occurs in the capital. It merely changes hands. Its real transformation into capital does not take place until it is in the hands of B. But for A it becomes capital as soon as he gives it to B. The actual reflux of capital from the processes of production and circulation takes place only for B. But for A the reflux assumes the same form as the alienation. The capital returns from B to A. Giving away, i.e., loaning money for a certain time and receiving it back with interest (surplus-value) is the complete form of the movement peculiar to interest-bearing capital as such. The actual movement of loaned money as capital is an operation lying outside the transactions between lender and borrower. In these the intermediate act is obliterated, invisible, not directly included. A special sort of commodity, capital has its own peculiar mode of alienation. Neither does its return, therefore, express itself as the consequence and result, of some definite series of economic processes, but as the effect of a specific legal agreement between buyer and seller (Marx 1998: 228).

While one cannot reject the patent absurdity of money without commodities or of money as a commodity, one can understand the fetishized misunderstanding of money as the capital which  produces interest, which makes money out of nothing.

The profitability of such fictitious capital rests on what Marx called the "magic" of compound interest.  An eighteenth century political economist, Richard Price, identified the fundamental problem with compound interest: "A shilling put out at 6% interest at our Saviour's birth would... have increased [by 1769] to a greater sum [than a solid gold sphere]... equal in  diameter to the diameter of Saturn's orbit" (Price, 1769).  Of course, there are no gold spheres the diameter of Saturn's orbit.  The reason for this is that for most of the period between the eighteenth century and now there has been a roughly fifteen-year cycle during which debt is accumulated until debt service on the aggregate debt exhausts the resources of debtors and the bubble collapses; creditors are forced to write off uncollectible debts and insolvent debtors find protection in the bankruptcy laws.  However, at least since the second Reagan administration it has been the policy of the U.S. government to prevent such bubbles from collapsing - a policy which has been pursued with only intermittent success, albeit with profound structural consequences for international capital and extremely high costs for the international working class.

 Returning to Marx's analysis of fictitious capital, he identifies this rent-seeking as intrinsically destructive of capital formation:

Interest-bearing capital, or, as we may call it in its antiquated form, usurer's capital, belongs together with its twin brother, merchant's capital, to the antediluvian forms of capital, which long precede the capitalist mode of production and are to be found in the most diverse economic formations of society.... [T]his usurer's capital impoverishes the mode of production, paralyses the productive forces instead of developing them, and at the same time perpetuates the miserable conditions in which the social productivity of labour is not developed at the expense of labour itself, as in the capitalist mode of production (Marx 1998: 424-425).

It is for these reasons, as well as others, that Marx believed that usurer's capital would be transformed into modern interest-capital and that banking would evolve from rent-seeking debt financing to directing investment into making industrial production increasingly dominant and technologically sophisticated with national banks and major banking houses nascently fulfilling economic planning functions which would eventually be fully realized in the triumph of socialism.  To a large degree German banking developed significantly in that direction, but the German model was not the direction taken by Anglo-American banking.  As the financial sector has grown in importance, so also has the rent-seeking behavior on which it is focused.

The financial sector has grown massively in the past few decades. While there is evidence that this phenomenon began as early as the late 1970s, in 2000 it was dramatically displayed as profits of the finance, insurance, and real estate (FIRE) sector substantially exceeded those of the manufacturing sector.  This trend has widened in every succeeding year since with the exception of 2008.   FIRE profits now encroach on the service sector.  Mortgage debt, credit card debt, and student debt provide a mammoth income flow for monopoly finance capital. This has been accompanied by the weighting down of major American corporations with huge amounts of leveraged debt.  Since the Reagan administration the pattern for investment has been to finance corporate acquisitions, taking on debt to leverage control of the firm, spinning off less than optimally profitable divisions, and extracting as much liquid wealth as quickly as possible by borrowing against inflated assets, using surplus-value and outside investment income to pay debt service on the loans.  The strategy for corporations which want to avoid hostile takeovers has been to take on as much debt as possible so that further debt leveraging cannot produce an income flow which will service the additional debt necessary to acquire the firm, the so-called "poison pill" strategy.  By 2007 FIRE sector-related debt accounted for 83.05% of private debt in the U.S.; real sector-related debt accounted for only 16.95%.  Since 1952 in absolute terms FIRE sector-related debt has soared by approximately 400.9%, while real sector-related debt has remained almost constant (U.S. Federal Reserve System, 2013).  This has been enormously profitable for the FIRE sector and disastrous for the American people: it focuses management's attention almost entirely on the next quarter and meeting the debt service obligations of outstanding debt, and it has forced lay-offs, wage reductions, and failure to refurbish constant capital even in the absence of crisis.  The push for austerity at the level of the firm has much predated the current crisis.

As the level of debt rose, bankers and investors scrambled to find new and old ways of supposedly reducing the risk associated with dizzying levels of debt.  On the one hand, between 1994 and 2004 insurance premiums for companies increased internationally to $3.3 trillion, an increase of 50% - $1.2 trillion of it in the U.S. alone.  Hedge funds emerged to spread risk more widely and, thus, reduce the level of risk of any single investor.  Collateralized debt obligations (CDOs) were created originally to secure lending against excessive risk.   But as banks began to roll their toxic debts into CDOs to avoid regulatory scrutiny and market loss of confidence, and hedge funds acted to protect their investors rather than cushioning risk for the banking system as a whole in 2008, the U.S. housing bubble collapsed and a related debt bubble threatened.  Here the U.S. decision that the banks were "too big to fail" (a euphemism for a policy to avoid the consequences of a collapse of a debt bubble no longer sustainable by creditor resources) collided with economic reality. Political cover had been created by democratization of the investment pool (i.e., commercial depositors' deposits were available for speculative investment, protected by government insurance, because of abolition of the wall between commercial and investment banking with the repeal of Glass-Steagall) which necessitated protecting finance capital from the costs of excessive debt.  However, such protection came at the price of trillions of dollars in TARP,[viii] bail-outs, and Federal Reserve credit extensions.  Millions of Americans were foreclosed on, unemployment soared, austerity was imposed on the country by stealthy sequestration, but the banks, the hedge funds, the insurance companies - basically the entire FIRE sector - were indemnified for all their losses.  There was no asset deflation, no cancellation of uncollectable debt, no pain for the investing class.

Interestingly, Marx envisioned something eerily like TARP in the context of credit-induced crises of capital in volume iii of Capital:

In a system of production where the entire continuity of the reproduction process rests upon credit, a crisis must obviously occur - a tremendous rush for means of payment - when credit suddenly ceases and only cash payments have validity. At first glance, therefore, the whole crisis seems to be merely a credit and money crisis. And in fact it is only a question of the convertibility of bills of exchange into money. But the majority of these bills represent actual sales and purchases, whose extension far beyond the needs of society is, after all, the basis of the whole crisis. At the same time, an enormous quantity of these bills of exchange represents plain swindle, which now reaches the light of day and collapses; furthermore, unsuccessful speculation with the capital of other people; finally, commodity-capital which has depreciated or is completely unsaleable, or returns that can never more be realised again. The entire artificial system of forced expansion of the reproduction process cannot, of course, be remedied by having some bank, like the Bank of England, give to all the swindlers the deficient capital by means of its paper and having it buy up all the depreciated commodities at their old nominal values [emphasis added] (Marx 1998: 335-336).

He dismissed such a course of action as economically imbecilic and thought that capitalists could not be so stupid as to embark on such a strategy.  In retrospect, he appears to have given the capitalist class too much credit for acumen.  He does, however, recognize that English banking as it had evolved in the mid-nineteenth century was capable of doing extraordinary damage to industrial capitalism, and thought that this capability for damage would militate industrial capital disciplining finance capital in a more production-facilitating direction:

The credit system, which has its focus in the so-called national banks and the big money-lenders and usurers surrounding them, constitutes enormous centralisation, and gives to this class of parasites the fabulous power, not only to periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous manner - and this gang knows nothing about production and has nothing to do with it. The Acts of 1844 and 1845 are proof of the growing power of these bandits, who are augmented by financiers and stock-jobbers (Marx, 1998: 382).

In this respect in criticizing nineteenth-century English banks he was more right about contemporary finance capital than he knew.

Hyperfinancialization has had extraordinary microeconomic and macroeconomic consequences for monopoly finance capital and the international system.  On the microeconomic front it has radically changed how economic actors - owners and managers of capitalist enterprises, investors, workers and their families - view themselves, their goals and objectives, and the constraints under which they operate.  For example, the Occupy movement's somewhat simplistic, but powerfully evocative, division of society into the 1% and the 99% arises directly from the crisis of 2008 and struggles against the depredations of finance capital in foreclosures, unemployment, and the austerity-driven shifting of the costs of the crisis onto working families.  Awareness of finance capital's role in saddling students and working Americans with an incommensurate burden of debt has risen strikingly with the crisis.  Equally important is the way short-sighted concern with next-quarter performance, the single-minded pursuit of asset inflation through leveraged financing, fetishization of investor profit maximization, and the pervasive influence of finance-based models of operation have influenced capitalist self-image, goals, and constraints.  On the other hand, the macroeconomic consequences have been equally far-reaching: economies are significantly driven by price fluctuations in financial and real estate assets, as well as the overwhelming need to service the financial obligations of debt, which increasingly crowds out all other expenditures of capital. Financial instruments remain a very important area of investment. The size and fragility of the FIRE sector have been significantly increased.  Financial deregulation remains the norm, even after the collapse of the mortgage and financial instrument bubbles.  One of the major consequences of hyperfinancialization has been the changed nature of the underlying crisis.

By huge transfers from the government to finance capital, the ongoing problem of underaccumulation was pushed into an actual crisis of underaccumulation.[ix]  As early as 2004, even neoclassical economists were pointing to strong evidence of financialization limiting capital accumulation (Stockhammer 2004) and this trend does not appear to be abating.  The nature of the problem is highlighted in Table 2:

Table 2

Mean Change in Gross Domestic Product (GDP) and Fixed

__________________Nonresidential Investment (FNI), 1930-2013__________________

Years___________Mean Percent Change in GDP     __Mean Percent Change in FNI____

1930-1934                              -7.63%                                            -12.76%

1935-1939                                7.16%                                               7.01%

1940-1944                              19.21%                                               7.98%

1945-1949                                4.10%                                              25.13%

1950-1954                                 7.44%                                               0.38%

1955-1959                                 5.93%                                               0.35%

1960-1964                                 5.56%                                               0.72%

1965-1969                                 8.22%                                               2.41%

1970-1974                                 8.80%                                               1.29%

1975-1979                                10.90%                                              3.04%

1980-1984                                  8.97%                                             -0.75%

1985-1989                                  6.88%                                             -2.26%

1990-1994                                  5.27%                                             -1.33%

1995-1999                                  5.71%                                               3.65%

2000-2004                                  4.86%                                              -3.38%

2005-2009                                  3.40%                                              -0.96%

2010-2013                                  4.08%                                              -0.24%

This table presents side-by-side the mean rate of change in Gross Domestic Product (GDP) and the mean rate of change in Fixed Nonresidential Investment (FNI) in five-year cohorts since 1930.  FNI is a measure of investment in constant capital.  Note that mean negative growth in FNI is characteristic of two periods: (1) the first five-year cohort of the Great Depression and (2) the period from 1980 to the present (with the exception of the 1995-1999 cohort, which is probably an artifact of the dot.com bubble).  What is particularly alarming is that mean growth in GDP ranged from 8.97% to 3.4% in the second period, so as GDP was steadily growing, mean growth of FNI was largely negative.  This must be seen in the context of the shift of firm profits and investment income away from reinvestment in plant and equipment to servicing leveraged debt which also occurred in this period.  If this trend continues, U.S. capitalism will be systematically deprived of necessary reinvestment in constant capital.  This will set very stark constraints on employment possibilities, and likely accounts today - together with American austerity policies - for the lack of a real employment recovery.  Furthermore, opportunities to bring on-line technological innovation, particularly investment in new, sustainable production technologies will simply cease to exist.

In addition to the longer-term structural causes the problem is exacerbated by the incentives provided by finance capital: if rent-seeking at compound interest is more short-term profitable, implied by the dominance if fictitious capital, than investment in constant and variable capital, where will investment go?   Several recent metrics indicate the greater attractiveness of financial sector stocks over other sectors; these serve as estimators of the greater profitability of the financial sector.  On the basis of yearly dividend yield in 2012 financial sector stocks averaged 4.31%, manufacturing and basic materials sectors stocks averaged 3.55%, and service sector stocks trailed with an average of 1.93% on the New York Stock Exchange.  Comparing the ten best performing NYSE stocks in each sector between Q4 2012 and Q3 2013, financial sector stocks increased in price by 30.87%, manufacturing and basic materials sectors stocks by 23.18%, and service sector stocks by 24.10%.  Furthermore, debt and equity securities, usually not publicly traded on capital markets, had reached more than $2 trillion by the end of Q1 2012.  Similarly, U.S. corporate bond issues in 2013 had annual yields comparable to manufacturing and basic materials sectors stocks and superior to service sector stocks -- 3.22% -- with significantly fewer risks.  In short, investments in firms and instruments associated with debt service remain on balance more profitable than traditional investments in constant and variable capital.

 If this analysis is correct, and the weight of the evidence supports it, the crisis of underaccumulation will be with us for the foreseeable future, compounding the impoverishment of working people, impeding real increases in employment, forestalling technological innovations in production, dooming mankind to an unsustainable future.  This has immediate implications for our tactics in struggle.  Two will become increasingly important.

First, the burden of debt - mortgages, credit car debt, student debt - plays an increasingly onerous role in the lives of working families, extracting more and more wealth through debt service, foreclosing educational and employment opportunities, making clearer to everyone involved the way wage slavery is careening toward debt peonage.  Struggles focused on debt, particularly demanding repudiation of debt or resisting the collecting of principal and debt service by financial institutions - debt strikes, demonstrations, actions against banks and other financial institutions, agitation against the political clout of finance capital, organizing campaigns for re-regulation of the banking and financial sector (e.g., full readoption of Glass-Steagall), playing on factional differences within capital, and building popular and united fronts around debt struggles.  These will offer almost limitless opportunities for popular mobilization and a vehicle for the transition to building a popular front against monopoly finance capital.  Intermediate struggles are important for building class consciousness, but struggles against the burdens of debt will allow us to focus popular attention directly on the primary contradiction of capitalism and the need for revolutionary, systemic change by concentrating on central aspects of monopoly finance capital.

 Second, the crisis of underaccumulation intersects the impact of global climate change and peak oil in a particularly vicious way.  The underaccumulation of capital means a systematic failure to invest in constant capital which makes it impossible in principle to build sustainable production and ensure a transition from fossil fuels which can increase living standards here and in the developing world.  As Marxist-Leninists, we must avoid casting the solution in terms of a choice between productionism and a neo-Luddite demand to cut the standard of living of the working class to "save the planet."  What we need is a smarter, sustainable productionism which focuses on recyclable materials, viable alternatives to fossil fuels, and increased efficiency and sustainability through the implementation of higher orders of technology, and which holds the promise of delivering a high standard of living to the world at large: this is a real program for saving the planet and mankind.  The crisis of underaccumulation dooms us to starting years behind where we need to be on achieving state power.  It represents a significant cannibalization of productive capacity to feed finance capital's need for constant rising profits.  It also presents us with an opportunity to mobilize popular and united fronts to demand reinvestment in plant and equipment, to fund a green revolution in production and technology, and to begin a real jobs program focused on upgrading plant and equipment with sustainable technology and rebuilding vital national infrastructure.  The demand for real jobs is directly tied to increasing productive capacity.  With a well-funded national program to invest in employment building sustainable technologies the supposed contradiction between the interest of workers and green sustainability dissolves.  However, this will involve pressuring capital today with demands for increases in investment in constant and variable capital, demands which, in turn, will increasingly mobilize and radicalize workers to understand the relationship between meeting the challenges of global climate change and peak oil and thwarting structural changes in capitalism brought on by monopoly finance capital.  The fight for jobs and a green New Deal puts us directly in the fight against underaccumulation.

REFERENCES

AFL-CIO (2002) The Service Sector: Vital Statistics. Department of Professional Employees Research Department. Fact Sheet 2002, 5.  Washington: AFL-CIO. http://www.dpeaflcio.org/programs/factsheets/archived/fs_service.pdf.

Cogoy, Mario (1972).  "Les theories néo-Marxistes: Marx et l'accumulation du capital."  Les Temps Modernes (September-October), 396-426.

___________ (1973a).  "A Reply to Paul Sweezy's 'Some Problems in the Theory of Capital Accumulation." Bulletin of the Conference of Socialist Economists (Winter), 52-67.

___________ (1973b).  "The fall in the Rate of Profit and the Theory of Accumulation." Bulletin of the Conference of Socialist Economists (Winter).

Harvey, David (1999). The Limits to Capital.  London: Verso.

____________ (2013).  A Companion to Marx's Capital, Volume 2.  London: Verso.

Hudson, Michael, and Dirk Bezemer (2012).  "Incorporating the Rentier Sectors in a Financial Model."  World Economic Review (1), 6.

Itoh, Makato (1980).  Value and Crisis.  London: Pluto.

__________ (1988).  The Basic Theory of Capitalism.  London: Macmillan.

Kliman, Andrew (2012).  The Failure of Capitalist Production: Underlying Causes of the Great Recession. London: Pluto Press.

Mattick, Paul (1969).  Marx and Keynes.  Boston: Porter Sargent.

Marx, Karl (1996).  Capital, volume i.  New York: International Publishers.

_________ (1997).  Capital, volume ii.  New York: International Publishers.

_________ (1998).  Capital, volume iii.  New York: International Publishers.

Mill, John Stuart (1909).  Principles of political economy with Some of Their Applications to Social Philosophy.  London: Longmans, Green and Co.  (http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=101ltemid=27).

Poynter, Gavin (2000) Restructuring in the Service Industries. London: Mansell.

Stockhammer, Engelbert (2004).  "Financialisation and the slowdown of accumulation." Cambridge Journal of Economics, 28(5), pp. 719-741.

U.S. Federal Reserve System (2013).  "'Z.1 Financial Accounts of the United States: Flow of Funds, Balance Sheets, and Integrated Macroeconomic Accounts." December 9, 2013.

Yaffe, David (1972).  "The Marxian Theory of Crisis, Capital and the State."  Bulletin of the Conference of Socialist Economists (Winter), 5-58.

ENDNOTES

[i] Since the 1970s Keynesian countercyclical fiscal policies have been decreasingly effective in stimulating aggregate demand and employment during the downswing of the business cycle.  Keynesianism, and its Neo-Keynesian and New Keynesian developments basically prioritizes restoring firm incomes and cash flows over increases in employment and household income, essentially treating the latter two as if the trickle-down effects from restoration of firm income and ash flows are genuine mediators of aggregate demand.  Prior to the 1970s they were to a significant degree effective, but that has to do with the structure of capitalism in the post-1932 world.  Upward-redistributive tendencies in income and the much greater role of finance capital in setting investment and fund flow priorities have significantly reduced both the amount of aggregate demand countercyclical policy can mobilize and the amount of employment that demand can potentiate.  Creation of aggregate demand and employment with Keynesian policies required maintaining what John Kenneth Galbraith once called "the truce on equality," maintaining the labor and social welfare goods associated with the New Deal, even if their importance was diminished and contained (I am grateful to Norman Markowitz for pointing this out to me). Income inequality which has structurally affected capitalism, has increased markedly. From to 1947 mean income grew by $5,708 and all gains in income were captured by the lower 90% of the income distribution.  In the period 1999-2010 average income grew $3,918 and 100% was captured by the top 10% of the income distribution.  The difference between the official unemployment rate and the U-6 rate since 2009 has averaged 7%-7.4%; historically it has been 3-4%.  The growing gap between the official unemployment rate and the U-6 rate is an indicator of the decreased effectiveness of Keynesian measures at creating employment.  Austerity policies, particularly those pursued at the state level (and later the national sequestration), have certainly contributed to this ineffectiveness, but the trend was visible even before those policies were adopted and is consistent with evidence from the mid-1970s where such policies were not an intervening variable.  The attempt to use monetary policy to aid Keynesian fiscal policy embodied in the Federal Reserve's QE2 program revealed the huge change finance capital has introduced into American banking: the entire $700 billion QE2 credit creation was  used entirely by banks for foreign currency arbitrage and other international speculation, not loans to the real economy.

[ii] Hyperfinancialization refers to the increasingly commanding role of finance capital (the so-called FIRE sector - finance insurance and real estate) in the international economy, creating demands and constraints on capital which privilege the needs of finance capital over other forms of capital.

[iii] A crisis of overaccumulation is one in which the tendency of the rate of profit to fall creates a surplus of capital relative to the opportunities which exist for that capital to be productively employed.  Capital is, thus, overaccumulated, and production stagnates.  There have been a variety of Marxist elaborations of the idea of a crisis of overaccumulation, which are suggested by Marx's own somewhat cursory treatment: Mattick 1969; Cogoy 1972, 1973a, 1973b, Yaffe 1972; Itoh 1980, 1988; Harvey 1999;  and Kliman 2012.

[iv] The organic composition of capital is the ratio of constant capital to variable capital (viz., http://www.marxists.org/glossary/terms/o/r.htm).  One implication of the law of the tendential fall of the rate of profit is that this ratio will increase as constant capital grows relative to variable because of the costs of prematurely amortizing plant and equipment made obsolete by technological innovation.

[v] The law of the tendential fall of the rate of profit was stated by Marx in the third volume of Capital: "...the gradual growth of constant capital in relation to variable capital must necessarily lead to a gradual fall of the general rate of profit, so long as the rate of surplus-value, or the intensity of exploitation of labour by capital, remains the same... It is likewise just another expression for the progressive development of the social productivity of labour, which is demonstrated precisely by the fact that the same number of labourers, in the same time, i.e., with less labour, convert an ever-increasing quantity of raw and auxiliary materials into products, thanks to the growing application of machinery and fixed capital" (Marx, 1998: 148).  It essentially argues that the rate of profit tends to fall, holding the rate of surplus-value constant, because, as labor becomes more productive because of technological innovation, that innovation causes the costs of constant capital to increase.  If the rate of surplus value held constant and the costs of constant capital increase, profit must necessarily fall.  This is, however, only a general tendency and Marx identifies a number of factors which can for short periods of time interfere with this tendency.

[vi] Hudson and Bezemer (2012: 6) provide a succinct definition of the rentier sector: "Rentiers are those who benefit from control over assets that the economy needs to function, and who, therefore, grow disproportionately rich as the economy develops.  These proceeds are rent -- revenues from ownership 'without working, risking, or economizing,' as John Stuart Mill (1909) wrote of the landlords of his day, explaining that 'they grow richer, as it were in their sleep'.... Just as landlords were the archetypical rentiers of their agricultural societies, so investors, financier, and bankers are in the largest rentier sector of today's financialized economies: finance controls the economy's engine of growth, which is credit in all its forms."

[vii] Marx uses the term fetishization to mean the confusion of a mystifying appearance for an underlying reality.  The classic example of this is commodity fetishism, where a relation between objects is confused for a social relation between people: "There is a definite social relation between men, that assumes, in their eyes, the fantastic form of a relation between things.  In order, therefore, to find an analogy, we must have recourse to the mist-enveloped regions of the religious world.  In that world the productions of the human brain appear as independent beings endowed with life, and entering into relation both with one another and the human race. So it is in the world of commodities with the products of men's hands.  This I call the Fetishism which attaches itself to the products of labour, as soon as they are produced as commodities, and which is therefore inseparable from the production of commodities" (Marx, 1996: 47).  In the third volume of Capital Marx likewise argues that, in the reproduction circuit of capital, money can be confused for the productive activity of labor which alone creates value.

[viii] The Troubled Asset Relief Program, administered by the U.S. Department of the Treasury.

[ix] I particularly want to differentiate the model of a crisis of underaccumulation I adopt here from the model put forward by Henryk Grossman (1929).  Grossman argues that accumulation will be ultimately stymied by the expenditure to raise the living standards of workers and to expand capitalist consumption with the inability to permanently thwart the law of the tendential fall in the rate of profit.   The model I am putting forward centers on the role of fictitious capital in luring capital away from investment in constant and variable capital.

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