Brief Outline of The Historical Dynamics of Crisis
In the crisis is almost after the crisis. That has been the message of positive thinking since the Lehman bankruptcy. Why should the biggest financial crash since the 1930s provoke any crisis-theory thinking? Sometimes things just go up and sometimes they go down. Anyway, everything changes all the time; but just to keep things the way they are. The crises come and go, but capitalism remains eternal. Therefore, it is not the crisis as such that is of interest, but what comes next, when it is over again like all the boring crises before. Who are the up-and-comers and who are the down-and-comers of the new era? Is the economic miracle finally upon us in Africa, is the Pacific century coming with China as the new world power, or rather the rebirth of the United States from the spirit of dishwashing? Will we perhaps even see the rise of the reborn lira as the reserve currency? Anything goes. One is allowed to do a bit of courageous trend research when the financial markets, which have become overconfident for their part, emit ash clouds like Mount Etna in its best days.
Who cares about the inner historical context of capitalist development: Happy is he who forgets. The fact that in 1982, with Mexico’s first insolvency, a crisis cycle of a new quality could have begun that continues to this day, eating its way from the periphery into the centers, must not even be thought of. The postmodern structure of perception excludes any insight that would go beyond the horizon of a seasonal trend. What Marx described in the preface to the first volume of “Capital” as a prerequisite of social-theoretical insight, namely the “power of abstraction,” has long been regarded as disreputable essentialism. Like Margret Thatcher, discourse-dominant microeconomics no longer knows society, but only individuals. Where everything is business management, even the relationship to one’s own self, space and time shrink to the horizon of mouse clicks and shopping experiences. The negative whole is not to be spoken of, so that it remains in merciful invisibility. Many a hoodie wearer might ask: What Lehman bankruptcy? Was it before or after the First World War? If one only moves between incoherent event points in the media space without any awareness of the past or the future, one can think the crisis away as long as money is still coming out of the vending machine.
But gradually it smells so dicey that even the entertainment value of trend scouts as soothsayers has diminished. The crisis seems to want to grow old in the new century. One recession and one false all-clear follows the next, while the guardians of the global banking system count their skeletons in the closet and would prefer to throw away the key. Not even German export chauvinism is quite sure whether the FRG is really in a different league from the rest of the euro zone with itself alone. No one knows where the fire will flare up under the roof tomorrow or the day after. But everyone knows that the trouble spots lurk everywhere and seem to be mysteriously connected. The postmodern primordial confidence in capitalism is crumbling, even if its disgrace has not yet become the leading theme.
Even the Foucault left is beginning to realize that it knows about as much about the critique of political economy as Karl Marx knew about riding a motorcycle. That is why the crisis has at least been allowed to steer the discourse onto terrain that was previously condemned as “economistic” and avoided on principle. So what’s wrong with capitalism? Unfortunately, Marx did not leave behind a handy crisis theory in Merve volume format. Because the urge is strong to unite deconstructive loss of reality with the cheapest possible rediscovery of disdainful economics, it is best to look up the somewhat shallower versions of Marxist lore.
According to these, capital from time to time enters a phase of so-called over-accumulation. Too much capital has been accumulated which cannot be sufficiently further valorized because the surplus value produced can no longer be transformed or “realized” into its money form for lack of social purchasing power. The investments in machines and labor were too large for the capacity of the market, overcapacities of production have arisen, unsaleable goods lie around everywhere, money capital flees into the financial markets and drives bubbles there. The surplus capital in all its components (physical capital, labor, commodity capital, money capital) must now be devalued in a crisis. After that, everything can start all over again.
This version is the most palatable for the postmodern un-spirit. For the crisis appears here as an ahistorical event in the eternal return of the same. Such a purge now and then does capitalism good like a sweating cure. The crisis is part of its miraculous functioning, as the detached left has long known. Expansion and contraction alternate in endless succession, without any recognizable coherent and progressive process.
But Marx also has quite different considerations. According to him, the problem in the long run is not the periodically lacking realization of surplus value on the market, but much more fundamentally its lacking production itself. Capital is self-contradictory in that, on the one hand, it has as its sole purpose the incessant accumulation of value or “abstract wealth” (Marx), but on the other hand, competition forces it to make human labor power, as the exclusive source of this value, increasingly superfluous through the development of productive power and to replace it with a scientific-technical apparatus.
The development of productive power, however, is not an eternal return of the same, but an irreversible historical process. As Marx shows in the “Grundrisse”, this process drives towards a situation in which the products are commodities, but as commodities they cannot represent a sufficient amount of past human labor power. They become unsaleable because they no longer represent any abstract value. This is not an adjustment, but an “inner barrier” (Marx) of capital. This aspect of Marx’s theory was already unacceptable to traditional Marxism, which was concerned with the “planning of value” rather than its abolition. For a consciousness that neither knows history nor can formulate a concept of value, but that rushes from event to event and wants to persuade itself of the compulsion to self-valorization as boundless freedom, an objective barrier of this form of existence is all the less conceivable.
What matters to capital is not value per se, but the surplus value that labor power produces above its own cost. The same development of productive power, which makes labor power progressively superfluous, cheapens the costs of the labor power still in use. Thus the relative share of surplus value in the total labor time spent increases. But for the social mass of surplus value it is not only the relative share per labor power that matters, but also the number of applicable labor forces at a given standard of productivity.
Marx formulated this problem in the third volume of Capital as the theory of the tendency of the rate of profit to fall. For each unit of money capital invested, the share of physical capital grows steadily, while the number of workers who can be mobilized with it declines just as steadily. Indirectly, this can be seen in the bourgeois statistics by the fact that the advance costs of a job historically rise inexorably, because an ever larger aggregate of machinery, infrastructure, etc. must be employed in order to be able to apply a labor force. Since only labor power produces new value, the average profit on a social scale per money capital advanced must decrease, even though the relative share of surplus value in the value production of a labor power increases.
In the social result, what matters is the magnitude ratio of the two opposing tendencies. Read together with the theory of a fundamental historical devaluation of value in the “Grundrisse,” however, the argumentation outlined is so inconvenient to the ahistorical understanding of eternally alternately expanding and contracting capital that the latest new Marx reading has taken the precaution of declaring the tendency of the rate of profit to fall to be a mere figment of Marx’s imagination.
In fact, the falling rate of profit can be compensated to some extent by a rising mass of profit, if the capitalist mode of production as such expands and thus additional money capital is productively employed. Externally, this expansion is exhausted by the “valorization” of the entire earthly space. However, there are various concepts of a qualitative internal expansion, all of which go back to the bourgeois economist Joseph A. Schumpeter. The latter described capitalist development as a periodic creation of new products and branches of production. According to this description, expansion is sustained by certain product cycles until they turn into stagnation and innovative entrepreneurs put an end to them with new products for new needs. In the “creative destruction” phase, contraction occurs. Only gradually does the new product cycle become sustainable and renewed expansion on the changed basis can begin.
Schumpeter’s theory has the small flaw that it is in no way related to the connection between the development of productive forces and substantial surplus value production. As in all of economics, the market surface is regarded as the sole object of economic science. Thus, the creation of new branches of production and needs automatically appears as the basis of a capitalist upswing, without the question of the concrete conditions of valorization of labor-substance under a changed standard of productivity being raised at all. This is precisely why the postmodernized left so readily seizes on Schumpeter’s idea and related theorems to add a bit of anti-substantialism to Marx. New branches of production, new opportunities for valorization, because the mass of expended labor energy could not possibly play such an important role, if soon money can be downloaded like everything else. One could then choose whether the central field for the coming boom is created by genetic monster production, friendship networks on the Internet, biofuel instead of bread for the world or saving the polar bears.
In the blanked-out strand of Marxian argumentation, the calculation looks different. No matter what content of production is concocted: For capital, the only thing that matters is the applicable quantity of value-creating labor power. This must increase absolutely if the presupposed end in itself of accumulation is to succeed. The creation of additional branches of production or the incorporation of former luxury products into mass production can, however, compensate for the scientific-technological rationalization of labor power only for a historically limited period of time. Capitalism reaches its climax when the internal expansion is caught up and overtaken by the development of productive power. Then the relative fall of the rate of profit turns into an absolute fall of the social mass of surplus value and thus of profit, and thus the supposedly eternal valorization of value turns into its historical devaluation.
There are some indications that capitalist development has entered this state with the third industrial revolution since the 1980s. The culmination of the internal contradiction is modified and filtered by the historical expansion of the credit system, which is a mirror image of the stagnation and decline of the value-productive labor mass. The permanent relative increase of physical capital drove up the dead up-front costs of production gradually to such an extent that they could be financed to an ever smaller extent from current profits. Credit transformed itself from an auxiliary driving force of surplus-value production into its substitute. Since then, accumulation has been fed less by past real labor substance and more and more by the anticipation of imaginary labor substance of the future. By means of an unprecedented global indebtedness and the financial bubbles that have arisen from it, investments and employment are financed without real foundations. This was also the social condition of possibility for the triumph of virtualist and deconstructionist ideologies. Despite temporary appearances, however, capital is not accumulated in the process, as was shown by the construction industry of many countries after the bursting of the real estate bubbles.
On the surface of the world market, the constantly advanced consumption of future profits and wages took the correspondingly absurd course of a functional division of surplus and deficit countries. The former buy goods with money from future revenues, the production of which was pre-financed by the latter by accessing future revenues. There is an expanding black hole between past real and fictitiously anticipated future value creation. This construct of a global deficit cycle has two focal points: a larger Pacific deficit cycle between China/East Asia and the U.S. and a smaller European deficit cycle between the FRG and the rest of the EU or the euro area. The employment mobilized for this, for example in China, is as unsustainable as the construction activity for the real estate hype. In the one case, Asia has accumulated dollar foreign exchange reserves on an astronomical scale; in the other, the international banking system has financed similarly high deficits within a common currency area. These notorious “imbalances” even make a mockery of the textbooks of economics, which nobody takes seriously anymore anyway.
After a dense chain of financial crises that had shaken individual countries and economic sectors and accompanied deficit booms over the past 30 years, the 2008 financial crash took on global proportions for the first time. The rupture of credit chains put the big devaluation push on the agenda. It was the already highly indebted countries that stopped the avalanche from going down with massive additional loans and the printing presses. They at least suspected that it was not a mere cleansing storm on the way, but that the lights of world capital were threatening to go out. So the bad loans were stashed away like nuclear waste with the help of state guarantees, the industrial overcapacities were maintained by horrendous subsidies, and the economy was artificially fed by state programs. Chinese state capitalism, in particular, forced its banking system, supported by the hoard of foreign currency, to finance investment ruins in the form of ghost cities, ghost airports, ghost factories, etc., pumping up the mother of all real estate bubbles.
All these adventurous measures did not solve anything, but only postponed the devaluation process and shifted the problem from the financial markets to the state. It was foreseeable that the government programs would quickly run out of steam. The euro zone started out as the weakest link, but all other government finances are also teetering and threaten to set off chain reactions. The Chinese dollar mountain, for example, will go up in smoke when the USA has to admit that it is broke. The unserviceable national debts add up to the bad loans of the financial markets; the meltdown of the credit system is approaching. The already spent capitalist future has become the present. Greece exemplifies that people will have to stop living for years to come in order to continue to meet capitalist criteria.
As soon as the central bank no longer merely delays the devaluation of debt securities but directly feeds the economy with insubstantial money, bypassing credit simulation, the money medium will devalue itself. Inflation also has a historical precedent. While it was almost unknown from industrialization until World War I, the war economies could only be financed with the printing press. After the world war epoch, however, the specter of inflation became a constant companion of capitalism, because the expanding credit system also became constitutive for ordinary commodity production. Today, the bailouts have already exceeded the dimensions of the war economy, and the direct money glut of central banks is proving to be the last resort. Even a radical monetary reform, dissolving all assets and credit balances, would not lead to a zero point and a new start. This is because the standard of productivity incorporated in the knowledge aggregate of society, which no longer permits sufficient surplus-value production, is inescapable. The devaluation would only repeat itself in ever shorter intervals.
May there come what will. Despite all this, the media consciousness of experience does not want to be bothered with uncool realities. The end of the world to be expected in 2012 according to the Mayan calendar promises more fun. The main thing is not to have one’s credit card confiscated. In the meantime, even the re-social-democratized postmodern left can imagine a capitalism without a world more easily than a world without capitalism. The ultimate self-deconstruction will certainly be a tingling affair. After all, one doesn’t treat oneself to anything else.
Originally published in Konkret 02/2012
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