Financialization of the Law of Value on a World Scale

• In Event: 473 - Section on Political Economy of the World-System Roundtables (one-hour)
  In Refereed Roundtable: Table 04. Markets and Economics

Abstract

The surge in global food, energy and metals prices in the aftermath of the 2008 financial crash had excruciating affects on the poor of the Global South. The key culprit was speculation in commodity futures. Today ‘spot’ or cash markets around the world look for ‘price-discovery’ information from commodity futures exchanges. As commodity futures markets began to grow in size since the 1990s they became centralized hubs of information that influenced world prices. This trend was further exacerbated with passing of the Commodity Futures Modernization Act (CFMA) in 2000 which deregulated derivatives trading and the crash of 2008 when finance capital found a safe haven in commodity futures. Finance capital in commodity futures has become a major influence in setting long term food, energy and raw material prices in addition to supply, demand, interest and currency rates. I argue that this speculation which intensified after the 2008 crash and inflated the long term prices of food, energy and raw material commodities has led to the redistribution of total value produced globally. This led to surplus profits on one pole by causing losses and the lowering of the value of labor-power on the other. To understand this, finance capital must be held in a totality with productive capital. This means adding a new layer of explanation of the effect of commodity futures speculation that modifies the functioning of the law of value. The paper concludes with prognostications on whether such speculation and price inflation will be sustained or attenuated.

Author

• Shehryar Qazi, State University of New York-Binghamton