Capitalism’s Insecurities

Secured transactions are transactions where payments, typically on a loan of some kind, are secured by certain goods, called collateral, being subject to seizure upon failure to make payment. Mortgages, pawnshop loans, and money judgments from a lawsuit are all examples of secured transactions. Like most kinds of financial accumulation, they are speculative – they do not have the capital and may not get the capital depending on the circumstances. That risk however is mitigated by the ability to foreclose on the collateral to the loan and subsequently liquidating or reselling it to recover some, all, or even a surplus of the money owed.

Such transactions are ones that modern orthodox economists like to point to as too complicated or too attenuated from the labor theory of value for Marxist economics to explain. This reasoning comes from a misunderstanding of the labor theory of value – Marx never asserted that capital accumulation only comes from the immediate exploitation of wage labor. But even in these transactions, the value realized can always be traced back to its creation by labor. Loans are a paradigm of the neoclassical fiction of economics: the debtor benefits from having more capital in the short term to spend and the creditor benefits from making a profit, either on the interest or on foreclosing on the collateral and reselling it (admittedly this is a gross oversimplification, but nonetheless is the core of the profit motive). It seems to be win-win. And that is certainly how these transactions are marketed to consumers:

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Anything I want? Even investment centrally planned by a proletarian state?

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