IDEAS home Printed from https://ideas.repec.org/a/sae/reorpe/v56y2024i3p355-379.html
   My bibliography  Save this article

The Tendency of the Non-Bank Financial Sector to Rise: A Materialist Account of the Growth of Market-Based Finance

Author

Listed:
  • Bruno Höfig
  • Leonardo Paes Müller
  • Iderley Colombini

Abstract

This article introduces the distinction between money-as-money dealing capital (MMDC) and money-as-capital dealing capital (MCDC), laying the foundations for new developments in the field of Marxian political economy. First, it explains why banks, which manage the circulation of money-as-money, are able to issue instruments that perform monetary functions, and also why non-bank financial intermediaries, which manage the circulation of money-as-capital, tend to become increasingly important as the capitalist mode of production evolves. The distinction between MMDC and MCDC also allows for a more thorough understanding of the nature of Marx’s category of interest-bearing capital (IBC), explaining when and why a capital’s net income takes the form of profit and interest, unveiling the mechanisms that produce the (socially valid) illusion that every capital bears interest. JEL Classification: B14, B26, E11, E43, E44

Suggested Citation

  • Bruno Höfig & Leonardo Paes Müller & Iderley Colombini, 2024. "The Tendency of the Non-Bank Financial Sector to Rise: A Materialist Account of the Growth of Market-Based Finance," Review of Radical Political Economics, Union for Radical Political Economics, vol. 56(3), pages 355-379, September.
    • Handle: RePEc:sae:reorpe:v:56:y:2024:i:3:p:355-379
    DOI: 10.1177/04866134241239694
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/04866134241239694
    Download Restriction: no
    File URL: https://libkey.io/10.1177/04866134241239694?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Makoto Itoh & Costas Lapavitsas, 1999. "Political Economy of Money and Finance," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-37578-9, May.
    2. Ben Fine, 2013. "Financialization from a Marxist Perspective," International Journal of Political Economy, Taylor & Francis Journals, vol. 42(4), pages 47-66.
    3. Costas Lapavitsas, 1997. "Two Approaches to the Concept of Interest-Bearing Capital," International Journal of Political Economy, Taylor & Francis Journals, vol. 27(1), pages 85-106, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Carolina Alves, 2023. "Fictitious capital, the credit system, and the particular case of government bonds in Marx," New Political Economy, Taylor & Francis Journals, vol. 28(3), pages 398-415, May.
    2. Costas Lapavitsas, 2000. "On Marx's Analysis of Money Hoarding in the Turnover of Capital," Review of Political Economy, Taylor & Francis Journals, vol. 12(2), pages 219-235.
    3. Kalim SIDDIQUI, 2019. "The US Economy, Global Imbalances and Recent Development: A Critical Review," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 69(2), pages 175-205, December.
    4. Michaelides, Panayotis G. & Milios, John G. & Konstantakis, Konstantinos N. & Tarnaras, Panayiotis, 2015. "Quantity-of-money fluctuations and economic instability: empirical evidence for the USA (1958–2006)," MPRA Paper 90145, University Library of Munich, Germany.
    5. Nick Bernards, 2019. "Tracing mutations of neoliberal development governance: ‘Fintech’, failure and the politics of marketization," Environment and Planning A, , vol. 51(7), pages 1442-1459, October.
    6. Di Bucchianico, Stefano, 2019. "The Impact of Financialization on the Rate of Profit: A Discussion," Centro Sraffa Working Papers CSWP36, Centro di Ricerche e Documentazione "Piero Sraffa".
    7. Staritz, Cornelia & Newman, Susan & Tröster, Bernhard & Plank, Leonhard, 2015. "Financialization, price risks, and global commodity chains: Distributional implications on cotton sectors in Sub-Saharan Africa," Working Papers 55, Austrian Foundation for Development Research (ÖFSE).
    8. Alicia Giron & Monika Meireles & Andrea Reyes, 2019. "Banking concentration and financial reorganization: Greece, Portugal, and Spain in the post-crisis period," PSL Quarterly Review, Economia civile, vol. 72(291), pages 259-277.
    9. Labrinidis, George, 2014. "The forms of world money," MPRA Paper 59962, University Library of Munich, Germany.
    10. Eckhard Hein, 2005. "Money, Interest, and Capital Accumulation in Karl Marx’s," Method and Hist of Econ Thought 0501002, University Library of Munich, Germany.
    11. Costas Lapavitsas, 2002. "Commodity Versus Gift As Metaphor For Market Versus Non-Market Relations," Working Papers 127, Department of Economics, SOAS University of London, UK.
    12. Hein, Eckhard, 2002. "Money, interest, and capital accumulation in Karl Marx's economics: A monetary interpretation," WSI Working Papers 102, The Institute of Economic and Social Research (WSI), Hans Böckler Foundation.
    13. Nicolás àguila & Juan M. Graña, 2020. "The Influence of the Interest Rate in Capitalist Competition: Capital Differentiation and Structural Change," Bulletin of Political Economy, Bulletin of Political Economy, vol. 14(2), pages 153-177, December.
    14. Costas Lapavitsas, 2003. "Money As €˜Universal Equivalent’ And Its Origin In Commodity Exchange," Working Papers 130, Department of Economics, SOAS University of London, UK.
    15. Bill Lucarelli, 2011. "The Economics of Financial Turbulence," Books, Edward Elgar Publishing, number 14252, March.
    16. W A Jackson, 2015. "Markets and the Meaning of Flexibility," Economic Issues Journal Articles, Economic Issues, vol. 20(2), pages 45-65, September.
    17. Ulas Sener, 2011. "Turkish Monetary Policy in a Post-Crises Era: A Further Case of ‘New Consensus’?," Chapters, in: Claude Gnos & Louis-Philippe Rochon (ed.), Credit, Money and Macroeconomic Policy, chapter 14, Edward Elgar Publishing.
    18. Giovanni Scarano, 2019. "Capital accumulation and corporate portfolio choice between liquidity holdings and financialisation," Departmental Working Papers of Economics - University 'Roma Tre' 0243, Department of Economics - University Roma Tre.
    19. Hyun Woong Park, 2021. "A division of the capitalist class and the market for money capital," Metroeconomica, Wiley Blackwell, vol. 72(1), pages 2-21, February.
    20. Richard Bůžek & Christoph Scheuplein, 2022. "The Global Wealth Chains of Private‐Equity‐Run Physician Practices," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 113(4), pages 331-347, September.

    More about this item

    Keywords

    Marx; credit; banks; non-bank financial intermediaries; interest-bearing capital;
    All these keywords.

    JEL classification:

    • B14 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Socialist; Marxist
    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:reorpe:v:56:y:2024:i:3:p:355-379. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.urpe.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.