Why We Need to Understand Derivatives in Relation to Money: A Reply to Tony Norfield

In: Historical Materialism
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  • 1 Department of Political Economy, University of Sydney
  • 2 School of Business, University of Sydney

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Abstract

The issue of the relation between financial derivatives, money and crisis remains one of on-going debate within Marxism. This paper takes issue with a recent contribution to this debate by Tony Norfield. We contend that the relationship between financial derivatives and the concept of ‘money’ needs to be framed in the context of a changing understanding of liquidity, and that issues of crisis and renewed accumulation are better understood though this path than via debates about speculative versus real investment and productive versus unproductive capital. Indeed these latter taxonomies are being superseded by current developments within finance, and Marxian analysis needs to be attuned to these current developments.

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  • 1.

    Norfield 2012.

  • 2.

    For example, McNally 2009, p. 70; Lapavitsas 2006 and 2011; Norfield 2012.

  • 4.

    For example, Lapavitsas 2000 and 2005.

  • 5.

    Ingham 2001 and 2004.

  • 7.

    Merton H. Miller (Miller 1988, p. 109), one of the leading figures of modern conventional finance theory, locates the foundations of the analytical dilemmas of preference shares in the original Black-Scholes option price theory.

  • 8.

    Bank for International Settlements 2010.

  • 12.

    Sengupta and Tam 2008.

  • 13.

    Norfield 2012, p. 106.

  • 14.

    Keynes 1971, p. 3.

  • 15.

    Norfield 2012, p. 113.

  • 18.

    Lapavitsas 2009; see also dos Santos 2009.

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