Clarification and Application of the Category Profit on Alienation

Abstract

This article presents profit on alienation (POA) as one of the sources of profit in capitalist economies. In addition to identifying and situating POA among other profit flows, we have attempted to operationalize it in the real estate and finance sectors. In the empirical part of the article, we estimate POA in those sectors in Turkey for the period 2010–2019. The extent of estimated profits based on POA in those sectors is not insignificant. These findings confirm our position that utilizing POA in exploring capitalist dynamics would be a fruitful endeavor.

JEL Classification: B3, B51, H27, G51

Keywords

rent and profit unequal exchange Marxist economics Marxist value theory finance

1. Introduction

The modern literature on the Marxian labor theory of value generally neglects an important concept of political economy, profit on alienation (POA). Only a few political economists have attributed special significance to the concept, notably Anwar Shaikh (1986, 2016) and Costas Lapavitsas (2014). In his entry on “Surplus Value” in the New Palgrave: A Dictionary of Economic Theory and Doctrine, Shaikh (1986) emphasizes POA as an important albeit secondary source of profit in capitalist economies, besides surplus value. Shaikh uses the concept in his recent monumental book Capitalism, where the very existence of POA constitutes the basis of his explanation of the inequality between total surplus value and total profit in the context of the transformation problem (Shaikh 2016).¹ Lapavitsas attempts to utilize POA in his conceptualization of financial profits. Although Lapavitsas does not operationalize POA, his analysis of the nature of the financial relationship between banks and households is very insightful, and we use it in one of our empirical cases below. Moreover, beyond its theoretical importance, the size of POA can be significant in its own right, especially in developing and less developed countries where transactions based on an unequal exchange are more likely since substantial noncapitalist production spheres exist.

In this article, we first briefly discuss surplus value and POA as two different sources of profit (see, especially, Shaikh 1986, 2016). Since our main focus is on identifying types of profit that can be characterized as POA, as distinct from other flows of profit that derive from surplus value, we first attempt to classify all profit flows. The rest of the article is organized as follows. In section 2, in order to operationalize POA so as to estimate it, we situate it in two specific sectors, namely, those of real estate and finance. In the privatization of public land, we consider POA a very useful concept for specifying profit-making channels. Similarly, in the context of the widespread lending practices from banks to households, POA is necessary to grasp one of the sources as well as the extent of financial profits beyond a share of surplus value. In section 3, we provide an empirical estimate of POA in both the real estate and the financial sectors in Turkey between 2010 and 2019. We conclude our discussion by pointing out possible ways of refining POA both conceptually and empirically.

2. Theoretical Background: Surplus Value and POA

Marx’s theory of profit is based on the production of surplus value presupposing an exchange between equivalents.² Capital pays the worker a wage as the equivalent of the value of his or her labor power and takes possession of the surplus value produced, thus appropriating surplus labor. This appropriation presumes productive consumption of the use value of the labor power that Marx identifies as a peculiar commodity with a unique capacity of producing more value than its own (Marx 1977).

This is the most abstract level of analysis regarding the formation of profit in the capitalist mode of production. As Marx’s analysis becomes less abstract through the volumes of Capital, we are introduced to more concrete manifestations of surplus value such as industrial profit, ground rent, interest, and profit of enterprise. Figure 1 presents in detail various monetary expressions of surplus value generated by the production activities of labor in productive sectors, which also funds nonindustrial profit.

Figure 1.

Flows of surplus value.

As indicated in figure 1 through the distinction between industrial profit and nonindustrial profit, every capitalist economy consists of both production (e.g., industrial) and nonproduction (e.g., trade and finance) activities.³ This phenomenon led both the classical economists and Marx to develop the concepts of productive and unproductive labor employed in corresponding economic activities (or sectors).⁴ According to Marx, surplus value is only created through the activities of productive capital, but it is not fully retained in those sectors.⁵ Instead, it partially flows out of those sectors to other, unproductive sectors, and constitutes the pool out of which are paid their costs and their profit.⁶ In figure 1, the categories of industrial profit and nonindustrial profit, respectively, correspond to the productive and unproductive capitalist firms’ gross profits. Because the capitalist firms in both productive and unproductive sectors pay interest to lenders, what they retain as their net profit (profit of enterprise) must be adjusted by subtracting the net interest they pay from their gross profit. Hence, if one focuses solely on the quantitative estimation of the surplus value of an economy, one must take into consideration all of the above-mentioned monetary expressions of surplus value. However, if it is the empirical measurement of profit that is being explored, then one must begin by focusing on the profit of enterprise of all capitalist firms.⁷

That profit can also arise from transfers between the circuit of capital and other institutions or spheres of social life, including households and the state, is often overlooked. It is this latter form of profit that Marx calls profit upon alienation (POA), which—unlike profit from surplus value—is fundamentally dependent on some sort of unequal exchange.⁸ Profit upon alienation also allows us to explain how capitalism can derive profit from noncapitalist spheres without the creation of surplus value. As the empirical part of this study focuses exclusively on the state and worker households in terms of their relationship respectively with the real estate and finance sectors, figure 2 is based on those two sectors as sectors where POA is generated.

Figure 2.

Profit upon alienation.

2.1. Real estate and the privatization of public land

When the state owns a piece of land, that constitutes public wealth. Let us assume the market value of a piece of land is $500. In the context of privatization⁹ (or through some other such policy),¹⁰ if the state sells this land to a capitalist developer at $100, the public wealth decreases by $400 as the developer's wealth (capital) increases by the same amount. So, from the point of view of society at large, there is no change in total wealth; the only difference is in the redistribution of wealth between the public and private actors, that is, the state ($100) and the capitalist developer ($400). Table 1 illustrates this transaction between the state and a capitalist developer.

Table 1.

The Transfer of Public Land to Capitalist Firms.

Now the capitalist developer has at least three options for turning a profit from this under-valued land:

Option 1: Sell the land at market value ($500) and realize a $400 profit, which is POA facilitated by the state's policy of privatization.

Option 2: Wait and sell the land when its price increases, say to $700, and realize a $600 profit, of which $200 is additional profit (due to differential rent) over the $400 POA;

Option 3: Develop the land by building a structure—e.g., a house—on it. As shown in table 2, producing the dwelling requires additional expenditures of material (constant capital, say $500) and labor (variable capital, say $500) over and above that incurred for the land for which the developer spent only $100 (original material cost, also a part of constant capital) when its market value was $500. Assuming a 100 percent rate of surplus value, this production process generates a new surplus value of $500. Based on this numerical example, the market value of the house must be $2,000, of which $900 constitutes the developer’s total profit, the sum of the surplus value ($500), and POA ($400).

Table 2.

Capitalist Development of the Land.

Capitalist DeveloperLand + Building

2.2. Finance: Lending to workers

Lapavitsas (2014: 139) points out that “individual workers and households have been drawn systematically into the financial system. Thus, financial profit could be earned by those who lend to workers as well as by those who handle workers’ savings.”¹¹ These types of profit have nothing to do with the flows of surplus value generated by the production sector. The following example from Shaikh illustrates the relationship between the circuits of capital and revenue by using an example of a consumer loan obtained from a bank:

For transfers between circuits, consider the simple case in which the production sector has wages of 300 and profits (surplus) of 400. Suppose a new bank opens in town and lends the workers some money which they pay back with net interest of 18 (20 paid on loans minus 2 received on deposits). The latter is bank revenue which after allowance for banking costs of 12 leads to a new bank profit of 6. Production profit is still 400, but now aggregate profit has risen to 406: the transfer from the workers’ circuit of revenue into the banks' circuit of capital has increased aggregate profit by 6. (Shaikh 2016: 210)

Let us examine this transaction in detail and locate POA (or profit upon expropriation, as Lapavitsas calls it) through table 3.

Table 3.

Profiting from Lending to Workers.

	No Loans
	Production Sector	Banking Sector

At Stage I, the production sector’s profit ($400) is generated by productive workers. Hence its source is the sector’s surplus value and is located within the circuit of capital. At Stage II, workers obtain a $100 loan from Bank A at an interest rate of 18 percent. However, at stage III, in addition to the $100 principal payment, workers pay the interest ($18) out of their income, that is, from the circuit of revenue, and the $18 interest thus becomes part of the bank’s circuit of capital. More importantly, after deducting the bank’s cost of the loan ($12), the leftover amount ($6) constitutes the bank’s profit in the form of POA.

From the workers’ point of view, the $100 bank loan initially expanded their standard of living (Workers’ Income I = Wages = $300 became Workers’ Income II = $400) without changing the rate of exploitation within the production sphere. In other words, S/V stayed at 133 percent. Even if this loan could be used to make non-consumption-related payments by workers, there would be no change in the rate of exploitation.¹² But, at stage III, after paying the loan and associated interest, the workers’ living standards deteriorate since their effective (or post-loan-payment) wages are reduced to $282 (Workers’ Income I = Wages = $300 became Workers’ Income III = $282). This transaction did not affect the rate of workers’ exploitation within the production sphere. In other words, S/V still stayed at 133 percent. However, one would interpret the $18 interest payment or even the $118 interest plus principal payments as the source of additional (or secondary exploitation) within the sphere of circulation (Lapavitsas 2014). Obviously, the presence of the latter type of exploitation reduces the workers’ living standards.¹³

3. Empirical Cases

3.1. Land privatization

As pointed out above, our first empirical illustration of the concept of POA comes from the relationship between the state and the real estate sector—specifically, when the state privatizes public land by selling it to a capitalist firm.¹⁴

In such a context, to calculate the POA we need two basic prices. First, the market price of the land that is privatized, and second the price at which the private sector participants buy the land that is being privatized, i.e., the public price.

In Turkey, the Directorate General of National Property (DGNP; Milli Emlak) publishes annual reports on transactions of land privatization and leases (Milli Emlak 2022). Employing these reports for various years, we have extracted data on total revenue acquired from land sales and the total size of such transactions undertaken by the government. Dividing total revenue by total size, we estimated the average public price per square meter, denoting this term PP (public price).

Unfortunately, given the poor quality of data gathering by the Turkish Statistical Institute (TÜİK), no reliable official statistics on land prices exist. The only available official price statistics are the average indices of housing prices, collected by the Central Bank of Turkey and dating back to 2010.¹⁵ We use these data as the underlying index for tracing back the market price of land in Turkey from 2010 to 2021 once the benchmark market prices were estimated in 2021. We assume that housing prices are highly correlated with land prices. Assessing the market price of the land in the benchmark year 2021 requires a different approach. We obtained all the land sales data from the largest commercial website in March 2021 and calculated the average price per square meter (Duman 2022), which we call MP (Market Price).

The difference between MP and PP is the basis for the estimation of POA in the real estate sector.

Estimation steps

(a) We started with the DGNP data on privatized land and revenue for the period 2010–2021. Note that these do not include agricultural land, and all prices are in Turkish lira except for the estimated figures of POA. The latter is converted into US dollars by using the mean values of the exchange rate for each year.

Using the land size and revenue data, we get the public price PP by dividing the revenue by size. Note that PP fluctuates dramatically: the public price per square meter could be as low as 8.31 TL and as high as 225.52 TL in nominal terms.

Capital inflows slowed dramatically after 2013 as the US FED began hiking the policy rate in the United States. Thus, Turkey’s state had less room for foreign borrowing afterward. The PP may have declined immediately after that as the state may have fallen in greater need of revenue generation and thus given up its bargaining power.

(b) Switching to housing price index data and the data we have extracted from the commercial website on land sales, and using 2021 as the benchmark year, we deflate the average market price in 2021 by the housing price indices in previous years.

Once we have the market price, MP, we can calculate the potential market revenue for privatized land by multiplying the MP by the area of privatized land. The difference between this and the PP will then be our estimate of the POA in real estate. In other words, the difference between the third column in table 4 and the second column in table 5 denotes the estimated POA.

Table 4.

Market Price.

	House Price Index	Market Price, MP (TL)	Potential Market Revenue (billion TL)
2010	48.1	135.78	0.97
2011	51.2	144.73	1.42
2012	56.4	159.51	2.51
2013	63.6	179.74	1.98
2014	73.1	206.59	2.11
2015	84.5	238.89	1.70
2016	94.8	268.06	4.26
2017	103.4	292.52	4.33
2018	108.0	305.41	2.40
2019	118.8	336.14	8.09
2020	154.9	438.47	7.62
2021	247.4	700.30	18.05

Source: Milli Emlak (2022); Duman (2022); authors’ own calculations.

Table 5.

Public Prices.

	Area Sold (million meters square)	Total Revenue (billion TL in current prices)	Public Price per Square Meter, PP (TL)
2010	7.13	0.13	19.07
2011	8.93	0.22	22.52
2012	15.77	0.56	35.81
2013	11.01	0.78	71.43
2014	10.20	2.29	224.52
2015	7.11	0.51	71.44
2016	15.90	0.61	38.71
2017	14.81	0.34	32.17
2018	7.86	0.40	50.76
2019	24.06	0.47	19.60
2020	17.40	0.14	8.31
2021	25.83	1.77	68.81

Source: Milli Emlak (2022).

As seen in the last column of table 6, the estimated POA in real estate for the whole period amounts to US$9.31 billion in nominal terms, which is not insignificant.

Table 6.

Profit upon Alienation, Real Estate.

	Potential Profit upon Alienation (billion TL)	Potential Profit upon Alienation (billion $)
2010	0.83	0.55
2011	1.20	0.72
2012	1.95	1.09
2013	1.19	0.63
2014	−0.18	−0.08
2015	1.19	0.44
2016	3.65	1.21
2017	3.99	1.09
2018	2.00	0.41
2019	7.62	0.34
2020	7.48	1.07
2021	16.31	1.84

Source: Authors’ own calculations based on tables 4 and 5.

3.2. Loans to worker households

Workers depend on their wages for their livelihood. From the 2000s onward, the real wage in Turkey has not kept up with productivity, and the purchasing power of workers’ income has declined. Consequently, loans to worker households have exploded.¹⁶

In order to figure out the total loans extended to worker households, we use data from the Banks Association of Turkey (TBB) and the Banking Regulation and Supervision Agency (BDDK), and report bank loans to worker households in Turkey in table 7 (TBB 2022a; BDDK 2023). About 70 percent of all consumer loans are offered to worker households (TBB 2022a).

Table 7.

Interest Income on Loans to Worker Households.

	Interest Income on Consumer Loans (including mortgages, in billion TL)	Interest Income on Credit Cards(in billion TL)	Interest Income on Loans to Worker Households(in billion TL)
2010	14.96	4.84	13.86
2011	17.84	4.57	15.69
2012	22.80	6.10	20.23
2013	26.03	6.60	22.84
2014	30.43	6.98	26.19
2015	34.77	8.08	29.99
2016	39.88	9.05	34.25
2017	47.27	9.06	39.43
2018	56.57	11.23	47.46
2019	69.63	13.98	54.26
2020	72.14	10.53	57.87
2021	96.80	21.70	82.95

Source: TBB (2022a) and authors’ own calculations.

Next, we use the ratios of interest income to interest expense¹⁷ to obtain the net income (or profit) of banks on loans to worker households as seen in table 8. The figures we get are our estimates of POA in the financial sector, presented in US dollars by converting national currency values based on exchange rates in the relevant years. The total estimated POA in the financial sector for the whole period is US$57.23 billion in nominal terms, which is a staggering amount.

Table 8.

Profit upon Alienation, Finance.

	Interest Income to Interest Expense Ratio	Profit upon Alienation(in billion TL)	Profit upon Alienation(in billion $)
2010	1.87	6.45	4.30
2011	1.72	6.57	3.92
2012	2.04	10.31	5.75
2013	1.65	9.00	4.72
2014	1.67	10.51	4.80
2015	1.86	13.87	5.10
2016	1.91	16.32	5.41
2017	1.91	18.78	5.15
2018	1.93	22.87	4.73
2019	2.12	28.66	5.05
2020	1.94	28.04	4.00
2021	1.84	37.87	2.27

Source: TBB (2022b), BDDK (2023), and authors’ own calculations.

Even considering only the above channels of POA in two sectors alone gives us a reasonable sense of its significance. In order to obtain an approximate relative size of POA regarding total corporate profit, we use total income data on real sector profits through the Entrepreneurial Information System (EIS, Ministry of Industry and Technology), and banking sector profits through BRSA annual reports (BDDK 2023; GBS 2023). As seen in the last column of table 9, the average ratio of POA to total profits is 9.23, once again a hard-to-ignore share. Also, for example, in 2019, when the share of total corporate profit was around 8.7 percent, the size of POA as a percentage of GDP was 0.71 percent, which is in itself significant.

Table 9.

The Relative Size of POA.

	Total Corporate Sector Profits (in billion $)	Total Potential POA(in billion $)	POA as a Share of Total Profits (%)
2010	76.49	4.85	6.34
2011	43.47	6.44	10.68
2012	78.28	6.85	8.75
2013	59.77	5.35	8.96
2014	65.36	4.72	7.23
2015	57.40	5.54	9.65
2016	47.52	6.62	13.93
2017	73.65	6.24	8.48
2018	42.19	5.14	12.19
2019	65.61	5.39	8.22
2020	55.98	5.07	9.06
2021	83.75	6.11	7.30

Source: GBS (2023) and authors’ own calculations.

4. Conclusion

This article presents POA as one of the sources of profit in capitalist economies. In addition to identifying and situating POA among other profit flows, we have attempted to operationalize it in the real estate and finance sectors. In the empirical part of the article, we estimate POA in those sectors in Turkey for the period 2010–2019. As indicated earlier, the extent of estimated profits based on POA in those sectors is not insignificant. These findings confirm our position that utilizing POA in exploring capitalist dynamics would be a fruitful endeavor. Moreover, the recent privatization activities of the current government and its favoritism toward ideologically close capitalist groups will make POA-based empirical investigations more relevant.

Research on the existence of potential POA in Turkey may be extended toward multiple venues. For example, current legislation allows the Ministry of Science and Technology to allocate almost free land for investment purposes in three cases: (1) regional development, (2) priority sector investments, and (3) strategic sector investments. We can treat free public land transfers to capitalist firms as another source of POA. A vast tract of public land in Gemlik was recently allocated to TOGG (Türkiye Otomobil Girişim Grubu), a special favor for business.¹⁸ Large amounts of land may be transferred to other firms in the same way. Because of the fact that those firms have the possibility of reselling the land to a third party in the future, they may earn POA.

Investors that locate their operations in “industrial zones,” in addition to receiving many other incentives including tax breaks and subsidized credit, may have access to tracts of public land at rock-bottom prices. In the last two decades the total land allocated for industrial zones has reached almost 24 thousand hectares, 240 million square meters. Even assigning a very low figure of 1,000 TL per square meter in current 2023 prices, the approximate total value of such land would be 240 billion TL.¹⁹

As in many developing capitalist economies, a large informal sector exists in Turkey where petty commodity producers are organized as family-owned micro firms. Those firms mainly depend on working capital from the large capitalist firms with whom they have an outsourcing relationship. In most cases, the interest rate charged for such borrowed capital is even greater than the standard lending rate by the banks. This is also a case in which a relatively large POA might exist.

Regarding the empirical estimation of POA, we suggest additional refinement to make our initial findings more robust. First, better methods of calculating specific prices can be explored. In the article, we use province-based averages. Locating the specific plots sold by the public authorities would make estimations more accurate.

A different method of calculating public prices from the one we use in the article based on the Milli Emlak database may be pursued. Since there is a time lag between the announcement of public land sales and the completion of the purchase, it is best to individually calculate the public price for each piece of plot sold rather than relying on the annual reports of DGNP. Lastly, incorporating the share of the total worker loans in “overhead costs” into the POA calculations may be considered. However, this refinement may not be entirely plausible as the balance sheets of each bank operating in Turkey are not accessible. However, considering the top eight to ten banks in BIST (Stock Exchange) would be sufficient to get a representative estimation.

The specific instances of POA generation that we have taken up in this article are of universal relevance. Land privatization is not at all peculiar to emerging countries or less-developed countries. Nonnegligible amounts exist in advanced countries and probably the highest in formerly centrally planned economies, where urban land in particular had been nationalized totally. As for bank loans to households, advanced economies would by far surpass emerging economies such as Turkey in this area, since debt-driven consumerism is so much more a structural characteristic of those economies. In this sense, reflection on POA at a conceptual level is relevant to all economies.²⁰

However, since POA depends primarily on unequal exchange, the existence of precapitalistic relations of production in the form of petty commodity production and of large socioeconomic layers and classes such as the small-holding peasantry and the urban petty-bourgeoisie engaged in petty forms of manufacturing and trade would tend to increase its importance. Thus, emerging economies and even more so the less and the least developed countries are susceptible to a higher level of POA generation. In this sense, both theoretical work and quantitative calculation of the amount of profit thus generated are important for a more concrete analysis of many societies around the world.

Footnotes

Acknowledgements

The authors thank Sungur Savran for insightful comments and appreciate feedback from three RRPE referees—Sabri Öncü, Han Cheng, and Ron Baiman. The usual disclaimer applies.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iDs

Alper Duman

E. Ahmet Tonak

1

There are other references to POA in Shaikh’s earlier works, such as Shaikh (1984) and .

2

To quote from : 16): “In Marx’s words, ‘to buy cheap so as to sell dearer is the law of commerce. Hence not the exchange of equivalents.’ Merchant capital, whenever it takes a dominant form, ruling over productive capital, relies on ‘profit upon expropriation’ and ‘fraud,’ constituting a ‘system of plunder.’”

3

The labels in figure 1, such as “industrial” and “nonindustrial,” do not imply all nonindustrial economic activities; for example, activities in various service sectors should be considered unproductive. See Shaikh and Tonak (1994) for a detailed sectoral classification of productive and unproductive economic activities in the context of the US economy. We argue that the distinction production vs. nonproduction, and hence Marx’s criteria for productive and unproductive labor, provide clarity and insight into our understanding of the so-called digital sector and its economic activities. An application of this approach can be found in where the case of Facebook is analyzed.

4

The significance of this distinction for a proper understanding of the dynamics of capitalism was extensively discussed by Savran and Tonak (1999), and the concepts themselves were operationalized and applied to the US economy by .

5

: 35) expand on this: “The growth of capitalist economies is fueled by profit. Profit in turn depends on two sources, profit on alienation and surplus value, and the latter is the dominant one in industrial capitalism. For this reason, [Marx] refined and made concrete the distinction between production and nonproduction activities. Moreover, within each type of labor, he distinguished sharply between noncapitalist and capitalist activities. It is only capitalist production labor which is surplus-value-producing labor, productive labor for capital. Other labors are then unproductive of surplus value, though they may be productive of value or productive of direct-use value (if they are production labors), or forms of social consumption (if they are nonproduction labors).”

6

Contrary to the view of many progressive economists, the caption of figure 1, “Profit upon Exploitation,” should not be interpreted as suggesting that only surplus-value-producing productive workers are exploited in capitalism. Since Marx’s notion of exploitation is based on the appropriation of surplus labor not exclusively in the form of surplus value in productive sectors, it should be obvious that unproductive workers whose surplus labor is appropriated by capitalist firms in unproductive sectors are also exploited. For a further discussion of this point and an estimation of the rate of exploitation of unproductive workers in the United States and in Turkey, see Shaikh and Tonak (1994) and , respectively.

7

A more detailed and comprehensive operationalization of flows of surplus value—e.g., the extent of various types of rents and royalties—in the context of the US economy can be found in , where a series of empirical estimation procedures for those categories are systematically provided.

8

As Shaikh and Tonak (1994: 210–11; see also Shaikh 1984) explain, “Its existence enables us to solve the famous puzzle of the difference between the sum of profits and the sum of surplus values brought about by the transformation from values to prices of production.” Reference to POA in the context of the transformation problem was recently challenged by . Indeed, Moseley completely rejected Marx's adoption of the notion of POA on the grounds that the concept itself is based on a mercantilist theory profit and is completely alien to a theory of profit based on surplus value. We find Moseley’s refutation rather weak because it is mostly based on a literal interpretation of Marx’s texts.

9

As Vasudevan (2021: 93) points out, David “has highlighted how accumulation by dispossession, involving the privatization of common property resources and state-aided corporate takeover of land has been actively promoted through the imposition of the neoliberal policy agenda in developing countries and is an integral component of ‘new imperialism.’”

10

What is described in our numerical example is also applicable to all publicly-owned natural resources (e.g., forests, rivers, etc.) as sold by the state to private capitalist entities.

11

: 238) further states: “The most striking aspect of financialization is the penetration of financial transactions into the circuits of personal revenue. Households have been driven into the arms of the formal financial system with respect to both liabilities and assets. The implications are profound for banks and financial markets.”

12

As Marx explains: “[Here] the fact is disregarded that interest may be a mere transfer and need not represent real surplus-value, as, for example, when money is lent to a “spendthrift,” i.e., for consumption. The position may be similar when money is borrowed in order to make payments. In both cases it is loaned as money, not as capital, but it becomes capital to its owner through the mere act of lending it out. In the second case, [if it is used to] discount [bills] or as a loan on temporarily not vendible commodities, it can be associated with the circulation process of capital, the necessary conversion of commodity capital into money capital. Insofar as the acceleration of this conversion process—such acceleration is a general feature of credit—speeds up reproduction, and therefore the production of surplus-value, the money lent is capital. On the other hand, insofar as it only serves to pay debts without accelerating the reproduction process, perhaps even limiting it or making it impossible, it is a mere means of payment, only money for the borrower, and for the lender it is, in fact, capital independent of the process of capital” (Marx [1861–63] 1963: 486–87, quoted by : 144; our emphasis).

13

The provides data on primary income accounts of the Turkish economy. The ratio of average total interest income over the gross operating surplus is 33 percent. On the other hand, the proportion of household loans to total loans is around 35 percent. Thus, revenue transfer to the capital circuit as a percentage of gross operating surplus would be about 10 percent on average.

14

We note that land privatization is not a particular subject merely occurring in developing countries such as Turkey. As observes, in Britain 1.6 million hectares of public land was privatized after Margaret Thatcher took power.

15

The house pricing index is based on appraisal reports by banks issuing mortgages for house sales. See .

16

Total loans to households (consumer loans and credit card debt) increased from 6 billion TL in 2002 to 1.4 trillion TL in 2022, i.e., from 1.7 percent of the GDP in 2002 to 8.9 percent in 2022.

17

The ratios given in TBB (2022b) simply is the ratio of the earnings to the costs of a unit loan. The costs include not only the borrowing costs of the banks but also administrative costs of lending as well.

18

TOGG (Türkiye'nin Otomobili Girişim Grubu) is a Turkish automotive manufacturer of electric cars headquartered in Gebze, Kocaeli Province, Turkey. The company was founded as a joint venture by five Turkish companies in 2018 (see ).

19

Obviously, we do not infer that the estimated total value is all POA, but given the fact that the sale prices are rock-bottom in the industrial zones, a big portion of that total value can be inferred as a potential source of POA.

20

It seems that lately such an awareness has been developing and recent contributions have been exploring the relevance of notions of “unequal exchange” and POA to advanced economies. For both neo-Marxist and post-Keynesian takes on those concepts, see Baiman (2020), Hudson (2015), and . We are grateful to Ron Baiman for drawing our attention to this literature.

Author Biographies

Alper Duman teaches in the Department of Economics at Izmir University of Economics in İzmir, Turkey. His research interests are political economy, development economics, and social and economic networks. His articles appeared in the Journal of Artificial Societies and Social Simulation and Applied Economics.

E. Ahmet Tonak teaches at Smith College in Northampton, MA. He coauthored In the Tracks of Marx’s Capital: Debates in Marxian Political Economy and Lessons for 21st-Century Capitalism (Palgrave Macmillan 2024) and Measuring the Wealth of Nations: The Political Economy of National Accounts (Cambridge University Press 1994).

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