Crises come and go, but capitalism remains. Liberal and left-wing theorists alike are convinced of this. How is a major economic crisis overcome? By devaluing surplus capital in all its forms (means of production, labor power, commodities, money capital). After that, it can supposedly go on and on. The economics professors call this “adjustment,” the academic leftists “cleanup.” Since the fall of 2009, it has generally been said that the new global economic crisis is already over. But the great devaluation or shakeout has not taken place at all. Instead, there has been “rescue” by hook or by crook. According to the official economists’ own views as well as those of their leftist colleagues, this would prove that the real devaluation shock has yet to come.
Perhaps the pragmatists were wiser than the theorists because they sensed that only economically scorched earth would remain after the global shakeout. Admittedly, their rescue measures only push the elementary problem in front of them and let it grow into ever greater dimensions. For more than 20 years, the global economy has lived mainly on financial doping. For a long time, it was the financial bubbles that created purchasing power without a real basis, then, since the turn of the century, the central banks and state budgets. The mobilization of labor in China, India and Europe was based solely on one-sided deficit cycles. Ultimately, the production processes stimulated in this way are “invalid.” They must end with the devaluation of all their components. Thus, while the theorists will be proved right, no new prospects for global capital valorization will follow from this.
One can speak of a paralysis of economic theory and economic or monetary policy. This is also evidenced by the fierce controversies in the economic guild and in governments. The neoliberal hardliners, such as the ECB chief economist Jürgen Stark, who has just resigned, want to accept an end of the horror because they believe their ideology more than reality. The pragmatists, on the other hand, want to extend fiscal policy doping excessively, even though in doing so they are always piling up new fuel for the inevitable devaluation shock. At present, government stimulus programs are coming to an end everywhere, and immediately growth rates are falling at a remarkable pace – just like a doped-up runner runs out of air when he runs out of dope. The next global recession is just around the corner. In the USA, President Obama already wants to put together a new mega stimulus package without knowing where he is going to get the money for it.
The unsolvable capitalist dilemma can also be formulated differently. As long as only the thoroughly ailing financial system is propped up with ever new measures, the crisis will remain in abeyance, so to speak. But as soon as insubstantial money creation turns into real demand, demonetization, which was still limited as long as only the economic slump of 2009 was bridged, will march on. Nevertheless, inflation, which can hardly be curbed in the emerging markets, is also on the doorstep in the EU; in the UK, it has already reached the 4.5 percent mark. Like the British administration, the ECB, the Sarkozy and the Merkel governments have apparently opted for inflation as the supposed lesser evil. This is leading to political and economic turmoil. In reality, it is a systemic issue, but no one wants to admit that.
Originally published in Neuen Deutschland on 09/19/2011