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New Left Review I/224, July-August 1997

Giovanni Arrighi

Financial Expansions in World Historical Perspective: A Reply to Robert Pollin

In his review of The Long Twentieth Century, Robert Pollin advances three surprising criticisms. [1] Robert Pollin, ‘Contemporary Economic Stagnation in World Historical Perspective’, nlr 219, pp. 109–18. All three criticisms concern what I have called ‘systemic cycles of accumulation’. These cycles consist of two phases: a phase of material expansion, in which profits come primarily from investments in the purchase, transformation, and sale of commodities (as encapsulated in Karl Marx’s formula of capital M→C→M'), and a phase of financial expansion in which profits come, not from the further expansion of trade and production, but from borrowing, lending and speculating (as encapsulated in Marx’s abridged formula of capital M→M'). The first criticism concerns the mechanisms that bring about the change of phase from material to financial expansion; the second concerns the mechanisms that sustain financial expansions over long periods of time; and the third concerns the method used in constructing these cycles. I shall respond to the three criticisms in this order.

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