The following was written in late November 2003 in response to some questions and comments by two comrades, Chris and Asan, on a list-serve. I am posting it here as a relatively self-contained text that elaborates on “Pause in the Crisis or the Beginning of a New Boom?” posted in early November. Chris and Asan raised questions about the role of class struggle in the crisis, both in terms of the ever-tightening conditions in which capitalists extract surplus-value and in terms of the Italian operaista thesis according to which class struggle causes the crisis.
Pause In The Crisis? Reply to Chris and Asan
First of all, I don’t think much of the Italian workerist theories, either for today or for the 60s/70s, about class struggle causing the crisis. Where was the class struggle that caused the world depression beginning in 1929, or any of the decennial crises of the 19th century? I don’t deny for a minute that the strikes and wildcats in U.S. industry from 1955 to 1973 were a powerful spur to capital flight (i.e. de-industrialization), when Canada, then Europe and finally Asia offered much lower wages and comparable labor productivity. Nor do I deny today that the capitalists on a world scale face increasing problems of over-investment, pressure to extract maximum surplus value from the labor process, or some of the other imbalances (U.S.-China trade, for example) to which I and various others have referred. My differences with some of the conceptions aired in this discussion (which are perhaps more difference of emphasis than disagreement) is in how to interpret them in relationship to more “surface” phenomena such as the crisis of the dollar and of the international financial system.
Undoubtedly much rests on the idea of “fictitious capital”. It is not necessary here to rehash all aspects of my debate with Aufheben over the origins of fictitious capital. There is no disagreement that there is an abundance of it. But it is important to emphasize a specifically Marxian approach to fictitious capital because many other currents have their versions of it: Hyman Minsky (a very intelligent left-Keynesian), the “Tobin’s Q” ratio developed by James Tobin, Kurt Richebacher and the “Austrian school” that influence the often insightful Prudent Bear web site, as well as many ideas currently floating around the anti-globalization movement. Finally, we can include in this list crackpot (National Credit, real bills, Silvio Gesell) and openly fascist theories of credit that counterpose “international finance” (read Jewish) capital to honest productive (industrialists and workers) capital. (Some of the latter crops up in the anti-globalization movement in the excessive focus on “casino capitalism” and international debt.)
In spite of the relative neglect of the sphere of production in Pause in the Crisis or the Beginning of a New Boom?”, in a longer piece I would have emphasized the centrality (hence my debate with Aufheben) of linking the creation of fictitious capital to devalorized fixed capital.
Much can be cleared up—I think—if we distinguish between the deep problems of capitalism in the immediate sphere of production, i.e. the sphere in which capital extracts surplus value from the productive work force—and the problem of the reproduction of the total social capital, i.e. the question of the valorization of all titles to profit, interest and ground rent on a world scale. (I do NOT think, as the following will show, that if all fictitious capital were eliminated that everything would be OK.) Many of the concerns raised by Chris and Asan about the rate of exploitation or class struggle or the falling rate of profit focus necessarily on the immediate sphere of production whereas what I call fictitious capital, namely the gap between the total existing capitalized value of assets and their cost of reproduction in today’s terms, is valorized both within and without the immediate sphere of production. Without going into great detail, the looting of nature, the looting of Third World peasants who are reproduced and recruited outside of the wage labor relationship, and the outright cannibalization of both V and C within “normal” capitalism itself (i.e. the non-reproduction of labor power and the running down of plant and infrastructure) all move quanta from V and C to S through “non-exchange of equivalents”, i.e. non-reproduction. What matters to capital is the completion of the M-C-M’ circuit, and “loot” above and beyond the surplus value extracted directly in production can serve than purpose just as well as actual surplus value itself (i.e. slave labor in Nazi Germany).
If all commodities exchanged at their value, if there were only capitalists and wage-laborers in the world, if there were no credit system, if there were no mass of unproductive consumers (to avoid for a moment the question of productive and unproductive labor) feeding off the available surplus-value, then the phenomena posed by Chris and Asan would be right on the surface in the declining amount of living labor required to set in motion the total constant capital.
But there are all of the above, and hence the question of the rate of profit is greatly complicated, and that is what has prompted me to focus on the international credit system where titles to wealth (profit/interest/rent) are valorized on a world scale.
To take one example: what do “profits” of U.S. corporations taken by themselves mean (quite aside from the problems of “pro forma” accounting and out-and-out fraud of the Enron variety) when one considers how they are interwoven with runaway corporate debt, which in turn depends on the financial markets, which are in turn drawing 40% of the world’s savings through the international dollar-standard financial system, where a 30% decline of the dollar wipes out 30% of the value of all dollar-denominated assets held by foreigners? I fully recognize that “Tobin’s Q”, the ratio of current valuation of total assets to their current replacement cost, actually includes lots of fluff in what are defined as total assets, but something is indeed captured about the U.S. economy when Tobin’s Q goes from 1 for the 1898-1995 period to 2.11 for the 1995-2002 period, exactly the period of the stock market and high tech (and more recently housing) bubble, fed by vast inflows of foreign capital taking advantage of the “virtuous circle” of “pro forma” profits, runaway stock valuations AND a rising dollar.
What I see as the fundamental process occurring today is as follows. British capital and British financial markets dominated world accumulation in the 1815-1914 period, during which the U.S. and Germany (after 1870) surpassed Britain as industrial powers. It took the two world wars, the Great Depression, Keynesian welfare statism, fascism and Stalinism to “shake out” the dead weight of British hegemony and restart world accumulation on a new standard of value, i.e. a new generalized value foundation for global production and exchange, under U.S. dominance. That shakeout laid the foundations, with all the blood and gore involved, for the boom of 1945-1973 (or 1938-1973 for certain countries). The 1914-1945 period played the role of “devalorization” comparable to the more strictly economic deflationary shakeouts that happened in the world depressions of the 19thcentury, particularly 1837, 1857, and 1873. Further, following the “Theses On Feuerbach” according to which “vulgar materialism fails to recognize that human activity is objective”, the relaunching of world accumulation on a new standard of value required the massive involvement of the “left”, namely the Popular Fronts and the American CIO, to push through the institutional and structural changes necessary. It is in this sense that I think the activities of workers are indeed essential to the transformations of production and accumulation. (When I refer to a new standard of value, I mean that the booms of the 1815-1914 period (such as from 1896 onward) were “apples” to the “oranges” of the 1945-1973; they occur in qualitatively different “manifolds” of incommensurability, based on qualitative leaps in the social productivity of labor.)
Since the collapse of the Bretton Woods system (1944-1971/73) American hegemony has constituted the same obstacle to a new boom phase as Britain constituted in 1914-1945 (and in fact well before 1914, just as the U.S.-dominated system started to unravel ca. 1958). World capitalism has been groping toward a restructuring similar to the one that launched the previous boom. During the post-1973 period of the unabashed “dollar standard” (in contrast to the Bretton Woods “gold-exchange standard”), we have seen massive social retrogression on a world scale, in Latin America and Africa, in Eastern Europe, Russia and the ex-Soviet republics, in the non-tiger countries of Asia, and to a lesser extent in the advanced capitalist world itself, under the weight by the Anglo-American finance-capital driven “shareholder value” entrepreneurial culture. (It is no accident that the two advanced countries most stricken by retrogression are precisely the two successive financial centers of capitalism, first Britain and then the U.S.)
The most immediate mechanism of this retrogression has been the ever-increasing mass of U.S. dollars held abroad, reflecting the perennial U.S. balance of payment deficits, and exactly comparable to the British pounds held (though on a significantly smaller scale) in Britain’s colonies and semi-colonies (e.g. Argentina) up to 1945, reflecting Britain’s growing balance-of-payments deficits. America’s unique ability, through the printing presses of the U.S. Treasury, to tap the world’s wealth by accumulating IOU’s held in Asia (between $1 and 1.6 trillion), Europe and the OPEC countries goes way beyond what Britain managed in its more restricted colonial sphere. To find the surplus value and loot necessary to valorize this enormous floating mass of dollars, capitalism has been obliged to break open ever-newer sources of accumulation and loot, from Eastern Europe and Russia and the ex-Soviet republics, to China, to the protectionist development states of the Third World (up to the 1970’s), and now increasingly the industrial blocs of Asia and Europe. (I cite at random the Financial Times of 11/27/03 “Foreign predators hope to feast on Germany’s banks”, as Germany is increasingly opened up to foreign (i.e. U.S. and British) hostile takeovers through Schroeder’s “reforms’). Above and beyond this, the American successes (through the “war on terrorism”) in establishing a direct military presence along the perimeters of Russia and more recently of China (from Poland and Rumania via Georgia to Uzbekistan) shows clearly how the “politics” in the critique of political economy are working themselves out as the U.S. struggles to keep world accumulation as the preserve necessary to keep the M-C-M’ process operative in dollar terms.
What is necessary today, as the indispensable “active moment” is a fake left movement ready to play the role played in the 1930’s by the Popular Fronts, Keynesianism and the New Deal/CIO in the U.S. As the neo-liberal free-market ideology and practice of the past 25 years lurches from one crisis to the next (we can cite from memory, and incompletely, the Mexico and Brazil crises of 1982, the U.S. savings and loan meltdown of 1989-1991; the Mexican tequila crisis of 1994, the Asian crisis of 1997-1998, the Russian default and Long Term Capital Management crisis of 1998, the Brazil crisis of 1999, the U.S. stock market collapse of 2000, the Argentine default of 2001) we see a growing array of theoreticians and movements positioning themselves to take over: Jeffrey Sachs, George Soros, Paul Krugman, Joseph Stieglitz, the other newly-revived Keynesians, and above all the anti-globalization movement and its “Porto Alegre” icon. Space and concision make it impossible to lay out the possible ways in which this movement could oversee a new world accumulation process, just as it was impossible to foresee how Keynesianism would ultimately triumph in 1929.
Hopefully the preceding answers more questions that it raises, and clarifies my position relative to a more exclusive focus on the rate of profit in the immediate sphere of production, not to mention class struggle, which as Chris says, is a pretty nebulous construct in the U.S. where strikes tapered off to almost zero over the past 30 years.