In his thoughtful consideration of Adam Tooze’s Crashed: How a Decade of Financial Crises Changed the World, Cédric Durand salutes the magnitude of Tooze’s achievement—a ‘landmark account’ of the mechanisms precipitating the economic disaster that started to engulf the West in 2008 and of the remedies and ruins that followed. Particularly impressive, he remarks, is the way the book illuminates ‘the technical workings of financial markets and asset-backed commercial paper without losing sight of the political dynamics at stake’:

As Tooze writes: ‘Political choice, ideology and agency are everywhere across the narrative with highly consequential results, not merely as disturbing factors but as vital reactions to the huge volatility and contingency generated by the malfunctioning of the giant “systems” and “machines” and apparatuses of financial engineering.’ Crashed is, indeed, a highly political book.footnote1

At the same time, Durand observes, its narrative is no simple—or rather in this case, of course, highly complex and intricate—empirical tracking of the crisis and its outcomes. It possesses definite ‘conceptual underpinnings’, suggested by Tooze himself in acknowledging his debt to Wynne Godley’s use of ‘stock-flow consistency’ modelling of the financial interactions between public, private and foreign sectors. This in Durand’s view supplies ‘the unstated backbone’ of Tooze’s general argument.footnote2

Both judgements appear sound. But in Durand’s exposition a paradox attaches to each of them, since by the end of his review, somewhat different notes are struck. For Godley, one of the key advantages of the stock-flow consistency approach was that it integrated the financial with the real economy, as alternative models did not. Durand, however, remarks that Crashed ‘does not discuss the concrete intertwining of the financial and productive sectors in the global economy at all’, and so ‘fails to set the financial crisis in the context of the structural crisis tendencies within contemporary capitalist economies.’ This observation in turn generates another, which might seem to put in question Durand’s overall tribute to the book. For there he writes of ‘Tooze’s unwillingness to investigate the relations between the political and the economic’, a reluctance that ‘ultimately undermines his account of the crisis decade.’ Logically, the question then arises: do these two apparent contradictions lie in Tooze’s work, or in Durand’s review of it? Or can both be coherent in their own terms?

Perhaps the best way of approaching this question is to turn to Durand’s own work on the metastases of contemporary capitalism. With a reticence that does him honour—all but unheard of in an Anglosphere where even bibliographies so often become mere catalogues of self-promotion—he makes no reference to Le Capital fictif, which appeared in France in 2014 (its English edition Fictitious Capital in 2017), though its bearing on the concerns of Crashed is plain. A succinct, luminous study, it displays a combination rare in the literature on the economic landscape of the new century: in a bare 150 pages, a driving conceptual energy joined to a controlling empirical grasp of statistical data across all the major capitalist states. Organized around the growth in the object of its title—a term coined by the first Earl of Liverpool, Secretary for War in North’s administration under George iii, received by Ricardo, theorized in differing ways by Marx and Hayek alike, whose history it traces—Fictitious Capital sets out to show the character and logic of the financial system that brought the world to crisis in 2008, and has only continued to burgeon since.

What are the leading themes of the book? At the root of the instability that has triggered successive crises in the last forty years, first in the periphery and then in the core of the global capitalist economy, lies the peculiarity that distinguishes financial markets from markets in goods and services.

Whereas in normal times rising prices weaken demand in the real economy, the opposite is generally true of financial securities: the more prices increase, the more these securities are in demand. The same applies the other way round: during a crisis, the fall in prices engenders fire sales, which translate into the acceleration of the price collapse. This peculiarity of financial products derives from the fact that their purchase—dissociated from any use-value—corresponds to a purely speculative rationale; the objective is to obtain surplus-value by reselling them at a higher price at some later point.