Marx on Financial Intermediation: The Promise of Money as Command Over Future Labor

Abstract

Confronting capitalist finance, we examine Marx’s articles on the French Crédit Mobilier, written for the New York Daily Tribune during the 1850s, to identify the outlines of a theory of the destabilizing role of financial intermediaries (FIs) in economic development. By combining Marx’s real-time historical analysis of joint-stock investment banking in France with the theoretical treatment of financial accumulation in the Grundrisse and Capital, we extract a framework for understanding the role of financial intermediaries in capitalist development. Five propositions emerge: (1) FIs proliferate speculative claims to social wealth beyond realization; (2) FIs immobilize and misallocate capital; (3) State debt as ‘lender of last resort’ is ineffective; (4) FIs concentrate capitalist property; and (5) FIs play an explicit political role in “buying time” in class struggle to defer intractable conflicts to a later date. The object is to read Marx politically—to root Finance in class relations. Money advanced as credit is the promise to command future labor. Successful completion of the circuit of interest-bearing capital presupposes the successful imposition of surplus labor. We distinguish Marx’s analysis of speculative financial crises from Post-Keynesian views, recognizing that the uncertainty of money as capital is the uncertainty of the class struggle itself.