Tuesday, 7 January 2014

Book reviews: Marxism and UK GAAP

Profiting Without Producing: How finance exploits us all, Costas Lapavitsas (Verso, £20)

There isn’t much argument any more as to the headline factors that led to the collapse of global financial markets over the course of 2007/2008. Regardless of these causes, there is perhaps even less room for argument about the impact these factors had on the whole economy.

In this dense, technical but highly articulate treatise, Lapavitsas, a professor of economics at London’s School of African and Oriental Studies (SOAS), goes a few steps further back by trying to identify an underlying cause. In his view, there is no question what this cause is – it’s something he refers to as the “financialization” of capitalism. The entire system that underpins advanced Western economies (and most developing economies as well if Lapavitsas is right) has become so dominated by - and in thrall to - the financial sector that all the old models of economics, not to mention the old realities of capitalism, can no longer be relied upon.

Lapavitsas draws heavily on his roots in Marxist political economy (and Japanese Uno Marxism in particular) to piece together a meaningful version of events that offers a new narrative for the events of 2007/2008, not to mention the 30 years leading up to those events. He started to write about the financialization of capitalism in the early 2000s, when the boom was in full swing.

The bursting of the bubble offered an excellent opportunity to develop his theories using the ultimate real-world case study, but as he explains, it also meant he has spent the last five years “trying to hit a moving target” as the crisis unfolded in one wave after another (the book goes up as far as the near collapse of the eurozone in 2010/2011). The interpretation won’t be to everyone’s tastes, but it’s hard to fault the academic rigour and difficult not to feel that this is a valuable addition to the growing canon of work suggesting what we can learn from the financial crash.