Robert Kurz

There are increasing signs that the economic downturn is turning into a new global recession. After the crash of the financial markets, the extremely indebted world economy is reaching its second barrier, that of public finances. As in the first half of 2009, a renewed slump would hit the export-heavy countries hardest, and all the harder the smaller the share of the domestic market in their national product. This does not bode well for Germany, whose elites are currently patting themselves on the back in view of their world market leadership in key sectors. But it would also hit the much-vaunted emerging countries hard, all of which have bought their recent rise with a one-sided export orientation.

However, there are different forms of dependence on the world market. While China acts as the world’s industrial workbench with still relatively little vertical integration of its own, most emerging countries are mainly dependent on the export of raw materials. They have thus not been able to improve their traditional weakness vis-à-vis the industrialized countries. Their position has even deteriorated structurally because industrialization processes have failed or at least declined. This has only been masked by the commodity boom of the global deficit economy, especially the commodity hunger of rapid Chinese growth. A new world recession, which can no longer be absorbed by public finances, would mercilessly bring to light the particular plight of the raw material countries.

Thus, the Brazilian upswing of the last few years has feet of clay. The export success is based primarily on industrial and agricultural raw materials such as iron ore, sugar, ethanol (biofuel from sugar cane), coffee and meat. Their upward price jumps spurred growth and foreign exchange reserves. In a global recession, this process can reverse within a very short time. Behind this is a dramatic shift in the structure of exports. While the share of manufactured goods has fallen by 16 percent over the last five years, the share of raw materials has also risen by 16 percent. Accordingly, the contribution of industry to the national product fell by almost half. An important factor in deindustrialization is foreign trade with China, which floods the Brazilian market with cheap industrial goods as a countertrade for raw materials. This only works well as long as raw material prices are high.

The situation is even worse with countries like Russia and Venezuela, which are extremely dependent on oil and gas exports. It is true that the depletion of natural reserves promises a demand surplus in the long term. But in the short and medium term, these countries would hardly survive a cyclical drop in the price of their “liquid gold.” The designation of Russia as an “emerging market” is sheer mockery and only an expression of the widespread deindustrialization after the collapse of state socialism. The consequences were concealed by the raw materials boom, but must appear all the more violently when it ends. The highly indebted economies of the Emirates and Saudi Arabia, with their bizarre construction activity, are also threatened with collapse if the oil price crashes. Such a development would not only cut off the air to the autocratic regimes of the oil-exporting states, but would also intensify the chain reaction of a global recession and financial crisis.

Originally published in Neuen Deutschland on 10/17/2011

Robert Kurz

A hard currency with a high external value is generally regarded as a sign of economic superiority. So-called soft currencies, on the other hand, belong to losing states and candidates for relegation on the world market. However, this rule seems to have lost its credibility. Everywhere, people are afraid that their own currency could become too strong. In Switzerland, the central bank is intervening to push down the rising franc against the ailing euro. Central banks in Japan and other countries are pursuing the same policy against the dollar. Emerging economies such as Brazil are also desperately fighting the appreciation of their money. Conversely, people in the U.S. and the EU are anything but sad about the downward trend of their own currency, no longer so proud. Since the supposed end of the crisis, one can practically speak of a devaluation race.

This can be explained by the changed economic structure of crisis capitalism. The world economy now runs only on surreally inflated credit and the associated external economic relations. Surplus countries like Japan, China or the FRG are dependent on one-sided exports, deficit countries on the equally one-sided inflow of transnational money capital. Both have reached their limits. Now they are all trying to rehabilitate themselves at the expense of the others. Some want to save their export surpluses by hook or by crook; others, conversely, want to gain a larger export share themselves. However, the weaker a country’s currency, the cheaper and more competitive its exports become, while imports become more expensive. The devaluation race shows that the domestic economy is being written off everywhere and that the focus is now only on increasing exports.

In the euro zone, we have the particularly paradoxical situation that the deficit countries cannot devalue against the surplus country FRG, because both sides have a common currency. Moreover, the relatively weaker euro, precisely because of the southern European debt crisis, is additionally boosting German exports to the rest of the world. But this success story is short-lived because it is destroying its own preconditions. It is the German export roller that is flattening the euro. Even every textbook of economics knows that such a thing cannot work. A dissolution into the old national currencies would, of course, increase the external debts of the deficit countries immeasurably and at the same time cause the returned deutschmark to appreciate so drastically that the export machine would grind to a halt. The construction of the euro was obviously a suicide mission.

For countries with large export surpluses, revaluation is unproblematic for some time only if they also have a strong domestic market and/or an industrial monopoly. This was the case for Great Britain in the 19th century and the USA in the mid-20th century. Therefore, the currencies of these world powers were able to take over the function of world money. After the descent of the heavily indebted USA, there is no successor candidate anywhere in sight, least of all China. The overdue drastic revaluation of the Chinese currency would ruin large parts of the export industries there, too, and at the same time devalue its huge dollar foreign exchange reserves. No one can get down from their position anymore, but objectively, permanently unilateral exports to indebted countries are impossible. The devaluation race leads beyond the euro crisis into a world currency crisis.

Originally published in Neuen Deutschland on 11/14/2011

Robert Kurz

In terms of lifestyle, it’s called nostalgia: namely, the memory of supposedly better times, for example, of the economic miracle. In pop culture, it’s called “retro”: When producers can’t think of anything else, they rehash old stuff in a slightly different form. And when you watch “Tatort” on TV, you have to make sure you haven’t already seen it a few years ago. Nothing new under the sun, that seems to be the motto. Somehow, the belief has spread that if you want to find a recipe for the present, all you have to do is look to the past. Why else are politicians, the media and economists constantly looking for historical parallels in the crisis developments of recent years? Anyone who opens the newspaper often believes they have been transported to a history lesson.

Breakneck financial speculation, minor and major crises, a host of state bankruptcies, even the odd failed monetary union – the economic historians of modern times have just about everything on offer. And the moral of the story? It’s all been there before, which also means that everything is not so bad, everything can be overcome on the basis of the prevailing facts. Not only is wishful thinking the father of thought here, but also a certain image of capitalism as the eternal return of the same. Sometimes the economy is humming, sometimes it is crashing; there are up-and-comers and down-and-comers of the year or the century. But in principle, so the belief goes, it will always go on like this.

However, this is a mistake. We are not dealing with a static system, but with a dynamic one. Capitalism does not repeat itself, nor does it go round in circles, because it is itself an irreversible historical process. Capital valorization does not always start from scratch, but on a social scale it must exceed its last level if it is to continue. The degree of global economic integration cannot be turned back, and neither can the development of the productive forces. Universal competition ensures that this is the case.

But if globalization and productivity are developing ever higher, why should the character, depth and scope of crises always remain the same? The fondly told story of the tulip bulb speculation on the Amsterdam stock exchange in the 17th century teaches us nothing about the real estate bubble of 2008 and the bankruptcy of Lehman Brothers. To understand that a sovereign bankruptcy in the early 19th century was something quite different from what it would be today, just look at the government’s share of the national product. The current history lesson of the experts and media tea-leaves readers is a witching hour.

Again and again, one hears the claim that politics and management have learned so much from the crises of the past that today there are sufficient instruments and tools available for coping with them. At most, the diagnosticians argue about whether the crisis is now one like 1872 or possibly one like 1929 or merely one like 1973. The learning success seems to be a minor one when governments and central banks prove to us every day that their economic and monetary policy concepts are about as helpful and competent as the toolbox of a steam locomotive for the emergency repair of an high-speed train. Anyone who talks as much about the future as the elites of the present should not rely too much on the system rescues of the past. In the memory of mankind, the old rescue packages and their consequences tend to go down as disasters anyway.

Originally published in Neuen Deutschland on 12/12/2011

Brief Outline of The Historical Dynamics of Crisis

Robert Kurz

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

How an Example Should Be Made in Greece

Robert Kurz

In the 21st century, as has become known, the powers of capital are no longer looking for territorial conquests. What should they do with zones of economically scorched earth and superfluous populations? This does not mean that imperialism has died out. But it is no longer about national empires and zones of influence, but about the controllability of globalization as a crisis. The limits of capital valorization are to be redefined into limits of viability for the losing masses, the collapse of national economies into a controlled coexistence of credit-financed boom towns and abandoned slum regions.

The production of security for the residual businesses under these conditions requires ideological legitimation. It is a good thing that the dismissed and disinherited children of capital are not better people, but rather like to attack their fellow citizens instead of their impossible conditions of existence. Not the external but the internal war along ethnic and religious divisions became the conflict paradigm of a disintegrating world of states. The world police operations on the part of the powers of order of the capitalist center against the barbarians of the periphery could be justified with democratic idealism.

This picture was, of course, only a snapshot in the process of the gradual dissolution of the global order. At the latest, the global economic crisis since 2008 has once again fundamentally changed the situation. Now the limits of creditworthiness are being reached even in the Western centers themselves. Everywhere, debt crises are emerging there of a kind that had previously only flared up in the peripheral zones of the global market. Thus, a qualitatively different crisis management is on the agenda for the metropolises, shifting the emphasis from external to internal distress. In addition to unaccountable populations in the squalid backyards of world capital, their own middle classes must increasingly be targeted. The content-empty democratic formalism, which the God-fascists of various stripes have long since recognized as the shaping principle of their madness, asserts the valorization compulsion of capital as its “natural basis” (Marx) all the more when its inner barriers are erected. The capitalist lifeblood of money must no longer be turned off step by step to solely a marginalized new poor, but to also the majority of the metropolitan “people’s sovereign.”

This, of course, also points to a state of legitimacy emergency. While NATO bombed the Sharia in Libya with reference to democratic values, for the Western core zones of globalization only the practical constraint of the teetering financial system can take over the role of the combat bombers for the time being. The execution of this economic imperative in the name of democracy against the elementary vital interests of a majority of the formal “sovereign” seems to take place first in the EU, because here the monetary construct of the euro has already taken the contradiction to extremes and there is a supranational instance of intervention.

Greece has become a precedent under global crisis conditions qua de facto state bankruptcy. An uncontrolled execution would blow up not only the European financial system and exceed the consequences of the Lehman bankruptcy. Controlled execution, however, would only be possible if almost the entire Greek population were pushed below the subsistence level. Mass unemployment in new dimensions, impoverishment deep into the middle classes, collapse of medical care and public infrastructures will become reality. The Greek elites can no longer justify such a collection of capital logic on their own account. What is needed is crisis-imperialist intervention from the outside, claimed by a troika of the EU Commission, the ECB and the IMF; now no longer against a poorhouse of the former Third World, but for the first time against a Western country.

The Merkel government has become a hardliner, speaking from the heart of the management, political and media class as well as the lowly master race in this country. With the assistance of the deputy sheriff Sarkozy, the systemic crisis is denied in order to appear as the self-appointed bailiff of the “automatic subject” (Marx). The Greeks, who have been dismissed as capitalistically untrustworthy, are not to be hooked up to Berlin Disneyland, but they are to be taken by the purse strings until they spit blood. There was even talk of a German savings commissioner for Greece, even though the EU majority spoke out against this with a residual sense of shame. The false gesture of superiority feeds on the FRG’s provisional position as a crisis winner, because German exports have profited from the expiring global government programs, from the devaluation of the euro precisely because of the debt crisis, and from the implementation of the homegrown low wage since Hartz IV. Suppressed is the fact that the Teutonic economic fairy tale has as its prerequisite not only its own debts but also those of others and must end with the evaporation of purchasing power in the European and global recession. Nevertheless, at least enough is known to make an example of Greece, which, if necessary, must also apply to Germany, in the hope of the historic social masochism of the German “sovereign,” which has always been unable to walk with civic goodness.

Greece also lends itself as an experimental field for the new democratic crisis management, because an isolated youth revolt with no prospects can serve as a sparring partner. It fits in well with the picture that the Greek state budget is being driven to zero socially, while the military budget almost doubled in 2012 compared to the previous year. The associated debts are also perceived favorably by the savings commissioners-to-be, because orders from Athens account for 15 percent of the sales of German arms manufacturers. Besides, in any case, the apparatus of the democratic state of emergency is also flexing its muscles militarily, which is only allowed to be as pseudo-self-reliant in this respect in Greece as it is to become in Afghanistan. If things really heat up, the state of emergency terror under German leadership could already show what it is capable of. The Assad regime may appear to be a wimp as soon as more than a slim Arab social product is at stake.

For the time being, the Greek political class will have to haggle a bit over its surrender terms and feign resistance in order to save its barely recognizable face. The electorate no longer knows what it should want anyway, and the entire party system is also wrapping itself up in exemplary fashion. The post-national crisis administrators approve of the nationalist upsurge, which can serve as an outlet all the more because it only processes the bankruptcy in a manner appropriate to the species, so to speak. The merely anti-German rage of the Greeks does not concern the German export chauvinists, because the pogrom that is due is really directed against Albanian and African refugees or other migrants, as has long been practically demonstrated, and not just in Greece. In this point, too, Germany, with its neo-Nazi serial killers spoiled by the democratic Stasi, certainly has pan-European leadership qualities to offer.

Originally published in Konkret 03/2012

Robert Kurz

The European and US debt crises are eagerly moving ahead, but this seems to have little impact on the global economy. The German export industry, in particular, believes it is springtime. The car companies are leading the way, reporting ever new record figures. This proves that auto production continues to be a key sector of capitalism. The branch gives an example of where the economic journey is headed. So are the optimistic forecasts that want to see a real economic upswing without end for the coming decade justified?

It is worth taking a closer look at the structure of the auto boom. Sales in Europe continue to decline. On the other hand, exports to the emerging markets, especially China, and the USA have virtually exploded. For this economy to be sustainable in the long term, consumption by the masses  would have to fueled with small and mid-range cars, while the expensive premium segment would be reserved for the small number at the top. But the opposite is the case. The driving force behind the supposed car miracle is the ostentatious luxury cars from Daimler, BMW or Audi and the sports cars from Porsche.

In China, as in the USA, the gap between rich and poor is widening. This is a social problem as well as an economic one: If mass car consumption is largely absent among lower incomes, it is a sign of the febrile nature of the luxury economy. It is an illusory boom based on pump-priming and financial bubbles.

The solvent new middle class in China, whose size is dazzling because of the sheer mass of its population, has no solid foundation. It is linked to the speculative run-up of largely vacant apartment and office buildings, sports stadiums and other investment ruins orchestrated by corrupt party cadres at the municipal and regional levels. Credit or irregular income finances their luxury consumption. The situation is very similar in the United States, where the permanent financial injections from the government and the central bank reach only a minority.

It doesn’t take the next financial crash to see that the premium global consumers have overreached themselves – even in the much-praised German wonderland: The big cars are hardly ever sold in cash anymore, instead, they are leased. They can be purchased for a comparatively modest monthly sum. Then the financing air becomes thin, because some people have already reached the limit of their income.

However, the high-horsepower prestige cars are so highly equipped that repairs quickly become necessary. What was still relatively cheap to repair in a pre-electronic small car starts in high-priced cars at 800-1000 euros. It is not only in Germany that leased gems accumulate in car dealerships and repair shops because their proud users cannot pay for the repair (or the next installment). A small hint that the premium-class car boom could be just as phony as the real estate boom.

Originally published in Neuen Deutschland on 06/04/2012

Robert Kurz

From the Classic Petty Bourgeoisie to Universal Human Capital

Since the mid-1980s, postmodern discourse has dominated global theoretical discussion for almost two decades, especially on the left. The critique of political economy was replaced by the critique of language, and the analysis of objective material relationships by the arbitrariness of subjective interpretation; Traditional left economism was replaced by an equally abbreviated left culturalism, and social conflict was replaced by media simulation. In the meantime, however, the situation has changed radically. The economic crisis is now also affecting large social classes in the West that had previously been spared. That is why the social question returns to the intellectual discourse.

But the interpretations remain strangely pale and seem downright anachronistic. The polarization between rich and poor, which is inexorably increasing, has not yet found a new term. If the traditional Marxist concept of “class” suddenly has a boom, it is more a sign of helplessness. In the traditional understanding, the “working class,” which produces surplus value, was exploited by the “capitalist class” through “private ownership of the means of production.” Not a single one of these terms can accurately represent today’s problems.

The new poverty does not arise through exploitation in production, but through exclusion from production. Anyone who is still employed in regular capitalist production is one of the relatively privileged. The problematic and “dangerous” mass of society is no longer defined by its “position in the production process”, but by its position in secondary, derived areas of circulation and distribution. They are permanently unemployed, recipients of welfare payments or cheap service providers in the areas of outsourcing, right up to wretched entrepreneurs, street vendors and waste collectors. These forms of reproduction are increasingly irregular, unsecured and often illegal by legal standards; employment is irregular; incomes are at the limit of the subsistence level or even fall below it.

Conversely, a “capitalist class” can no longer be defined in the old sense according to the standards of the classic “private ownership of the means of production.” In the form of the state apparatus and infrastructures as well as in the form of the large (today transnational) stock corporations, capital appears in a certain way as socialized and anonymized; it has turned out to be an abstract form of society as a whole that can no longer be personalized. “Capital” is not a group of legal owners, but the common principle by which the life and actions of all members of society are determined not only externally, but also in their own subjectivity.

In the crisis and through the crisis, a structural change in capitalist society takes place once again, which dissolves the old, apparently clear social situations. The core of the crisis consists precisely in the fact that the new productive forces of microelectronics are melting down labor and with it the substance of capital itself. With the increasing reduction of the industrial working class, less and less real surplus value is being created. Money capital is fleeing into the speculative financial markets because investments in new factories have become unprofitable. While growing sections of society outside of production become impoverished or even go into poverty, there is only a simulative accumulation of capital through financial bubbles.

Logically, this is nothing new, because this development has shaped global capitalism for two decades. What is new, however, is that the middle class in western countries is now also being hit by the wheels. The American essayist Barbara Ehrenreich had already published a book in 1989 on “The Fear of the Middle Class before the Fall”. The problem then shifted for a full decade because the speculative financial bubble boom of the 1990s, along with the upswing in information technology and the commercialization of the Internet, once again sparked new blossoming dreams. The collapse of the New Economy and the bursting of the financial bubbles in Asia and Europe, partly also in the USA, have now, since 2000, brutally started to bring about the previously feared collapse of the middle class.

But who is this middle class and what role does it play in society? In the 19th century the world of social classes was still simple and transparent. The class of the so-called petty bourgeoisie stood between the class of capitalists, that is, the private owners of the social means of production, and the class of wage workers, who have nothing but their labor power. This old middle class was characterized by having its own small means of production (workshops, shops, etc.), in which they mainly had to use their own labor and that of their families in order to sell their products on the market themselves. The expectation of the orthodox Marxists was that these “petty bourgeoisie” would gradually disappear through the competition of the big capitalist enterprises and sink into the class of industrial wage workers, until society was completely polarized into the two main classes, bourgeoisie and proletariat.

But already at the beginning of the 20th century there was the famous debate between Bernstein and Kautsky about the “new middle class” in German social democracy. This meant certain technical, economic and intellectual functions as they emerged from the process of capitalist socialization. With the increasing scientification of production and the corresponding expansion of infrastructures (administration, engineering, education and training, health care, communication and media public, institutions of research, etc.) a new social category arose, which according to the old scheme was “neither fish nor meat.” They were not capitalists because they did not represent great money capital; just as little were they classic petty bourgeoisie, because they did not have their own means of production and were largely wage-dependent or only formally independent; but they were not proletarians, because they were not employed as “direct producers,” but as functionaries of the capitalist development of the productive forces in all areas of life.

As early as the 19th century there were teachers and other state officials as well as those business functionaries whom Marx described as “officers and sergeants of capital.” But these social categories were numerically so negligible that they could not be called a “class” in their own right. Only with the new demands of capitalism in the 20th century did the corresponding functions become so massive that they constituted a new middle class. While in the Marxist debate at the beginning of this development Kautsky tried to press the new middle classes into the old scheme and somehow to classify them into the proletariat, Bernstein wanted to see in this social phenomenon a stabilization of capitalism that would make a moderate reform policy possible.

At first, Bernstein seemed to be right for a long time. The new middle class increasingly emerged as a social category distinct from the traditional working class; not only in terms of the content and location of the activity, but also in economic terms. Barbara Ehrenreich mentions as a criterion that for these people their “social status is based more on education than on ownership of capital or other assets”. The higher qualifications, the training of which takes a long time up to the age of 30 or beyond and devours large resources, increased the value of the labor far beyond the other average fluctuations.

In this context, a momentous term emerged, namely that of “human capital.” White-collar workers, engineers, marketing specialists or human resource planners, self-employed doctors, therapists or lawyers, and teachers, scientists and social workers paid by the state ‘are’ capital in two ways under certain circumstances: On the one hand, because of their own qualifications, they behave strategically, in a guiding or organizing manner in relation to the labor of other people in the sense of capital utilization; on the other hand, they partly relate (especially as self-employed or managerial employees) to their own qualifications and thus to themselves as ‘human capital,” like a capitalist, in the sense of ‘self-exploitation.’ The new middle class does not represent capital on the level of the external material means of production or money, but on the level of the organizational qualification for the process of exploitation with a high level of use of science and technology.

Numerous new functions of this type emerged in the course of the 20th century, and the new middle class continued to increase in number. Especially the development after the Second World War, together with the new forms of Fordist production and the leisure industries, brought an additional push in this direction; This can be seen from the fact that in most countries the proportion of students rose from generation to generation. The worldwide student movement of 1968 showed the growing importance of this social sector; but it was also a first signal of the crisis. If up to then the emergence of the new middle class had actually stabilized capitalism in Bernstein’s sense and was connected with advancing reforms, a process of destabilization now began.

It is true that the new structural mass unemployment in the wake of the third industrial revolution and the globalization of capital primarily affected the immediate industrial producers. But it was already becoming apparent that the new middle class would not be spared either. The rise of this class had in many respects been accompanied by the expansion of state infrastructures, education, and the bureaucracy of the welfare state. The crisis of real industrial exploitation, however, led ever deeper into the state’s financial crisis. Suddenly, many areas that had previously been considered proud achievements appeared as unnecessary luxuries and ballast.

The catchphrase of the “lean state” made the rounds; funds for education and culture, health care and numerous other public institutions have been cut; the dismantling of the welfare state began. In large companies too, entire sectors of skilled activity fell victim to rationalization. The crash of the New Economy even devalued the qualifications of many high-tech specialists. Today it can no longer be overlooked that the rise of the new middle class had no independent capitalist basis, but was dependent on the social redistribution of surplus value from the industrial sectors. To the same extent as the real social production of surplus value gets into a structural crisis as a result of the 3rd Industrial Revolution, the secondary areas of the new middle class are gradually being deprived of their breeding ground.

The result is not just growing unemployment among academics. Through privatization and outsourcing, the “human capital” of qualifications is devalued and degraded in status even within employment. Intellectual day laborers, cheap workers and wretched entrepreneurs as “freelancers” in the media, private universities, law firms or private clinics are no longer the exception, but the rule. Nevertheless, in the end, Kautsky is not right either. The new middle class is falling, but not into the classic industrial proletariat of the immediate producers, who have become a slowly disappearing minority. Paradoxically, the “proletarianization” of the qualified classes is connected with a “deproletarianization” of production.

The devaluation of qualifications goes hand in hand with an objective expansion of the concept of “human capital”. Contrary to the decline of the new middle class, a new kind of general “downsizing” of society takes place, the more the industrial and infrastructural resources appear as anonymous mega-structures. The “independent means of production” shrinks down to the skin of the individual: everyone becomes their own “human capital,” even if this is only the naked body. A direct relationship arises between the atomized people and the economy of value, which can only be reproduced in a simulative manner through deficits and financial bubbles.

The greater the income differences between rich and poor in the context of this financial bubble economy, the more the structural differences between the classes in the structure of capitalist reproduction disappear. It is therefore pointless for some ideologues of the formerly falling new middle class to want to claim for themselves the earlier “class struggle of the proletariat,” which no longer exists. Social emancipation today requires overcoming the social form common to all. Within the commodity-producing system there is only the quantitative difference of abstract wealth, which is existential up to the question of survival, but remains emancipatorily sterile. A Bill Gates is as petty-bourgeois as a wretched entrepreneur, both have the same attitude towards the world and use the same phrases. With these phrases of the universal market and of “self-realization” on their lips, they cross the gate to barbarism together.

Post Comment: This text has sparked debate among Brazilian intellectuals. Dieter Heidemann (São Paulo) writes about a letter to the editor in the Folha de São Paulo that uses the expression “Boias-frilas”: “The expression ‘Boias-frilas’ makes a joke to equate temporary sugar cane cutters and the perspectives of academics. The sugar cane migrants are called ‘boias frias.’ Boia is the ‘lunchbox’ and fria is cold. The expression refers to the cold lunch they take to the sugarcane field when they are carted to work at 4 a.m. by ‘sub-contractors’ (called ‘gatos’ = cats!). ‘Boia fria’ became a general metaphor in Brazil for the most precarious working conditions. The letter to the editor calls the jobbing academics ‘boias frilas’ = boias freelancers…”

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Published in the Folha de São Paulo in September 2004