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Why the collapsing of the financial bubble is not the fault of “greedy bankers” and why there can be no going back to a social welfare capitalism
A new version of the “stab in the back” legend of the 1920s and ‘30s is making the rounds: “our” economy has supposedly fallen victim to the limitless greed of a handful of bankers and speculators. Gorged on the cheap money of the U.S. Federal Reserve and backed up by irresponsible politicians, these greedy bankers have–so the legend goes–brought the world to the edge of the abyss, while honest people are made to play the fools.
Nothing could be more contrary to fact nor, given its demagogic and even anti-Semitic propensity, as dangerously irrational as this notion–now being broadcast across the entire spectrum of public opinion. It stands things on their heads. The cause for the current misery is not to be sought in the huge over-valuation of financial markets; the latter was itself not a cause but an effect, a mechanism aimed at avoiding the real, underlying crisis with which capitalist society has been confronted ever since the 1970s. That was when the post-WWII boom, and the long and self-sustaining period of growth made possible by the generalization of industrial production methods and their expansion into new sectors such as auto-making, came to an end. Mass production of commodities in the 1950s and 1960s required additional masses of labor-power–labor-power thereby in a position to attract the flow of wages and means of subsistence that in turn enabled it to go on mass-producing such commodities. Since then, however, widespread rationalization of the core, world market-oriented sectors of production has displaced ever greater quantities of labor-power through processes of automation, thus destroying the basis for this “Fordist” mechanism and with it the precondition for any renewed tendency towards prosperity in the real economy. Capitalist crisis in its classical form gives way to an even more fundamental crisis in which the viability of labor itself comes to the fore.
De-valorized labor power –“superfluous” human beings?
The real insanity of the capitalist mode of production is expressed in the contradiction between the enormous advance in productivity brought about by the “microelectronic revolution” and the fact that that advance has not even come close to guaranteeing the possibility of a good life for all. On the contrary: work itself has been intensified, its tempo accelerated and the pressure to produce ramped up even more. Across the world, more and more people must sell their labor-power under the worst possible conditions because, as measured against the standard set by the current level of productivity worldwide, that labor-power is increasingly de-valorized.
But it is also a contradiction of capitalism that, in the process of becoming ‘too productive,’ it wrenches its own foundations out from under its feet. For a society that rests on the exploitation of human labor-power collides with its own structural limits as it renders this labor-power, to an ever-greater degree, superfluous. For over thirty years, the dynamic of the world economy has only been sustained thanks to the inflation of a speculative and credit bubble – what Marx termed “fictional capital.” Capital is diverted into the financial markets because the real economy no longer offers adequate investment possibilities. States go into debt to maintain their budgets and more and more people finance their own consumption, directly or indirectly, at the credit pump. In this way finance turned into the “basic industry” of the world market and the motor of capitalist growth. The “real economy” now so suddenly prized is not forced into submission by finance. On the contrary: it could only flourish as the latter’s appendage. The “Chinese economic miracle” and Germany’s so-called world-class export economy would never have been possible except for the gigantic, global recycling of debt that has been going on for more than twenty years, with the USA at the center of it all.
Crisis management and stagflation
Such methods of postponing an eventual collapse have now reached their limit. There is no reason to be overjoyed about this. The effects will be dramatic in the extreme. For the combined potential for economic crisis and de-valorization that has been building up over the last thirty years is now exploding violently into the here and now. Politics in the accepted sense may be able to influence the tempo and the trajectory of this process. But it is inherently incapable of stopping what has, in truth, become unstoppable. Either the rescue packages themselves, already topping the trillions, will go up in smoke, and the crisis will break through into the “real economy” with catastrophic results. Or they will catch hold of the runaway train one more time with the result being an exorbitant increase in national debt, followed by another, still more gigantic collapse in the near future. The return of “stagflation”—galloping inflation combined with a simultaneous recession—is already looming, and at much higher levels than in the 1970s.
The last decades have already seen massive downward pressure on wages, a descent into ever more precarious working conditions and the privatization of large parts of the public sector. The present crisis means that, to a degree previously undreamt of, ever-greater numbers of human beings will simply be declared “superfluous.” The much-invoked “new role of the state” has not the slightest chance of recreating a 1960s style social welfare capitalism, with full employment and a rising standard of living. What it portends, rather, is the organization and administering of racist and nationalist policies of social exclusion. The return of “regulation” and “state capitalism” is at this point conceivable only as an authoritarian and repressive form of crisis management.
The world is too wealthy for capitalism
The present financial crisis marks a turning point in the epoch of fictional capital and with it a new stage in the underlying crisis of capitalism already discernable in the 1970s. This is not just the crisis of a specifically “Anglo-Saxon system” of “neoliberalism,” as is widely affirmed amidst the current emotional outburst of European anti-Americanism–an outburst in which, however faint as yet, the echoes of anti-Semitism are unmistakable. What is clearly apparent now, rather, is that the world is and has long been too rich in relation to the stinginess of the capitalist mode of production—and that society will break apart, unravel and sink into a morass of poverty, violence and irrationalism if we do not succeed in overcoming that mode of production.
It is not the “speculators” and the financial markets that are the problem, but the utter absurdity of a society that produces wealth only as a waste product of the valorization of capital, whether as a real or a fictional process. The return to a seemingly stable capitalism, kept standing by the onslaught of massive armies of labor, is neither possible nor anything worth striving for.
Whatever sacrifices now being demanded of us in order to perpetuate the (self)destructive dynamic of this senseless mode of production and the capitalist way of life count only as an obscene mockery of the good and decent existence long since within reach in a society beyond commodity production, beyond money and beyond the state. With the present crisis the question of the system itself is finally being posed. It is time that we answered it.
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