Financial Collapse, Systemic Crisis?
Illusory answers and necessary answers
By Samir Amin
Global Research, November 23, 2008
World Forum of Alternatives
Editor's Note
There are some errors in the translation of this text, which we hope to correct. The original French version is available on our French language website Mondialisation.ca
To link to the original French article, click here
Paper introducing the World Forum of Alternatives, in Caracas, october 2008
The financial crisis could not be avoided
The violent explosion of this crisis did not surprise us; I mentionned it a few months ago while the conventional economists were ignoring its coming development and consequences, especially in Europe. In order to understand it we must get rid of the conventional definition of the system which qualifies it as “neo-liberal” and “global”. This definition is superficial and masks the essential. The current capitalist system is dominated by a handful of oligopolies that control the basic decisions making of the world economy. These oligopolies are not solely financial; such as the banks or the insurance companies, but include enterprises involved in industrial production, services, transports and the like. The way they are financiarized is their chief characteristic. We must understand here that the main source of economical decision has been transferred from the production of surplus value in production towards the redistribution of profits between the oligopolies. To that effect the system needs the expansion of financial investments. In that respect the major market, the one which dominates all other markets, is precisely the monetary and financial market. This is my definition of the "financiarization" of the global system. Such a strategy is not the result of independent "decisions" of banks, it is rather that the choice of the “financiarized” groups. These oligopolies hence do not produce profits; they just swipe the monopolies’rent through financial investments.
This system is extremely profitable for dominating sectors of the capital. Thus, the system should not be qualified "market economy" (which is an empty ideological qualification) but as a capitalism of financiarized oligopolies. However, financial investment could not continue indefinitely, while the productive basis was growing at a low rate. Consequently, we have the logic of a “financial bubble”, the sheer translation of the financial investments system. The gross amount of financial transactions reaches two thousand trillion alone, while the world GDP is 44 trillion only. Quite a huge multiple! Thirty years ago, the relative volume of such transactions did not have this extent.
[French] Le volume des transactions financières est de l’ordre de deux mille trillions de dollars [en français, 1 trillion = 1 milliard de milliards; en anglais, un trillion = 1000 milliards; l’auteur fait référence ici au sens anglais, NDLR], alors que la base productive, le PIB mondial est de 44 trillions de dollars seulement. Un multiple gigantesque.]
As a matter of fact, those transactions were directed in general and expressly to cover the operations linked to production, and internal and external trade. The overall outlook of this financed oligopolies system was – as I said previously- the Achilles’ heel of that capitalist structure. The crisis was doomed to be initiated by a financial collapse.
Behind the financial crisis, the systemic crisis of the aging capitalism
To attract the attention on the financial colla
Illusory answers and necessary answers
By Samir Amin
Global Research, November 23, 2008
World Forum of Alternatives
Editor's Note
There are some errors in the translation of this text, which we hope to correct. The original French version is available on our French language website Mondialisation.ca
To link to the original French article, click here
Paper introducing the World Forum of Alternatives, in Caracas, october 2008
The financial crisis could not be avoided
The violent explosion of this crisis did not surprise us; I mentionned it a few months ago while the conventional economists were ignoring its coming development and consequences, especially in Europe. In order to understand it we must get rid of the conventional definition of the system which qualifies it as “neo-liberal” and “global”. This definition is superficial and masks the essential. The current capitalist system is dominated by a handful of oligopolies that control the basic decisions making of the world economy. These oligopolies are not solely financial; such as the banks or the insurance companies, but include enterprises involved in industrial production, services, transports and the like. The way they are financiarized is their chief characteristic. We must understand here that the main source of economical decision has been transferred from the production of surplus value in production towards the redistribution of profits between the oligopolies. To that effect the system needs the expansion of financial investments. In that respect the major market, the one which dominates all other markets, is precisely the monetary and financial market. This is my definition of the "financiarization" of the global system. Such a strategy is not the result of independent "decisions" of banks, it is rather that the choice of the “financiarized” groups. These oligopolies hence do not produce profits; they just swipe the monopolies’rent through financial investments.
This system is extremely profitable for dominating sectors of the capital. Thus, the system should not be qualified "market economy" (which is an empty ideological qualification) but as a capitalism of financiarized oligopolies. However, financial investment could not continue indefinitely, while the productive basis was growing at a low rate. Consequently, we have the logic of a “financial bubble”, the sheer translation of the financial investments system. The gross amount of financial transactions reaches two thousand trillion alone, while the world GDP is 44 trillion only. Quite a huge multiple! Thirty years ago, the relative volume of such transactions did not have this extent.
[French] Le volume des transactions financières est de l’ordre de deux mille trillions de dollars [en français, 1 trillion = 1 milliard de milliards; en anglais, un trillion = 1000 milliards; l’auteur fait référence ici au sens anglais, NDLR], alors que la base productive, le PIB mondial est de 44 trillions de dollars seulement. Un multiple gigantesque.]
As a matter of fact, those transactions were directed in general and expressly to cover the operations linked to production, and internal and external trade. The overall outlook of this financed oligopolies system was – as I said previously- the Achilles’ heel of that capitalist structure. The crisis was doomed to be initiated by a financial collapse.
Behind the financial crisis, the systemic crisis of the aging capitalism
To attract the attention on the financial colla
