‘Opening up’ Marx. A comparison of Open Marxist and French Regulationist approaches to political economy



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3.3 Capital circuit

We have now arrived at the point where we can complete some of the already started ideas connected with the notion of capital circuit. In Open Marxist texts, this assumes some curious formulations, as for example when they talk about the “circuit of social capital” (Bonefeld and Holloway 1996d: 224). As we had seen, this is incompatible with Regulationist conceptology, where social capital is the potentiality of transformation of reality, not a dimensional abstraction.

Another peculiar concept arising out of Open Marxist explanation is the dichotomy of productive and unproductive capital, usually expressed as “fictitious capital” in the “growing separation between productive and monetary accumulation” (Holloway 2000:178). In Marx, capital undergoes changes within the circuit. There is no dichotomous relationship implied, ‘productive capital’ is simply the capital employed directly in goods production. As a result, the weakening of circulation affects all forms of capital, heuristically and analytically, and it does not make sense to speak of two types of capital, one productive, the other not. At least this seems to be the interpretation picked up by the Regulation Approach.

Capital circuit is parallel to the metamorphoses of value of a commodity. “It is the continuity of production that determines a new total income as the realized monetary form of a new expenditure of social labour” (Aglietta 2000: 44). The process of valorisation demands that labour transformed into commodities becomes consumed, and thereby annihilated as value.

This is closely connected with the important distinction that Regulationists take over from Marx, namely the understanding of one section of economy as Department I (in most translations Marx talks of “Sector”), producing means of production, and Department II, producing means of consumption (Aglietta 2000: 56). Uneven development of the two departments play crucial role in Regulationist explanation of structural crises of capitalism. However, in contradistinction to Open Marxism, which explains capitalist crises as unwillingness of labour to produce, Regulationists theorise in detail the development of a mode of consumption that must underlie a mode of production.
Connected with this, Marx’s “fall in the rate of profit” is strictly treated as a law of tendency. Boyer warns against undue emphasis on developments that should be viewed strictly as tendencies, which leaves to underestimating of the contradictions of capitalism (Boyer 1990: 12). Open Marxists do not make a distinction between tendential laws and concrete moves by market player. Bonefeld speaks of “mass of profits” offseting “a fall in the rate of profit” (Bonefeld 2000: 55). Tendency for the rate of profit to fall, which is the phenomenon pertaining to economy as a whole, is here lumped together with the attempts by individual capitalists to increase their profits through “economics (sic) of scale”14. Contrast this with Aglietta’s warning that “the phenomenon of concentration involves more than the partial statistics devised to measure it. Concentration is the expansion of ownership over a process of valorisation” (Aglietta 2000: 216).
By analysing the connection of production and consumption through Department I and II model, Marx followed Quesnay in pioneering investigation of physical equilibrium (Elster 1985: 142). The problem was that he was not able to coherently explain how capitalists arrive at investing the right amounts of surplus value in both sectors (2000: 143). This is closely connected with the problem of transmitting value magnitudes into monetary system which we have already discussed.

The way the two schools we analyse in this paper respond to the problem is telling. Open Marxists simply refuse to deal with ‘the doctrine of the invisible hand’ (Bonefeld 2000:47).

Regulationists do state that the price equilibrium model of neoclassical economics is “quite foreign to the developmental logic of the basic concepts of Marxism”. However, they are able to deal with establishment of the physical equilibrium through the wage relation, which helps contain the struggle of the two polar social classes (Aglietta 2000: 18).


3.4 Money and credit

It is not easy to reconstruct any argument in the political economy sense of word from Open Marxist formulations, which present wide-ranging conflation of phenomena or at least lack of explicit differentiation. Holloway (2000:179), for example, enumerates indicators that show that “the growth in world money transactions has been faster than the growth in world trade”, and then goes on to list some that include the same thing: for example the growth in foreign exchange dealings and the growth in the derivatives market. No effort is made to distinguish between increasing velocity of money, growth in the ‘superstructure’ (not in the Marxist sense) of derivatives and rise in money aggregates. These three are inter-connected but clearly distinct phenomena.

Using ‘credit’ in a dynamic way to break up working class resistance would make sense, as when monetary and credit instruments are used to affect changes in consumption and production structures. However, this is not how money is portrayed in Open Marxism. The ‘rise of money’ here rather features as an attempt by ‘capital’ to prolong the functioning of some essentially defunct mechanism.

In order to analyse this view we need to open up the categories of ‘money’ and ‘credit’.


The brief survey of conceptions of value and capital has indicated some of the differences in the basic epistemological outlook and consequently methodological approach between Open Marxists and the Regulation Approach. Open Marxists tend, despite the sophisticated summaries of Marx that often precede their analysis of contemporary events, to construe explanations through microeconomic, unicausal, static lens.

Explaining the recession of 1970s, Bonefeld (2000: 178) says “money has been expanding at a far faster rate than the value it represents”. Again, it has to be stated that he never makes clear what he means by this, rise of prices or growth in money supply (there is a relation between the two, but not strict).

In fact, this statement, just as others, shows a paradoxical fact. Open Marxists, whose favourite target are ‘monetarists’ actually share with them their conception of money15. Practically all descriptions of 1970s and 1980s structural problems of capitalism are reduced to the nexus of ‘rise of money’ versus stagnation of production. ‘Capital’, was trying to postpone the inevitable breakdown of production relations by expanding credit (Bonefeld 2000: 56). Money no longer represented the previous value of labour.

These statements imply a belief in neutrality of money, as expressed by the Cambridge school formula, where the value of money is the inverse of the general level of prices (we can say this, since Open Marxists, as we saw, use monetary expression of value rather than labour value magnitudes). This is a purely quantitative, exogenous conception of money, counterpart to the notion of ‘unproductive capital’.

It seems they also share the understanding of the role of the state with Friedman’s monetarists. Open Marxists believe the capitalist state was expanding ‘money’16 (again, the problem of to what extent they mean credit and to what extent different aggregates of money supply), while monetarists typically were also claiming state manipulation of money was diluting its power. This is very different from the views of, for example, Aglietta. He states, first of all, that the view of how monetary authorities can control money supply and consequently the rate of inflation is an illusion (2000: 331.) Secondly, it is precisely one of the major contributions of Aglietta’s Theory that he proposed an elaborate description of how intensive surplus value accumulation in the Fordist economy naturally leads to creeping inflation (2000: 49).

What both of these statements say, in other words, is that money cannot be treated as an exogenous factor.


Aglietta explains the formation of money economy as an integral part of commodity economy, and derives the description of monetary constraint from Marx’s notion of the metamorphosis of the commodity. We have already hinted how Aglietta insists on the need for money in order to have a commodity economy. Money cannot be understood to be simply an intermediary in an extensive set of exchanges. The exchange-realized value of A relative to B is asymmetrical. This stems from the realization that “exchange is in fact not a confrontation of subjectivities, it is rather a social process by which the products of independent private labours are integrated with one another and form fractions of society’s overall labour” (Aglietta 2000:40). “This is why the representation of abstract labour is fixed on one single commodity that becomes the general equivalent and is known as money” (2000: 41, emphasis in the original). And then “money… never expresses its value relative to any other commodity, since it never faces any equivalent”. It is a value “determined by the repeated practice of exchange” since “the principle of exchange is a relationship of equivalence in which value is preserved” (2000: 42)17.

The conceptualisation of value as a converse of a spatio-temporal phenomenon, namely of commodity circulation, leads us to the notion that some form of temporality needs to be constructed in order to give a framework for modalities of value within this fix. This will be discussed shortly, when talking about credit.


We have already broached the issue of metamorphoses of value. What is meant by this is the contradictory unity of a sale and a purchase. When the owner sells the commodity C, the value of is has taken the form of money. It is now that the owner can be said to be in possession of an element of abstract labour which “remains constant as long as the monetary expression of the working hour is unchanged” (Aglietta 2000: 43). The owner of this monetary equivalent M can now complete the metamorphosis by purchasing another commodity C’. The metamorphosis thus involves a double change of value. It is possible due to the separation of sale from purchase.
It is this separation that makes the universal alienation of commodities intelligible as a social process capable of reproducing the entire set of conditions of production. By this we can measure the absurdity of the neo-classical view which would have us believe that exchange is a simple process of barter C-C’ between subjects each provided with a pre-established and ophelime field of choice, money being no more than a merely technical intermediary (Aglietta 2000: 43).
What follows from this is the conception of money that has certain autonomy. This autonomy is not presented as some ex-post characteristic, as in neoclassical economics and Keynes, but is the inevitable outcome of its function as a constraint and intermediary of two distinct spheres – the capital circuit and the sphere of labour power.

Two activities, production and exchange, necessarily need to be separate, otherwise the economy would not have its commodity character. On the other hand, they also need to be connected, otherwise we could not speak of economy. This is what Aglietta describes as a “real contradiction” and from which he derives the autonomy of the monetary system. Money needs to be a general equivalent which would make commodity exchange possible. This is imparted by the monetary expression of the working hour. Aglietta, in this early work, as we can see, strictly follows Marx’s analysis that first put labour forward as creator of value and then connected it with the money. However, Aglietta, as we just saw, is clear in stating that the contradiction of production and circulation logically entails autonomy of the monetary sphere. “The formation of the general equivalent makes possible a refraction of the homogenous space of value that evolves over time” (2000: 329 ).


The relative autonomy of the monetary system, however, as Aglietta warns, gives rise to all sorts of ‘monetarist illusions’ (2000: 329). One is the conception of money in terms of a dichotomy of money and ‘real economy’. As Aglietta notes, “this purely quantitative conception of money is the necessary counterpart of the subjective theory of value”. Money’s “function of a means of exchange is non-existent or has no economic significance… Expelled from the exchange process, the only logical way money can intervene in the economy is as a stock, a reserve holding” (2000: 330). In contradistinction to this, Regulationists build their conception of money on the notion of metamorphoses of value. Consequently, they see money and credit not as quantitatively different, but qualitatively different. They are not quantitatively defined dichotomies, in the form of credit being an extension of money. It is then no surprise that at the level of banking system, money is already conceived as a token of credit (Aglietta 2000: 331). It is an essential part of the metamorphoses of value of a commodity. Of course, the token of credit can be taken out of circulation, our of the metamorphoses of value (2000: 333). In this sense, it becomes a store of value. And when the commodity circulation “has reached a sufficient degree of centralization and permanence, the money commodity or its paper representative has no need to be present in circulation at the actual moment of exchange. Commodities are sold on credit and purchase anticipated” (2000: 333). This is the credit economy that many modern authors deal with, especially when describing international monetary system, since the fact that connecting up of production and purchase in anticipated creates a very dynamic environment.
In the Regulation Approach, therefore, we have a two-fold approach to commodity circulation, and, by extension, to money. What is of primary importance is the circulation of commodities, especially between Department I and II. The really serious breakdown of commodity circulation and subsequent depression cannot be caused, according to the Regulation Approach theorists, due to purely monetary factors. From this point of view, it is the dynamic of labour value magnitudes that counts, not the ever-changing monetary equivalent18. Secondly, Regulationists refuse the notion that some central power, the state, can effectively manipulate the money supply. That notion, Aglietta says, “has been cultivated by the amalgamation of money and credit in the framework of the quantitative theory, by way of the monetary multiplier. But to understand how the monetary system is organized, it is essential to see that money and credit are qualitatively different, even though credit arises out of money.” Hence he condemns the “illusion that the monetary authorities control the amount of money and consequently the rate of inflation” (2000: 331).
On both counts, the charge, although explicitly aimed by Aglietta at neoclassical economists, also applies to Open Marxists (who, as this paper tries to show, in reality base their explanatory schemes on neoclassical understanding of basic economic categories).

Open Marxists see monetary phenomena, especially credit, as essentially manipulable and manipulated. Open Marxists do understand money and credit as quantitative extensions of each other. Hence the formulations such as ‘inflationary dissociation of money and production’ and so on. After professing adherence to Marx’s conceptual schemata, they totally ignore interaction of labour value magnitudes and slip into the pyjamas prepared by generations of neoclassical economists to dream their dream of explaining everything by capital’s manipulation of production output, consumption, money supply.


But this seems to be a logical extension of their discursive strategy, where, having rejected analysis of ‘structures’, ‘capital’ and ‘labour’ are presented as two manipulating and resisting monadic principles. Thus, ‘money’ becomes “a central axis of class conflict” (Bonefeld et al 1996d:223). Compare this with the Regulation Approach, where money is a partly autonomous force which is, however, the converse of commodity circulation. For Regulationists, monetary relations are essentially of little epistemic importance. Rather, for them they expresses changes in the interplay of consumption and production, via that key structural form, the wage relation.

The best way to illustrate this is to point at how they view inflation. The positions are quite wide apart. For Open Marxists, it seems, inflation is credit-expansion and vice versa. The “inflationary dissociation of money from production” (1996d: 212) is a “speculative containment of insubordinate labour” (1996d: 222), a “mortgage on the future” (Bonefeld 2000: 56), which the ‘capital’ tried to contain in 1980s by moves to “deflate the money supply” (1996d: 223).

Inflation is credit-driven (or pushed: it is uncertain what exactly they mean; however, deferral of some ‘real’ payment is the central notion here). Aglietta takes quite a different view. He states firmly that the creeping inflation as observed in Keynesian-type economies arises out of the need for new modalities of devalorisation in an intensive economy (Aglietta 2000: 110). The form of the money constraint “is a sufficient condition for inflation” (2000: 350). This can go on for quite a long time, while all the time “the general equivalent is reconstituted by the permanent unification of different bank moneys” leaving behind a general rise in price level” (2000: 350). Or, to put it into a broader perspective, at the time of structural crisis, inflation, which had been contained within the time horizons of functioning Fordist economy, forced investors to shorten the expectable valorisation lines, and, as a result, “speculation displaced long-term investment (Guttman 1995: 60).
Analysis of Open Marxist statements on political-economic events is generally made difficult by their refusal to attain the level of lucidity that would make debate possible. Thus, Holloway explains, for example, how “the lack of control over the expansion of credit was greatly exacerbated by the development of a market in dollars outside the United States…” (1996a: 30-31). This is difficult to understand, since it was the benevolent attitude of governments in these early days that made Eurodollar markets possible (Strange 1998: 7). Then follows the claim that dollars “were increasingly transformed into reserves in European banks…these reserves were used as a source of credit for public authorities and for private capital” (1996a: 31). Now, this seems to be confusing central bank reserves with bank reserve holdings. The fact that there was a high demand for dollars is explained by dollar’s function as international currency. Holloway points at the dollar overhang in 1960s as if this was the ‘source of credit’. However, the overhang dollars were used for settlements of obligations. The Eurodollar market did not really take off until 1970s, when oversight was relaxed (Strange 1998: 6-7).

Some statements read as misunderstandings of economic mechanisms. For example, Bonefeld claims that “What gave monetarism its practical importance was the deregulation of global financial institutions in the early 1970s” (1996b: 46). The fact is that it really worked the other way round, monetarism failed due to deregulation of global finance, as it was a doctrine based on the assumption of certain insularity of national economies (Lewis and Mizen 2000:336).

These issues will be taken up when we discuss pragmatics of Open Marxist argumentation later.

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