The breakdown of a relationship? Reflections on the crisis - Endnotes

The history of the capitalist mode of production is punctuated by crises. One could say that crisis is the modus operandi of capital, or of the capital-labour relation. This is true insofar as capital, the self-valorisation of value, the self-expansion of abstract wealth, is at any given time a claim on future surplus-value extraction: the accumulation of capital today is a bet on tomorrow's exploitation of the proletariat.

The crisis today has taken the form of a financial crisis, while the prospect of a full-blown economic crisis looms ever larger. These two crises do not merely stand in a relation of cause and effect, however (whichever way one were to posit the relation). Rather they are the different manifestations of the same underlying crisis - the crisis of accumulation of capital, which is at the same time the crisis in the relation of exploitation between capital and proletariat.

Finance capital is the form of capital which most closely corresponds to its pure concept, in that the plethora of byzantine forms of finance capital can be reduced to the process whereby money begets more money or value begets more value. The relation between finance capital and productive capital, or between finance and the real economy, is marked, on the one hand, by the discipline which finance capital imposes on productive capital, and on the other, by the possibility and indeed tendency for finance capital to "run away with itself" - to run too far ahead of the possibilities of valorisation which are ultimately given by the profitable exploitation of labour-power in production.

This relation between finance and productive capital, or between finance and the real economy, while it has always existed in some form in the capitalist mode of production, has not remained unaltered. Since the global crisis of profitability of capital, or looked at another way since the crisis in the capitalist class relation in the late 60s and early 70s (marked by a wave of class struggle, industrial and social unrest), financialisation has been an integral element of the capitalist restructuring and counter-offensive - i.e. of the global restructuring of the relation between capital and proletariat. On the one hand, financialisation has been a vehicle by which the exploitation of labour-power has been integrated on a global scale (with the emergence and integration into the world economy of new poles of accumulation in the emerging "BRICS" economies - Brazil, Russia, India, China, South Africa etc); on the other, it has been a means by which the entrenched position of the high-wage proletariat in the advanced capitalist economies could be weakened. These two aspects of financialisation together correspond to the integration of the circuit of reproduction of labour-power with the circuit of reproduction of capital. With the increasing financialisation of the relation between capital and proletariat, workers' wages in the advanced economies have stagnated, and the reproduction of their labour-power has been increasingly mediated through finance (mortgages, loans, credit cards, and the investment of pension funds in the stock and money markets). This new configuration of the class relation has offered to many, but not all, strata of the proletariat in the advanced economies rising living standards, tied to asset-price inflation. The capitalist counter-attack and restructuring has involved fundamental alterations in the class relation through the defeat of the old workers' movement and the obsolescence of its institutions (trade unions and parties) which promoted the rising power of the proletariat within capitalist society; the new shape of the class relation and the financialisation of this relation depend ultimately on the ability of capital to extract sufficient surplus-value in the global economy (by increasing productivity and by the intensification of labour).

The present financial crisis has its roots partly in the subprime loans and mortgages which were predicated on the continual upward trend of the housing market, and the inflation of asset prices (after the collapse of the previous asset bubble - the dot.com boom), with vast amounts of fictitious capital being generated by the leveraging practised by financial institutions (banks, investment funds, private equity funds etc). The finance-led boom ultimately outran the ability of the real economy - i.e. productive capital - to extract surplus value through the exploitation of workers in production (whether this production is 'material' or 'immaterial'). As a consequence we are witnessing a massive 'correction' - the falling stock markets, housing market - in Marxian terms the devalorisation of capital (expressed in write-downs, defaults, bankruptcies, mergers and fire-sales of financial institutions, and now their part-nationalisation by capitalist states across the board).

Thus the pre-existing tendency towards the overaccumulation of capital (whether this tendency is to be understood as cyclical or secular), such that the productive investment of capital can no longer meet its valorisation requirements, is exacerbated by finance capital's penchant for generating fictitious capital (through leveraging, debt financing, futures, options, derivatives and an increasing plethora of complex and arcane financial instruments). Even though finance capital disciplines productive capital (and productive capital is increasingly financialised), the extraction of surplus value through the exploitation of the proletariat can not keep pace with the demands for valorisation which are made by finance capital.

Capital is in crisis. The crisis asserts itself as devalorisation. Devalorisation is the only way that capital can lay for itself the basis of a new round of accumulation, and involves the disciplining of the working-class to accept new terms of exploitation; however, this means that it also places the very reproduction of the capital-labour relation at stake. To avert the crisis, the nationalisation of the banks is not sufficient. The economy is facing recession or depression, and the spectre of deflation. The state managers of capital are caught in a double bind: with huge budget deficits increased by the financing of the bail-out of the financial system (through the purchase of toxic securities, the recapitalisation of banks and the guaranteeing of new loans), the deficit-spending that capitalist states would need to engage in to maintain levels of effective demand in the economy will be increasingly difficult to finance. The question of the credit-worthiness of banks now asserts itself at a higher level as the dubious credit-worthiness of capitalist states (central banks and state treasuries).

Capital might find a way out of the crisis: it will seek to maintain or increase profitability in the real economy through pressure on wages (although this will perversely have a deflationary effect) and the intensification of labour (the increased exploitation of workers) - i.e. strategies to increase both relative and absolute surplus value. The way out of the financial and economic crisis involves the intensification of exploitation on a planetary scale and a crisis of the relation between capital and proletariat. In the 19th and 20th centuries up to the capitalist restructuring of the 1970s and 80s, the proletariat could assert itself as a positive pole in the relation of exploitation. Now, as the reproduction of the proletariat is increasingly mediated through finance, and is thus immediately entwined with the reproduction of capital (with the effect that the reproduction of growing swathes of the proletariat is increasingly precarious, as shown by the current wave of foreclosures and repossessions), and financialisation enables the integration of the capitalist exploitation of labour-power on a planetary scale, the very means which on one level enable capital to fight its way out of crisis threaten crisis on a higher level - the level of the reproduction of the class relation itself.