The Politics of Money - Werner Bonefeld and John Holloway

1 Introduction: The Politics of Money
Werner Bonefeld and John Holloway

The neo-liberal retreat from the state which has shaped politics in nearly all countries of the world in recent years implies a change in the form in which power is exercised. The 'retreat from the state' has not, in general, reduced the role of the state or made society less bureaucratic, but it has meant a direct (re-)commodification of many aspects of social life. Many of our social needs which were previously provided by the state (at least in minimal form) are now transformed into objects of exchange. More and more, our access to so many things that previously did not depend entirely on the market - medical care, housing, education, transport, not to mention the 'luxuries' of holidays, food and drink - depends directly on how much money we have. Money has risen to a new prominence in our daily experience.

The rise of money is not merely a question of personal experience. The relation between the productive, commodity and money forms of capital has changed sharply over the last twenty years or so. 'Deindustrialisation', a topic of concern in Britain and many other countries over the period, has meant above all the conversion of productive capital into money capital. When a factory is closed, the capital does not simply disappear; nor, usually, does it simply reappear in the construction of a new factory elsewhere. What was previously productive capital becomes money capital which can be moved to wherever in the world it is likely to yield the greatest profit. At the same time, the movement of money has gained in importance in relation to the movement of commodities (trade). In 1979, transactions in the international financial markets represented six times the value of world trade: by 1986 they represented about twenty-five times the value of world trade (see Waiter, 1993, p. 197).

The enormous shift of capital into money has important consequences for states and their relation to the international economy. In Britain, Black Wednesday (16 September 1992, when speculation against the pound on the international financial markets forced the Major government to withdraw from the European Exchange Rate Mechanism and radically to revise its economic policies) did much to bring home to public consciousness the awesome political power of the vast quantities of money (now over $1 trillion) traded each day on the world's financial markets, and to create an awareness of the changing relation between international finance and individual nations states1 . Events such as this have made it clear that it is not possible to discuss the political development of any state in isolation from the movement of money on the world markets.

One aspect of the rise of money has been the even more spectacular rise in the importance of debt. The possible consequences of the expansion of debt were made clear in the so-called 'debt crisis' caused by the Mexican government's announcement in 1982 that it was having difficulty in meeting its debt repayment obligations. The implications were enormous for the whole world: debt default by Mexico and other leading debtors like Argentina and Brazil could easily have led to the total collapse of the world financial system. In the event, the immediate danger was avoided, partly through the imposition of unprecedented 'austerity' on large parts of the world's population (the 'lost decade' in Latin America, misery and famine in Africa), and partly through the displacement of debt. Debt shifted to the richer and apparently more credit-worthy parts of the world: the US government, by cutting taxes and raising arms expenditure, took over the role of principal debtor (and on a vastly larger scale), and there was a huge increase in personal and company debt throughout the richer countries.2 The consequence of the huge expansion of private debt were increasingly felt as the credit-based boom of the 1980s turned into the recession of the 1990s, and the offers of easy credit turned into debt enforcement, bankruptcies and house repossessions.3

From these few comments on the rise of money and debt, it should be clear that we need to be able to speak of a 'politics of money'. The rise of money means a change in the form in which social relations of power are fought out. Money has always been a dominant form of power relations in capitalist society, but in recent years it has assumed a new quality, acquired a new brazenness. Much that was temporarily hidden from view by the welfare state capitalism of the post-war period has now become obvious: principally, the power of money and (another way of saying the same thing) the inherently global nature of power relations.

Money, then, cannot be treated as an aspect of economics. At one level, certainly, it appears to have a life of its own, to be an economic thing which stands outside and above social conflict. On the other hand we constantly experience money as a constantly contested relation of power. Every time we go to a shop, every time we pass a beggar in the street, every time a house is burgled, every time the rate of interest goes up or the price of shares falls, every time we hesitate to go to the dentist because of the cost, every time the sheriff officer (bailiff) makes a call, money is at issue, not as external to social conflict, not as the framework of conflict, but as the very stuff of conflict.

This book makes a contribution to the growing field of international political economy. The approach adopted, however, is a specific one. All the authors write from a background in Marxist theory. However, within the Marxist tradition, as in the non-Marxist tradition, money has too often been treated as an aspect of 'economics', as an element of the framework within which class struggle takes place rather than as being a form of class struggle itself. In this book the focus is on understanding money as class struggle, and on how the changing role of money is constituted by the antagonistic social relations of capitalism. This is an area of discussion that has been largely neglected by Marxists as by others.

The book explores three interrelated aspects of the crisis of capitalist accumulation. It examines the crisis of Keynesianism and the rise of monetarism; it analyses the relationship between the global economy and the national state and the transformation of this relationship over the last two decades; and it supplies a critique of the politics of money.

The book is an exploration of money as a form of social relations, a form of class struggle. All the studies presented here share this concern: they do not all pursue the same line of argument, but all are attempts to develop an understanding of the changing significance of money as class conflict. Central to the whole discussion of money as a form of class struggle is the understanding that the other side of monetary instability is the insubordinate power of labour. This issue is taken up from different perspectives in all our contributions.
Central to the whole discussion is the crisis of Keynesianism (a form of domination in which many aspects of society are withdrawn from direct subjection to money) and the rise of monetarism. These two topics are discussed in Chapters 2 and 3, by John Holloway and by Werner Bonefeld. Their contributions show that both Keynesianism and monetarism were political responses to labour's insubordinate power. Holloway emphasises the importance of the October revolution of 1917 for the so-called Keynesian revolution and argues that Keynesianism was a means of making capitalism safe for capital. He goes on to argue that the class conflict of the late 1960s undermined the Keynesian notion of a reformed capitalism. Bonefeld argues that monetarist policies never overcame the crisis of Keynesianism and that the apparent success of monetarism during the 1980s was a delusion. Both contributions follow the trajectory of Keynesianism/monetarism and show that Keynesianism and monetarism are political by virtue of the way in which labour's insubordinate power is integrated into the capital relation.

The analysis of the changing relation between national states and the global movement of money, and of the changing meaning of 'the state' in relation to world capitalism is developed in Chapters 5 and 6 by John Holloway and by Peter Burnham. Holloway starts by assessing the so-called 'state derivation' debate of the 1970s and goes on to examine the territorial organisation of the 'political' in the form of the national state. Burnham examines the historical development of the capitalist state during so-called primitive accumulation and shows that the 'capitalist state' always existed in the form of an 'international state system'. He criticises realist approaches to the study of international relations by analysing the changing relation between the national state and the global economy during the last two decades.

The question of the internal relation between money and class struggle and of the politics of money in the 1970s and 1980s is developed in Chapters 4, 7 and 8, by Christian Marazzi, by Harry Cleaver and by Werner Bonefeld. The issue of the relationship of money to the state is taken up in Bonefeld's Chapter 8. He supplies an interpretation of Marx's writing on money and shows that money exists contradictorily as command over labour. His interpretation of Marx shows that the speculative dimension of capitalist accumulation during the 1980s was not an aberration but that it rather manifested the most elementary form of capitalist wealth, that is, the expansion of money through money. At the same time, his contribution also shows the contradictory character of capitalist speculation. According to him, money has meaning only when it commands the labour of others. This speculation, while being the most elementary form of capitalist accumulation, also deprives capital of its meaning. The result is the assertion of money as a social power which imposes itself through force. He summarises Marx's treatment of money by examining the relation of money to the state. The issue of money as a self-contradictory social power is analysed in Marazzi's contribution. He examines the relation of money to exploitation against the background of the breakdown of the system of Bretton Woods and shows that the expansion of money meant that it no longer managed the exploitation of labour. He theorises the crisis of money and examines the politics of austerity in the 1970s, taking as an example the case of New York City. His focus is on money as awesome social power which he addresses in terms of an 'international terrorism of money'. Marazzi shows that the rise of monetarism in the 1970s was a response to the inconvertibility of money into expanded command over labour in production. The contribution by Cleaver shows that the notions of ‘Keynesian economics’ and ‘monetarist economics’ are false names given to capitalist strategies to secure the exploitation of labour. He focuses on the failure of monetarist policies in the 1980s and argues that the monetarist regimes of tight money failed to strengthen the link between money and exploitation. For him, the other side of the capitalist failure to use money as a means of managing the exploitation of labour is labour’s insubordinate power. He shows that it is this power which lies at the heart of the capitalist crisis. The other side the expansion of credit during the 1980s is the self-activity of the working class which, for him, has become much more socialised and globalised.

The book concludes in Chapter 9 with a joint article by Bonefeld and Holloway. in which we try to draw some of the strands together by suggesting that the development of money can be seen as the movement of the composition, decomposition and recomposition of insubordinate labour. The study draws parallels with the 1930s and argues that the present crisis carries both hope and warning. The warning is that the current fragility of capitalism might be resolved through a slump (or worse) with all its political and human consequences. The hope is that labour’s insubordinate power can be made productive and fruitful for a world in which poverty is not the condition of wealth.

From this brief presentation of some of the issues discussed in the studies collected in this book, it might appear that all that is at issue is the definition of concepts and an analysis of the changing relationship between the global economy and the national state with little practical importance. Nothing could be further from the truth.4

It is important to remember that the last major crisis of capitalism was resolved only through the destruction of millions of lives, and the possibility of this recurring, but on a far greater scale, is a very real one. 'Crisis', as one of us has argued elsewhere, 'does not simply refer to “hard times”, but to turning points. It directs attention to the discontinuities of history, to breaks in the path of development, ruptures in a pattern of movement, variations in the intensity of time' (Holloway, 1992, p. 146). This book contributes to an understanding the dangers and opportunities which the current crisis presents. Crisis does not mean the restructuring of capital, although it may contain the possibility of restructuring. Between crisis-as-rupture and crisis-as-restructuring there is an abyss of possibility. Our hope is that this hook will contribute in a small way to the construction of a reasonable society in which humanity exists as a purpose rather than as a resource for the accumulation of money. The critique of capitalist exploitation entails a critique of 'money' and the understanding that the liberation from exploitation means a liberation from money.

References
Ford, J. (1988) The Indebted Society: Credit and Default in the 1980s (London: Routledge).
Holloway, J. ( 1992) 'Crisis, Fetishism, Class Composition', in W. Bonefeld, R. Gunn and Psychopedis, K. (eds), Open Marxism Vol. II: Theory and Practice: (London: Pluto Press).
Ticktin, H. and Cleaver, H. (1993) 'Harry Cleaver debates Hillel Ticktin on Capitalism's present Crisis . . . Danger and Opportunity', Radical Chains, 4.
Waiter, A. (1993) World Power and World Money (London: Harvester Wheatsheaf).

• 1Central bank reserves are less than the equivalent of two days· turnover in the world's foreign exchange markets, which indicates that one central bank or even a number of central banks intervening together in exchange markets cannot hope to oppose a concerted onslaught on a particular currency or currencies by the exchange markets' (Waiter, 1993, p. 199).
• 2For example, 'between 1976 and mid-1987, aggregate US debt rose from $2.5 trillion to nearly $8 trillion, and the ratio of total debt to GNP rose from 136% to 178% . . . The indebtedness of the private sector in Japan has risen substantially in recent years: the indebtedness of non-financial companies increased from 94% of GDP in 1975 to 135% in 1990, while that of households increased from 45% to 96% of disposable income over the same period' (Waiter, 1993, pp. 214-15).
• 3For a discussion of the implications of rising personal debt, see Ford (1988).
• 4See also the debate between Ticktin and Cleaver (1993)