Reviews of the Book

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• Reviewer: Bruce K. Martin

5.0 out of 5 stars A Book that Should be read Today, June 1, 2014

This book should be read today. By no means its only but certainly a chief virtue is Ismael Hossein-zadeh’s crisp, lucid style and method. His avoidance of the obscurity and (to a non-economist) mind-numbing statistics too often found in much writing by academic economic writing fits his critique of conventional economists of both liberal and conservative persuasions. He shows clearly how their attempts to explain the 2008 financial meltdown and persistent recession reflect a failure to escape from the trap of theoretical models into the real world of class and politics that inform (and have always) informed what is happening in American society. He demonstrates forcibly how such modeling has blinded most economists to the centrality of finance capitalism in economic collapses for over a century, as well as how the events of 2008 and the resulting moribund recovery represent a watershed event in the advance of the financial sector—with insidious consequences for us outsiders (i.e., the great majority of Americans).

But if he develops his argument in a dispassionate, orderly fashion–without questioning the motives or character of those who have profited by these developments—his scrutiny of the financial sector, as well as the federal reserve and the policy-makers who answer to it– masks an implicit indignation at the rigged game. Indeed, in his final chapter he takes the gloves off by calling for a globalized labor movement to counter the effects of the globalized economy in which most people feel trapped. His offers a thoughtful and timely critique of established labor organizations in most developed nations. Rather than seeking a return to the “good old days” immediately following World War II—which came out of a set of circumstances not likely to be repeated—he urges attention to the present situation and the opportunity it affords for alleviating the economic, social and political malaise currently plaguing most of the world’s citizens. The long view taken here toward present problems merits careful consideration.


• Reviewer: Alan G. Nasser Sr.

5.0 out of 5 stars a comprehensive, illuminating and accessible overview of the economic crisis, June 11, 2014

I have read most of the most widely discussed accounts of the causes and nature of the current economic crisis. Those written by insiders like Sheila Blair and Neil Barofsky provide details of what went on during the initial stages of the crisis and who said and did what. The useful information they contain is available nowhere else, and that seems to me to be the main merit of these accounts. A key problem, though, is that they tend to locate the causal origins of the crisis in bad decisions made by powerful and influential individuals. A few do a bit better: they may go further in tracing the Great Recession to the rise of financial speculation and the growing share of financial profits in total profits since the 1970s and 1980s. But virtually none try to explain the relative rise of finance capital in recent decades. Ismael Hossein-zadeh’s (hereafter HZ) account in Beyond Mainstream Accounts of the Financial Crisis is to my mind the most informative of the books dealing with the crisis, and for three main reasons: he offers a compelling account of the relative rise of finance capital, his account is clear and cogent, and, very importantly, he assesses comparatively the most important and influential alternative explanations for the emergence of the crisis. That is, rather than simply detailing his own analysis, he attempts, successfully I think, to test his account, so to speak, against competing explanations. In natural science, this is standard procedure: a proposed theory is defended against the most salient alternative accounts. In the process the author hopes to show that his or her narrative is superior in explanatory value to those alternatives. HZ adopts this demandingly comprehensive strategy and succeeds in defending an explanatory story that is forceful in its own right, and features none of the defects of the alternative accounts. All this is accomplished in pellucid, unpretentious prose.

It is neither possible nor desirable to cover literally every one of the alternative approaches, mainstream/neoliberal, Keynesian, Marxian, Institutionalist, Post-Keynesian, Libertarian, et al accounts of the crisis. HZ focuses on the most widely discussed and adopted theories, the mainstream/neoliberal, Keynesian and Marxian approaches. Interestingly, the most pertinent points in HZ’s critiques can be applied fruitfully to just about any respectable alternative account. Since mainstream theory is now neoliberal in content, HZ’s extended and powerful critique of the mainstream can be applied nicely to e.g. libertarian accounts as well.

It is not easy to give an accurate account of positions with which one strongly disagrees. It is to my mind one of the most valuable features of HZ’s book that his accounts of theories with which he disagrees are clear and do not create straw men. HZ offers reliable accounts of rival theories. So readers feeling they need a refresher course in any or all of the three theories HZ treats of are well served.

Not long after the poop hit the fan in September, 2008, the Keynesian economist Paul Krugman of Princeton University and the NYT op-ed page, and surely the most widely read economist in the country, wrote in The New York Times Magazine that on the whole economists had failed to see the crisis coming. Well, “on the whole”… In fact, a good many economists had been warning for years that unless the explosion of credit, the ascendancy of finance and the long-run decline in the median wage was reversed, a bubble-triggered crisis was not unlikely. It was not “economists” who failed to read the handwriting on the wall, but economists like Krugman. Krugman is no idiot, and it’s not as if there is nothing to be learned from his writing. But the limitations of Keynesian analysis are not negligible. For example, why was Krugman not attuned earlier to the what is now a forty-year decline in the median wage? In a more recent op-ed, Krugman reveals that he had included the incomes of hedge-fund managers and other financial bigwigs under the category of ‘wages.’ Had Krugman understood that the incomes of radically different socioeconomic classes do not belong in the same category, he might have focused not on how “we” were doing, but on how different social classes were doing, and why the difference directly impacts the future of employment, and, more generally, the material security and well-being of the working majority. The typical median wage earner is working-class; no hedge fund manager is. No significant conclusions can be drawn from aggregating their incomes under a single category. HZ’s approach rules out the kind of errors we find in much Keynesian analysis. For HZ, economic analysis is a species of social analysis. Because we live in a hierarchically stratified society, we should expect that economic and political power are intertwined, and we should suspect that policymakers may be guided by interests that diverge from the interests of the working majority. HZ is able to reveal the explanatory power of an approach that takes the realities of socioeconomic power asymmetries seriously.

In the course of his comparative evaluations, HZ provides substantial discussion of a range of related matters. Among these are Rudolf Hilferding’s analysis of finance capital (which has oddly been given short shrift by many Marxian commentators) the history and rationale of debt cancellation and the case for public banking.

In sum, HZ manages to pack a lot into 167 pages. The book is written in such a way as to be informative to both scholars and to the reasonably educated reader. You will learn a great deal from this book. I wish I had written it myself.


• Reviewer: Michael Gillespie

5.0 out of 5 stars Another tour de force, April 18, 2014

Ismael Hossein-zadeh’s Beyond Mainstream Explanations of the Financial Crisis has exceeded my expectations. As a lay reader, one who is widely read but whose formal training in economics is limited, I was delighted to find that this work makes even complex issues accessible and interesting. Its interdisciplinary approach, which illuminates historical, political and sociological aspects of economics, captured this reader’s interest and held it. Having read the author’s previous work, The Political Economy of U.S. Militarism, I was prepared for a fearless, thought-provoking analysis that challenges mainstream paradigms. Even so, Hossein-zadeh’s latest contribution to the public discussion about economics surprises again and again. Closely-reasoned and meticulously-crafted, Beyond Mainstream Explanations of the Financial Crisis took this reader places he did not expect to go and offered unexpected insights along the way. Isn’t that what the best writers do? Enjoy!


• Reviewer: Isaac Christiansen

5.0 out of 5 stars Review of Hossein-zadeh, Ismael. 2014. Beyond Mainstream Explanations of the Financial Crisis: Parasitic Finance Capital., May 16, 2014

Ismael Hossein-zadeh has done a masterful job in explaining the causes of the 2007-08 financial collapse and in identifying what must be done in response. He sets out in Beyond Mainstream Explanations of the Financial Crisis to first demonstrate the origins of the crisis and the subsequent transfer of “tens of trillions” of dollars from the vast majority of society into the coffers of the financial speculators through the imposition of austerity cuts on the many for the benefit of the few; and secondly to examine potential societal responses to avoid the repetition of such crises in the future. To do this, he begins by examining the two most prominent explanations for the crisis: the neoliberal explanation, which claimed it was due to irrational market actors and/or intrusive government policies that interfered with the self-correcting market mechanism; and the Keynesian explanation, which explained the crisis as the result of excessive deregulation, “inappropriate” public policy and supply side strategies. The author skillfully exposes the weaknesses of both and offers a compelling and well grounded alternative explanation, as indicated in the book’s title.

The book is well written and is easily understood by those who may not have an extensive background in economic theory. At the same time, it provides keen insights that are essential to understanding the crisis for those who may be more experienced in the field. It is structured with the first five chapters devoted to understanding crises within advanced capitalism, particularly the role of finance capital in provoking them, while the final three chapters are dedicated to examining solutions. Moreover, the work is an essential heuristic tool for any and all who wish to show how and why advanced capitalist economies tend towards crisis and the role of finance capital as a catalyst of crisis. A more thorough examination of the work’s primary contributions follows below.

In Chapter one Hossein-zadeh explains that neoliberal conceptualizations suffer from a misplaced religious-like faith in the market mechanism that led the leading neoliberal/neoclassical economists to remain oblivious to the impending crash. Due to neoliberals’ blind faith in the income-expenditure (or supply-demand) circular flow model, their economic theory is impervious to the fact that contradictions can arise within the real sector itself as well as to the reality that contradictions can also arise between the financial and the real sector. This led the leading neoliberal/neoclassical economists like Ben Bernanke and the IMF financial gurus to predict continual expansion up through the very eve of the crisis, and later to offer mistaken remedies such as quantitative easing and more funds to the financial sector. The impact of these measures is that instead of preventing a new bubble from forming they put us well on the way to creating another one.

In chapter two Mr. Hossein-zadeh delves into the weaknesses of Keynesian explanations of the crisis, arguing that while they are not wrong to signal deregulation as part of the problem leading to this crisis, they naively believe that capitalism will allow itself to be regulated without pressure from the people, thereby ignoring the power relationship between capitalism and the state. Not surprisingly, Keynesians tend to be oblivious as to why their more sane-sounding prescriptions for increasing public demand (through the promotion of New Deal type economic programs) and curtailing the aggressive and irresponsible behavior of financial players through more regulation have not been followed. While their policy suggestions may prove effective under certain circumstance, Keynesians fail to see or acknowledge that profit can also be increased through more intense exploitation of workers, that is, through supply-side measures. Furthermore, while the New Deal reforms were beneficial for the extrication of the U.S. economy from the grips of the Great Depression, these were followed much more as a response to working-class pressure from below then as a deliberated response to the writings of Keynes. In addition, the long economic expansion that followed was also due to the specific global economic situation of vast amounts of capital destroyed in Europe leaving the U.S. without much competition for its exports.

Much of the weakness of Keynesian economic theory, like all neoclassical economics, is their rejection of the category of value, and thus any real understanding as to the origin of social wealth and class dynamics. The general weaknesses of neoclassical economics are covered expertly in chapter 3. This chapter examines the weaknesses in the neoclassical understanding of the relationship between industrial and finance capital. The neoclassical position traditionally argues that the latter is limited by the real expansion of the former, and thus remains oblivious to the possibility of a crisis forming in the financial sector and spreading to the real ‘productive’ sector. To understand the real developments, Hossein-zadeh convincingly argues, we need to turn to Karl Marx’s Volume III and look at what he termed ‘fictitious capital’, when Marx examined how value tended to be siphoned from the sector in which it was produced to the unproductive sectors of the economy in pursuit of speculative investment.

Chapter 4 looks at the historical growth of finance capital (whose share of GDP in 2008 was more than double its share on the eve of the Great Depression in 1929), the growth of speculative activities (derivative markets, credit-default swaps) and the role of private control of the money supply. Each one of these phenomena is analyzed here in their social impacts and class/political dynamics. Here the author (p76) demonstrates that the speculative activity of finance capital accelerates “accumulation of fictitious capital through asset price inflation” (often with the help of public funds that simultaneously act as insurance protecting the speculators from the potential consequences of their socially deleterious behavior), creating a bubble that eventually bursts—with the public left paying the debt for the now-devalued assets.

This chapter also demonstrates that the bailouts for the speculators and austerity for the many, which further increased the already sharp economic inequality, were not an economic necessity but a reflection of the power of finance capital over the state and the monetary authority. To this end, Hossein-zadeh reflects on the immense tax-breaks for the wealthy, gargantuan military spending and lucrative contracts for weapons producers that created ‘public’ debt as a pretext to slash necessary social programs. The chapter demonstrates that we live under an economic system where losses are socialized and profits are privatized.

In Chapter 5, Hossein-zadeh reflects on Marx’s understanding of parasitic finance capital, its place within labor theory of value, and its contribution to a better understanding of the causes behind the present economic crisis. In Vol. III of Capital Marx outlined how the surplus value produced in the industrial and agricultural sectors ends up being divided between the merchant (or commercial capital), finance capital (money lending capital) and ground rent (Marx [1894] 1981). Hossein-zadeh points out that, according to Marx, fluctuations of finance capital could take place independent “of the movement of the actual capital it represents” (p86, quoted in Hossein-zadeh); and that as capitalism develops the movement of money (finance) capital becomes more and more independent of the movement of industrial capital. This is critical for his argument that crisis can hit the speculative financial sector at a moment when there is not a crisis within the real sector, but that through the tightening of credit and asset price deflation spread the crisis from the speculative to the productive sector.

The author further argues in this chapter that contemporary Marxists, unlike Hilferding and Lenin who expanded in the early 20th century on Marx’s work on finance capital, have largely abandoned systematic explorations into the workings of finance capital (generally viewing it as secondary to their conception of a Marxian theory of crisis), and focused primarily on the movements within the productive sector. It is not that Hossein-zadeh disagrees in principle with the contemporary Marxist scholars about the potential for crisis to arise within the circuit of productive capital; but that many of these Marxists have overlooked the fact that crisis can and does at times start within the financial sector and proceeds to spread to the real sector. Many contemporary Marxist theoreticians and economists seem to argue, in an inconsistent or self-contradicting fashion that “asset price inflation can boost demand and cause or magnify an expanding real cycle; but debt and/or asset price deflation cannot cause or aggravate a real-sector recession!” (p107).

In Chapter 6 the author explores the historical record of debt cancellations/writedowns, dating back to Bronze Age Mesopotamia (2400-1400 BCE) and running through the 5th and 4th centuries BCE. Here he examines the evidence that suggests that not only were debt cancellation and land restitution/reform common practices in this epoch, but that they often led to economic renewal. While there are moral and ethical arguments that can easily be made in favor of the biblical Jubilee and debt cancellation in general, Hossein-zadeh goes beyond these points to argue that the historical record offers clear evidence that an economic recovery would not occur so long as the vast majority of the population is saddled with overwhelming debt and interest payments. The author further argues that the decline of these socially-beneficial practices coincided with the rise of private property and the growth of power of landowning and rentier classes, and that these classes exerted influence over the state/religious authorities to deemphasize these central aspects to the Old Testament’s socio-economic reforms.

In Chapter 7 the author makes the case for public banking. Here he underscores once again the pernicious role of private banking in advancing the interests of the wealthy few in general and finance capital in particular at the expense of the many. He argues that while private banks “create financial bubbles during expansionary cycles and credit crunch during contradictory ones”, public banking “can provide steady, reliable financial resources as dictated by a nation’s industrial and/or commercial needs”(p129). Crucial here is the superior economic record held by the BRICS (Brazil, Russia, India, China and South Africa) countries in weathering the 2008 financial collapse and the ensuing economic crisis. Contrary to a situation in which the state becomes beholden to creditors, when banks are nationalized the state has additional resources with which to engage in essential public projects that both serve a social purpose and stimulate demand. While acknowledging that public banking by itself is insufficient to prevent the recurrence of all economic crises, Hossein-zadeh successfully makes the case that this is a necessary first step to avert crises that originate within the financial sector.

In the final chapter, the author soundly argues that there are no shortcuts to superseding capitalism by solely nationalizing the banking system; and that we must move beyond capitalism itself, or else we would be subjected to the throes of its logic. Here he examines the role of labor as one of the key players in confronting capital. Sadly, as he points out in this chapter, many unions have become caught up in business unionism and have tragically become vehicles for transmitting the dictates of capital to the workers (as opposed to vice-versa!), and have been unable (or unwilling) to resist the generalized assault on labor in the form of layoffs, wage cuts and outsourcing.

A central explanation for the debilitation of unions offered here lies in capital’s global reach and the globalization of production. Capital has free global movement and is organized on an international level and thus is able to play off workers in various countries against each other in a race to the bottom in terms of worker safety, salaries, benefits, labor laws and environmental protections. Labor must therefore organize internationally so as to be able to effectively resist a globalized capitalist system. A key element of this strategy lies in resisting all forms of chauvinisms, and reactionary nationalisms that have at times infected the labor movement and can lead to what Edna Bonacich (1972) referred to as a split-labor market.

Dr. Hossein-zadeh in this chapter also looks at the limitations of the Occupy movement, arguing that while their heart was in the right place, Occupy activists had condemned themselves to be ineffective as a long-term force for change by refusing to adopt an organizational structure or outline specific demands. The author thus points us back to the critical role of labor to play in this regard, but that it is essential that they organize and coordinate globally, otherwise capital will be able to outmaneuver workers’ resistance and subject labor to its logic. In the end, Hossein-zadeh remains hopeful based on the seeds of international labor organizing that labor will be able to meet this challenge in the future and serve as a primary catalyst for meaningful socio-economic transformation. In summary, I recommend this book without reservation, as a critical component of the library of those who are not just concerned with understanding the dynamics of finance capital and its role in facilitating economic crisis, but to all those who are genuinely interested in bringing about a more socially just and equitable society.

Works Cited
Bonacich, Edna. 1972. “A Theory of Ethnic Antagonism: The Split-Labor Market” American Sociological Review, 37:5 547-559.
Marx Karl. [1894] 1981. Capital Vol. III Penguin Books in Association with New Left Review. London WI.


5.0 out of 5 stars Debunking Mainstream Economics, June 16, 2014

Reviewed by: Chet Guinn


If I were granted a wish today, I would wish that labor leaders, religious leaders, political pundits, and all thoughtful persons apprehensive of the social and economic trends of our society would take seriously the economic perspective articulated in this book.

Ismael Hossein-zadeh’s concluding appeal for a global labor response to the woes and vagaries of our profit-driven economic system follows a sweeping overview of economic history and theory in which every sentence counts. I gave up underlining key passages and allowed myself to be absorbed in the narrative.

My theological/Biblical training singled out Chapter Six of the book, “Debt Cancellation—Learning from Biblical Jubilee,” for its potential to initiate a serious dialogue within religious circles. Church leaders played a significant role in the establishment of U.S. labor unions c. 1900. Their historic primary concern requires a repeat performance; and this book provides useful guidelines for this purpose.

All socially conscious and/or responsible individuals have reason to be concerned about the rapid concentration of wealth in the hands of a very few while poverty becomes the lot of more and more in every corner of the globe. Hossein-zadeh’s book explains why—beyond symptomatic and oft-repeated factors such as greed and deregulation—and what to do to reverse this ominous trend.

The only downside of this wonderful book is its high price, which makes its purchase beyond the reach of many potential readers. While scholarly, the book is also accessible to educated lay readers as it is written in a very lucid and clear style. Hopefully the publisher would realize this and publish the book in paperback at a reasonable price so that more people would be able to buy it.


5.0 out of 5 stars Essential Reading, August 5, 2014
This review is from: Beyond Mainstream Explanations of the Financial Crisis: Parasitic Finance Capital (Routledge Frontiers of Political Economy) (Hardcover) 
Insightful for experts, yet accessible to laypersons, Professor Hossein-zadeh’s book, “Beyond Mainstream Explanations of the Financial Crisis:Parasitic Finance Capital,” is a must read for anyone concerned about the future of the American (and world) economy. His discussion of the coziness of Wall Street and the Federal Reserve, the uncoupling of the real and financial economies, counterproductive austerity measures, and the ever-widening inequality of incomes, leaves little doubt that this will all end in a very bad way.