This article was downloaded by: [Universitaetsbibliothek Tuebingen]On: 14 April 2015, At: 07:37Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number:1072954 Registered office: Mortimer House, 37-41 Mortimer Street,London W1T 3JH, UK

Review of Social EconomyPublication details, including instructions forauthors and subscription information:http://www.tandfonline.com/loi/rrse20

Marx on Credit, Interest andFinancial InstabilitySteve Shuklian aa Marshall UniversityPublished online: 29 Jul 2006.

To cite this article: Steve Shuklian (1991) Marx on Credit, Interest andFinancial Instability, Review of Social Economy, 49:2, 196-217, DOI:10.1080/00346769100000016

To link to this article: http://dx.doi.org/10.1080/00346769100000016

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of allthe information (the “Content”) contained in the publications on ourplatform. However, Taylor & Francis, our agents, and our licensorsmake no representations or warranties whatsoever as to the accuracy,completeness, or suitability for any purpose of the Content. Any opinionsand views expressed in this publication are the opinions and views ofthe authors, and are not the views of or endorsed by Taylor & Francis.The accuracy of the Content should not be relied upon and should beindependently verified with primary sources of information. Taylor andFrancis shall not be liable for any losses, actions, claims, proceedings,demands, costs, expenses, damages, and other liabilities whatsoeveror howsoever caused arising directly or indirectly in connection with, inrelation to or arising out of the use of the Content.

This article may be used for research, teaching, and private studypurposes. Any substantial or systematic reproduction, redistribution,reselling, loan, sub-licensing, systematic supply, or distribution in anyform to anyone is expressly forbidden. Terms & Conditions of accessand use can be found at http://www.tandfonline.com/page/terms-and-conditions

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

Marx On Credit, Interest and Financial Instability* 13y Steve Shuklian*" Marshall University

I. Introduction Over the past decade or so, there has been a strong revival of interest

in Karl Mam's theory of money anlong many heterodox econonlists. These studies have focused on such issues as the relationship between his theory of money and those of contemporary monetary theorists, his criticisms of the quantity th~:ory of money, and the role of gold in his monetary theory.' Yet, much less attention has been paid to his analysis of the relationships between credit, interest and financial instability. The present study attempts to integrate and contribute to the literature on Marx's thought on thes,e topics. The first section of the paper discusses Marx's analysis of the various f o m ~ s and functions of credit in a capitalist economy. The second section focuses on Marx's ideas about the nature of interest and his theory of the determination of the rate of interest. In panicular, the reasons for Marx's rejection of the classical loanable fund:; moclel of interest and the idea of a natural rate of interest are explored. In the third section, the role the financial system plays in intensifying business cycles and econon~ic crises will be examined. Finally, i t is s~lggested that there are a number of insights that can be drawn from h/[arx's discussion of credit and financial instability that cannot be obtained from conventional monetary and financial theory. Perhaps the most important insight is that the financial system, while essential for capitalist development, encourages pro- cesses that continually exacerbate the inherent instability of a capitalist monetary economy.

**The author would like to thank Professor Erncst Randa of the University of Utah and two anonymous referees of this journal for their comments on an earlier version of thrs paper.

'The standard reference for IMarx':: ideas on nloney is DeBrunhoff (1976). The reader is forewarned, however, that this study i s written in a rather complicated style and is actually inore difficult to follow than Marx's own writing on n.mney. More lucid studies on this subject are Foley (1983) and Morris (1967).

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

MARX ON CREDIT. IIN~EKES'I' A N D FINANCIAL. INSr.4BILITY

The Forms and Functions of Credit In a Capitalist Ecorlomy

In Marx's analysis, the credit systeni is conceptualized as a set of institutions and processes that niobilizes idle money balances hoarded by individuals and capitalist enterprises so that they {nay serve as money-capital in the hands of industrial capitalists. Money functions as capital when it is invested in the process of production by purchasing labor-power and nieans of production, and mobilized to produce comn~odities for profit. While it is true that credit can be advanced for individual purchases of consumer goods and in order to finance government expenditures, Marx suggests the principal function of the credit system is to concentrate idle hoards of nioney so they can be employed by industrial capitalists. The money is transformed into productive capital by the industrial capitalist, and the lender is given a claim on a portion of the expected profits. Money advanced for these purposes becomes capital, yields interest for its owner, and is, therefore, called interest-bearing capital by Marx. In, this way, even money beconies a comnlodity once a sophisticated systeni of credit develops (Marx, 1967c, pp. 338-41). In essence, the deniand for credit is a deniand for nioney to function as capital.

Credit exists in two principal forms, conlmercial credit and bank credit.' Commercial credit, which constitutes "the basis of the credit systeni," is the mutual credit that capitalists advance to one another in the process of production and circulation (1967c, p. 479). Since the periods of production vary for different coniniodities, some capitalists come to the market as sellers before others arrive as buyers. The niore extensive the division of labor and the number of coni~iiodities produced become, the greater the proble~ns of synchronization and the niore difficult the conversion of coriimodities into money becomes. Under these circumstances. capitalists must sell conlrnodities on credit with the payment deferred until a later date, so the continuity of production and circulation can be maintained. [n effect. capitalists loan each other comn~odities against written promises to pay money for them at some specified future date. These promissory notes are called bills of exchange (or con~nlercial bills) and are a form of comniercial

'This study focuses on these t\vo forms o f credit rather than on some of the forriis of cnj~ital to which these forrns of credit are related. On the various forrns of capital see Fine (1985-86) and Harris ( 1976).

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

REV1E.W OF SOCIAL ECONOMY

credit. According to klarx, the bill of exchange form of commercial credit provides the basis of all forms of credit-money (1967c, pp. 400-0 1).

Capitalism could not develop very extensively on the basis of comn~ercial credit alone. One of its limitations is that the issue of bills of exchange is restricted by the "wealth of the industrialists and merchants, that is their command of reserve capital in the case of delayed returns" (1967c, p. 481). There is also the problem of uncertainty. In the period between the issue and maturity of the bill of exchange, market condition!; may change and may adversely affect the ability of the borrower to make good on the promise to pay. Therefore, "the longer the bills of exchange run, the larger must be the reserve capital, and the greater the possibility of a diminution or delay of the returns through a fall ot'pricc:~ or a glut in the market" (1967c, p. 48 1). It is clear, therefore, ,:hat c:ommercial credit in the fornl of bills of exchange cannot expand rap~.dly enough to accommodate the growth of output, the expansion of the market, the lengthening periods of production and the increase in uncertainty that accompany the development of a capilalist monetary economy. Capitalist production cannot expand solely on the basis of the credit capitalists n~utually advance to one another. 11: must be supplemented by a different, alternative source of crgzdit, and that is bank credit.

A nascent form of bank credit involves the discounting of bills of exchange by commercial banks or other financial institutions (e.g., acceptance houses, discount houses or merchant banks). The bank purchases the biil of exchange and gives the bearer a cash payment. It discounts the bill by deducting a certain interest charge for the time remaining until the bill falls due. Once the bill matures, the bank will collect the face value of the bill from the debtor. In this seemingly simple operation, bankers bzgin the process of the concentration and centralization of the sou.rces of credit and act as financial intermediaries between the various kinds of capitalist enterprises. The process of concentration and centralization of sources of credit, of porerztiul money-capital, develops further as capitalists reduce their lending to one another and begin extending credit to the banks in the form of deposits, while drawing credit from the banks in the form of loans. With this concentratior~ and centralization of loanable money-capital within the banking system, the limitations of commercial credit are overcome. The conditions ot' existence for the extension of bank credit are set in place.

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

kIARX ON CREDIT. LY'I'EREST AND FINAKCIAI- 1NST.ABLLI'I'Y

The development of banking institutions creates a new and increasingly intricate set of relationships between industrial and financial capital. The banks monetize debt by discounting bills of exchange, accepting individual capitalists' promises to pay by backing them up with the bank's own funds, or by accepting pronlises to pay and issuing their own promises (banknotes and drafts) in exchange. The banks can also advance money capital by concentrating and managing idle reserves of all kinds, and loaning them to functioning industrial capitalists. In addition, the banking system relieves individual capitalists of the risks and costs involved in engaging in their own credit transactions. The banks themselves function as capitalist enterprises! making their profits on the difference between the interest they receive on their assets (loans) and the interest they pay on their liabilities (deposits). In essence, banks become the "general managers of money-capital," representing all borrowers and money lenders (1967c, pp. 402-03).

With the development of a banking and credit system the act of financing production becomes a general social process. In Marx's words:

This social character of capital is first promoted and wholly realized through the full development of the credit and banking systc~n. . . . It places all the available and even potential capital of society that is not already actively employed at the disposal of the industrial and corntnercial capitalists so that neither the lenders nor the users o f this capital are its real owners or producers. It thus does away with the private character of capital. . . . By l~leans of the banking syste~n the distribution of capital as a special business. a social function. is taken out of the hands of the private capitalists and usurers (1 967c. p. 607).

This "socialization" of capital is reflected in the sources of the reserves of money-capital that banks have available to loan. One of these is the idle money balances such as cash. gold and proniissory notes deposited by capitalists in the banks. These funds flow out of accumulated surplus value that is not immediately employed as capital because there may be no incentive to do so or because the total amount of money-capital required to undertake an investment project has not yet been amassed. The principal sources of these funds include the capital released by temporary interruptions in the process of produc- tion, the depreciation reserves held by firms, and windfall profits

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

REVIEW OF SOCIAL ECONOMY

arising from unexpected retluctions in the prices of raw materials or increases in the prices of finished comnlodities. In addition to these sources are the idle money balances of landlords and workers. Indeed, idle cash balances anywhere in the econonly are channelled into the banks where they become pctential money-capital. According to Marx, "with the development of the banking system, and particularly as soon as banks came to pay interest on deposits, money savings and the temporarily idle money of al! classes [are] deposited with themn(1967c, p. 403). The merging of snla.11 hoards of idle money into massive pools of potential money-capital creates the foundation for large-scale capital investment.

There is another component of bank reserves that Marx finds particularly important. These are the public securities that banks hold. Public securities include mortgages, treasury notes, government bonds and all kinds of stocks, "in short interest-bearing paper . . . significantly different from bills of exchange" (1967c, pp. 463-64). These bonds, securities and shares have no intrinsic value. They are sinlply paper titles conferrinl; upon their owners the right to appropriate a portion of the profits of enterprise. These claims are separated from the actual process of production but are, in general, easily negotiable and convertible into cash in financial markets. Marx calls these kinds of paper claims on wealth "fictitious capital" because the market value of these shares does not correspond to the value of the real physical assets employed by capitalist fim!.s (1967c, p. 400).3 In other words, the

3DeBrunhoff (1976. pp. 94-99) plovides no clear definition of fictitious capital. but implies that any Loan of capital creates fictitious capital. Actually, Marx uses this concept in two senses. First. fictitious capital can bc thought of as a capitalizcd claim on future wealth (surplus vi~lue) held by an individual or institution that has loanecl money in the form of interest-bearing capital to an industrial capitalist. who. in turn, e~nploys this nloney to finance a long-tenn investment project. The moneylender expects a share of the prospective profits on this investment. In this sense, fictitious capital would include corporate stocks and long-term bonds continuously negotiable in secondary financial market::. It u-ould not include short ten11 co~nmercial loans to complete the production, or iinancc: the acquisition of inventories of finished goods. In the second sense, Marx thinks of fi.:titious capital as the difference between the market value of a finn's outstanding shares of stock and the actual value of the firm's real physical capital assets. In what follows, 1 will use the term "fictitious capital" to refer to the first sense in which Marx used this term, and the phrase "value of fictitious capital" to refer to the second sensl:.

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

MARX 0 N CREDIT. NIXREST AND FINANCIAI- INSI~ARILITY

market value of the firm's outstanding shares of' stock exceeds the value of the firm's productive capital. As Marx puts it., "all this paper actually represents nothing more than accuniulated clain~s. or legal titles. to future production whose money or capital value represents either no capital at all, as in the case of state debts, or is regulated independently of the value of the real capital which it represents" (1967c, p. 468).

The value of fictitious capital is created by capitalizing the stream of revenue yielded by the security. For example, suppose that a firm has $50 million in real capital assets and that it obtains a 10% rate of profit annually. allowing it to make $5 million profit per year. Suppose also that it distributes this profit equally among its 500?000 shareholders. paying each of them $10 per year. If the state of business confidence is such that investors desire a 5% rate of return on their shares, the market price of these shares can be determined usin2 a simple capitalization formula: Ps = W,, where Ps is the price of the share, R is annual revenue payment equal to $10, and i is the desired rate of return equal to 5%. In this situation, each share will be priced at $200, and the n~urker value of the outstanding shares will be $100 million. Thus, the market value of the shares exceeds the r-eul value of the firm's physical assets by $50 n~illion, and this excess constitutes fictitious capital ( 1 967c, pp. 464-68).

Fictitious capital is generated whenever a stream of payments. whether interest payments on a government bond or dividend payments on shares of stock, are capitalized in financial markets. In the case of a government bond, the capitalized value of this kind of security "is purely fictitious" (1967c, p. 465). This is because government bonds do not represent any real physical capital. The state does not borrow money with the intention of e~ilploying it as capital in order to produce surplus value; it simply finances public spending. These securities yield returns on the basis of public taxation, not on the basis of profit generated by industrial enterprise. Shares of stock, on the other hand, represent real physical capital only to the extent that they reflect the value of the capital invested in a firm through the initial issue of its shares. Once these shares enter the financial market, however, fictitious capital is generated. The market value of the shares depend on the state of business confidence and the desired rate of return, and both these variables depend on the rate of interest and the expected rate of profit (1967c, p. 467). I11 general, the market value of this fictitious capital varies inversely with the rate of interest and directly with the profit rate.

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

REVIEW OF SOCIAL ECONOMY

Marx points out that "the market value of this paper is in part speculative, since it is determined not only by the actual income. but also by the anticipated incor:e which is calculated in advance" (1967c, p. 467). He illustrates r:he speculative and illusory nature of fictitious capital by presenting an example of a stock market crisis that results in a depreciation of all kinds of financial assets:

To the extent that the depaxiation . . . in the value of this paper is independent of the movement of value of the actual capital it represents, the wealth of the nation is just a:; great before as after its depreciation . . . in value. . . .Unless this deprecration reflect[sl an actual stoppage of produc- tion and of traffic on canals and railways, or a suspension of already initiated enterprises, or squandering capital in a positively worthless venture. the nation did not grow on? cent poorer by the bursting of this soap bubble of nominal money-capital (1967(:, p. 468).

This means that a collapsr: in the value of fictitious capital during a financial panic need not imply a collapse in a nation's real physical capital wealth or its level of output. The forces regulating the market value of fictitious capital are independent of the laws regulating the process of social production Financial markets have a certain amount of autonomy from the actual process of production. The principal impact of a financial c:risis is on the distribution of wealth between capitalists, not the amount of wealth. As Marx suggests, the depreciation of financial assets in times of financial crisis "serves as a potent means for centralizir~g fortunes" (1967c, p. 468. See also p. 493). In other words, rhe depreciation and redistribution of fictitious capital (i.e., claims on wealth) that occurs during financial crises accelerates the concentration and centralization of wealth that Marx sees as inherent in capitalist development.

While the destructior~ of the value of fictitious capital need not imply a reduction in real wealth, an increase in the value of fictitious capital should not be identified with an increase in real social wealth. As Marx points out:

In all countries based 011 capitalist production. there exists . . . an enornious quantity of so-called irlterest-bearing capital, or moneyed capital. And by accu~nulation of money-capit:~l nothing more. in the main, is connoted than an accumulation of these claims on production, an accu~nulation of the market-price, the illusory capital-value of these claims (1967~. p. 468).

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

MARS ON CKh1)I'I: INI'EREST AND FINANCIAI. INSTARILIT'I

Fictitious capital is only a claim on wealth: it does not create wealth. The growth in the market value of fictitious capital makes it appear as if money is capable of generating and augmenting itself independently of the process of production. This, Marx argues, is an "automatic fetish" because it appears as if it is a property inherent in money "to generate value and yield interest, much a, it is an attribute of pear trees to bear pears" (1 967c. p. 392). This is important to Marx because he believes it leads to a false conception of the nature of interest and to a poor explanation of the determination of the rate of interest.

The Theory of Interest

Since the early part of the nineteenth century, the predominant theory of the rate of interest has suggested that the rate of interest is a price determined by the supply of and demand for loanable funds in the financial n1arket.Vhe supply of loanable funds is represented as a savings schedule determined by thrift (or abstinence) and is a positive function of the rate of interest. The demand for loanable funds is represented as an investment schedule detern~ined by the productivity of capital and is an inverse function of the rate of interest. Of course, the intersection of the two schedules determines the real or ~laturul rate of interest. The natural rate of interest is the rate of interest that would be determined by the marginal productivity of capital and the thrift of the community if all borrowing and lending took the form of exchanges of real capital goods; it is the rate of interest that would prevail in the absence of money and monetary disturbances brought about by govenlnlent intervention in the financial markets. In this theory, the rate of return on financial and physical capital assets tend toward equality under competitive conditions, and, therefore, the natural rate of interest is identical to the rate of profit (Conard, 1966; Fisher? 1930; and Harris. 1981). In this loanable funds theory of interest, capital is simply capital whether it is thought of as money, financial assets or physical capital assets. This is why there is no lucid distinction made between the rate of profit and the rate of interest (Harcourt, 1972: Panico, 1983; and Pasinetti, 1974). Furthemlore. it is an intrirzsic property of capital -

- ~~ --

%ince the predominant. neoclassical vision of the economic proccss is presented in ternis of Walrasian general equilibrium analysis, the neoclassical theory of interest obscures the important tiistinctions between the loanable Funds and liquidity preference approaches to the theory of interest. See Harris (1981. Chs. 15 and 16).

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

REVIEW OF SOCIAL ECONOMY

whether in the form of' money, financial assets or physical means of production - to yield interest (profit). With respect to the nineteenth century theories of money artd interest, which became the basis of the twentieth century theories, Miirx commented, "As the growing process is to trees, so generating money appears innate in capital in its fornl of money-capital. . . Money is now pregnant" (1967c, p. 393).

In Marx's analysis, profit and interest are distinct and antagonistic, economic ~ategor ies .~ I'rofit arises because the value of the output that has been created by human labor-power in the process of production exceeds the socially nt:cessiuy labor-time required to reproduce this labor-power. In a capitalist r:conomy, private ownership of the means of production allows the industrial capitalists to appropriate the surplus value as the profit of the enterprise. The industrial capitalist cannot retain the whole of this suq~lus value because in advanced capitalist economies much industrial investment is financed by borrowing money-capital. As was pointed out earlier, it is the financial capitalists who make these funds available to industrial capitalists. In return for this service, the bankers appropriate a portion of the industrial capitalists' gross profits in the form of interest. The source of the interest payments is ultirnaeely the gross profit appropriated by the industrial capitalists from the process of production. In short, interest is a portion of surplus-value. Just as private ownership of the means of production permits industrial capitalists to appropriate a portion of the value created by labor-power in the form of profit, private ownership of money-capital allows t~ankers to appropriate a portion of profit in the form of interest. As hlarx argues, "Interest is only a portion of the profit, i.e., of the surplus-value, which the functioning capitalist squeezes out of the labourer ' (1 967c, p. 392).

One of the best discussions of the antagonistic relationship between profit and interest is in Harris (1976). One might also. cc~nsult Panico (1983). Panico is interested in this issue because he wishes to argue that Sraffa's (1960) standard system can be closed by having the money rate of interest dl:ter~ni~ie the rate of profits independently of the system of production. This way the profit rate rather than the wage rate can be taken as the independent variable, along with the technical conditions of production, in detemiining commodity prices in Sraffa's systenr. In developir~g his argument, Panico rejects the labor theory of value. This has led to a rather heated exchange between Panico (1988) and Fine (1988) on the necessity of maintaining the labor theory for Marx's analysis of interest and capital in particular, and for Marxian political econonly in general.

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

M A R S ON CREDIT WTEREST AKD FIKAKCIAL INS'I:4RlLITY

Interest, therefore, does not arise from the productivity of capital or from thrift and abstinence. In the first instance. there is no such thing as the intrinsic productivity of capital, whether it takes the form of money, financial assets or physical means of production. The attribution of a human quality, productivity, to inanimate objects is a form of fetishism. This is a constant theme in all of Marx's writings (1967c, pp. 814-31). In the second instance. it is even more absurd, in Marx's view, to suggest that interest is a reward for abstinence because the "exclusion of nloney from circulation would also exclude absolutely its self-expansion as capital" ( 1967a, p. 589). The process of accunlulation requires that money be continually recommitted to the process of production and circulation. i.e.. continually converted into new means of production and labor-power so that it can function as capital and produce profit and interest. So long as the money-capitalist holds his money "in his own hands, it does not collect interest and does not act as capital; and as long as it does gather interest and serves as capital, it is out of his hands" ( 1 9 6 7 ~ . p. 371 ) . Similar to the conditions facing industrial capitalists, bankers nus t continually channel their loanable funds into circulation in order to preserve them and increase their magnitude (l967a, p. 592). It is but a short step from this analysis to a rejection of the notion of a nurirrul rate of interest.

Money-capital is a con~modity that has the use-value of being employable in the process of production and , as a result, yields interest to its owner. Unlike other comniodities, however, money-capital has a market price but requires no socially necessary labor time to produce. While money-capital has a market price. i t has no value or price of production around which this market price fluctuates. Therefore, "the average rate of interest in a certain country - as distinct from the continually fluctuating market rates - cannot be determined by any law. In this sphere there is no such thing as a natural rate of interest in the sense in which econonlists speak of a natural rate of profit or a natural rate of wages" (1967c, p. 362). In the case of a commodity that requires a certain amount of socially necessary labor time to produce. its value, or price of production, is the center of gravity around which its market price fluctuates. Its market price, determined by supply and demand, has a determinate locus around which it will vary ( 1 9 6 7 ~ ~ pp. 178-79).

Since money-capital requires no socially necessary labor time to produce, its market price has no center of gravity around which to fluctuate. The rate of interest is determined siniply by the supply of,

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

REVIEII' OF SOCIAL ECONOMY

and demand for, loanable money-capital. Marx's theory of interest is in the tradition of the loanable -funds theories, but he argues that there is no constant, or natural rate clf interest as distinct from the perpetually changing market rates of interest. The rate of interest is determined by a competitive struggle between industrial and money-capitalists, and whenever something is determined by supply and demand, or sin~ply competition, "the thing to be determined becomes arbitrary and lawless" (1967c, p. 356). Such is the case with the rate of interest. As Marx comments:

There is no good reason why average conditions of co~npetition, the balance between borrower and lcnder :;hould give the lender an interest rate of 3. 4. 5%. etc.. or else a certain percentage of the gross profits, say 20% or 50% on his capital. Whenever i l is cornpetition as such which determines anything. the determination is accidental, purely empirical, and only pedantry or fantasy would seek to represent this accident as a necessity (l967c. p. 363).

There are, however, uppcr and lower limits to fluctuations in the interest rate. The mavimuln limit is the average rate of profit. Money-capitalists coulcl not, for very long, appropriate more than the total gross profits of industrial capitalists (1967c, p. 360).6 No rational capitalist would produce commodities simply in order to enrich bankers. The minimum rate of interest must, however, be positive and above zero since no rational money-capitalist would loan money at a zero or negative rate of return. In addition, since banks appropriate income on the basis of the difference between the interest they charge on loans and the interest they pay for deposits, the rate they charge on loans would have to be high 1:nough to cover their overhead costs. The minimum rate of interest would have to be sufficient to cover rent on buildings, utility costs, insurance fees, and interest on their liabilities. Exactly where it will fall be1 ween the maximuni and nlinimum limits cannot be determined by any general rules, and this is because the price of money-capital cannot be determined by the socially necessary labor time expended in the production of loanable funds. The rate of interest has no natural magnitude toward which it gravitates.

In addition to these limil:s, Marx suggests that customs, juristic traditions and legal opinions set some broad limits on the rate of interest (1967c, pp. 362, 364). The State can also impose limitations on the

61t should be noted that over the b~lsiness cycle interest could exceed profits, forcing capitalists to liquidate some of the;,. assets in order to avoid bankruptcy.

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

MARX ON CREIII'I: INTEREST AND FLNANC1P.L INST.AHILl'fY

magnitude of interest rates. In particular. it imposes ceilings on interest rates that benefit industrial capital ( 1 97 1 , p. 468). Over the long run, the rate of interest tends to vary with the rate of profit, and declines with the degree of industrial developn~ent and the increasing sophistication of the credit system (1967c, pp. 359-62). Finally, and most importantly for what follows in the next section, in the shorter run the rate of interest varies inversely with the rate of profit over the business cycle. As Marx comments:

If we observe the cycles in n,hich modern inclustry moves - state of inactivity. mounting revi\.al. prosperity, over- prc~d~lction. crisis. stagnation. state of inactivity. etc., . . . we shall find that a low rate of interest generally corresponds to periods of prosperity or extra profit. ;I risc in interest separates prosperity and its reverse, and a tnaximum of interest up to a point of estreme usury corresponds to the period of crisis ( 1 9 6 7 ~ . p. 360).

These remarks will be more fully examined in the next section, but in general, the movements in the rate of interest over the cycle reflect changes in the industrial capitalists' need for liquidity at different phases in the cycle and, consequently. a shifting balance of power between industrial and financial capitalists. In particular. "the rate of interest reaches its peak during crises. when nioney is borrowed at any cost to meet payments" ( 1 967c, p. 361).

The important point here, however, is that in Marx's analysis. there is no "natural" rate of interest. The market rate of interest is determined purely by the supply of and denland for money-capital. Its magnitude at any point in time depends on econon~ic conditions and social institutions, and especially on the relative strength of money-capitalists as opposed to industrial capitalists at any point in time. The rate of interest mediates the relationship between these two factions of the capitalist class in their struggle over shares of the surplus value created by living labor in the process of production. The variations in the rate of interest and, consequently, the value of fictitious capital reflect this constant tension; the capitalist class can socialize capital but has great difficulty dividing its yield - surplus value. Furthermore, the existence of interest has nothing to do with the productivity of capital or the thriftiness of the public. Attributing interest to the productivity of capital and abstinence or to believe that nioney is inherently capable of its own self-expansion is, from Marx's viewpoint, completely indefensible (1967c, pp. 358-69, 391-99, 814-31).

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

REVIE'V OF SOCIAL ECONOhlY

The Role of Credit a.nd Finance in Business Cycles aind E:conomic Crisis

Marx argues that the development of the credit system creates a very complex web of mutual obligations and financial interdependencies between commodity producers. This highly intricate network of trade and bank credit reflects the complex productive interdependencies between industries in a modem capitalist economy. Marx suggests there are two fundamental problems inherent in a capitalist economy that perpetually threaten to destroy this network of financial and industrial interdependencies. The first is the spatial and temporal separation of purchase and sale. The second is the contradiction between money as the measure of value and money as the sole acceptable form of the :realization of value. In its role as a measure of value, money does not need to change hands when debts are initially contracted, when debts are due money must absolutely be present. Debt obligations are specified in, and must be settled ulti~iiately in, cash (1968, pp. 513-15). The first problem suggests that there is always the possibility that commodities ]nay be unsaleable within a certain amount of time. The second problem then follows from the first. If commodities cannot be sold in time enough for capitalists to meet their payment commitments in money, then the entire network of financial obligations can collapse into crisis. If there is a general failure to meet payments, then there will be a financial panic and credit crunch in which "not only commodities and securities are unsaleable but bills of exchange are undiscouritable and nothing counts any more but money payment, or, as the nierchanl. puts it , cash" ( 1 967c, p. 459). The credit system creates a situation in which the entire economy is highly sensitive to any discontinuity in the process of production and circulation. If anything,jolts confidence in the viability of the system of production and circulation, ;I financial panic erupts that can trigger a general economic collapse. In times of crises, the financial system functions as a transmission mechanism that generalizes problems in any given sector to the entire economy.

The single most likely cause of econonlic crises and financial panics is, according to Marx, a fall in the rate of profit (1968, pp. 508-09). He believed this tendency of the rate of profit to fall was the single most important law of political ecc~nomy (1973, p. 748). The problem is that Marx explored several diffeient reasons the rate of profit might fall. They include what are now called underconsumptionist-stagnationist

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

MAKX ON CKEDIT. INTEREST AN11 PlNr\NCIAL IKSTABILITY

theories, the profit squeeze theories. and the rising organic composition of capital theories. The question of which particular theory best explains the tendency of the rate of profit to fall is a matter of intense controversy has been extensively examined by other writers and lies beyond the scope of this study.' In explaining the role that credit and finance play in economic crises, it will be assumed that the rate of profit does in fact fall, particularly at the end of an expansion, and that there can be a number of factors putting downwarcl pressure on the rate of profit at any point in t i m e . V h e approach take11 to the relationship between credit and econon~ic crises will be to examine the effects of changes in the availability of credit and variations in interest rates over the business cycle from expansion to depression."

According to Marx, in the early phase of an expansion there are increases in output, employment, consumption, investment, wages, and profits. Furthermore, "a period of brisk business is simultaneously a period of the most elastic and easy credit" (1967c, p. 447). The payment of loans proceeds smoothly, and all forms of money-capital are relatively abundant. The value of fictitious capital grows dramatically with optimistic expectations about future profits. Since the supply of money-capital exceeds the demand for it, interest rates are relatively low. As Marx suggests, during an expansion "the rate of interest is still low. . . . This is, in fact, the orzly time that it can be said a low rate of interest, and consequently a relative abundance of loanable capital, coincides with a real expansion of industrial capital" (1967c, p. 488). The demand for loanable capital in the early phase of

'On the h~story of c r ~ s ~ s theorles and controlcrsles see Sh'l~kh (1978). Swcczy (1970) and Wrlght (1978).

~ e o c l a s s i c a l and neo-Ricardian ccononiists have continually criticized the Marxian argulnent about the tendency of the rate of profit to fall. Nevertheless, there is ample evidence that this tendency does assert itself. See Glick. et. al. (1984). Shaikh (1987) and Pollin (1986-87). Pollin is one nf the few Marxian writcrs to stress the tendency for interest rates to squeeze profit rates in a crisis.

'The analysis that follows draws on Crotty (1987). He does not. however. stress the role of the growth in the value of fictitious capital in amplifying the magnitude of expansions. crashes. and crises. I t is the contention of rhis study that changes in the value of fictitious capital are crucially important in explaining the anlplitude of business cycles and the severity of crises.

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

REVIE\V OF SOCIAL ECONOMY

an expansion is primarily for the purpose of financing capital investment. The elastic supply of credit and low interest rate encourages "a great extension of fixed capital of all forms, and the opening of new enterprises 03 a vast and far reaching scale" (1967c, p. 488).

As the expansion continues, investment in plant, equipment, and inventories increases the denland for labor and begins to place greater upward pressure on the wage rate. The higher wage rates gradually erode profit rates and flows. It might also be suggested that a progressive growth in physical capital equipment relative to labor power also forces down the ,-ate of profit, so long as the length of the working day and the intensity of the exploitation of labor remain fairly constant. In either case, the continued expansion of industrial investment and the higher wage rates increase the denland for money-capital in order to meet wage costs and other obligations. Therefore, the interest rate begins to rise on bank loans and new bond issues. The rise in interest rates depresses the capitalized value of business firms' assets which is itself based on the discounted present value of expected future profits. This further depreciates the market valuation of the firm's outst;inding shares, and thus increases the cost of raising funds through new stock issues. In essence, the value of "fictitious money-capital is enormously reduced in times of crisis, and with it the ability of its owners to borrow money on it in the market7' (1967c, p. 493). The value of firms' liquid assets declines relative to their liabilities and their liquidity positions begin to deteriorate rapidly late in the expansion. Finally, as "the rate of profit falls. the fixed charges - interest, rent - which were based on the anticipation of a corlsturzt rate of profit and exploitation of labor, remain the same and in part carznot be paid. Hence, crisis" (1 968, p. 5 16).

The fall in the rate of profit and the consequent inability to fulfill payment obligations triggers a financial panic, and puts a stop to the extension of credit as kveryc,ne clambers after cash to meet their debt obligations. In the period of crisis, "credit suddenly stops,. . . payments are suspended, thz reproduction process is paralyzed, and . . . a superabundance of idle industrial capital appears side by side with an almost absolute absence of loan capital" (1967c, p. 488). This credit crunch causes the complex web of nlutual obligations that presupposed a certain rate of profit to unravel, and the result is a financial crisis and depression:

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

MARX ON CRE1)II: INTEREST AND FINANCIAL INSTABILITY

In a system of production. where the entire contir~uity of the reproduction process rests upon credit, a crisis nlust obviously occur - a tremendous rush for means of payment - when credit suddenly ceases and only cash payments have validity (1967~ . p. 490).

The crisis begins with everyone trying to get. their hands on money in order to pay debts and preserve some liquid claim on social wealth. Capitalists are willing to cut prices below costs of production to obtain cash. The banks are unwilling to lend because they want to protect their reserves. The value of fictitious capital is drastically reduced as everyone attempts to convert these paper clai~ns on wealth into cash. However, there simply is not enough cash to liquidate all of these claims. The levels of output, employment, and prices collapse. Wages and consumption fall, and profits continue to decline. There is a general depreciation in fixed capital and other real assets. The universal desire for liquidity at all costs transfornls the credit system into a monetary system as the economy slides into a depression (1967c, p. 254).

Yet after such a crisis, the conditions necessary for a new period of expansion based on a revitalized and liquid financial system are recreated. Wages, interest rates and the value of capital have all fallen. Inventories have been depleted. A profitable investment environment has been restored. The entire process of social production has been restructured in a way that permits a new period of accumulation to begin again. It is precisely the crisis that makes this revitalization possible. Marx often stressed that economic crises are forcible solutions to the problems encountered in the process of accumulation (1967c, pp. 248-49; 1968, pp. 500, 509, 5 13). Marx also points out that these crises canqot occur in the absence of money and credit (1970, p. 96). The monetary and credit system is the mechanism through which a fall in the rate of profit is transmitted to the entire economy. For Marx, it is one of the great ironies of capitalist production that the system must be periodically destroyed by economic and financial crises so that it can continually be reproduced; the entire process reveals the contradictory character of a capitalist monetary economy.

Conclusion There should be no doubt that Marx's study of credit, interest and

financial crises is incomplete. There is, for example, no discussion of consumer credit and very little conimentary on government debt. Marx's principal focus is on financial relationships between capitalists;

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

REVLE\b' OF SOCIAL ECONOMY

thus he has very little to say about financial relationships between the working and capitalist c l a s ~ e s . ' ~ Furthermore, Marx says very little about the ways modern governments, through their central banks, regulate the availability of credit and act as lenders of last resort. Since these institutions and processes are far more important today than was the case in the nineteenth century, they would have to be integrated into any thorough discussio:n of 1.he modern financial system." Neverthe- less there are several insights about the nature of credit, interest, and financial instability that can be gleaned from Marx's analysis.

Marx fully integrates the system of production, finance, and exchange. The modem credit system is viewed as creation of the capitalist mode of protluction, and reflects the extensive productive interdependencies between the industries that constitute the economy. It overcomes the limits on ac~:umulation in a simple monetary economy by concentrating the idle money reserves of the society as a whole, and placing them at the disposal of the capitalist class. Financial capitalists provide industrial capitalists .with the means for speeding up the process of circulation, financing Ion;; term industrial investment, and meeting their debt payments when current profit flows are not sufficient to do so. The credit system acc.ommodates the growth of output, the extension of the market, and the lengthening periods of production that accompany capitalist develol)ment, primarily by allowing expenditures to exceed current income. It permits capitalists to borrow and lend through financial intermediaries and thus eliminates many of the risks and costs involved in conduc:ting their own mutual credit transactions. Marx also points out that credit is essential for the mobility of capital, which allows capitalists to transfer their expenditures between industries and, thus, bring:; about the tendency toward profit rate equalization between various branches of production ( 1967c, p. 435). The single most significant function of the credit system, however, is the socialization of capital itself. As Marx describes it:

loHarris (1976) makes a be:ginnir.g attempt to extend Marx's analysis of financial relationships to credit flows between capitalists and workers.

I1Foley (1986) has initiated some work in this area, as has Harvey (1982). Harvey brings a radical geographer's perspective to bear on development, imperialisnl and world economic crises in the final three chapters of his book. It is one of the more creative studies in Marxian j)olitici~l economy to appear in the past ten years.

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

MARX ON CREDIT. IKI'EREST AND FINANCIAL INSIXBLITY

Ci.edit . . . is the means by which the capital of the whole capitalist class is placed at the disposal of each sphere of production. not in proportion to the capital belollgillg to the capitalists in a given sphere. but in proportion to their production requirements. . . Credit is both the result and the condition of capitalist production (1968. p. 21 I ) .

The socialization of capital begins with conimercial credit, develops further with bank credit and reaches its pinnacle in the various forms of fictitious capital. These are all progressive aspects of the development of the financial system, without which capitalist development would be impossible.

Marx's analysis does not end here, however, because there is a fundan~ental dichotomy in capitalist financial processes. The financial system also has retrogressive aspects that intensify the inherent instability of capitalist production: Marx argues that with the development of fictitious capital i t appears that money, or money- capital, has the intrinsic capacity to generate more money independ- ently of the production process. The proliferation of these paper titles to wealth makes it appear as if society is growing wealthier and as'if money itself is productive, yielding interest and entitling its owner to a share of this newly created social wealth. Yet this* according to Marx, often is a pure illusion. The socialization of capital, which is necessary to finance capitalist production, constantly generates financial assets, and the market value of which often bears no relation whatsoever to the value of the real capital invested in the production process or the real earnings potential of that capital. In fact, there is a continual tendency to overestimate the profit or wealth generating potential of the real capital invested in industrial enterprises. This is made quite clear when, in times of crises, individuals and firms attempt to convert their financial assets into cash and find themselves empty-handed.

Since the pricing of the financial assets that constitute fictitious capital takes place independently of the formation of the final prices, and hence the realized profits of a given volunie of output, there is no reason the two sets of prices should correspond to each other. On the one hand, the pricing of financial assets depends on the esl~ectecl profitability of the enterprises they represent and is largely speculative. The pricing and profitability of a given volume of output depends, on the other hand, on the uct~rul cost of capital, the intensity of the exploitation of labor, and market conditions. In other words, the total wealth estimated in the market value of the financial assets e.1- c~l7rt..

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

REVIEW OF SOCIAL ECONOMY

need not correspond to the actual amount of total wealth created ex post. Indeed, the very act of capitalizing an expected stream of payments creates this deviation between the value of the claims on output and the actual value of real output. In the language of modern finance, a "correction" or "~~ortfolio adjustment" often must take place in order to bring the market value of the financial assets into line with the real wealth generating potential of the economy's productive capital. Marx suggests that :a financial crisis accomplishes this task by obliterating a large percentage of the value of fictitious capital. revealing the often illusory nature of these financial titles to wealth. If the financial calamity i; of snfficient magnitude, interest rates rise, and a cumulative process of falling profits, investment, output and employment is set in motion as the entire economy falls into depression. l 2

Thus, while many monetary econon~ists have stressed the virtues and benefits of financial intermediation, Marx is almost alone in emphasiz- ing its limitations and its te~dencies to generate economic instability. By continually striving to broaden the range and profitability of capitalist production, financial innovation and intermediation often drive capitalism beyond its own internal limits set by the technical conditions and social relations of production. The result is an economic crisis. Marx explains this chronic tendency in the following manner:

The credit system appears a!. the main lever of [crises] solely because the reproduction process, which is elastic by nature, is here forced to its extreme limits, and demon st rat^:^ the Fact that the self-expansion of capital based on the contradictory nature of capitalist production pemiits an actual free development only up to a certain point, so that it constitutes an irnmanent fetter and barrier to production, which are continually broken through by the credit system. Hence, the credit system accelerates the material developrlient of the productive force:: and the establishment of the world market . . . at the same time credit accelerates the violent eruptions of this contradiction - crises - and thereby the elements of disintegration ( 1 9 6 7 ~ . p. 41 1).

"The separate determination of th- prices of financial assets on the one hand. and the prices of current output on the c.ther. has been of critical importance to Minsky's "Financial Instability Hypothesis." See for example M~nsky (1 982). It should be noted. however. that Minsky attributes some of the inspiration for his analysis to the work of Keynes.

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

MARX ON CRE1)l.K INTEREST A N D FINANCIAI- INSTABILITY

For Marx, the credit system can expand the horizon of the capitalist mode of production, but it cannot eliminate its many internal contradictions; indeed, it often exacerbates these contradictions, making periodic crises inevitable.

In essence, economic and financial crises cannot be thought of simply as the result of excessive use of computerized trading techniques, panicky institutional investors running for cover rather than fulfilling some public responsibility to maintain order in financial markets, or irresponsible actions of indivitlual public official^.'^ Marx's analysis suggests that the causes of crises should be thought of as the result of problems that endogenously develop within the process of capital accumulation over time. and in particular, those problems that undermine profit rates and flows. Furthermore, financial instability is inherent in the processes of pricing financial assets, financial innovation and financial intermediation. The ultimate message of Marx's analysis of credit and financial institutions is that, no matter how well developed the financial system becomes. it can never overcome the inherent instability of a monetary economy. Financial fragility is an inveterate characteristic of the capitalist mode of production.

'These ideas about the causes of "The Crash of 1987" were set forth in numerous business periodicals at the time. as well as in the 1988 Kel~ort of the, Presirler~tiril Risk Force or1 Market M e c h a r ~ i n ~ ~ s .

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

REVlE:W OF SOCIAL ECONOMY

REFERENCES Conard, Joseph. Art I~ttroducriort to the Theory of Interest, Berkeley: University of California

Press. 1966. Crotty, Jim. "The Role of Money and Finance in Marx's Crisis Theory," in Editorial Collective.

eds., Tltr Imperiled Econc~nry. Ncw York: Union for Radical Political Economics. 1987. pp. 71-82.

DeBrunhoff, Suzanne. Mar.r or1 Mane:?. New York: Urizen Books, 1976. Fine, Ben, "Banking Capital and thj: Theory of Interest," Science and Society. 49 (Winter

1985-86). pp. 387-413. -. "From Capital in Production to <:apital in Exchange." Science N I I ~ Sociep. 52 (Fall 1988).

pp. 326-37. Fisher, Irving. Tlte ~ h e o r y of lrrterest, New York: MacMillan. 1930. Foley. Duncan. "On Marx's Theory ol' Money," Social Corrcept 1 (May 1983), pp. 5-19. -. Money, Accrtnntlatio~~ ant! Crisis, New York: Harwood Academic Press. 1986. Click, Mark, G. Dumenil and J . Rangel. "The Tendency for the Rate of Profit to Fall in the United

States: Part I," Contenlporan Mar.risnt (Fall 1984). pp. 148-64. Harcourt, G . C. Sonle Carnbrid,pe Co~lrroversies in the Theot?, of Copitol. Cambridge: Cambridge

University Press, 1972. Harris, Laurence. "On Interest, Credit and Capital." Ecortonly and Socieh 5 (May 1976). pp.

145-77. -. Monetary Theory, New York: McGraw-Hill, 1981. Harvey, David. The Lirnits to Chpital, Chicago: University of Chicago Press. 1982. Marx. Karl. Capital, 3 vols. N I : ~ Yorlc: international Publishers, 1967 abc. -. A Contribltrion to the Critique o f Political Eco~to~~ty . New York: Internation;~l Publishers,

1970. -. Gntndrisse, trans. and ed., Mart~n Nicolaus, New York: Vintage Books. 1973. -. Theories of Surplcrs Value, 3 vols.. Moscow: Progress Publishers, 1 (1963). 2 (1968). 3

(1971). Minsky, Hyman, "The Financial Instat~ility Hypothesis: A Restatement." in Hyrnan Minsky. Con

"It" Happert Again, Ammonk, NY: M.E. Sharpe, 1982, pp. 90-1 16. Morris, Jacob. "Marx as a Monetary Theorist," Science and Society 3 1 (Fall 1967). pp. 404-27. Panico, Carlo. "Marx's Analysis of the Relationship Between the Rate of Interest and the Rate of

Profits," in J. Eatwell ant1 M. Milgate, eds.. Keynes's Ecor~or~tics and the Theory of \'rrllte and Distribution, New Ycbrk: Oxford University Press, 1983, pp. 167-86.

-. "Marx on the Banking Sector and the Interest Rate," Science and Society. 52 (Fall 1988), pp. 310-25.

Pasinetti, Luigi. Grotvrh and 111come Uistrib~trion, London: Cambridge University Press, 1974. Pollin, Robert. "Corporate Interest Payments and the Falling Rate of Profit in the U.S. Postwar

Economy ," Eco~~omic F O ~ I U I I 16 (Winter 1986-87), pp. 129-45. Report of the Presidential T17sk Force 0 1 1 Market Mechonisr~~.~. Washington. D.C.: U.S.

Government Printing Office. January 1988. Shaikh. Anwar. "An Introduction to th: History of Crisis Theories," in Editorial Collective. eds..

U.S. Capitalisrrr bt Crisi:, New York: Union for Radical Political Econonlics. 1978. pp. 219-41.

-. "The Falling Rate of Profit and )he Economic Crisis in the U.S.," in Editorial Collective. eds., The Itnperiled Ecortc~rtty. New York: Union for Radical Political Economics. 1987. pp. 1 15-26.

Shuklian, Steve, "Orthodox hlonetar, Doctrines and Marx on Value. Money and Econo~nic Crises," unpublished Ph.1). dissertation. University of Utah. 1988.

Sraffa. Piero. Prodrtctiorl of Corrl~rlctdities by Means of Co~rrnlodities. London: Cambridge

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015

MAKX O N CREIII'I: IN'I'EIZESI' A N D FINANCIAI. INS7ABIL1TY

U~~ivers i ty Press. 1960. Sweezy. Paul. Tlic, Tliror:\. oj'Capitcrlisr Dr~,cloprrrct~r. New York: Monthly Reviexv Press. 1970 Wright. Erik. Class. Crisis rrrirl rlir Sror~,. London: New Left Books. 1978.

Dow

nloa

ded

by [

Uni

vers

itaet

sbib

lioth

ek T

uebi

ngen

] at

07:

37 1

4 A

pril

2015