Disentangling the Connection between Marx’s ‘Sixth’ Countertendency to a Falling Rate of Profit and the Rise of Financialization
Nowadays, financialization is a deep-rooted theme of discussion in heterodox economics, and rightly so considering the dramatic impact that the rise of the financial sphere has already had, and will continue to have over a long-term horizon. Unsurprisingly, given its many facets, this subject is a field of numerous and long-lasting debates (Sawyer 2013). Among the schools of thought involved, the Marxian strand plays a prominent role. For instance, the first authors to speak openly about the explosion of finance as a major feature of US capitalism were Magdoff and Sweezy (1987) for the Monthly Review. It comes, then, as no surprise that the discussion in the Marxian field on the development of financialization and the origins of the last big crisis is very variegated (Basu and Vasudevan 2013; Sotiropoulos and Hillig 2020). In its discussions of structural changes in a capitalist system, a prominent role is often attributed to the Law of the Tendency of the Rate of Profit to Fall (LTRPF) (Shaikh 1992), as stated by Marx in chapter XIII of Capital, vol. III. Even though the LTRPF has received several differently nuanced interpretations and modifications over the years, the fundamental idea remains that behind noticeable transformations in advanced capitalist economies, falling profitability plays a remarkable role. This can be seen, for example, in the explanations that, despite not strictly adhering to the LTRPF, place faltering profitability at the heart of the tendency for advanced economies to become increasingly financialized and caught in secular stagnation (Brenner 2012; Magdoff and Foster 2014; Bischoff, Krüger and Lieber 2018). This paper will focus on two points. First, it contributes to the debate on the countertendencies to the LTRPF, by providing an interpretation for the ‘sixth’ factor (the ‘increase of stock capital’) that is grounded in the process of establishing a uniform rate of profit throughout the economy and the exclusion from it of sectors exhibiting, first, (natural) monopolistic elements and second, a very high organic composition of capital. As we will see, authors such as Sweezy (1942), Foley (1986), and Harvey (1982) left the ‘sixth’ countertendency aside, while Grossman (1929) offered a different interpretation that has inspired more recent ones. Second, it examines whether financialization can be correctly read as a ‘sixth’ countertendency to the LTRPF (Giacché 2011; Guillén 2014; Mavroudeas and Papadatos 2018). According to our interpretation, Marx's sixth countertendency does not refer to the phenomenon of speculation and the rise of finance (elements that are, however, discussed at length in vol. III).
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Keywords: Law of the Tendency of the Rate of Profit to Fall; Karl Marx; financialization; Capital, Volume III; rate of profit
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