In this 1995 essay, Robert Kurz examines “fictitious capital”, “unproductive labor”, the “tertiary sector”, “State debt”, “speculative bubbles”, “derivatives”, and “globalization” in the context of the wave of bankruptcies, crashes and bailouts of the 80s and 90s; discusses Rosa Luxemburg’s crisis theory, Keynesianism, Aglietta’s “regulation theory”, and the “neo-liberal” offensive; and predicts a “devaluation shock” that will invalidate the bloated property claims of fictitious capital in a “monetary atomic explosion” heralding “the end of the history of the mode of production based on money”.
The Apotheosis of Money: The Structural Limits of Capital Valorization, Casino Capitalism and the Global Financial Crisis – Robert Kurz
1. Real Capital and Interest-Yielding Capital
The contradictory relation between labor and money is one of the many schizoid structures of the modern world. Labor, as the abstract expenditure of human energy in the process of commercial rationality, and money, as the phenomenal form of the economic “value” produced by the former (in other words, of a fetishistic phantom of the objectivized social consciousness) are two faces of the same coin. Money represents, or “is”, nothing more than “dead labor”, which has really become abstract in the form of a thing, in the capitalist end-in-itself, which consists in a constantly increasing accumulation of that fetishistic medium. The human “process of metabolism with nature” (Marx) became an abstract and per se absurd expenditure of labor power, precisely because money became autonomous from human agency, in the potentiated fetishistic form of capital: it is not human need which directs the expenditure of energy; on the contrary, the “dead” form of this autonomous energy in the form of a thing has subordinated the satisfaction of human needs to itself. The relation to nature, as well as social relations, became mere stepping-stones for the “valorization of money”.
This valorization process, however, in which the fetishistic means became an end-in-itself, does not proceed without any hindrances. Since labor and money constitute distinct phases of the development of valorization as an end-in-itself, these two moments can also be separated in crisis situations, so that they no longer coincide. This lack of convergence is manifested as a disconnection between money and the abstract substance of labor: the multiplication of money then takes place more rapidly than the accumulation of abstracted “dead labor”, thus becoming separated from its true basis. But because the two processes of labor and of money together form one blind historical process, behind the backs of human subjects, its intrinsic nexus escapes consciousness, both wholesome “common sense” as well as scientific thought. Labor and money can come to be opposed to one another in various ideologies, as well as in the conception of the economic process.
It is true that modern society is generally considered to be a “society of labor” or a “society of wealth”, and it is indisputable that labor and monetary profit are, in the final accounting, identical. But this logical nexus is only understood in the form of a banal sociological concept or is presented as a kind of moral postulate—in the ideologies of “honest labor”, for example—while, at the same time, the economic necessity for these two phenomenal forms of the valorization process to coincide is not accepted. By way of the forms of mediation between labor and money, which are not at all easy to recognize and become increasingly more complex in the course of modernization, the illusion is born according to which money can develop independently of its abstract substance constituted by labor.
As everyone knows, bourgeois economic theory ignores the equivalence of abstract labor and money that is required by the logic of capitalism: in fact, bourgeois political economy, after the advent of marginalist theory, totally abandoned the concept of value, unlike the classical political economists (Adam Smith and David Ricardo), or it superficially identified it with realizable prices, subjectivizing it, because the existence of an objective substance of value was thought to be disproven, and the labor theory of value was considered to be simply a fossil. On this point the two postwar doctrines, Keynesianism and monetarism, are in theoretical agreement, although neither can completely ignore the real labor/money nexus. Keynesianism does not fail to take into account, at least superficially, the logic of abstract labor—even though it denies it in principle—when it establishes the nexus between “employment” and “monetary profit”. The problem is also present in Milton Friedman’s monetarism, intuitively if not conceptually, when the disconnection between the total amount of money and the total amount of production is identified as a fundamental problem. But neither the Keynesian concept of “employment” (the factor of demand) nor the monetarist concept of production (the factor of supply) imply any intrinsic or substantive relation between total labor and the total money supply, in such a way as to overcome the illusion that money is capable of autonomous movement. The problem is only posed indirectly.
In capitalist practice, this illusion is born from the particular nature of monetary capital concentrated in the banking system. Expressed more precisely, money is transformed into capital when it is directly spent on the valorization of abstract labor, thereby being transformed “from a given value to a self-expanding, or increasing, value” (Capital, Volume 3): the means of production so acquired, including human labor power, are transformed, in accordance with the logic of commercial rationality, into commodities for sale on the market, with the respective surplus taking the abstract form of “money”. This logic, summarized by Marx in the formula, M-C-M’, can only be measured by the abstract labor embodied in commodities. The commodity-producing enterprise, should its own monetary capital not suffice, can borrow (either all or part of) the initial amount “M” of money, which will act as capital. Society’s savings serve this purpose, concentrated in the banking system: money which its owners are not using, neither for consumption nor for business investments, and which has been deposited, like the bone that a puppy buries in order to dig up and gnaw later.
Meanwhile, even that money is capital—capital in the form of credit: temporarily, the banking system loans “working” business capital. Money is not used here as a go-between for commodities, nor is it directly used as monetary business capital, which employs abstract labor in its valorization process, but is paradoxically transformed into a commodity with a price in special markets (the financial markets) and whose price consists of interest.1 Money, as a commodity on the financial markets, is thus capital which yields interest, unlike “real” business capital, which is employed for the purposes of the effectively substantial valorization. From the perspective of interest-yielding capital, the valorization formula is reduced to M-M’; in other words, money, seemingly without the intervention of the real production of “C”, immediately obtains, as a commodity, the “occult quality” (Marx) of generating—presumably by itself—“added value”: “The characteristic movement of capital in general … i.e., the return of capital to its point of departure, assumes in the case of interest-bearing capital a wholly external appearance, separated from the actual movement, of which it is a form…. Giving away, i.e., loaning money for a certain time and receiving it back with interest (surplus-value) is the complete form of the movement peculiar to interest-bearing capital as such. The actual movement of loaned money as capital is an operation lying outside the transactions between lender and borrower. In these the intermediate act is obliterated, invisible, not directly included…. Neither does its return, therefore, express itself as the consequence and result, of some definite series of economic processes, but as the effect of a specific legal agreement between buyer and seller.” (Capital, Volume 3)
On the one hand, one obviously cannot seriously deny that money without commodities (or money in itself as commodity) is a social absurdity; on the other hand, in accordance with the common preconception which sees capital in money, the true form of capital is not so much the entrepreneurial capital which produces commodities, but rather the capital which yields interest. The only effective source of “money which generates money” (Marx), the consumption of abstract labor in the actual production of commodities, thus disappears into the “form without a content” (Marx) of its own movement. In interest-yielding capital, the production of “more money” does not, in fact, appear to be a social (fetishistic) expression of capitalist commodity production, but as the production of commodities among other things, like the production of socks, candles or adventure tours. Nothing more than that, the abstract labor of the banking system itself is put on the same level (even in the concept of “value creation”, typical of bourgeois economic theory) as labor carried out in productive and tertiary enterprises—one even speaks of the “financial industry”.2 The spectral duplication of products, in the system of commodity production, into commodities and money is concealed by a vulgar identification of money with the commodity.
At first glance, this might seem to be only a matter of a subjective illusion, that is, of a simple ideology of interest-yielding money capital, whose agents are not conscious of the real substantial movement. If the real valorization process were to function on its proper foundations, this could in fact be the case. For the owner of loaned money can be indifferent concerning the origin of his interest, which makes his miraculous “money which generates money” fruitful. The case becomes problematical, however, when the loaned money is not actually employed in the real entrepreneurial consumption of abstract labor. Such use of money, if it occurs on a large scale, causes interest-yielding capital to become increasingly separated from the real valorization process and therefore to become “fictitious capital” (Marx).3
The simplest case is naturally the one where real entrepreneurial capital, which borrows money, cannot sell its commodities on the market and declares bankruptcy. The non-convergence of labor and money (the labor of the commodity-producing enterprise was declared invalid by the market) hence has an immediate repercussion on interest-yielding capital: the advanced credit becomes “unrecoverable”.4 The same effect is produced when borrowed money is not originally destined for real commodity production, but for luxury and prestige, for example; this was the case for innumerable loans granted by the international financial system during the 1970s to various despots and murderous regimes of the Third World that were considered to be friendly.
The apparent direct movement of M-M’ only becomes fictitious in the strict sense when the frustration of the substantive valorization process is concealed by paying off loans which have become insecure with new loans. That is what is happening today on a vast scale, not only with the loans of the Third World, but also with a great quantity of business and consumer credit. In this way the financial system lives on a constantly growing mountain of “insubstantial” credit-money, which is treated “as if” it were passing through a real valorization process, even though it is barely simulated by meta-credit. The nexus between abstract labor and money is thus stretched, so that the non-convergence of the two phenomenal forms does not become immediately operative, but is in a way “postponed”. Ultimately, the fictitious chain of extensions will end up breaking, because the meta-remuneration of interest of the M-M’ movement, developed beyond its substantive content, will reach its limits.5
Credit money attains a yet higher degree of disconnection from labor when it serves as a point of departure for speculation, in which there is no longer even the appearance of real commodity production. The traffic in simple ownership claims to stocks and real estate thus produces fictitious increases in value, which have nothing to do, even formally, with the real profits derived from the entrepreneurial consumption of abstract labor. A speculative movement of this kind is always set in motion when the real entrepreneurial accumulation of capital reaches its limits and the profits of past periods of production cannot be invested because they do not suffice for an increase in real commodity production, but have to be exclusively applied to the financial system. The pressure for an immediate M-M’ movement thus grows so strong that compared to the speculative increase in the value of stocks, the real dividends are insignificant; the ratio of stock prices to profits grows entirely out of all proportion. These speculative bubbles, the fruit of the fictitious increase in value of titles to property, witnessed on innumerable occasions in capitalist history, always and inevitably terminate in a great financial crash.
2. Real Capital’s Increasing Dependence on Credit
The “enabling condition” that allows money to break free of its real labor substance is all the more powerful the greater the role played in general reproduction by that part which is encompassed by interest-yielding capital. As for the latter, it can in fact bring about, over the long term, a disequilibrium in favor of credit. The gradual extension of commercial rationality over all of production—its rationalization and the consequent secular increase of capital’s density (that is, always higher start-up costs for the competitive production of commodities)—apart from the concomitant extension of anonymous stock capital, demands always-greater masses of credit money in order to keep capitalist production going.
The private capital of the 19th century (which seems archaic from today’s standpoint), with its personal patriarchal ownership and its family dynasties,6 was still ruled by the principles of responsibility and “solvency”, in the light of which the growing recourse to credit seemed almost obscene, almost the “beginning of the end”; the literature of the epoch is full of stories in which “great houses” fell to earth due to their dependence on credit, and Thomas Mann, in some passages in Buddenbrooks, made this theme famous when he was awarded the Nobel Prize. Interest-yielding capital was, naturally, indispensable from the very beginning for the system in formation, but did not yet play a decisive role in the totality of capitalist reproduction; above all, traffic in fictitious capital was considered, so to speak, typical of the environment of imposture of frauds and “con-men”, at the margins of authentic capitalism (but who even then were joined by the honorable bourgeoisie in times of waves of speculation). Even Henry Ford long refused to have recourse to bank credit for his business, attempting instead to finance his investments only with his own capital.
The patriarchal concept of solvency completely disappeared over the course of the 20th century, simply because it was no longer possible to sustain, even in the normal course of capitalist business affairs. The Marxist theories concerning the new power of “finance capital” (Hilferding, Lenin, et al.) at the beginning of the century were already the reflection of a process which saw real entrepreneurial capital begin to structurally separate from its own basis, that is, from abstract labor; ultimately, the Marxists of the old labor movement did not grant much importance to the authentic economic content of this development (that is, the emergence of the limits of the economy based on value), but only to the changes on the surface of capitalism and in sociological power relations.
This separation of the credit system can be described as a growing structural disproportionality between scientifically developed fixed capital and the mass of labor which could still be profitably employed; the enormous scale of the augmentation of capital concentration (which appears in Marx’s work as the “increase of the organic composition” of capital) requires an increasingly greater use of monetary capital, which can, however, mobilize a diminishing mass of labor per unit of capital. This fact is also expressed on the monetary plane, where it takes the form of the recognition of the growing importance of interest-yielding capital, described above. In other words: real, “working” entrepreneurial capital, which utilizes abstract labor in the effective production of commodities, must have ever yet more recourse to monetary capital, borrowed from banking capital, in order to continue to pursue the valorization of value. In this manner, the so-called social reserve of capital drastically fell over the long term; now, with few exceptions, the latter is always less than 50%.7 This simply means that real entrepreneurial capital, in order to be able to continue producing in the current situation, must in anticipation mortgage ever-greater quantities of labor to utilize in the future (that is, future profits).
Real commodity-producing capital thus, so to speak, vampirizes its own (fictitious) future, thereby prolonging its life on a meta-level beyond its now-visible internal limit. This mechanism only functions as long as the mode of production continues to expand (as was the case until the last third of the 20th century) and only to the extent that the fictitiously anticipated mass of future value is effectively realized, at least on a scale sufficient to pay the interest on their loans. The fact that continuously rising capital investments can no longer be entirely self-financed, that is, by means of the real mass of profits—at least usually and in normal circumstances—is a clear indicator of the increasingly precarious character of the whole process. This structural postponement in favor of interest-yielding capital is still not the same as directly paying the interest with other loans; but the real movement of accumulation ends up depending indirectly on society’s concentrated savings.
In order to attract this money for the anticipatory financing of the accumulation process, its owners must be provided with an incentive, in other words, the interest rate has to rise, not only sharply and cyclically as in the case of a temporary scarcity of money capital (as a consequence of the dissimulation, by means of credit, of a crisis in real commodity production), but also structurally and at a secular level, which one can effectively observe as a long term tendency since the Second World War at the latest, above and beyond strong cyclical oscillations. This secular increase is only counterbalanced by the frantic creation of liquidity by the central banks, which in turn accelerates the process whereby money is disconnected from the productive basis of capital, as interest rates only temporarily fall. At this point it therefore becomes evident that the cyclical process is slowly choked off by a structural exhaustion.8 The structural limit of the accumulation process as a whole was breached, but must sooner or later be manifested again on the plane of money capital, hindering real production because of the rising price (and, ultimately, the crisis) of money. At the same time, capitals involved in the real production of commodities suffer enormously from the fluctuations of the money markets; thanks to the growing social importance of interest-yielding capital, the conditions improve for speculative movements that exceed all historical precedent. In a word: due to its internal growth, industrial capitalism becomes increasingly more irresponsible according to its own criteria.
3. The Tertiary Revolution
The discussion conducted above refers exclusively to the development of industrial capital or the relation between the real industrial production of commodities and interest-yielding money capital. In the 20th century, however (and especially after the Second World War), the “tertiary sector” of the continuously expanding so-called service sector was erected upon this basic structure. Some economists and sociologists deduced from this development the gradual formation of a “post-industrial”, service-sector capitalism (Jean Fourastié, Daniel Bell, et al.). Just as the primary (agricultural) sector lost its predominance in favor of the “secondary sector” of industry, so also would industry now yield its preeminence in the reproductive sectors to the “tertiary sector” of the services.
This superficial reflection, however, completely ignores the fact that the first of these changes in the reproductive structure did not by any means constitute an internal development within capitalism, but coincided with the very history of capitalism’s formation and rise. Not only were the techniques and material contents of production modified, but the basic forms of social relations were also convulsed by a long, painful and turbulent transformation. Pre-industrial agrarian society certainly knew commercial and interest-yielding capital as marginal forms, but not the productive valorization of capital; markets existed, but not a market economy; money existed, but not a monetary economy. The commodity and money nexus, as a closed system of reproduction, was only born with the transformation of the means of production and human labor power into industrial capital.
If such a historical transition of industrial society to a service society were now imminent, one would suppose that it would not be limited to a mere internal sectoral re-shuffling of the existing forms of social relations bequeathed by the market economy and money. In other words: the loss of social importance of the industrial “sectors” might very well be identical to a crisis and a loss of importance of the market and money, in the capitalist form as a general form of reproduction; just as in its time the reduction of the agrarian “sector” was identical to a crisis and atrophy of the non-capitalist subsistence economy and of feudal relations. From this perspective, which goes to the heart of structural change, the capitalist mode of production appears as identical to the rise of the industrial system; and the “tertiary revolution” consequently appears as the overthrow and end of capitalism itself, which is no more eternal than was the old agrarian society.
Such a thesis can only be illustrated by the historically diverse characteristics of the activities in question in the various sectors. What is decisive for capitalist reproduction is the concept of “productive labor”, which logically implies its opposite, “unproductive labor”. Looking at the past, all the labor carried out in the feudal world and the subsistence economy is “unproductive” from the capitalist point of view, since it did not (yet) serve capital’s valorization; strictly speaking, it is not even a question of “labor”, since this abstraction of reproductive activity was only born with the modern system of commodity production.9 Within the latter system, all activity carried out in exchange for money or which is situated within the context of the valorization of money is formally abstract labor. But this does not mean that it would also be so in a substantive sense. In a substantive sense, abstract labor, that is, labor whose expenditure of energy really impels capitalist reproduction, is only “productive” (capital-producing) labor which effectively creates surplus value.10
At first glance, it seems hard to imagine how this distinction could be argued in an analytically transparent way, without falling prey to arbitrary assumptions. In this respect, Marx’s theory does not have any instruments at its disposal capable of an unequivocal assessment; hence, the Marxist debate concerning “productive and unproductive labor”, which was hardly articulated as a whole, never reached a conclusion.11 It is therefore necessary to elucidate the criteria which enable us to distinguish between the formal and the substantive expenditure of human labor power in the system of commodity production. We should first distinguish between productive and unproductive labor in an absolute and a relative sense.
Labor is unproductive in an absolute sense in the system of commodity production when, although carried out in exchange for monetary remuneration and within the context of money-oriented reproduction, it does not itself produce commodities (that is, it does not as such take part in the production of commodities), or when the quasi-products it creates assume only a formal and insubstantial commodity character. It would be a pseudo-solution, as a result of an exaggerated attachment to empiricism, to want to specifically locate the substantive character of the commodity in the “material” tangibility of the product, enabling one to declare, for example, that labor for the production of car-washing machines is “productive” and the labor of the hairdresser, the postal employee or the policeman is “unproductive” because the products of “hair-cutting”, “mail delivery” or “public safety” are not material in the strict sense of the word. Such a theoretical definition—which obviously derives from the vulgar productivist materialism of the old (industrial) workers movement, with its false pride in its industrial product—constitutes at the most an initial and vague approach to the problem.
It is, in fact, impossible to answer this question with a cut-and-dried positivist definition. The character of labor which is “in itself” unproductive can only be deduced from the reproduction process of capital, in which abstract labor passes through diverse forms of transformation and representation. It is not necessary for the unproductive character of certain kinds of labor to be externally determined by arbitrary definitions; it should, instead, appear in the relevant calculations as “costs”. The mass of unproductive labor and its remuneration appear from the capitalist point of view as a “faux-frais” (Marx), as false costs. One must, however, make a distinction between the level of the particular capital and capital as a whole. On the plane of the particular capital, that is, of the enterprise, the most necessary unproductive labor can easily be included under the heading of “overhead costs”, such as, for example, human resources, accounting, janitorial services, etc. These activities are indispensable from the technical-organizational point of view for the general operations of the enterprise; but they do not participate in its actual production of commodities (the production of automobiles or brooms, for example), even though they must naturally be paid for, just like the labor involved in the enterprise’s actual production of commodities.
On the plane of the particular capital, the unproductive character of this kind of labor does not manifest itself in an absolute (“in itself”) sense, but only relatively, insofar as the “overhead costs” of an enterprise can appear as a substantial production of commodities or services on the part of a second enterprise, which specializes in providing them to other enterprises (a firm, for example, which employs janitorial personnel and offers this “janitorial product” to other firms). From the point of view of the commercial economy, the labor of cleaning, unproductive in an auto factory, constitutes in turn the productive labor of the janitorial company, and thus enters into its substantial commodity production, while the labor of the accountants in the cleaning company forms part of its unproductive “overhead costs”. It is possible, however, that a third firm would carry out the accounting for every kind of enterprise, this being the specialized commodity-service which it offers: in this case, for the providers of these specialized services, even accounting itself becomes productive labor in the commercial sense. One can imagine a whole chain of this type, and the outsourcing of kinds of labor considered to be “overhead costs” to service enterprises actually constitutes one of the greatest tendencies of tertiarization: thanks to their specializations, providers of services can rationalize operational procedures and offer them at such a price that the organization of this kind of labor within an enterprise becomes uneconomical.12
The tertiarization referred to above therefore transforms, so it would seem, unproductive into productive labor, by means of its simple formal autonomization in a separate enterprise.13 But things are different on the plane of the total capital, which obviously does not immediately appear on the balance sheets of the so-called economic subjects, but which can, however, be theoretically and analytically reconstructed. First, it is necessary to point out that the unproductive “overhead expenses” reappear on the plane of the total capital, that is, the operational outsourcing by particular enterprises and the resulting regrouping within production as a whole reappears in the balance sheets. The unproductive “overhead costs” can be reduced, for the reasons adduced above, by outsourcing them to autonomous enterprises, but, on the plane of society as a whole, they are always a subtraction from the total surplus value. The representation of the “costs” (of the surplus value-creating enterprise) as “profits” (of the service-providing enterprise) disappears on the plane of the total capital. Marx demonstrated this by using the example of the costs of purely commercial transactions (purchase and sale, monetary intermediaries, etc.): a large part of the labor in small-scale trade and all the labor of the banking system, credit and insurance, as well as that of the “juridical superstructure”, is “in itself” unproductive, because it does nothing but mediate commodity-money relations, without itself being a substantial production of commodities. It is true that the wage-workers in these sectors create an entrepreneurial profit, but their activity is effectively limited to mediating the redistribution of the surplus value, generated exclusively in the productive sectors, among the particular capitals: by means of this unproductive labor of mediation, commercial capital appropriates a portion of the total surplus value (see the detailed explanation in Volumes 2 and 3 of Capital).
What, then, is the decisive criterion for conceptually determining, on the plane of the total capital (that is, after eliminating the distortion that typically accompanies the point of view of the particular capital), whether or not labor is productive? The distinction between “true” value creation and the activity of “simple mediation” (in the commercial, monetary or juridical sense) is not sufficient, since it still adheres to a definition that directly applies to each particular expenditure of labor. This definition can only indicate the external reason why an activity is considered to be unproductive labor, but does not clarify the underlying economic concept. A definition of productive labor, with reference to the mediation process of capitalist reproduction as a whole, can only be presented in the last instance in terms of the theory of circulation. In other words: in terms of the theory of circulation, only that labor whose products (as well as its reproduction costs) return to the capital accumulation process is productive; that is, labor whose consumption is recovered again in expanded reproduction. Only this kind of consumption is “productive consumption”, not only directly but also with reference to reproduction.14 This occurs when consumption goods are consumed by workers who are in turn producers of capital, whose consumption is not a dead end, but which returns in the form of capital-producing energy, in a new cycle of surplus value production. On the other hand, none of the consumption goods which are consumed by unproductive workers or by non-workers (children, prisoners, invalids) return, as renewed energy, to surplus value-creation: on the plane of society as a whole, this kind of consumption only disappears without a trace and without providing any impetus to capitalist reproduction. This also applies to the production of capital goods: in terms of the theory of circulation, this kind of labor is productive only if the consumption of its products takes place within the context of surplus value-creation, that is, if it returns to the cycle of surplus value production. On the contrary, all those capital goods whose consumption occurs outside surplus value production comprise, on the plane of society as a whole, mere consumption which “falls outside” of the global reproduction of capital and its accumulation process.
Conceiving productive labor in terms of circulation theory may seem strange to those who, influenced by positivism, want strict definitions, but it is an approach which allows the problem to be resolved beyond the vulgar “materiality” of the produced commodity. In this perspective, the labor of the public functionary or of the policeman is strictly unproductive, since the consumption of their “products” (regardless of whether it is organized by the State or by private enterprise) never enters into “productive consumption” in any way. But the production of armored personnel carriers is also unproductive, even though they are more tangible commodities; in fact, the consumption of such vehicles (of the energy, “nerves, muscles, brains” expended in their production) cannot, even with the best will in the world, reappear in the cycle of surplus value-creation, but “falls outside” of the latter. Highway construction is also unproductive, since the consumption of highways is neither “productive consumption” nor surplus value production and also strictly “falls outside” of such production. The hairdresser’s labor would be productive when he cuts the hair of productive workers (which enters into the costs of rejuvenating capital’s productive energy); the same service would, in turn, be unproductive if it was offered to unproductive workers. Even the production of automobiles, refrigerators and washing machines is unproductive in every case where these products are consumed by unproductive workers; the energy so intensively expended again “falls outside” the reproductive process of total capital.
In other words: capitalism is only really possible if a sufficiently expanding part (which grows with capital accumulation) of “employment” is capable of producing, within the context of commodity-money relations, a self-mediated identity of “productive consumption”, in which the production and consumption of value interact, so as to make the fetish-form and the fetish substance sufficiently coincide in amplitude. Rosa Luxemburg posed this problem, but she could not further elaborate it, because her argument was restricted to the superficial plane of the (circulatory) “realization” of surplus value, instead of analyzing the problem from the perspective of the internal cycle of capital’s own reproduction (which only “appears” indirectly on the plane of the market), that is, from the perspective of the categories of productive and unproductive labor. Nonetheless, her thesis of a growing dependency on the part of capital accumulation upon the money income from “third persons” (which lie outside the real productive reproduction of capital) approaches the core of the problem. Rosa Luxemburg, of course, as a product of her times, saw these “third persons” in the context of pre-capitalist or non-capitalist commodity production (peasants, artisans, colonies), whose purchasing power was supposed to have fed the capitalist market which had shrunk too much due to the structural “underconsumption” of the industrial proletariat. Capitalism thus seemed to depend, on the plane of market realization, on the non-capitalist sectors of production and the non-capitalist regions of the world; consequently, it was supposed to reach its absolute limits when it absorbs these sectors and regions. It is true that Rosa Luxemburg mentions, in passing, among the “third persons”, the public functionaries themselves; but it still did not occur to her that, exactly to the contrary of her argument, the structural limit of capital might consist in the very fact that its dynamic creates an increasing number of unproductive sectors and “third persons”, whose revenues and consumption become a growing burden which the reproduction of capital will ultimately be unable to support.15
This is in fact the way that the problem that was recognized by Rosa Luxemburg, although in an inverted manner, so to speak, is now manifested: that part of the expenditure of labor power which does not return to capital’s extended circulation structurally increases, until it ultimately crosses the critical threshold. Ironically, it could be said that the “costs of doing business” or the “overhead expenses” of the marvelous market economy grow so disproportionately that the latter ultimately becomes unprofitable according to its own criteria. Most tertiary labor, structurally in constant expansion, cannot return to surplus value production as “productive consumption” for various reasons; partly due to the nature or the character of much of this kind of labor, partly due to external limitations.
In the case of labor involved in purely commercial, juridical or monetary transactions, what prevents it from entering or returning to the substantive production of surplus value is its character of simple mediation evoked by Marx (even if the “products” it supplies appear on the market); other products cannot even begin to assume the form of a commodity, since their consumption cannot be privatized (for example, vital air quality control measures); even so, in a totalized money economy, this kind of labor must also be remunerated and appear on the labor market. With other products (highways, canals, schools, hospitals, etc.) the privatization of consumption is possible in principle (with various degrees of difficulty); but it would be necessary to reserve this consumption for a minority which is capable of paying for it, which would contradict the ubiquitous character of social infrastructure. Most of the infrastructure cannot therefore be organized as private production for the market (in such a case, the volume of the massive profits would be two or three times the amount attainable in the market economy). Commercial sectors like tourism, however, are different: it is debatable whether this sector involves the unproductive luxury consumption of a few rich countries, mediated only by their extraordinary power of the appropriation and redistribution of world surplus value (three-quarters of humanity has never engaged in tourism), or whether this consumption partially enters (to the extent that it is enjoyed by productive workers) in the productive expenditures of reproduction, thus returning again to surplus value production.16
The problem which arises here is, however, more complicated than it appears in the various discourses on “Justice”, which often assume that part of the poor countries’ value production is stolen, perhaps by means of political pressure, etc. In reality, it is the very “equality” of the value parameter which renders capitalist countries with little capital capable of appropriating a relatively lesser mass of capital in relation to countries with more capital. The system of coordinates is not constructed by autonomous “national” processes of value creation but by the creation of value of global capital as a whole, whose parameter is the level of productivity which prevails on the world market. Just as a single enterprise’s capital does not obtain an “individual” value on the market in accordance with the measure of labor time it effectively incorporates but, by way of the price realized on the market, it obtains only a portion of the totality of value produced in accordance with the socially prevailing productivity, neither does a national economy obtain on the world market a mass of value corresponding to its national expenditure of labor, but only a portion of global value production which corresponds to its productivity; and the latter is, in fact, relatively lower in countries with little capital. In the relation between the single capital and capital as a whole as well as in the relation between the national economy and the world market, the paradox lies in the fact that it is those enterprises or those countries which, thanks to their relatively higher productivity, create less value (less fictitious “congealed labor”)—requiring less labor per product, or for each unit of capital employed—can appropriate, in market competition, the greater part of real (valid) value produced by the totality of world capital. In the terminal stage, however, of the current globalization of capital, this competition demonstrates the absurdity of the production of value and surplus value as such, as will be seen below.
In any event, it is clear that the tourism industry, or at least mass tourism, constitutes a grey area in relation to the distinction between productive and unproductive labor within the context of the global appropriation of surplus value. Although other such limiting cases, grey areas and “hybrid” forms of activity certainly exist, it is clear that, taken as a whole, the share of those unproductive workers (viewed from the perspective of surplus value production) who only represent social consumption, that is, “overhead costs”, is constantly increasing. The ultimate causes of this development are, on the one hand, the process of the application of science to production promoted by competition and, on the other hand, the growing “remediation costs” for man and nature, provoked by “systemic damages”. The costs of unproductive labor can be reduced by means of corporate outsourcing and the associated rationalization of corporate “overhead costs”, but this reduction is more than compensated for by the structural expansion of these sectors, which are “technically” necessary, despite their not being productive of surplus value. The costs of commercial, monetary, or legal transactions, the secondary costs of unproductive luxury consumption, administrative costs, costs relating to infrastructure and socio-ecological damage control, as well as the costs of the general conditions and logistics of the real production of surplus value, grow in such a way that the latter begins to suffocate.
4. Tertiarization, Interest-Yielding Capital and State Credit
To prevent this suffocation a new infusion of credit, or interest-yielding capital, is necessary, whose role in reproduction once again increases vertiginously. One must now add to the costs of credit for the industrial production of surplus value, which have increased enormously due to the growing share of constant capital, the costs of credit for the general conditions and infrastructure of the market as a whole, which are also rising. This, however, greatly exacerbates the problem. In fact, if in the first case the always-increasing amount of credit is still at least used for the effective production of surplus value (although the risk incrementally rises of a disproportion arising between the costs of credit and the surplus value which it engenders), in the second case the credit must be completely evaporated in unproductive consumption. As for the unproductive commercial sectors, they indirectly put pressure on the interest rate of society as a whole; while for the infrastructural sectors mediated by the State, by socio-ecological costs, etc., the result is the direct pressure of taxation on wages and profits, or else the State must have recourse to credit, its real income no longer being sufficient.17 The increasing share of unproductive labor is yet further verified in a modified form in the calculations of economic subjects as increasing costs (of that part of the social “overhead costs” mediated by the State, under the form of “wage costs”, for example), which not only provide the pretext for jeremiads under the entrepreneurial motto, “learn to groan without suffering”, but also become, in fact, a problem for social reproduction.
It is, in addition, necessary to consider another phenomenon, seldom addressed by theory. To the same extent that the share of unproductive sectors as a part of reproduction as a whole increases, another growing portion of industrial production itself becomes structurally unproductive. This simple fact is the result—as we shall demonstrate—of an analysis in terms of the theory of circulation. The mass of unproductive workers—which is inexorably growing and which is paid only with credit money, always refreshed with new credit—must naturally eat, drink, and be housed, as well as drive cars, consume televisions, refrigerators, etc. Since this production, however, is not productive and therefore does not return to surplus value production, this only means that, indirectly, a growing portion of industrial production paradoxically depends upon unproductive sectors financed by credit.
The paradox referred to above is based on the fact that, on the one hand, the unproductive sectors must ultimately be fed by real surplus value production at the same time as, on the other hand, industrial production as the principal agent of surplus value creation itself becomes, due to the growing consumption of unproductive workers, less (or nowadays, only apparently) a real production of surplus value, being fed by unproductive profits. The decisive distinction between productive and unproductive labor does not coincide with the absolute clear-cut relation between nominal industrial production and the “tertiary sector”, but—analyzed in terms of the theory of circulation—cuts across both. In reality, basic industrial production depends not just on first-order credit, that is, credit for financing fixed capital proper, but also on second-order credit, because it depends upon consumption-goods markets which are also financed by credit.18 If State consumption and State credit, crushed together as if by an avalanche, play a central role in this development, this is also due, of course, to the fact that the State (unlike a private entity which avails itself of credit) is considered to be a “secure debtor”: which means, however, that the State, in the event of a great monetary and credit crisis, will not declare bankruptcy, but will simply expropriate its citizen-creditors.19
5. Globalization and Ghost Industries
Up until this point we have only addressed the concept of unproductive labor in the absolute (“in itself”) sense, on the plane of capital as a whole, so that it could be analyzed, in its multi-faceted aspect, in terms of the theory of circulation. But no less relevant is the rise within the industrial system of the proportion of that labor which is unproductive only in a relative sense. As everyone knows, a commodity-producing activity is unproductive in the relative sense, regardless of its other characteristics, when its level of productivity (the relation between the labor expended and the outcome of production) falls below the established social level, that is, below the average social productivity. It is obviously of decisive importance to establish the scale at which this level is operative, that is, whether it is operative on the scale of a region, a national economy, or a world market. Ordinarily, regionally limited commodity production is not yet totally organized according to commercial rationality and is only indirectly linked to capital valorization (so-called small-scale commodity production, crafts, repair shops, etc.). On this plane, the pressure of an always more demanding social standard is not yet felt, or is only felt on a small scale. Only on the plane of the national economies which have been unified over the course of history is a social average productivity also asserted, at the same time as the “average rate of profit”, which becomes a diktat for enterprises.
The case of the world market is different. Here there is nothing like a world average, but the level of productivity of the most developed countries prevails. The reason for this is simple: a social average can only develop on the basis of a historical contemporaneity, that is, at the level of historically mature national economies, whose productive sectors arose at a common level and could thus, through the constant process of scientific rationalization and the increasing concentration of capital, etc., elaborate a common standard of productivity. The situation is different when industrial systems at various historical levels of development come directly into contact with each other. Instead of establishing a new average (as Paul Mattick erroneously supposed), which would quickly lower the level of the most developed economies (‘developed’ in the sense of having been the first to “enter” industrialization and capitalization), what takes place is the annihilation and liquidation of the non-contemporaneous and less productive production.20
Once again it is the State which must intervene, both with regard to a large part of the internal “overhead costs” of the system of commodity production, as well as with regard to the external pressures of competition. The simplest way to buffer this inequality—or non-contemporaneity—is a purely administrative one: the erection of customs barriers. This measure only works, however, when the State’s integration into the world market is relatively slight, with the concomitant isolation in relation to the technological progress attained in the world and with the profound stagnation of productivity. After the connection with the world market reaches a higher stage, it suddenly becomes clear that customs isolation bears significant costs, since everything which must be imported must be acquired at world market prices, and it is thus necessary to first obtain currency by means of the country’s own exports. One can protect one’s own underproductive industry from more competitive foreign competition with tariff walls, but when one must export one’s own products to obtain currency, those products can only be sold at world market prices, that is, in accordance with the productivity level of the most developed countries which dominate the world market. A dichotomy in the terms of trade is soon manifested, that is, always-greater quantities of one’s own labor must be exchanged for always lesser quantities of foreign labor.21 This situation gives rise to the illusory theme of “fair” and “unfair” trade.
This situation is made worse due to the fact that higher duties on imports provoke the compensatory response of equally high duties on their own commodities exported to other countries, making the currency problem still worse. Ultimately, the State must have recourse to subsidizing its industries, whether to preserve them in the domestic market, even in the case of a reduction in customs tariffs, or to make them artificially competitive in export markets (export subsidies). These subsidies then devour all the more credit the greater the industry’s backwardness in comparison to the global level of productivity, defined by the leaders in that category. In the case of isolated industries (mining, steel, shipbuilding, textiles and shoes, furniture, etc.), this also applies to the leaders of the world market.
The much-discussed globalization of financial markets and of production, the international dispersal of the productive processes and the global competition to offer more profitable locations for production, are now beginning to break down the cohesion of national economies themselves. Basically, a few centers of highly productive manufacture, distributed over the globe in accordance with the criterion of the lowest costs (the “supply factor” of the monetarists), could flood the entire world with commodities, annihilating the majority of existing industries. The result would be the collapse of the already-precarious global purchasing power; the system of commodity production would thereby prove its own absurdity, not only in structural terms and with regard to the domestic economy, but also on the plane of the world market. State credit must therefore once again be expanded towards infinity, and State subsidies and expenditures together surpass all previously known records. For many countries, this factor already constitutes the most important part of all credit transactions. The alternative would be the complete collapse of these national economies; capitalist reproduction would then become extremely limited, restricted to a few “islands of productivity” for the world market, a market which, should such a state of affairs become generalized, would cease to exist. Currently, despite the ideological declarations to the contrary, the costs of credit for subsidies necessarily continue to grow on a world scale. In reality, that part of the global industrial system which now depends directly (that is, not only by way of the consumption of growing unproductive sectors) on the simulation of credit is growing; from the point of view of the logic of the system, these enterprises are mere ghost-industries, artificially created and maintained on life-support.22 Along with the increasing costs of credit for real production of surplus value, and the growing share of structurally unproductive labor financed by credit, we then find ourselves faced with the third pillar of all of society’s dependence on credit.
6. The Desubstantialization of Money and Structural Inflation
Taking all three of these aspects of structural dependence on credit into consideration, it becomes clear that the inexorably growing cleavage between credit money and the abstract labor substance of the system must lead to a collapse. This means that, during a period of incubation, which lasted a few decades, the credit chain was increasingly stretched, in anticipation of a payoff in an ever more distant future. Financial institutions then underwent secular expansion,23 accompanied by a vast expansion of State credit. This new stage of capitalism’s development, which heralds not only its zenith, but also its absolute limit, was first reached in the First World War. Theoreticians of the workers movement as different as Lenin or Rosa Luxemburg (as we shall see, the latter approached the problem at a much higher level of reflection than the “politician” Lenin) sensed the truth when they spoke of “the last and highest stage” (Lenin) and even of “collapse” (Luxemburg); but this “stage” would not run its course until the end of the century, and its effective historical limit can no longer be adequately comprehended by the concepts of that era, since it transcends the historical horizon of the old workers movement as such.
Before the First World War, capitalism constituted only one segment (albeit a continuously expanding one) of social reproduction, and had not yet invaded all the sectors of production; the State had not yet assumed a determinant role in the reproduction process and was financed primarily by means of taxes (a budget which approximated an equilibrium between income and expenditures was considered to be the fundamental precondition for a responsible policy); money was, in the strictest sense, precious metal (above all, gold), which amounts to saying that the paper money in circulation was always convertible into gold. These three elements dissolved in the First World War which, like the Second World War barely two decades later, proved to be a gigantic stimulus for capitalist development. Industrialized warfare not only opened the floodgates to the subsequent victory of Fordist industries and for capital’s widespread penetration of society as a whole, but also obliged the State to assume responsibility (obviously prepared long before) for the logistics and “overhead costs” of this process.
The people of that time did not notice this; from the beginning, most saw in the new course only a temporary interruption by the war of a supposedly normal situation. Only later did it become evident that there would be no return to pre-war structures. The “financial crisis of the Taxation State” became a major issue which, until late in the middle of the century, gave birth to numerous heated polemics (Rudolph Goldscheid and Joseph Schumpeter in 1917/1918, James O’Connor in 1973, Klaus-Martin Groth in 1978, etc.). From 1914-1915 until today, that is, for over eighty years, all the foundations of the State economy, of monetary theory, and economic and financial policy were subjected to violent convulsions. During this whole period, State credit grew almost without interruption, and theory could only react to this disconcerting process; first with amazement, then fearlessly and with equanimity. If, at the end of the First World War, the dangerous expansion of State finances beyond all real income was still considered to be a temporary phenomenon and a crisis to be overcome, Keynes and Keynesianism soon had to promote the new phenomena to the category of a new normal condition which, as Schumpeter had precociously observed, did not imply an immediate global collapse. It was finally concluded that a structural collapse induced by the expansion of the credit system would never occur.
The late 1970s again witnessed almost the same fears and the same kind of relief after the end of the emergency, when attention was once again focused on the limits not only of the U.S. debt with its global power of consumption, but also upon the issue of the “taxation State” in general (in Germany, the peak of the crisis was marked by the bitter end of the liberal-social democratic coalition). Since the big crash did not take place, everyone relaxed again and displayed a spirit of self-confidence not seen since the beginnings of the structural disproportion between (capital-producing) labor and money. The more autonomous the credit system became, the more that the former bad news and crisis were transformed into innocuous and, in principle, easily resolved “secondary contradictions”.24 A biased and historically blind argument, which often arises in this context, consists in the assertion that the problem is not even new; in every century since the Renaissance, and even in the famous Rome of antiquity, there has always been a very large State debt, without the latter ever leading to a collapse.
Those who employ these arguments do not know what they are talking about. It is not, in fact, possible, either in an absolute or a relative sense, to compare past examples with the developments witnessed since the First World War. The excessive indebtedness of the old States and dynasties was not structural in a 20th century sense; either they were linked to the (temporary) financing of wars or (in which case it was a more permanent feature) to the expenses of maintaining a Court, etc., but it never spread to social reproduction as such, becoming its very soul. The “law of the State’s growing share” (of domestic production), already announced in 1863 by Adolph Wagner, the German “academic socialist” and economist, and completely verified by current developments, indicates the new character of State indebtedness, under totally capitalist and scientific conditions of reproduction.25 A totally new situation thus arose: the problem of State Finance, and thus of fictitious capital in the form of State credit, no longer referred only to the State apparatus, but also to the fact that social life itself, organized in accordance with the commodity form, depends on the State’s finances.
At a very high level of the rationalization and concentration of capital, the overhead costs and infrastructure expenses of the value creation process begin to impinge on value creation itself, which becomes evident in a paradoxical inversion of the relation between State and Society: it is no longer Society which feeds the State, so that the latter assumes responsibility for “overhead costs”, but it is the State which, to the contrary, must feed Society with “fictitious capital”, so that the latter can maintain itself in its now-obsolete form of a system of commodity production. The process by which increasingly larger masses of future labor are mortgaged and “capitalized”, this vampiric feeding off the future, now includes the reproduction of capital as well as that of the State, and the two forms of credit-dependency are interwoven. Yet in this manner the monetary search for State credit enters into competition with the monetary search for private credit, definitively raising interest rates to new heights, independently of cyclic movements. In this way, the State, after having assumed control of financial and economic policy, forfeits that control whenever its insatiable search on the credit markets impedes a coherent policy (in the sense of reducing interest rates).This is one of the reasons why so-called prime rates, established by the central banks, lost much of their regulatory function; in fact, the impact of State demand on the financial markets is not modified by the official prime rate. Unlike private demand, the “debtor of last resort” (the State) is neither hindered nor stimulated by the official prime rate, as it is guided by completely different pressures and considerations, situated beyond the private monetary calculus.
Naturally, the imperious need for credit cannot allow money to preserve its hitherto prevailing form. The convertibility of money into something else, and therefore the real value-substance of monetary systems, had to fall to earth. The initial stages of the First World War had already shown that it was no longer possible to finance an industrialized war with a gold-backed currency; later developments demonstrated that the Fordist total mobilization and capitalization unleashed by the Second World War caused the increase of debt-financed State consumption to become irreversible even in civilian sectors. Although Keynes would still see State consumption as a temporary emergency measure to “set everything in motion”, and therefore as a primarily external intervention, it was actually—as became obvious after the Second World War—a long-lasting structural change, born of the system’s internal necessities. The Keynesian program that was supposed to confront the crisis (deficit spending) was transformed into a constantly stoked furnace to fire the mortgaged future. This, of course, rendered any return to the gold standard utterly impossible, since the now necessary masses of credit money could by no means correspond to an authentic value-substance of money.26
To put it another way: the desubstantialization of money itself has become a reality. From the superficial point of view of bourgeois economic theory—which never managed to understand the allegedly “philosophical” implications of the economic concept of value and which had long restricted itself, on the practical plane, to producing techniques of financial manipulation or formulating, on the theoretical plane, Platonic mathematical models—this was, naturally, no catastrophe. Thus, after Keynes, everyone was compelled to assert that gold was only a “barbarous metal”, without any contemporary monetary significance. No one, of course, asked whether monetary social mediation and the fetishistic self-movement of “value” were not themselves barbarous primitivisms and ultimately not unlike the “barbarous metal” in that regard. The desubstantialization of money signifies nothing less than its effective devalorization, and thus the loss of an essential function of money: that of being the means of storing value.
In other words: the function of storing value by means of money rests, after the loss of its convertibility into gold, only on convention and subjective acceptance, but no longer on an objective foundation. This means that the storing of value by means of money is indissolubly linked to times of economic prosperity, but that it could not endure a deeper crisis of reproduction. In this manner the system de-activated its own internal safety device. Here one can distinguish the fourth aspect of the disconnection between “labor” and “money”, without which the others would have truly been incapable of development: it is situated on the plane and the form of money itself. The logical consequence of this structural desubstantialization of money is necessarily structural inflation.
From this perspective, the reassuring declarations of the Keynesian economists (as well as those of many Marxists) are quite premature. The assertion that the accelerated price inflation which followed upon the explicit or veiled reduction of the precious metal content of money during the Late Middle Ages, or upon the suspension of the convertibility of paper money into gold or silver (such as the famous fiat paper money of the absolutist epoch in France, the vouchers of the French revolutionary government or the greenbacks of the American civil war) was only a consequence of the lack of financial experience or technique is not even a half-truth. In fact, the temporary devaluation of money in the past was not overcome by the customary use of desubstantialized money but, to the contrary, by the generalized imposition of the gold standard. Furthermore, the war economies of both world wars were followed by drastic monetary devaluations, which obviously began with a defeated Germany: in 1923 with hyperinflation and in 1945-1948 with a deflationary shock (invalidation of depositors’ claims and paper money).
It was also during the era of Keynesian credit expansion (above all of State credit), after the Second World War, when inflation became ubiquitous: and it was just during that period that inflation was transformed from a transitory oscillation to a permanent structural condition. In this permanent structural inflation—which could occasionally be ameliorated with monetary policy interventions by the central banks and legislation, but never entirely eliminated—the hidden mass of unproductive labor rises to the monetary surface and becomes a factor in the calculations of economic subjects, as well as in the constant growth of wage costs and interest payments on the debts of business, the State and consumers. If this structural inflation takes place on a relatively subdued level, at least in the OECD countries, this is due, on the one hand, to the fact that the whole economy “is advancing” (although a profound recessive phenomenon can already be perceived), and on the other hand to the partial export of the problem to the less competitive regions of the world market.27
Thanks to their advantage with regard to the productivity and concentration of capital, the industrial heartland was long able to absorb the greater part of global surplus value and to maintain its access to international credit outside its respective national financial markets; at the same time, the peripheral and historically-backward countries, in order to uphold a minimal reproduction, were increasingly compelled to resort to State-created money without substance, that is, to inflated paper money. Ultimately, due to the globalization process beginning in the 1980s, the old capitalist heartland also found itself approaching closer to this situation. Temporary finance by way of printing currency, typical of the war economy during the world wars, is not only being repeated today throughout a large part of the world, but has also become a permanent condition of social reproduction as such. This phenomenon must be considered to be the fifth aspect of the disconnection between “labor” and money, since in this case desubstantialized money no longer even passes through the regular financial markets; instead, social reproduction under the commodity form is directly fed with masses of money created from nothing, based on the simple decision of the State.
In Latin America, Africa, many parts of Asia, and even Eastern Europe, we are confronted by a totally new phenomenon of hyperinflationary cycles, that is, an economic movement which no longer follows the “regular” cycle of capital accumulation, but the rhythms of currency printing runs, in an uninterrupted chain of devaluation and recomposition of money. In reality, it is no exaggeration today to speak of the global collapse of the money economy (and thus of the modern “society of labor” and the market system that goes with it). Only the old Eurocentrism—which in this respect, curiously, is the subject of little criticism—prevents an adequate assessment of real global developments. While the West finds itself for now in the low level phase of structural inflation of the post-war era, the overwhelming majority of humanity must now coexist with double- or triple-digit inflation, or with hyperinflation at the rate of between 1,000 and 1,000,000 percent. Meanwhile, the per capita global rate of inflation must now approach a triple-digit figure. This fact proves that global unproductive labor has crossed a critical historical threshold, in the absolute as much as in the relative sense, and that our scientifically advanced world society has outgrown the forms of the system of commodity production.
7. From Fordist Expansion to Microelectronic Revolution
During the period between the end of the First World War and the late 1970s, the structural crisis of “overhead costs” generalized by unproductive labor, state financing and inflation appeared to be only a secondary problem, insofar as it was limited to temporary or low-level structural crises. The cause of this apparent overcoming of that problem, which made the epoch hardly seem to be the period of incubation of the true and absolute systemic disaster, must be sought in the characteristics of the Fordist expansion. The expansion of new industries, with automobile production leading the way—itself a result of the First World War—concealed for more than half a century the structural crisis born from the contemporaneous expansion of unproductive labor.
At this point we are confronted by a paradoxical conjuncture, since there was a simultaneous expansion of productive and unproductive labor. On the one hand, Fordism mobilized new masses of productive labor on a hitherto inconceivable scale; on the other hand, this same development was only possible with the sudden expansion of social logistics, of the infrastructure, and so on; that is, with the increase of unproductive labor. The disproportionate expansion of these two opposed factors at times made the problem of structural crisis the order of the day (above all on the level of State finances); but ultimately the expansion of unproductive labor could still be “fed” over the long term with the simultaneous expansion of productive labor in Fordist industries, which is to say that the absolute growth of the real substance of value compensated for the absolute and relative growth of unproductive sectors.
In phenomenological terms, the Fordist expansion of productive labor and of the real substance of value can be described in terms of various superimposed categories. The domestic and foreign expansion of capital valorization, and thus of commercial rationality, opened up new fields for the real production of surplus value. As for the foreign dimension, this expansion was translated into the ongoing penetration of the capitalist form of reproduction—already mentioned in The Communist Manifesto—into previously non-capitalist regions of the Earth, as well as into the export of capital associated with that development (an important element in Lenin’s theory, although conceived in a reductive form); domestically, the same effect was obtained with the transformation of previously non-capitalist forms of reproduction (farmers, artisans and subsistence economy) into sectors of capital valorization, made possible by new Fordist methods. Contrary to what Rosa Luxemburg believed, the transformation of former “third persons” into wage laborers for capitalism initially increased surplus value creation on the plane of production, instead of representing a limit on the plane of the market and therefore on that of realization. In fact, along with the expansion of real value creation, more real capitalist monetary profits were generated.
But the true expansion was due to the combination of new industries and new mass needs. The mere expansion into already existing sectors of production would never have made the Fordist boom possible, particularly after the Second World War. With regard to basic energy sources, fossil fuels, the step from coal-burning steam engines to gasoline-powered internal combustion engines, along with Fordist rationalization (the “scientific organization of labor”, the assembly line), made a great leap forward in social development possible, which made products which had been limited, prior to the First World War, to society’s higher social layers available for mass consumption. New products like radio and television were introduced, which were mass-produced for mass-consumption from the very beginning. Fordist mass products, all directly or indirectly created on the basis of petroleum, led to Fordist capitalism, with the latter’s monstrous energy consumption, which approaches madness, and after the Second World War, to democracy based upon energy consumption, which, despite its historically ephemeral nature, is still viewed today as normal in the heartland of the OECD (and also among the middle classes throughout the world).
The decisive factor, however, for reproduction under the commodity form, is the expansion of the real substance of value and of its social forms of mediation, concealed behind the phenomenology of Fordism. This is where the famous “tendency of the falling rate of profit” is obviously relevant, which Marxist debate, now almost forgotten, ponders in vain. The “organic composition of capital” (Marx), which historically grew with growing rationalization and which, in capitalist calculations, appears as an increasing concentration of capital, that is, as an increase in capital required per employee, points towards a movement in the opposite direction within the value creation process (and thus within that of surplus value production).
The rapid growth of the application of science, technology and rationalization to production became necessary only after the expansion of “absolute surplus value” by way of the unlimited extension of the working day and the unlimited expenditure of labor power had, in the course of the 19th century, encountered their natural and social limits (the workers movement, State interventions). Instead of “absolute surplus value” as the principle means of accumulation, “relative surplus value” became more important, that is, the reduction of the costs of the reproduction of labor power—a reduction that made means of subsistence cheaper, which, in turn was made possible by the application of the natural sciences; Fordism only accelerated and generalized this tendency.28
The production of relative surplus value, however, leads to a logical contradiction. It increases the share of surplus value per unit of labor power, but at the same time, due to the effects of rationalization produced by the same development, it can employ a diminishing amount of labor power per unit of capital (which causes, as we have seen, the preliminary start-up costs per employee to rise; in other words, it increases the concentration of capital or the share of fixed capital in the “organic composition”). This second effect of this counter-tendency compensates for the first effect over the long term. This means that the increase in profit together with that of relative surplus value per unit of labor power are obtained at the price of a concomitant fall of the rate of profit for each quantity of capital invested. Such an effect can only be compensated for if the absolute mass of (productive!) labor power utilized grows, and therefore only if the absolute mass of profit grows together with the absolute mass of surplus value; but this is only possible with an expansion of the mode of production as such. Such an expansion was effectively achieved to a certain extent by the expansion of the Fordist mode of production.
But there was already a serious problem in the dynamic of the Fordist expansion of the absolute mass of surplus value/profit:29 such an expansion was only possible by way of the concomitant expansion of the infrastructural conditions, which are unproductive in capitalist terms. An increasingly greater part of the new Fordist industrial products were consumed by unproductive workers, which presupposes a fundamental alteration of the system of accumulation. For precisely this reason, Keynesian deficit spending, from its very beginning, was not a simple measure of preparation or transition, but the structural precondition and regulatory political instrument of the Fordist expansion, which only began on a global scale after the Second World War. This means, however, that the Fordist expansion, with its “economic miracle”, was no longer in principle a great autonomous secular advance for capital accumulation; instead, it had to be fed by the mortgaging of future masses of value. What was truly “autonomous” in the Fordist era and its “model of accumulation” was the regular payment of interest on a constantly growing mass of debt, by means of an effective expansion of the absolute mass of profit. Nonetheless, this expansion of the absolute mass of profit was now less than the concomitant and inevitable expansion of unproductive “overhead costs” of a market system in the process of its totalization.
It therefore follows that the Fordist expansion could only be a circumscribed historical process from its very beginning. Furthermore, since capitalism and its commercial rationality only constituted one segment of social reproduction at the end of the First World War, the Fordist era of accumulation must be considered as an unrepeatable transitional stage in the internal history of capitalism, instead of an abstract “structural condition”. Capitalism is a historical process which generalizes its own criteria, which must continue at always higher levels, without ever being able to reverse course. It is therefore erroneous to conceive of its history as a simple succession of structures, without taking account of the self-destructive dynamic of the process as a whole. One could even say: to the extent that capitalism “triumphs”, becoming the ubiquitous form of social reproduction (and ultimately of world society)—the latter phenomenon introduced only by Fordism—it also demonstrates its logical impossibility. Its absolute victory must thus historically coincide with its absolute limit, despite the fact that the Marxist left itself does not want to hear any talk of such a thing, because it never undertook an in-depth analysis of the problem of the sectors of reproduction (nor, consequently, of the problem of the “tertiary revolution”) having increasingly convinced itself of the capitalist mode of production’s immanent capacity for self-perpetuation.30
The expansion of the capitalist mode of production, as a prerequisite for the Fordist expansion of the mass of profit and thus of the compensation for the decline in the rate of profit, implies the necessity of a permanent expansion of production and therefore also of markets. But this only works if investments for new product development and for expansion are large enough to outweigh the investments destined for the development of new procedures and rationalization: in fact, this is the only way that a mass of industrial labor power, growing in absolute terms, was employed, and growing money profits “based on production” were created, despite rationalization. Only to the degree that this relation could be maintained, at least up to a point, was it possible to keep the “snowballing” Fordist expansion alive, despite the presence of a disproportionate share of unproductive sectors, and to continue paying the interest on the simultaneously growing mountain of debt with a mass of real value.
This decisive distinction is absent from most discussions, both Marxist as well as bourgeois, concerning “development theory”: the “growth of productivity” or the increase of productivity is almost always directly identified with the growth of markets, the creation of value and then with capital accumulation.31 This is only true, however, in quite particular and delicately balanced conditions, i.e., as long as the increase in productivity is less than the expansion of domestic and foreign markets that the former made possible. The sharp rise of productivity in the automotive industry organized by Henry Ford made each automobile embody much less labor power; but the consequent transformation of the automobile into a product of mass consumption developed automotive production in such a way that, taken as a whole, despite rationalization and the increase of productivity, much more labor power could be productively employed in the industry, thus increasing its real production of value. It is obvious, however, that this condition does not arise automatically and that it cannot last ad infinitum. A point must inevitably be reached where the relation is turned upside down: faced with relatively saturated markets, new advances in productivity growth have the opposite effect, that is, they overtake the expansion of labor and commodity markets which they made possible.
The whole compensatory mechanism ceased to function as soon as the impetus of the Fordist expansion waned. With respect to foreign expansion, this critical point was already reached after the Second World War; the statistics for capital exports do not show a positive balance, even when they are not negative; it is always less a question of the growth of production and more of the simple transfer of production for cost-saving reasons. Today, thanks to the globalization of production this process has entered its mature phase (which could already be seen coming long ago, due to the fact that world trade grew faster than world production). In this sense, Rosa Luxemburg’s crisis theory proved (and still proves) to be substantially correct, since the compensatory character of foreign expansion diminishes and the immediate character of crisis once again becomes visible as the limit of this mode of production.
Meanwhile, the collapse of the compensatory mechanism with regard to domestic expansion was a crucial development, which reached a critical phase with the microelectronics revolution. At the end of the 1960s, the Fordist expansion ran out of steam within the heartland of the most industrially advanced countries. Agriculture, small-scale trade and commodity production, etc., were by that time completely integrated into commercial rationality and Fordistically industrialized; furthermore, Fordist product innovation as well as markets for mass consumption, no longer such novelties, had reached the saturation point. From that point on, innovations (for example, the replacement of the vinyl disc by the CD and new products of that kind) could no longer sustain significant advances on the plane of real value creation; the old Fordist products (automobiles, home appliances, audio-visual equipment, etc.) would only be replaced (this replacement was to be accelerated by “planned obsolescence”, that is, by materials designed to wear out quickly and therefore of a lower quality) and there would be no more vast new markets of consumers.
The total collapse of the stagnating, fully developed Fordism could still be postponed for some time by the expansion of the capital goods industry. Domestically, however, these investments were now increasingly undertaken for rationalization, which began to undermine the real potential for value creation. Externally, it was the backward Fordists in the capitalist periphery and the Third World who still offered some additional potential for exports. But it was then demonstrated that the Fordist expansion could not be generalized, but remained restricted to a few countries. Both the start-up capital costs as well as the costs of the necessary social infrastructure rose to such astronomical levels after the Second World War that they became prohibitive for the overwhelming majority of the world’s countries by the beginning of the 1970s. Fordist expansion was thus nipped in the bud or cut off halfway in its development in many cases. The export of privately owned capital goods or elements for infrastructure had to be financed in advance with loans, and the productive process thereby engendered could not even pay the interest on these loans. The result was the famous Third World Debt Crisis, which persists to this day and is now approaching 1.8 trillion dollars. In many cases the financed projects were totally senseless from the start (dams, nuclear power plants, etc.), exclusively the fruit of connivance between corrupt politicians and international corporations (like Siemens, for example) for the purpose of obtaining easy profits.32
The generally catastrophic stagnation of Fordist expansion in the capitalist periphery also heralds the final crisis in the heartland. The oil crisis of the 1970s already proved that the stagnating real value creation of Fordist industries could ill afford any additional costs. A movement in the opposite direction then began, whose most visible phenomenon is mass structural unemployment in all Fordist sectors; unemployment which grows from cycle to cycle. Since the beginning of the 1980s, the driving force of this process was the microelectronic revolution, which made the core of industrial employees melt away like snow under the sun. In West Germany alone, industrial employment fell by several million in successive waves from 1980 to 1995. The same holds true for the other industrialized countries. This decrease was not compensated or much less over-compensated for by the Fordist expansion in Asia and elsewhere, as a certain Marxist-inspired discourse, utterly naïve regarding accumulation theory, would have us believe.33 The mass of data on industrial expansion in India, China and the “Little Tigers” of Southeast Asia, which is impressive at first glance, does not, however, take two things into account. First, in the case of big countries like China, this expansion mostly involves the old model of ghost-industries (from the point of view of the world market) subsidized by the State, a model which is becoming more precarious from year to year and which cannot possibly be maintained in the case of a growing opening to the world market, imposed by the new industrialization devoted to exports. In the final accounting, significantly fewer additional jobs are created in export-oriented eastern industrial sectors than are lost in the course of the same process in the old State industries.
Secondly, creating more industrial jobs in a relatively few backward Fordist countries does not by any means imply more value creation, whose prevailing standards, with increasing globalization, are dictated by the level of productivity of the world market, that is, by the most highly developed industrial systems. Since such levels of enterprise and infrastructural costs are inaccessible even for the Asian newcomers, the latter try to compensate for their particular disadvantage primarily by means of low wages, poor working conditions and untrammeled environmental destruction. This is unsustainable in the long run even by capitalist standards, even though it could be partially compensated for in the short term by the industrial countries’ superiority in terms of available capital. Under the conditions imposed by globalization, it is always the same western corporations which profit from the disparity in wages and rights, by flexible investments throughout the world. But all of this takes place only on the plane of the individual businesses involved and on the surface of the market. Real value creation on the part of global capital is in no way increased. Measured against the global standard of productivity, it is quite possible that 100 or 1,000 low-paid workers with a relatively small fixed capital produce less value than one worker provided with high technology and a large fixed capital in the same sector. What is presented as being advantageous for the particular planning process of a particular capital—which must by its very nature be blind to the valorization process as a whole—has nothing to do with substantial value creation on the plane of society (today, of global society).34 The problem of the real substance of value will obviously become apparent on the surface of the market, resulting in some apparently external (and unexpected) limitations on business calculations.
Briefly, one can say that with the microelectronic revolution starting in the early 1980s, whose potential is far from being exhausted, not only the Fordist Expansion but the expansion of productive labor and therefore real value creation also stagnated; productive labor has since been in retreat on a global scale. This means that the historical compensation mechanism, which sustained the parallel expansion of capitalistically unproductive labor, no longer exists. The basis of capitalist reproduction has truly reached its absolute limit, although its collapse (in the fullest sense of the word) has not yet taken place on the formal phenomenological plane. But such an event would no longer merely take the form of an accelerated decrease in the rate of profit. This expression only demonstrates, in fact, the mode of appearance of the relative limit of capitalist reproduction in the conditions of a still-growing absolute mass of profit (expansion of the mode of production).35 With regard to this point, Rosa Luxemburg is once again correct in her Anti-Critique, even if this relative limitation will not endure “until the sun burns out”. The absolute limit will not appear in the form of a simple linear acceleration of the “tendential fall”, in such a way that capitalism would be abandoned in a fit of resignation by its management due to a lack of profitability. Instead, once its absolute limit is reached, the absolute accumulation of “value” in general also comes to a halt. In substantive terms, the rate of profit does not “fall”, except by totally ceasing to exist, through the disappearance of additional new masses of value. The concept becomes meaningless.36 At the same time, the accumulation process will still formally continue for a certain period of time (and thus formally obtain profits), but now without any connection to the real substance of value (which is in ruins), guided solely by the now-uncontrolled creation of “fictitious capital” and money without any substance, in their various phenomenal forms.
In the 1980s, capitalist institutions did not fail to react to this development. On the one hand, in the wake of the neo-liberal ideological wave that successfully swept the world, financial markets were “deregulated” (or “liberated” from all remaining safety mechanisms) for the purpose of creating sufficient global liquidity for spectral accumulation without any real basis. On the other hand, an offensive against State consumption was launched (above all against the Social State), for the purpose of shrinking the State’s share and to return to allegedly “normal” conditions; in this case monetarism must be considered, so to speak, as a kind of shadowy premonition and instinctive reaction on the part of capitalist institutions. The hope for a return to “normal” capital accumulation is a vain hope, however, since a segment of private capital of the same dimension never arose to replace State consumption; there was only a substantial empty space in reproduction reflecting the fact that a large part of capitalist reproduction has long depended upon the “fictitious capital” of State consumption and cannot survive with a truly “lean” State. It is for this reason that the “Reaganomics” or “Thatcherite” offensives against State consumption failed, even in the United States and Great Britain. The crux of this great crisis, which is also becoming greater than ever, is inevitably manifested on the plane of the deregulated financial markets.
8. Global Deficit Structures and the Short Summer of Casino Capitalism
For the remarkably short memory of men socialized by the market (including, for many years now, the theoreticians of the left and the former left), all of this may seem like a fantasy, because they will only believe in the absolute crisis when they have to scrounge for food in dumpsters or when they are menaced by artillery fire; but since they are experts in self-repression, maybe not even that would convince them. ‘Where is the collapse around here?’, they ask with a more or less forced smile. True, it is a question of historical processes; but in a historical context they are quite short-lived processes, despite the fact that they may seem long lasting for a consciousness formed by the market and politics. If the Siberian summer of the post-war Fordist boom was already brief, the subsequent epoch of “casino capitalism” will be briefer still. After the mid-1980s, fictitious accumulation was transformed into a purely speculative boom, which persisted at a high level in the 1990s, although the “bursting of the bubble” had already been announced on several occasions.
What would be the consequences of the bursting of the global bubble? Naïve souls believe they will be minor or that there will be none at all, and some even quote Marx himself, who in fact wrote: “To the extent that the depreciation or increase in value of this paper is independent of the movement of value of the actual capital that it represents, the wealth of the nation is just as great before as after its depreciation or increase in value.” (Capital, Vol. 3, Chapter 29—“The Component Parts of Bank Capital”) But this is obviously true only if “fictitious capital” moves exclusively in the financial and credit superstructure, without any feedback in real reproduction. For this reason, Marx already expressed certain reservations: “Unless this depreciation reflected an actual stoppage of production and of traffic on canals and railways, or a suspension of already initiated enterprises, or squandering capital in positively worthless ventures, the nation did not grow one cent poorer by the bursting of this soap bubble of nominal money-capital.” (Ibid.)
But how wealthy would this “nation” really be, if it either enriched itself “on property claims” and fictitiously financed production and profits, or if on the contrary the collapse only unfolds in the financial Olympus, impoverishing only the speculators—this is truly the question. Already in Marx’s time, the devaluation shocks of “fictitious capital” did not fail to produce more or less grave harm to industrial production; for example, the great crash affecting railroad speculation in Germany during the 1870s was followed by a period of stagnation which lasted almost 20 years.37 But in that century, when capitalism was merely one segment of society and when its reproduction was much less dependent on the credit system, the movements of “fictitious capital” were in fact relatively limited, both in their volume as well as in their impact on real production. Marx himself, however, probably could not even imagine the current situation. In reality, after the Fordist expansion, the relation was turned upside down: real production became the appendage of a gigantic bubble of “fictitious capital” in its various phenomenal forms and its various stages of crystallization, instead of producing this bubble as a mere external emanation.
What exactly is going on here? State credit and speculative money capital are interconnected in many ways, and a dramatic devaluation of the financial superstructure would bring ruin in its wake, one way or another, to the State’s financial claims, thereby destroying the State’s capacity to finance its operations. In this case, subsidies for entire sectors of industry and agriculture, now already ruined in many countries of the Third World, would also have to come to an end in other countries: in Russia, in India and in China, as well as in the countries of the OECD itself. This mass of subsidies, still important on a global scale, is really only a “squandering of capital on absolutely worthless” enterprises from the perspective of the market; and it is clear that this factor has a much greater weight today than it did in Marx’s time, when it was almost insignificant or was restricted to a relatively small part of private investments.
Today, private speculative capital, in its fantastic derivative creations, far exceeds State credit. This means that, since the inception of casino capitalism, an increasing mass of Fordist money capital which now can no longer be profitably invested in real activities flows into the financial superstructure (the “overaccumulation” of Fordist industries after the 1970s), and there, in its fictitious accumulation (M-M’), it joins an unprecedented mass of fictitious values, which is entered on the books and treated as real monetary profit. Of course, a certain part of this fictitious commercial capital returns, directly or by way of borrowing (a fact which obviously further inflates the bubble), to reproduction as an apparently real effective demand. In this way, processes which no longer possess any substantial basis, and which must be interrupted in the case of a devaluation crisis, are nourished. This factor is also much more important today than in Marx’s time.
That part of the total mass of “fictitious capital” which has an impact on real production in the form of a demand without any real substance of value has until the present time been minimal, unlike what takes place with State consumption. Should the entire mountain of fictitious commercial values be set into motion as real effective demand, this would lead to an immediate situation of hyperinflation even in the West.38 The main part of fictitious value, however, which is not currently manifested as demand on real production, but which remains in the speculative superstructure, can indirectly serve as a basis for vast sectors of apparently productive real production. The balance sheets provide the solution to this enigma. One must never forget that a balance sheet is always a very intricate thing, which must first be deciphered. Ultimately, for a positive balance sheet, or at least one that is balanced, it is always necessary to have an effective balance (“effective” in the sense of assets in any form), if one does not want to descend to pure and simple falsification (the fact that the latter is also rapidly increasing is one more indicator of the proximity of the limit of fictitious accumulation). But where this “balance” comes from and how it is accumulated is another question entirely.
How is the transformation from real industrial capitalism to speculative casino capitalism manifested on the balance sheets? The answer is: by the predominance, in terms of profits and savings, of profits derived from the financial superstructure (M-M’) over the profits derived from real industrial accumulation (M-C-M’). In other words: the decisive factor is no longer real production and its results on the market, but guileful accounting which is capable of balancing the balance sheet by means of speculative transactions. Or expressed yet another way: today, the defense of market share is only possible partially or totally by means of speculative profits. This is obviously not always the case, but the equilibrating weight which “fictitious capital” possesses in society as a whole is nonetheless decisive. Even if it does not appear as a real demand on investments or consumption, these assets can sustain a significant portion of real reproduction and keep enterprises, production and jobs alive, simply by achieving a balance on the balance sheet.
If fictitious capital were to suffer a large-scale devaluation, this would rapidly lead to the bankruptcy of a surprising number of apparently “thriving” enterprises.
These are not just hypotheses, as the scandals, mega-bankruptcies and suddenly necessary “bailouts” of the last few years prove, and they are only the tip of the iceberg. Whether one looks at the Frankfort Metallgesellschaft, the multi-billion dollar bankruptcy of the construction mogul, Schneider, or the bankruptcy of the old London bank, Barings, in each case there was an apparently immediate transition from “being in the black” to insolvency, because their accountants engaged in speculative ventures which proved to be ill-advised in the spheres of real property, currency, futures, and other derivative forms of speculation. The banks become the center, no longer of real capitalist credit transactions, but of global speculation; and the accusation voiced by Schneider, the outlaw and former star of German businessmen, seems plausible enough, who implies that the Deutsche Bank purposefully and strenuously favored such a dangerous diversion of its business. The case of Barings is also symptomatic. On February 4, 1995, a puff-piece in the Frankfurter Allgemeine Zeitung praised the bank as an exceptional business and “one of the strongest in Asia”, with a 54% increase in profits in 1994. This article quoted the words of its chief executive, Peter Baring: “We don’t need to follow the trend. We know how to think for the long term.” Truly an example to prove the good health of “capital” for the leftist “guardians” of capitalism. Less than a week later, Barings declared bankruptcy, due to unlucky speculation conducted on the Tokyo Stock Exchange by a 29-year old broker. Such a result would not have been possible were capitalism, in accordance with its own criteria, a “real” capitalism, in which the banking system would actually serve to finance real production for the market.
But it is not just on behalf of the banks and accounting departments of corporations that white-collar swindlers place bets in the global casino. Pension funds, public treasuries, municipal treasurers from Tokyo to the ends of the earth, and the funds of non-governmental parties, associations and groups are also placing ever more risky bets; in part compelled by necessity, since real profits are no longer sufficient. Their situation is similar to that of corporate balance sheets: more or less disastrous financial situations are “adjusted” by speculating in derivatives. In some cases it was the financial officers who were unable to resist the temptation and wanted to do something good for their institutions, by doing something that seemed so simple, with high risk bets, by creating vast financial reserves from scratch. That this scheme can fail was experienced, for example, in 1994 by a treasurer for the German Social Democratic Party (SPD) who, with the best intentions, gambled one of the Party’s regional funds on the Stock Exchange. When, also in 1994, Orange County (California) declared bankruptcy thanks to the unlucky speculations of its finance department, the financial officers of the federal German states and their administrative spokespersons rushed to assure us that nothing like that could happen in Germany. An assertion worthy of very little credit, since at just that moment it was announced that finance departments would be allowed to make “investments” in derivatives.
In all the forms of fictitious capital considered up to this point, and in their repercussions on production, the general condition of global “structural over-accumulation” is manifested which more or less obviously gave birth, in all national economies, including those on the verge of collapse, to “casino capitalism”, lacking a real basis in their respective national currencies.39 As long as the absurd global creation of liquidity by “fictitious capital” continues to expand (and now it is expanding with more vigor than ever), devaluation catastrophes can be limited to significant isolated cases, which are generalized only in conditions of unavoidable contraction. But the precise magnitude of the problem is unknown, as can be seen from the estimates of financial analysts, which assume only for the new speculation-based derivatives a volume of 10 to 50 trillion dollars. The disparity can be explained by the fact that no one has a view of the whole and that the worldwide abolition of safeguards also annihilated any statistical controls as well. It is thus clear that such vast sums make the “miserable” 1.8 trillion dollar Third World Debt seem almost insignificant. Only by means of this measureless creation of liquidity, not guaranteed by the real economy, was it possible to declare the various debt crises resolved—“resolved” by the infinite accumulation of new explosive materials (while almost no one speaks any more about the consequences of the debt crisis, which continues to expand).
During the 1980s, however, “casino capitalism” not only became a structural condition within isolated national economies, but this structure was internationalized on a higher level; not only as the globalization of speculative financial markets, but also as the creation of international circuits of deficits between the various national economies which globalization is dissolving. This deficit circuit can occur on two levels, and in both cases the real economy is fed with money capital introduced from the outside. On the one hand, the public debt is no longer financed with domestic savings (or with domestic inflation of paper money), but with foreign money-capital; the same thing happens on the level of corporate debt. The Third World Debt Crisis is only a special, now quite fragile case of this foreign indebtedness. The truly urgent aspect of this issue is the fact that the continuous recourse to foreign capital must be paid for with foreign currency, that is, only by way of constant export surpluses which in turn lead to deficits in other sectors.40 This foreign indebtedness has the following effect upon the real economy: the borrowed money reappears somewhere inside the borrowing country as State or private demand, so as to be later evaporated in consumption or squandered in “investments” (arms, loans that will never be repaid, subsidies to unprofitable sectors, etc.).
On the other hand, it is a way to finance negative trade balances by means of debt, that is, to ensure that the more or less elevated import surpluses will be paid for not with domestic savings, but with foreign money capital. In reality, such a course of action represents a logical impossibility from the economic point of view: either one takes borrowed money from outside, and then it is necessary to pay for it with export surpluses, or there are import surpluses, and then one must pay for them with domestic financial reserves and deposits in foreign currency previously obtained; these two things are mutually exclusive. If, however, foreign debt and negative trade balance coincide, it is from the start a matter of an unstable project within the context of “fictitious capital” and/or the result of political strategies which try to bend the rules to escape from the economic system and its laws. In any case, this economic impossibility cannot be sustained for very long.
This is naturally not the first time that deficits have been registered in both trade and capital accounts, but in this case what was stated above concerning State debt and credit expansion generally also holds true: in past epochs, deficits were relatively modest, not being accumulated over very long periods and also being subject to rapid repayment (which was also facilitated by the simultaneous capitalist expansion). Today, to the contrary, we are confronted not only by much greater dimensions of foreign debt, but also with veritable structurally crystallized deficit circuits, which have been growing for 10 or 20 years and which are no longer subsumed under real economic expansion, but are limited to barely simulating it.
There are various deficit circuits dispersed throughout the planet, but the two most important are the European and the Asian. In Europe, it is West German finance capital, accumulated during the Fordist Expansion after the Second World War, which is at the center of deficit circuits at all levels. First, the countries of the European Union, all more or less operating at a deficit in their exchanges with Germany, borrow money capital from the latter, at market rates of interest; second, by way of the EU’s various compensation funds (to which Germany contributes the lion’s share), the weakest national economies also continuously receive structural aid funds; third, Germany has to loan increasing masses of money capital, much of it constituting veritable grants because it will never be repaid, to the countries of Eastern Europe and above all to Russia (which brandishes the dangers of its nuclear arsenal falling into the wrong hands) in order to delay the inevitable Second Collapse, which this time will be strictly attributable to the market economy; fourth, a transfer of liquid capital to the former East Germany became necessary, on the order of 150 to 200 billion marks per year, in order to artificially resuscitate the eastern economy, clinically dead after unification, for an indeterminate period of time.41 The financial superstructure of Germany, which according to current opinion is still a relatively responsible country in capitalist terms, is much more decayed than might appear at first sight. Not only thanks to its domestic structure, which in Germany, too, is now characterized by “casino capitalism”, but also due to its solid integration into the complex of European deficit circuits.
However, the most extreme rashness and lack of economic proportionality are probably to be found in the Pacific deficit circuit, which includes East Asia and the United States. Here, we face a particularly delicate system of machinery. From the point of view of Japan and the various “Little Tigers”, the Pacific deficit circuit appears as follows: first, the specific constitution of the Japanese financial markets and of their paternalistic and largely informal relation to export industries made an unequalled financial profit possible during the 1980s. Japan financed all of the re-tooling (which would otherwise have been impossible) of its high-technology export industries almost without spending any money at all (at least in appearance): it was the only industrialized country which transformed a large part of its gigantic quantity of fictitious value accrued over the era of speculation into real demand for extremely costly capital goods; there was effectively an immediate feedback of “fictitious capital” towards real production, and this took place without an equally immediate inflationary effect on the domestic Japanese economy, since this feedback assumed the form of an export flow directed primarily at the United States.42
The “Little Tigers” precariously adapted themselves to the steamroller of Japanese exports. Obviously, none of the “Little Tigers” could finance their export-oriented industrialization with domestic savings, but could only do so by means of a growing indebtedness to Japan. And it is also in Japan, where money was loaned and is being loaned for necessary investments, a large part of the capital goods are purchased (to a certain degree, it was directly a matter of capital exports by Japanese firms and to a much lesser degree by western corporations). One can, in a sense, therefore speak of an inter-Asian deficit circuit: Japan loans money to the “Little Tigers” so the latter can buy capital goods in Japan. This only works because these countries, as well as Japan itself, export as much as possible, and above all to the United States, which plays the role of a sponge. One can recognize the disastrous nature of this dynamic in the fact that the “Little Tigers” have very positive trade balances with Europe (although they are now shrinking) and the United States at the same time that their trade and capital account balances are extremely negative in relation to Japan (and for the most part in absolute terms!).
The small inter-Asian deficit circuit feeds in turn upon the big Pacific deficit circuit, which is manifested on the U.S. side. Under the pressure of the world power’s unproductive consumption, which is far higher than the other Fordist industrialized countries, the United States’ relative economic strength, which dominated all sectors without any competition after the Second World War, plainly receded after the 1960s. Its industrial base was almost totally liquidated, more radically than elsewhere: not so much in the form of a collapse of industrial employment brought on by technological rationalization, but as the total abandonment of entire sectors, whose products were replaced by imports.43 And because its consumption-oriented citizenry’s rate of savings simultaneously decreased to the point where today, it is one of the lowest in the world, it was necessary, in addition to running up the exorbitant domestic debt, to draw upon foreign money capital on an increasing scale.44
The United States has succeeded in and continues to succeed at—although it should be economically impossible—going deeply into debt to foreign capital while simultaneously having very high trade deficits, for the simple reason that the dollar played and to some extent still plays (in a diluted form) the role of world money. This means that the U.S. can pay off its foreign debt with its own currency, instead of first having to obtain foreign currency by generating a trade surplus in order to pay the interest on and amortize its foreign debt. In reality, it makes its foreign creditors pay part of its debt by means of raising and lowering the dollar’s exchange rate, although this method appears to have now lost a great deal of its efficacy and will sooner or later lead to a generalized flight from the dollar, which would result in a drastic collapse of the currency’s value and a world trade crisis. The weakness of the dollar and the crisis of the international monetary system over the last two years clearly demonstrate that the trend points in this direction.
Because of this duality formed by the deficit of its foreign debt and its negative balance of trade, the United States has also become over the last 15 years the two-sided sponge of the world economy: one side sucks foreign money capital, and the other pays for its gigantic import surplus with that borrowed money, sucking up an enormous mass of foreign industrial products. This grotesque disproportion is concentrated almost entirely in the Pacific region. All the palaver about the alleged “Pacific Century” which awaits us is melting into thin air, since it is founded upon the deficit circuit between East Asia and the United States. The Japanese loan money to the U.S. in order to realize trade surpluses in their exchanges with the U.S., and they use these trade surpluses to obtain the funds which they can loan to the U.S. It is obvious that this paradoxical economic situation, in which all of Southeast Asia now participates, will have to fall to Earth within a few years.
Export-oriented Asian industrialization, based upon low wages and the reckless exploitation of every resource, barely stimulates a reduced additional creation of value and condemns nationalized State industries, which flourished during the now extinct “Late Modernization”, to death; in addition, the millions of jobs which are thus created depend on the foreign deficit of the United States. Export-oriented Asian industrialization, besides being too small in absolute terms to produce another Fordist Expansion, is also, and has been from its inception, hardly credit-worthy from the perspective of its own capitalist parameters. It is only a simulated Fordist Expansion, by means of the Pacific deficit mega-circuit; unable to repeat the pattern of Western development, it is plunging instead towards an unexpected catastrophe.
9. The Road to Devaluation Shock
If we look for true, actual surplus value production and the corresponding need to augment it, we must necessarily conclude that the heart of world capital has already stopped beating. It has for at least a decade done nothing but simulate the accumulation of capital with monetary expedients, so that capital depends on the artificial pump of fictitious processes of value creation: on the plane of the national economy, with State indebtedness and “casino capitalism”; on the plane of the world economy, with the extension of “casino capitalism” to international financial markets, which have become uncontrollable, and with the great internationalized deficit circuits. Sooner or later, it is logical to expect capitalist reproduction to be led back to its real basis, by way of a violent contraction of insubstantial masses of money; at that time the fact that capitalism is truly a walking corpse will be confirmed. In other words: fictitious liquidity, created without any basis in capital production, will be devalued in one way or another, sooner or later.
The details of this devaluation process cannot be foreseen; whether it will take place at different times and at various levels or if it will embrace all levels at the same time; whether it will develop gradually or if it will assume the form of a great crash of global devaluation, by a monetary atomic explosion, so to speak. The required “critical mass” has long been accumulated, and the spark that will trigger this process could detonate at any moment, through economic or political crises. There can be no doubt, however, that the Pacific deficit circuit is one of its foreseeable causes, and that the Japanese financial market is one of its weak points.45 The fact that Japan was, during the 1980s, the only country to use its gigantic speculative bubble to make real and equally gigantic investments, conferred a particular form of development upon its “casino capitalism”.
While the U.S. stock market crash of 1987 and the collapse of real estate speculation in the late 1980s were mere bumps on the road of the accumulation of fictitious values (which in fact continued unhindered, fed by new liquidity), Japan was on the verge of a great financial catastrophe. In the West, the relation between fictitious speculative values and the real economy remained largely indirect, and the enormous accounting losses were compensated for, after a critical transition period, by new bursts of speculation or were even exceeded by repeated additions of fictitious value (the Dow Jones Index, Wall Street’s barometer, has more than doubled its value since 1987). In Japan, on the other hand, fictitious values were largely invested in the real economy, so that the crash dug a hole that was impossible to fill. The bubble had to burst, and Japanese stock prices and real estate values still have not recovered (the Nikkei Index, the Tokyo stock exchange’s barometer, has fallen by more than 50% since 1987).
Why has an open financial catastrophe not yet taken place in Japan? The answer to this question must be sought, once again, in the specific paternalistic structure of the Japanese economy, and in its archaic traits. The informal union of the government, the banks and the big corporations founded a national compensation corporation to which bad loans were transferred, thus preventing the imminent mega-bankruptcies. Nothing like that would have been possible in any Western country. But, naturally, not even the Japanese were so expert as to be able to cheat the laws of money by virtue of paternalistic cleverness. No sleight-of-hand can make the mass of bad loans disappear, and it is constantly growing due to the simple fact of interest payments however much Nippon, Inc. desperately tries to reduce it by means of small-dose amortizations, which the banking system can support. Now and then a mid-level partner is sacrificed to let off some steam: for example, the Japanese credit cooperative, the Cosmos Credit Corp., one of the country’s largest, had to go into receivership in August of 1995, and its depositors ran to the bank, in dramatic scenes, to withdraw their money.
According to data from the Japanese Ministry of Finance published in the summer of 1995, the volume of failed loans rose to approximately 650 billion dollars. Taking the usual jargon of financial diplomacy into account, we can make two deductions from this: first, that the real amount is even greater; second, that its point of no return is near, and will be announced with smiles full of discretion and courtesy. The vortex in the sea of bankruptcies could be large enough to drown the Pacific deficit circuit and to drag the mountain of the American deficit down with it. Japan is now obliged to bear the necessary costs of containing the avalanche of bad domestic debt, while at the same time it is still buying American Treasury Bonds so as not to endanger its exports to the United States. Nonetheless, trade surpluses on this scale cannot be sustained forever; the permanent increase of the yen’s value in relation to the dollar points to the inevitable correction, since Japanese exports were already declining. In the near future, all the mooring-cables will break, and behind the constant trade disputes between the U.S. and Japan, mutually connected by the deficit, actually lies the question of knowing who will have to pay for the greater part of the imminent devaluation shock on the Pacific front.
This shock will no longer be limited to one region of the world; it will constitute the starting gun for the devaluation process not only for “casino capitalism” but probably also for fictitious capital, which has long been ripe in the form of State loans, where abstract labor was mortgaged to a remote future. Such a global contraction would not only imply the invalidation of all the money and all monetary forms not derived from the originating M-C-M’ process, but also the annulment of the fictitious value creation process M-M’. This cancellation could assume the form of inflation or deflation (or more likely a hybrid of both).
In order to understand this logic, one must abstract from its phenomenal and purely external forms, from the strong rise or the strong drop in prices, which normally indicate inflation and deflation. In reality, it is not a matter of a rise in prices of commodities determined by the immanent development of the goods markets themselves, which as everyone knows are regulated on the surface by the movements of supply and demand, but of an autonomous development on the plane of money, that is, of the latter’s devaluation. As the devaluation of money, inflation and deflation are identical and can be distinguished only by the form assumed by devaluation. In the case of inflation, money continues to circulate; its devaluation is manifested as an unexpected rise in commodity prices to astronomical levels, independent of supply and demand. In the case of deflation, however, great masses of money or certain monetary forms are neutralized as such or disappear from circulation; devaluation then arises as an unexpected reduction in social buying power or solvency, which can (but may not always) take the form of a general fall in prices.
If the scale of the devaluation process is large enough, one could imagine that inflation and deflation would be manifested on various levels: for example, price inflation for consumer and capital goods, along with a simultaneous deflation affecting bank deposits, titles to public debt, stocks and real estate. Such a combination of the two forms of the devaluation of money is possible when speculation falls to Earth and the State decrees the cancellation of the debts it contracted with its creditors, since the government will continue printing paper money to prevent an interruption of mass consumption and to avoid uprisings (the contours of such a situation became visible, for example, in Yugoslavia and then in Serbia-Montenegro).
But whatever particular forms money’s devaluation assumes, whose initial signs can already be glimpsed in much of the world as hyper-inflationary cycles, its advent marks the end of the history of the mode of production based on money. It is illusory to believe that, after the great shock of devaluation and/or the global cycle of money’s devaluation, the capitalist game will be able to start again from the beginning, on a “purified” terrain.46 Unlike the situation in the past, the present-day devaluation is no longer a simple momentary disruption of the rise of abstract labor in industrial capitalism, but signals an irreversible stage in the application of science to the process of “metabolism with nature”: on the one hand, the rapid decline of value creation in industrial capitalism, thanks to rationalization and the globalization of microelectronics; on the other hand, the equally rapid expansion of labor which is unproductive in capitalist terms (which, from the system’s perspective, only mediates consumption for infrastructural conditions): the combination of these two processes represents a state in which capitalism can no longer obey its own criteria. Its logical contradiction becomes historically mature.
In these new conditions, the processes of capital’s devaluation no longer prepare the ground for a new phase of accumulation, as Joseph Schumpeter’s theory would have us believe. The devaluation of capital’s “antiquated” forms only makes the formation of new forms of capital possible when the latter open up the possibility of a further utilization of abstract labor at the prevailing level of productivity; the only example of this type was the Fordist Expansion. But if this potential for further expansion is not present because the level of productivity is too high and rationalization grows faster than the expansion of markets, then the mere devaluation of money, machines or buildings accomplishes nothing. No devaluation leads back to a previous (that is, lower) stage of the application of science to production, since the level of productivity is stored, in the final analysis, in the knowledge of society and in people’s heads, and not in its external forms, such as machines, equipment, etc. Their simple devaluation or even their destruction in war will not suffice to create a new point of departure for a secular phase of accumulation.
The primitive idea that capital periodically immolates itself, so as to later arise like the Phoenix from the ashes, thus passing from eternal destruction to eternal self-renewal, is an aspect of mythological rather than historical and analytical thought. Devaluation alone, if it is not followed by real and increased value production at a high intensity of labor (which is not exclusively goods production, but also the utilization of quantities of abstract labor), does not go beyond simple devaluation; a resumption of capitalist reproduction upon the allegedly new basis will therefore rapidly repeat the progression from crisis to collapse. In the cycle of hyperinflation and the periodic collapse of financial systems which afflict many regions of the world, one can already recognize a situation of this kind.
The old Marxism always tied its critical and emancipatory ideas to the immanent forms of capitalist reproduction (struggles for monetary redistribution, regulation or “planning” within the horizons of the commodity-form, etc.), reconstructing Marx’s half-digested crisis theory in accordance with these immanent necessities. It is just as incapable of providing a response to the new developments of the crisis as bourgeois theory, which has long been insipid. The crisis of commodity production as an absurd end-in-itself, implied by the fetishistic character of a “mode of production based on value” (Marx), can no longer be resolved on its own terrain.
The shock of monetary devaluation, however, is not only a devaluation shock for all previously existing scientific theory (under the reign of the commodity-form), but also a devaluation shock for social consciousness in general. In the concluding stage of a paranoid phase of development in the irrational form of value which has lasted more than 200 years, human society faces a decisive test: can it go beyond the fetishistic structures of commodity-money relations with which it is impregnated, without going totally insane, or will it regress to “barbarism”? Ultimately, one thing is certain: it cannot continue in its current form.
Originally published as: “Die Himmelfahrt des Geldes”, in Krisis 16/17, Horlemann Verlag, Bad Honnef, 1995.
Translated from the Spanish translation, “La ascensión del dinero a los cielos: Los límites estructurales de la valorización del capital, el capitalismo de casino y la crisis financiera global”, available online at:
- 1The intermediaries of money-as-commodity are the banks, which share the interest with their depositors. It is, however, an exaggeration to use the word “share”, since at least the private (non-institutional) depositors, and above all the so-called “small depositors”, as the principle fools of money, generally must content themselves with crumbs; a permanent source of the philistine resentment of “little” monetary subjects and compulsively anxious workers. The power of the banking system lies in its concentrated power of mediation in relation to money-as-commodity. Hence the saying: “The bank always wins.”
- 2This absurd expression only appeared, at least in Germany, during the 1980s, when international money capital, under speculative pressure, induced banks and other financial services to invent new derivative forms of money’s movement which are designated, analogously to industrial processes, as financial “productive innovations” on the part of “financial production”.
- 3The implications for a theory of crisis which could be derived from this concept of the third volume of Capital were only sparingly debated within Marxism, when they were not viewed with hostility. This fact reveals to what extent traditional Marxists still adhere to an alleged capitalist “responsibility” and stability; a stance which obviously conceals subterranean links to the idolatry of abstract labor. In a recent text, Kurt Hübner, of Prokla (a Berlin journal whose title is an acronym for “Probleme des Klassenkampfs”—Problems of Class Struggle), leads us to think that he prefers to address the problem of “fictitious capital” under the rubric of “forms of money and credit which increase elasticity”, instead of considering something as unworthy of notice as “a fictitious process of capital accumulation” (Kurt Hübner, “Für die Eröffnung der Debatte”, in Konkret, July 1995).
- 4In a highly developed banking system, the private individual or institutional owner of money is not normally aware of this, because the damage is covered by a bank insurance fund. Only when the divergence of labor and money attains a greater social dimension does the crisis spread from commodity production to the financial system as such and is manifested as a crisis of the banking system.
- 5The fact that the financial markets are subject to the usual market law of supply and demand is one aspect of this question: paying interest on loans with new loans increases the demand for finance capital, which makes the interest rate, as the price of money, rise. The result, when the scale of this process reaches a certain dimension, is the scarcity of finance capital, which ultimately reaches an insurmountable limit, despite all the clever ways of obtaining liquidity.
- 6In almost all the large corporations which are capitalized by means of shares of stock, not only is the “non-shareholder” corporate management separate from the simple possessors of juridical titles to property, who possess almost no influence over the real corporate decision making process; among the juridical owners, the “founding families” (like Siemens, the Krupps, etc.) have gradually fallen into second place behind the banks, and have become an insignificant luxury appendage in the history of capital, even though, for “name recognition”, they still retain outstanding stock portfolios. The same process, only more accelerated, affected the patriarchs of post-World War Two Germany (Grundig, Nixdorf, etc.).
- 7Some examples, taken at random: measured on the basis of balance sheets (that are generally “fixed” or tweaked), in the spring of 1995, Daimler-Benz still had 55%, AEG 17%, Viag 20%, Baiersdorf-AG 35%, Krupp-Hoesch 15% and Klockner-Deutz only 8%.
- 8As a result of the structural rise in interest rates, in spite of all counter-measures (a process filtered through the world market, so that, in isolated countries, efforts to counteract this process are possible), not only do the start-up costs for profitable real production increase, but this production, with respect to the search for wealth, must also face the competition of profits from merely financial investments.
- 9As far as we can reconstruct them, in the earliest developmental stages and in many cultures there was in fact no abstract concept of labor, but only various concrete concepts applicable in the context of particular activities. A developed concept of labor did indeed arise in the most highly developed agrarian cultures, although not (as Marx seems to assume) as a higher logical concept of social activity, as the (alleged) “rational abstraction” of thought, but, instead, as a designation for the activities of slaves and children (“what someone who is socially dependent does”, someone who cannot “demand satisfaction”). It is therefore a (negative and pejorative) social abstraction and not a logical abstraction like “house”, “tree”, “fruit”, etc. Only in the modern system of commodity production and within its logical and historical context did the abstract fetishistic category of labor arise as a universal social concept of activity under the reign of the commodity-form.
- 10Not even this superficial determination and purely formal definition of “productive labor”, which allows no analytic determination, is respected by Marxist economists. Kurt Hübner, quoted above, commenting on “hedging” operations which offer protection for exports from the typical risks of fluctuations in the exchange rate, states: “These concrete activities, although they do not create surplus value, must be understood in Marx’s sense of distributive and productive labor, as an integral part of the labor process which generates surplus value, that is, as productive labor” (Hübner, op. cit.). This definition makes no sense at all, since in that case all labor would be productive labor, since capitalism does not just squander labor and only activities “necessary” for the reproduction of capital occur in its sphere. This necessity can also exist in an external, technical-organizational and thus only formal, sense, essentially without creating surplus value or producing capital (for example, in the infrastructural preconditions for commercial production). On the plane of logic, surplus value-creating activity and productive labor are synonymous, even though there are activities which only indirectly enter into surplus value production (for example, transportation and construction materials). The “integral productive worker” about whom Marx speaks covers the totality of activities which create surplus value and which enter into real commodity production; it is necessary to conceptually distinguish his labor from all types of labor which, whether homogeneous or not (a worker can also do work which is partly productive, partly unproductive) do not in any way (and therefore not even indirectly) enter into surplus value-creating commodity production. By separating the concept of surplus value-creating labor from the concept of productive labor, Hübner erases the difference between productive and unproductive labor, since this separation eliminates any criteria for distinguishing them. This is naturally the most trivial solution of the problem, which also coincides perfectly with the concept of “value creation” typical of bourgeois political economy, which is just as ignorant of the conceptual distinction discussed here.
- 11This debate is either limited to the reaffirmation of the standard industrial productivism as opposed to the socio-political “irresponsibility” of still-semifeudal servants (domestic servants, etc.) whose importance declined commensurate with their numbers (even in Karl Kautsky); or else it is only focused on the incipient tertiarization on the terrain of capitalist development itself (in part baptized as “new middle classes”), and this topic is discussed from a purely sociological and strategic point of view, with attention to “alliances” of the “true” movement of the industrial workers. The consequences for capitalist reproduction, however, and thus the problem’s importance for crisis theory, were systematically neglected.
- 12What is, for the businessman, a reduction in costs, always corresponds, as is true of other forms of rationalization, to an imposition on the worker, since tertiary labor in the specialized micro-enterprises is always intensified, while the wage is generally lower compared to the wage received by the workers in the primary enterprises (which is partly due to the different contractual conditions outside the industrial sectors organized by the trade unions). Even the precarious pseudo-autonomy introduced in the form of outsourced fleets (subcontracting systems in transport services) is a part of the demoniacal character of this kind of tertiarization. As a rule, autonomous outsourced service enterprises are terrible places and have brutal working conditions, and are in the hands of individual social climbers with the yuppie mentality: another typical product of neo-liberalism.
- 13In many passages, Marx approaches the problem in this way, such as, for example, in Theories of Surplus Value and in “The Results of the Immediate Process of Production”, without making it clear whether he is limiting his analysis to adopting the point of view of the logic of the isolated capital, or whether he actually believes that he can discern a significant difference in this respect. In any case, it is clear that Marx does not always argue in this way, but also utilizes the concept of an absolutely (“in itself”)—that is, in every case—unproductive labor, particularly referring to those purely commercial sectors that are devoted to mere money transactions.
- 14This argument from the perspective of circulation was elaborated six years ago by Ernst Lohoff, in the sixth issue of Krisis, in an essay entitled “State Consumption and State Bankruptcy”, although it is limited to the narrowest definition of State activity, since his subject was a critique of Keynesianism. In addition, in his essay the framework in terms of circulation theory is still dissociated from the concept of productive labor, so that the argument’s effectiveness could perhaps pass unnoticed. Thus we can read, in Lohoff’s essay: “All the products which […] are unproductively consumed, that is, which do not reappear in further production cycles as elements of capital, are transformed into a faux-frais for social capital as a whole, although the actual labor consumed in their production must clearly be classified as labor which generates value.” Here he is still working with an abstract and “categorical” concept of productive labor, which seems to be independent of circulation theory, so that, paradoxically, “clearly” productive and value-creating labor (implicitly situated on the plane of the individual capital) is suddenly presented as a faux-frais on the plane of capital as a whole and is consumed “unproductively”. “Unproductive labor” and “unproductive consumption” are conceptually separated. Furthermore, “productive consumption” only requires that products should appear in the next productive cycle as elements of “a capital”, that is, not as State consumption. He still does not see that even “a capital” (that is, a private individual capital) can itself be as unproductive as State consumption. Both incongruities become apparent if—as we established above—the concept of productive and value-creating labor is deduced as such exclusively in terms of circulation theory, describing the problem on a higher plane of abstraction than the mere distinction between private capitalist production and State consumption. If the concept of productive labor is linked, in terms of circulation theory, to the process of “productive consumption”, all activities and all products which are not used up in the latter process automatically become socially unproductive consumption, regardless of whether they are mediated in their external form by the State or by private capital. Only in this way can one obtain a definition of unproductive labor which is applicable to all sectors of reproduction, by means of which one can discern the concealed unproductive character of that part of “material” and industrial production whose products are unproductively consumed.
- 15Thus, the structural crisis as absolute limit of capital is exacerbated from the very start not in the sphere of the commodity markets, but in that of the financial markets. Rosa Luxemburg, however, did not systematically address the issue of credit and the increasing relevance of interest-yielding capital in her theory of crisis, just as she did not address the related issue of the “tertiary revolution” (then only in its infancy). She probably would have considered both questions as suspect, so to speak, since she was compelled, as were her adversaries, to ideologically assume the point of view of the industrial proletariat. To her, it was unthinkable that capitalism could collapse not due to the growth but to the decline of the industrial proletariat and due to the simultaneous expansion of the tertiary sector and “fictitious capital”. This is why her crisis theory exhibits an inverted form of a correct problematic; the crisis does not consist in the disappearance of a certain kind of “third person” (the remains of pre-capitalist modes of production), but in the fact that a new kind of “third person” (the result of the tertiarization process) becomes structurally too numerous. Rosa Luxemburg’s opponents themselves always tried to refute her with arguments which presupposed the long-term expansion of industrial capital.
- 16Here we face a problem that Marx called the “moral factor” in the worker’s reproduction costs. For human labor power is not really just a commodity like any other—not only because of its productive power of creating value (of which a washing machine is just as incapable as a hand-operated drill, since they are merely things and not beings possessed of social relations), but also because the “costs of production” and of reproduction of the commodity “labor power” cannot be objectivized in exactly the same way as is done with other commodities, which are dead things. Even in the most primitive societies, a human being’s costs of reproduction were not totally consumed in the mere physical capacity of survival—and this is even more valid for modern, highly developed societies. What enters into the reproduction of labor power as the necessary satisfaction of needs is therefore subject to historical change. It is not, however, a question of a “moral” valorization in the strict meaning of the word, although even that could be possible in a particular sense. The standards of the satisfaction of needs are now reaching extremes—even in the western industrial countries—within labor power as a whole: the pauperization that is underway due to the reduction of wages below the reproduction threshold, even for basic needs, contrasts with a destructive fetishistic consumption prevailing in other sectors of labor power (the irrational consumption of resources and land, the direct consumption of destruction, etc.). On the economic plane, however, the qualitative valorization of the level of reproduction is of no account; what matters is which factors of the satisfaction of needs are quantitatively valid at any given historical moment, and which ones are not. Within the domain of “capital in general”, Marx’s theory, as everyone knows, abstracts from the mediation of the world market, which can nonetheless also generate distortions when viewed in this manner. This is particularly true when certain factors in the level of reproduction of labor power as a whole in a particular national economy are based on the fact that, due to that economy’s occupying the strongest position in the world market, it appropriates and redistributes a disproportionate share of the world’s real surplus value. This redistribution, by way of a mere supplementary consumption of luxury, goes far beyond the costs of the reproduction of labor power and is as unproductive as State consumption, and is paid for with surplus quantities of value. Only on the most superficial level is this situation reminiscent of Lenin’s theory of the “labor aristocracy”, since the latter only involves a moral political judgment (“corruption”), but not the true economic level of the system: Lenin would not even have dreamed of explicitly debating this question from the perspective of the crisis, in the context of the difference between productive and unproductive labor. What role tourism and its “industry” play in all of this must become the topic for specific research.
- 17The interest on the State debt must naturally be paid, just like the interest on commercial debt. However, the alleged logic of credit holds that only in the case of its real capitalist use, with the real production of surplus value, is it possible to “obtain” necessary interest payments. In State debts, everything is different right from the start because they entirely disappear in mere social consumption. The profits derived from State interest payments are nonetheless treated “as if” they were the consequence of real surplus value production. This is why Marx included State debts, commercial speculation in mere titles to property and the “rotten” mass of meta-credits which cover loans that have already been written off in the category of “fictitious capital”.
- 18Recall that private consumption for both productive and unproductive workers is also expanded by consumer loans. In this way the workers mortgage their future wages just as capital mortgages its future profits. This supplementary dimension of the credit system brings about a still deeper rupture between money and its real substance.
- 19Once again, Kurt Hübner, quoted above, shows how little he understands this structural circumstance. He claims “the assertion that 40-60% of wage workers are directly or indirectly public employees cannot be taken seriously”. But what is the implication of the fact that the State’s share amounts to 40-60% of the domestic product? It means that the State is now not only the most important “employer”, but also that a part of the jobs in the non-State sector depend directly on the State, through various mediations. Obviously, not every State-dependent job is financed with borrowed money, only a growing number of them are; otherwise, the system would have fallen into ruins a long time ago. The fact that Hübner refuses to see the problem is perhaps due to his affiliation with the “political” left, which sees “political intervention” as decisive within an unsurpassed system of commodity production (because in his mind it cannot be surpassed). Whether it wants to or not, this left depends on the expansion of the State’s financial capacities and thus on the increase of State indebtedness.
- 20Marx provided evidence supporting this hypothesis when he alluded to the example of 19th century Indian textile production, which was destroyed by English industrial production—a process which could be repeated today with respect to India and the West, or India and Southeast Asia, should Indian markets be opened up through the imposition of neo-liberal reforms. The same principle was also the cause of the sudden collapse of East German industry after its integration into West Germany without any subsidies to soften the blow. The now-moribund litany of the old anti-imperialist left about “unequal exchange” approached the problem not in terms of economic categories, but with inappropriate moral categories; basically, it always amounts to the simple demand for a global standard average productivity, which is economically absurd for non-contemporaneous levels of productivity—a demand which is no less illusory than the demand for a “World State”. This proves that the traditional left can only think in terms of bourgeois concepts of continued commodity production and in terms of the categories of national economy unrealistically extrapolated to the level of world society.
- 21Strictly speaking, even the purely administrative measure of establishing tariff barriers is not cost-free; in fact, staff must be employed, the problems of surveillance and smuggling must be addressed, etc. As everyone knows, even the prototype of such a measure on a grand scale, Napoleon’s “continental blockade” against England, was a colossal failure.
- 22With unbelievable economic ingenuousness, the remnants of the old left political radicalism, in their negative worship of the glories of capitalism, simply estimate the number of jobs in China, India, etc., without being at all aware of the real problem. Rainer Trampert and Thomas Ebermann, former champions of the Green Party’s radical left, think they can refute the prediction of a great crisis by “proving” that capitalism has no lack of work additional jobs, however, are either plainly “without substance”, that is, simulated by means of State credit; or they are jobs created by industrialization which is devoted to export within the framework of neo-liberal reform, which implies a forced opening to the world market and thus a colossal liquidation of jobs which had previously been “protected” (simulated) in industries organized or subsidized by the State and were not very profitable from the point of view of the world market. For each new job in “opened” industrialization which is devoted to exports, it is calculated that the country involved would lose between 10 and 100 jobs in domestic industry (as well as in agriculture) which had previously been simulated by credit. This negative balance was nowhere coherently decided upon, but the rupture between domestic subsidy and the opening to the world market is necessarily an all-or-nothing affair: the two cannot coexist. Both in relation to jobs and the quantity of work, as well as in relation to the creation of surplus value on a world scale, the balance is ultimately a negative one, and will inevitably come to light.
- 23A new leap forward was registered during the 1970s and 1980s, which transformed the financial system into one of the most important props for growth, both in respect to employment and to domestic production; an indicator of just how obsolete the categories of political economy were and how much the structural crisis had worsened.
- 24This also applies to bourgeois economic theory, where it still exists, as well as to the Marxist debate and its extension in the now almost totally atrophied new left. Rosa Luxemburg already felt pressured to proclaim that the collapse would obviously not really take place, since the proletariat will have “seized power” before that could happen; in answering her critics, she contrasted her theory with the theory of the end of capitalism brought about by the fall of the rate of profit, which in her view would take “as long as it will take for the sun to burn out”. The instinctive repudiation of an absolute “objective” limit to a capitalism swept away by the crisis led Marxism to acknowledge such an internal limit only in a purely logical and not a historically specific sense. In the epigones and the remnants of Marxism, this relation is inverted with an unequalled irony: as the “internal limit” becomes in fact historically palpable, it is considered non-existent in its logical sense as well. The remains of the left and the former left participate ever more zealously in simulation at all levels of the system of commodity production.
- 25Obviously, one cannot derive a vulgar State socialism from this, as Wagner supposed in his time, but only the limits of the reproduction of the system of commodity production.
- 26The umbilical cord of the gold standard was still connected to the dollar for a long time, breaking only in 1973 and preserving until now at least an indirect link between value-form and value-substance by means of the dollar as world-money. But this particular position of the dollar was exclusively due to the economic supremacy of the United States at the end of the Second World War and it could only last for a quarter of a century.
- 27Also decisive is the fact that a considerable portion of the desubstantialized money in the leading capitalist countries does not appear as real demand, but instead remains “parked” in the form of public debt or commercial speculation in the financial markets, where it is still proliferating. And this is precisely why inflation is lower today than it was in the 1970s, even though the mass of “fictitious capital” has vastly increased. The prerequisite for this constellation, which is as specific as it is temporary, will continue, however, to be the bleeding of the inflation-stricken majority of the world’s population. But as soon as the export of inflation no longer has any effect and/or the dikes of the financial superstructure are broken in the West, money here will also be devalued, one way or another.
- 28Relative surplus value (like the category of value in general) does not directly appear on the plane of the individual capital’s calculations, but—as an effect of the system’s blind development—on the plane of the total capital, and can only be theoretically and analytically reconstructed. Under the imperative of competition, productivity constantly increases by virtue of the technological application of the natural sciences and thus noticeably decreases the prices of both new goods and old goods, which, despite the growth of consumption and wages, increases the relative share of surplus value in the total value creation per worker; in other words, the relative costs of the reproduction of labor power decrease compared to its absolute value creation. This is yet more evident when viewed in terms of units of time: for the exchange value of an egg, a jacket or a television, a worker has to work, when viewed comparatively over the long term, fewer and fewer minutes or hours. Or: with an unchanged amount of labor time (or one which only slowly diminishes), an increasing portion of labor time enters into the production of surplus value, even though the volume of goods consumed by labor grows along with it. The production of relative surplus value by means of the increase of productivity has a negative side, however, which is economically absurd and ecologically disastrous over the long run: the need to expand, which increases just as rapidly. As each individual product contains less and less value and therefore less surplus value, it is necessary to inundate the world with an infinite sea of products. This historical invasion of products encounters not only the limits of what consumption can absorb, but also absolute natural limits.
- 29This concept must not be confused with that of “absolute surplus value”. The latter refers to the expansion of the absolute creation of value by each worker by way of the prolongation and intensification of the working day, as opposed to the above-cited increase of the relative share of surplus value in the case of absolute value creation by the same or a lesser amount of labor power. The concept of the “absolute mass of surplus value” in turn indicates the total social surplus value, which obviously does not depend solely on the rate of surplus value per each unit of labor power utilized. As is obvious, the measure of value in terms of its true substance, “labor time”, is always the same, since an hour of the “expenditure of nerves, muscles and brain” is in each case the same.
- 30On this topic, a very fashionable historical discovery is the so-called “regulation theory”, which was transformed, especially in Germany and France, into a veritable “school” (a few of its proponents are: Michel Aglietta, Regulations et crisis du capitalisme, Paris, 1976; Joachim Hirsch and Roland Roth, Das neue Geschicht des Kapitalismus, Hamburg, 1986; Rudolph Hickel, Ein neuer Typ der Akkumulation?, Hamburg, 1987). Aglietta’s original doctrine, although it was still argued in terms of value theory and accumulation, converted the specific Fordist regime of accumulation into a general and suprahistorical possibility of expanding the internal limits of accumulation almost at will, by means of political regulatory interventions. Among his German disciples, this orientation limited to the horizons of accumulation theory almost disappeared, giving way to superficial speculation about “regulatory models”. What these approaches lack is a critical analysis of the value-form and its historical transformations, because both the value-form as well as the subsequent accumulation of capital are axiomatically taken for granted. Regulation theory is basically no longer a Marxist theory of crisis based on the critique of the economy, but a positivist theory which seeks to contain the crises arising from bourgeois political economy. On the basis of one historical experience—the Fordist expansion after the Second World War—it surreptitiously elaborates the idea of a universalizing “regulation in general” as if, by means of a regime of regulation, it would be possible to generate a new model of capital accumulation (since, in reality, the case of Fordism was exactly the opposite). The argument seems to assume that capitalism already has hundreds of “models” of accumulation and regulation behind it, and that today all that is necessary is to recognize the contours of the next model. Fordism, with its Keynesian regulation, was in reality the first as well as the last “model” of an integral capitalist reproduction of society, which essentially was not a “model” but a unique historical phenomenon. With its end, the possibility for reproduction under the “value” fetish-form is generally exhausted—an idea that would perhaps be very badly received by both leftist economists as well as their political economist colleagues, since it implies the utter discrediting of their professions.
- 31This is obviously another instance of the old radical left showing itself to be particularly obtuse, when it speaks seriously about “surplus value augmented thanks to automation” by postulating a frankly absurd cause: “The more productive the workers become, the greater will be the number of people who will soon no longer be necessary for surplus value production.” But the increase of material output by way of increased production is not, in fact, identical to the production of “more value”. Here, the concept of capital is directly identified with the limited point of view of the individual entrepreneur, for whom this is indeed the case (but whose representatives, at least, do not nourish the ambition of conceptualizing “value theory”). Ultimately, in contrast to this particularistic consideration, which does not take the contexts of mediation into account, it is still true, on the plane of capital as a whole, that the continuous production of surplus value also implies an expansion rather than a contraction of the utilization of abstract labor. “Thanks to automation” as such, surplus value grows as much as a pair of pliers can grow tomatoes. On the contrary, what must be explained is the reason why, despite the growth of automation (or at least the growth of mechanization and rationalization) in the Fordist era after the Second World War, surplus value was able to grow—and not merely to take this truly self-contradictory fact for granted.
- 32Only in Asia is there still an ongoing wave of Fordist expansion, which meanwhile only affects the entire society in only a few small countries with relatively small populations which managed to occupy “export niches” (the so-called “Little Tigers”, such as Hong Kong, Singapore, South Korea and Taiwan). In the biggest countries in Asia, the Fordist expansion propelled by exports was limited to relatively minute sectors, which led to serious social upheavals (especially in China). Taken as a whole, the absolute volume of capital mobilized in Southeast Asia is too small to construct another engine of global value creation. The joint ventures of the German auto industry in China should, according to their own forecasts, produce only 60,000 units per year by the end of the year 2000: this is no more than a drop of water in the ocean. Most Asian imports of capital goods are firmly in Japanese hands. But even that volume is small in absolute terms. Until now, the exports of the late-Fordist Asiatic offensive were not even sufficient to finance the maintenance of the existing infrastructure, which has deteriorated and been exploited beyond its capacities. According to data provided by the Asian Development Bank, more than one billion dollars would be needed for just the next five years of investments for infrastructure maintenance. What is celebrated as a Southeast Asian “miracle” is not a “basic effect” of high rates of growth, whose starting point was extremely low. This miracle was exhausted within a few years; the “Little Tigers” expansion will succumb to the prohibitive costs implied by the investments in infrastructure, the remediation of catastrophic environmental damage and the next phase of capital’s concentration. In today’s world, however, the overwhelming majority of countries cannot even reach the starting point of the “basic effect” of Fordism.
- 33The champions of this viewpoint are Rainer Trampert and Thomas Ebermann, who simply add up numbers taken from here and there, and deduce from them an allegedly irresistible expansion of surplus value production. “In China, employment grew by 28% between 1983 and 1992, adding 130 million more wage workers. In various Asian countries an explosion of job growth is underway: in Thailand employment grew by 35%, in North Korea by 30%, in the Philippines by 26%, in Singapore and Malaysia by 23%, in Hong Kong by 13%, in India by 26% and in Pakistan by 19%.” (Konkret, 3/95, p. 36) But even disregarding the fact that the starting point was quite low, these numbers say nothing about the development of the real substance of value, since no theoretical or empirical mediations are established on the plane of value. It is not enough to superficially content oneself with sociological data and a “phenomenology of observation”, usually interpreted in moralistic terms. The fact that, thanks to capitalist development, many people live in poverty and miserable working conditions prevail says nothing about capital’s actual capacity for accumulation.
- 34Here, we must once again call attention to the obtuse sociological character of the old Marxism, whose calculations, at the very least, are ingenuous in terms of value theory. “For capitalism as a whole there will be no lack of labor, if a decrease of 2 million jobs in Germany is compared to the 130 million new jobs in China.” (Konkret, op. cit.) This kind of reasoning reveals an ignorance of the fact that “value” is a relative historical concept and does not lend itself to calculations based on absolute numbers of jobs, if the levels being compared are historically non-contemporaneous.
- 35From the perspective of business calculations, this means that each unit of capital employed undergoes a secular trend of constantly decreasing profits—which can be compensated for by increasing investment and thus also profits (in absolute terms). If a capital of 1,000,000 only yields a profit of 50,000 instead of the 100,000 it previously yielded, then this decrease must be compensated for in absolute terms by employing a capital of 2,000,000; and by employing 3,000,000 the profits will rise perceptibly. The assumption, naturally, is that the capital of 3,000,000, which replaces the preceding 1,000,000, can be invested profitably and productively in the market. From the point of view of the individual capital, this means that the simple increase in commercial volume and the struggle for market shares assumes an increasingly greater historical importance. In fact, even from the entrepreneurial perspective, it is only by means of such extension that it is possible to simultaneously compensate and over-compensate for the fall of the rate of profit as well as pay for the increasing costs of fixed capital investment. For this reason, the debate concerning “healthy restructuring” is an illusion, not only for society as a whole, but also for the individual enterprise. Below a minimum threshold (obviously varying from industry to industry and from cycle to cycle), the alleged “healthy restructuring” must rapidly be transformed into a corpse.
- 36This state of affairs can perhaps be formulated as follows: in a way, it concerns the difference between a relatively “very small” profit, on the one hand, and bankruptcy brought about by a lack of liquidity (and therefore by insolvency), on the other. What is at stake here, however, is the mode of production as such and not individual enterprises.
- 37In desperation, old Marxists like Trampert and Ebermann wisely quote only the second part of Marx’s statement, where he says that, “the nation will not be one cent poorer even if this soap bubble bursts”, while disregarding his reference to the possible backlash a financial collapse could have on real accumulation. Their purpose is clear: to suggest that the problem of “fictitious capital” does not, either in Marx’s time or our own, possess a decisive relation to authentic capital accumulation and, in comparison to the latter, is a rank of a second order, a mere collateral phenomenon of real exploitation, which continues to accumulate victories. The reason why so many former extremists desire at all costs to nourish capital “on claims to wealth”, celebrating its power and its glory, is not to be found in the theoretical or analytical fields. The stubborn evocation of the reliability of the global accumulation of capital shows that the consciousness of the Marxism of the workers movement feels the need to affirm this reliability, in order to preserve its own self-image.
- 38The American banker Felix Rohatyn seems quite ingenuous when he suggests, with good intentions, to somehow use internationalized speculative capital to pay for infrastructure in the Third World, the rising economies of Southeast Asia and the former East Bloc, in order to finally direct this capital toward productive channels. Rohatyn completely ignores the fact that it is the very lack of productive financing and profitability on a global scale that induced money capital to take off into the speculative stratosphere. He thus confuses cause with effect. On the other hand, taking fictitiously inflated monetary capital for something real and attempting to treat it as if it were capital generated by a real process of production shows a vast ingenuousness. The Baron von Munchhausen himself would be quite pleased with such a proposal.
- 39The same fact obviously assumes various forms depending on the level of productivity a country maintains on the plane of real production, as well as the position of its currency in the international financial system and the stage of socio-economic crisis which it has reached. Even so, Russia’s financial mafia and the Ukraine’s obscure system of micro-lender “banks” belong, at a much lower level, to the same “casino capitalism” which reigns in Olympian splendor in Japan and the United States.
- 40Here it is necessary to distinguish between the foreign capital which flows, on its own initiative, towards a country in order to make real investments (which means that the “location” is attractive), and the foreign capital which the State (or the businessman) borrows from foreign sources, induced by necessity to do so, and on which interest and amortization charges must be paid. In the latter case, a “deficit circuit” and a potential “debt crisis” arise.
- 41Naturally, none of these deficit circuits can be maintained over the long term. For this reason, the German government and the European institutions try to keep up morale, constantly announcing a strong recovery, positive results, etc., due according to the best hypotheses to the effects of the unproductive creation of liquidity. Even more idiotic, of course, are those who whine for the times of nationalism and monetarism, according to whom Germany is subsidizing the whole world and should finally look after its own interests. In reality, Germany has an almost desperate interest in keeping the European deficit circuits fed with Marks, since the German economy is massively dependent on exports, of which more than 70% are destined for European countries. It is thus a matter of life or death for the European deficit circuits to last forever.
- 42It is totally erroneous to reduce Japanese success, as some western management gurus have, to lean production [method developed by Toyota—also known as the Toyota Production System—for its auto assembly line, and introduced during the 1980s in the U.S. and Europe (note from the Spanish translation)] and other “innovative Japanese methods”, which were susceptible to emulation. Until the beginning or perhaps even the middle of the 1980s, Japanese successes were limited, and Japan was not considered to be the leading country of neo-capitalist miracles. This country only became the world champion during the course of its super-investments, which were financed in a hardly-responsible manner by the pseudo-boom of “casino capitalism”. This is the little secret of Japan’s great success, and not the fundamental nature of some technological innovation or a specific organization form. For this reason “Japanese supremacy” is ultimately a big, historically ephemeral bubble.
- 43It may be considered as symptomatic that a South Korean corporation recently purchased the last factory producing color televisions in the U.S. This obviously is not true of all production sectors, but it does apply to a wide range of high-value industrial products, on a terrain where the U.S. cannot even defend its own domestic competitiveness, which is proportionately greater the more closely its products are linked, either directly or indirectly, to the armaments sector, that is, to unproductive State consumption.
- 44It is commonly argued that the U.S. public debt, as a share of Gross National Product, is even less than that of other Western countries. This, however, does nothing but mitigate the danger of the situation and “overlooks” the fact that the American public debt, compared to that of the other industrialized countries, is weighed down by three negative factors: an extremely low rate of savings, an extremely high level of private debt (of families and businesses), and the consequent need on the part of the State to borrow from foreign sources instead of borrowing from its own citizens.
- 45The triggering event can be anything whatsoever, anywhere in the world: a financial collapse in Latin America, the outbreak of civil war in Russia or China, spectacular actions by fundamentalists in the Islamic crisis regions, or a natural catastrophe.
- 46It is not surprising that it should once again be the old left radicalism which shares, tinged with a tone of moralistic regret, this illusion of thought trapped in the total commodity-form; for them, it is an article of faith that “each crisis of capitalism simultaneously promotes its recovery” and that, therefore, “after the collapse of the system of capitalist values only one thing can happen: the same capitalism, which is reborn from the ashes….” (Konkret, op. cit.)