Finance Capital Revisited

This chapter deals with the concept of finance capital — a high topic in early-twentieth-century Marxist literature — emphasizing its usefulness as an instrument with which to analyses modern capitalist economies. Drawing mainly on Marx’s observations on chapter 27 Volume III of Capital, ‘The Role of Credit in Capitalist Production’, on Hilferding’s Finance Capital and on the more general Marxian framework (capital as a social relation) it seems possible to replace this pseudo divorce (also known as the ‘corporate revolution’) with a new phase of capitalism in which capitalists are as dominant as before, although operating through a different institutional apparatus. In this sense the chapter resurrects the more general meaning of finance capital so as to include not only capital at the disposition of banks but also capital at the command of non- banking entities and/or individuals. Both forms of private wealth — bank deposits and tradable securities — are seen as enjoying the same essential properties of liquidity (readily convertible into its money equivalent) and increasing value (appreciation, interest, dividends) and should therefore qualify as finance capital. Breaking away from the notion that the dominance of finance capital evolves through the dominance of financial institutions it seems possible to speak of a financial phase as a stage in which an ever-increasing proportion of the capital used in industry is finance capital without resorting to the unlikely task of demonstrating the preeminence of the banking sector over non-banking activities.