Theses on the crisis: On the road to nowhere

1) Polarisation and divisions

In all the crises of capitalism the balance of power initially shifted against the working class. During this crisis, too, worse conditions have been enforced: work has been intensified, real wages have declined, and social welfare has been cut. We are witnessing the biggest redistribution of wealth from the bottom to the top in human history. This redistribution does not only result in a harsh polarisation between the 'super rich' and the 'poor', the policy of crisis also deepens the differences within the class and intensifies individualisation.

2) Upheaval

But – in such historical moments societies also redefine themselves. The global crisis has taught a lot of people about the essence of capitalism, the states, the banks etc.; it delegitimises capitalism. New protagonists have taken the initiative – aware of the fact that they have become subjects of their history and history in general. The uprisings in North-Africa are the forefront of a wave of global struggles. They have already inspired movements in Europe and the USA – and in the medium-term they have toppled two main pillars of global capitalism: cheap oil and the re-cycling of 'Petro-Dollars' on the global financial markets.

3) Crash or stagnation?

Regarding its progression, scope and historical significance, the current crisis compares to the long depression of 1873 to 1896. This quarter of century was not characterised by a constant down-turn, it contained periods of economic growth – but these periods were never sufficient to compensate for the initial slump and were themselves constantly interrupted by setbacks. Since the crisis and slump of 1973 ('oil crisis') the rate of accumulation has fallen and unemployment has increased; the global crash after the financial crisis of 2007 was the transition into stagnation. All elements of capitalism are being put into question: banks, technology, welfare systems, political representation, currency system, energy production; 'Fukushima' demonstrated to everybody that the capitalist form of energy production threatens the planet itself. In 1972, at the beginning of the crisis the Club of Rome1 countered the demands of the working class by referring to ecological limits. Previously, capitalism was able to avoid struggles over social distribution by economic growth. Today, the 'limits of growth' have become limits of capitalism itself.

4) The assembly line has changed the planet

Capitalism as we know it today developed during the long depression: industrial production of durable products of mass consumption (sewing machines, vacuum cleaners, cars, fridges). The chemical and electrical industries came into existence, and corporations became the typical organisational form of capital during that phase. Oil / electricity replaced coal / steam as the main energy resource. In this period we also witnessed the formation of social democracy and industrial trade unions. The colonial powers destroyed the economy of the former periphery (first of all in China and India) to such an extent that millions died of starvation – a process which is seen as the 'birth of the Third World'.

The assembly line was the essential innovation. The engineers called it the 'peasant harness', because the assembly line made it possible to replace qualified artisan-workers with migrants and peasants 'who had been made redundant'. A tremendously productive combination between the expenditure of labour power and the accumulation of dead labour in form of machinery developed, which has transformed the whole planet. It was possible to produce food and basic necessities for the working class as cheaply as never before and this characterised the 'consumer society' of the second half of the 20th century (food stuff, textiles, later on household appliances and finally the car – nearly all commodities, which we buy today, are manufactured industrially).

5) The stages of Fordism

This – the workers' cheap consumption – was not inscribed within 'Fordism', but the result of hard struggles. Ford did not accept any union organisations on the shop-floor; he made use of spies and thugs and even forbade his workers to talk at work. They described the biggest Ford plant River Rouge at the time as a “huge concentration camp based on fear and physical violence”. In the 1930s the workers' revolts and factory occupations put an end to the authoritarian system of mass production at the assembly line. The recognition and integration of the trade unions, real wage increases according to productivity development, job guarantees, sick-pay, (company) pension etc., formed the foundation of the short phase of 'Keynesian Fordism' after the Second World War – during which productivity increases were more than ever achieved by the 'scientific' division of the labour process, the imposition of work rhythms embodied in the machinery and a general intensification of labour.

Within two decades this model undermined its international foundations. Japan and Germany became serious competitors of the USA, which also dissolved the monetary basis. The currency system resting on the gold standard of the US Dollar and fixed exchange rates started to shake and finally collapsed in 1971. Above all, in exactly those years workers' struggles intensified enormously and they not only demanded higher wages and less work, but essentially targeted the 'factory discipline' itself. For the first time in human history a global subject emerged, which had a deeply egalitarian character and outlook. It emerged out of the mass workers' struggles of a multi-faceted class of 'semi-skilled peasant workers' and their interaction with the anti-colonial struggles of the global south and the youth movement, which strengthened themselves through their interaction. These broad-based struggles in factory and society, which had the multi-national assembly-line workers at their core, burst open the constellation of the assembly-line and (the reproduction of) the working class, which was connected to it.

6) Over-accumulation crisis

Capital has tried to overcome this crisis by a radical restructuring of labour markets and of the labour process itself, in an attempt to dissolve any collective subject. Casualisation and outsourcing segregated the work-force, large factories were dismantled, temporary work and 'atypical employment' became more widespread, social security systems were privatised etc. During the 1970s the 'humanisation of work' and automisation were attempts to encircle the big factories, and subsidies and tax reliefs were supposed to move employers to invest again. The budgets for welfare expenditures were initially even extended. All this raised state debts, but did not deliver any results: wages and social demands further increased and investments did not materialise.

The 'big deceleration' only began by the time of the 'second oil crisis' at the end of the 1970s: a massive hike in interest rates, cuts to welfare services; end of the projects of 'humanisation'. Paradoxically it was the 'monetarist turn' in the economic policies – symbolised by the accession to government power by Reagan and Thatcher – which lead to an explosion in the volume of money and state debts.

Despite all these measures the rates of accumulation declined further from the beginning of the 1970s and the capitalists kept on searching for other 'investment opportunities': they partly invested in the relocation of production to 'low wage countries', and an increasing share was invested in financial business. We understand this interrelation between the crisis of valorisation and growing financial flows and credit as a 'crisis of over-accumulation'; the developmental stages since then have only been a transformation of this crisis.

7) The 1980s – the decade which changed it all

In the end the capitalist counter-attack only progressed because it was able to relate to 'behaviour patterns' from below: trying to escape from work, becoming self-employed/independent, alternative economy, buying shares etc. During the end of the 1970s and the early 1980s capitalism was threatened with the 'big crisis' – but the 1980s became a turning-point: defeat of the Iranian revolution, military coup in Turkey, defeat of the miners' strike in England... At the end of the 1980s 'everything was different' from what it was like at the beginning of the decade; the formerly radical left, as well, had discarded their egalitarian and collective perspective and jumped on the train of postmodern individualism or anti-German zeal for 'big politics' in its worst form, war.2 Right from the start these people interpreted the collapse of the Eastern Bloc as yet another defeat of an egalitarian outlook, not as a decampment.

Only shortly before, a new monetary policy had become prevalent; Greenspan, the new chairman of the American Federal Reserve System, had countered the banking crash in the US in 1987 by low interest rate policies, which guaranteed that share prices and prices of other financial assets would not drop below a certain bottom. This so-called 'Greenspan put' was the counter-piece to Keynesian wages, which did not drop below a certain level either. This new monetary policy allowed 'profits without investments'.

8) Credit expansion and asset inflation

Since the mid-1990s the so-called 'real economy' only grew because of the credit expansion. Credit firstly expanded within the IT (dot com) bubble. When this bubble burst Greenspan transformed it into a real estate bubble (it was called the Great Bubble Transfer). The implosion of the latter kicked off the current global crisis – and up to now they have not been able to resolve this combination of real estate and banking crisis, neither in Ireland, nor Spain, the UK, nor least of all in the US.

This time again, the end of recession was accomplished by the conscious creation of an asset bubble. Contrary to what is publically claimed, the goal of Quantitative Easing, a combination of zero-interest rate policy and buying up by the state of their own government bonds, was not to motivate the banks to issue more credits by providing them with cheap money – Quantitative Easing is meant to raise the prices of the assets and thereby to stabilise the bond markets. This made possible the survival of the banks and gave them the means to obtain massive profits soon after; also certain industrial branches prospered again.

9) The banks are in the centre of the state debt crisis

Due to the flight of capital into finance, the finance sector has grown over-proportionally since the 1970s. In 1947 in the US the finance sector (banks and insurances) accounted for 2.5 per cent of GDP, at the beginning of the 1980s it had grown to 5 per cent, since 2000 it accounts for around 8 per cent – the share of industrial production shrunk from 25 per cent in 1947, to 20 per cent in 1980 to about 11 to 12 per cent since 2007. The share of the finance sector of all corporate profits was about 10 per cent at the end of the Second World War, in 2002 it was 40 per cent and even in the first half of 2009 it was still 28 per cent. (In comparison, according to the Federal Office for Statistics, in Germany banks made 18.5 per cent of total capital gains in 2008.) The finance sector is the most heavily over-accumulated sector in contemporary capitalism.

In 2007 and 2008 this global banking system was close to collapse. In 2008 and 2009 the state governments spent at least 18 per cent of global GDP for its rescue. They were able to avoid the crash – but have launched themselves into historically unprecedented debts. Despite all of this, a lot of banks are still insolvent, so-called zombie banks, and are only kept alive by repeatedly huge infusions of capital. An important measure of resuscitation lies in the fact that the banks earn nicely from the debts which the states got into in order to save the banking sector. If such a state would declare bankruptcy, some banks would go bust. This is why the IMF, the EU, the US and China and their federal banks try anything possible in order to avoid a state from defaulting. There are two main dangers for banks which have been protected in this way: a bank run, people lose confidence and take money out of their accounts, or the freezing up of the inter-banking market, banks lose confidence in each other and stop borrowing each other money. Both events have structured the development of crisis in 2007/08 and the current wrangling of the so-called 'Euro crisis'.

10) The crisis of the EU

The state debt crisis became visible in the Dubai crisis in November 2009, but it has unfolded since 2010 in the European periphery. The huge imbalances within the Euro zone, which have been working well for the German export economy, are pushing the states of the periphery into bankruptcy. The 'Euro crisis', which returns in short intervals, is not a currency crisis – in comparison, the Euro is to date more stable than the Deutsche Mark used to be, in relation to the US Dollar the Euro is overrated, and it becomes increasingly important as a global reserve currency. The 'Euro crisis' is a crisis of the European banks, of political governance and of the EU itself. In particular, it is the structure of the EU itself which aggravates the crisis. It is not designed for a common European welfare and fiscal policy; the ECB independently decides about monetary policy, and is focused exclusively upon the stability of the Euro. Therefore the crisis has so far been managed by 'shadow governments in Brussels' and a 'state of permanent emergency to rescue the Euro'3 . The main burden is on the ECB, which rescued the banks by buying their junk assets. It bought the state bonds of the over-indebted states (for what it's worth breaking a cherished taboo by this), and at the same time putting pressure on these states to cut their public expenditure. But first of all, by its interest rate policies, the ECB tries to prevent workers from struggling and obtaining higher wages.

11) USA – the hegemon decomposes

The European periphery was only the weak link in the chain, the Euro crisis only the prelude to the next round, in the meantime the crisis of the US has come to the fore. On 16th of May 2011 the US state debts have grown beyond the legally defined upper-limit of 14.3 billion US Dollars; the government might be able to muddle through to the 2nd of August 2011, but by then the congress will have to have raised this upper limit, otherwise the state is threatened with default. At the end of June the second and last phase of quantitative easing (QE2) runs out, and after that the interest rates will most probably rise and the real estate crisis is likely to get worse again – people already talk about a 'double dip' of the US real estate market. So far the US was able to benefit from the crisis, because massive financial streams entered the 'safe haven' of the USA, which meant that the US state was able to sell its state bonds at very low interest rates. Once interest rates hike, the US state bond bubble might burst and the US-Dollar might crash – which would be the first crash of a truly global key currency. Keynes once issued the warning that there is no better way to topple a socio-economic system than to ruin its currency.

12) Global tectonic shifts

For the first time in the history of capitalism a hegemon decomposes without a follower being there to replace it.4 Hegemony is always based on the periphery being able to get its share. The global uprisings are an expression of the realisation that this very fundament of hegemony has come to an end. The BRIC-states might challenge the hegemonic position of the US, but a so far a new hegemon has always extended the productive cooperation of a global division of labour and industrial base by way of a new model of accumulation. A new model of accumulation has not been in sight for 40 years – Toyotism has been a mere copy of Fordism focussing on 'optimisation' and cost cutting and the Chinese model is only a copy of this copy.

During the last cycle 'Chimerica'5 has resulted in a few years of stable global economic growth. But this symbiosis of double-digit growth and huge export surplus on the side of China and real estate boom and massive deficits on the side of the US has been broken up. The USA is not able anymore to play the role of the global buyer of last resort. The high price for the rescue of the banks has to be paid and the high levels of private debt have to be lowered – so it will be impossible to increase consumption at the same time. The current efforts to solve the crisis mutually undermine themselves. The Quantitative Easing of the Federal Reserve of the USA produces a massive glut of 'cheap money'. This money, desperately looking for possibilities where to be invested has produced huge price hikes in raw materials and food and inflationary bubbles in emerging countries (and partly in the IT sector again). The Brazilian finance minister has called this a 'currency war'. The austerity programs in the European periphery and the stimulation of German exports to record levels have aggravated the global imbalances extremely (so far German exports have mainly gone to other EU countries, but now they increasingly go to the BRIC states).

13) The situation in Germany

The strong export dependency of the German economy can be seen as the reason for both, the relatively heavy slump in 2009 and the quick recovery in 2010. It was in particular, the economic stimulus package of the Chinese state which doped the German economy: in 2010 German exports to China hiked by 40 per cent. Germany was able to benefit from the 'Euro crisis' in similar ways like the US benefited from the global crisis by being able to sell their government bonds at very low interest rates. Due to the new export records and the economic stimulus programs such as 'short-time work', and the 'car scrappage scheme'6 , the labour market and wages in the core strata of the work-force developed in a way which seem to confirm the propaganda that Germany resurrected from the crisis in a stronger condition than it had entered it. Actually, the income of Hartz IV claimants has been further reduced, temporary contracts have become more widespread, and relatively well-paid industrial jobs have been replaced by 'service sector jobs', the so-called 'structural change' towards services has become stronger.

However, the recovery depends solely on exports and the global demand is already again in decline.

14) Crisis of politics

“The class of capitalists does not exist independently from the formal political institutions, which it dominates. The class of capitalists need the mediation of a formal political sphere in order to exist.”
Mario Tronti, Workers and Capital; translated from the German translation

“.. economic globalization, political democracy, and the nation-state are mutually irreconcilable. We can have at most two at one time ... if we want democracy along with globalization, we must shove the nation-state aside...”
Dani Rodrik, Greek Lessons for the World Economy – 11.5.2010

The ruling form of politics, including political regime and policy, are being eroded, on the one hand because of the de-legitimisation due to the global crisis, and on the other, because they are merely trying to win time from emergency measure to emergency measure, trying to postpone the crash. The political class is internally divided over this issue (within governments, within the reserve banks, governments vs. reserve banks etc.) and is thinning out; not only in Germany politicians defect in quick succession. In Belgium they have not been able to establish a government for more than a year now; turnouts during elections are decreasing everywhere, and the 'confidence in politicians' has reached historic low levels.

This 'crisis of politics' manifests itself particularly clearly within the EU. The “permanent state of emergency to rescue the Euro” by “shadow governments in Brussels” cannot be “justified in front of the voters” anymore – several governments have already collapsed over this. During the last few weeks and months the street, i.e. the 'occupied squares' have been the focus of revolt against this rigid political super-structure, which now bears little relation to a social base.

15) The last super-power is the working class

“The destruction of the bourgeois state means to destroy the power of the capitalists. In contrast, the working class does very much exist independently of the institutionalised spheres of its organisations.”
Mario Tronti

The mode of accumulation centred on the assembly line and the factory has reached a limit also because of the running out of the reservoirs of labour. In the capitalist centres only a small percentage of the population still works in agriculture. With India and China the last big reservoirs of global labour have been tapped – and in China half of the population already lives in cities. Within the world-wide struggles, whose decisive front-line currently runs straight across the Arabic countries, we can notice six main lines along which a global working class has started to move:

• Since the frontal attacks of Thatcher and Reagan, the ruling class had learnt from experience that the more they bash the working class the more they are able to keep it under their thumb – 'shock and awe' later on was the name of US war strategy. This strategy has come to an end now: repression now leads to a multiplication of resistances again! And they had learnt from experience that the more they fragment the working class the more they are able to exploit it – now it is from the casualised segments of the working class where the fight back has erupted. It is about dignity, higher wages, against corruption – the politicians are told to piss off.
• Already since autumn 2007 to about mid-2008 in more than 38 countries movements against the crisis emerged. Uprisings took place in, amongst others, Cameroon, Haiti, Burkina Faso, Gabon, Honduras, Morocco, Tunisia and Egypt, which were termed “food riots” by the mainstream media. In their organisational forms and social composition many of these uprisings were actually precursors of the insurgencies in North Africa during late 2010 and early 2011: a mixture of rank-and-file organisations, trade unions, oppositional political groups and first of all young people working in the informal sectors (some of them formally highly qualified).
• The feeling of uncertainty and the proletarianisation of the so-called 'middle classes' has led to a new type of social movement, for example, the movement against Stuttgart21 7 and the growing forces of the mobilisations against nuclear power even before Fukushima; these declassed 'middle strata' also played an important role in the uprisings in the Arab countries and the square occupations in southern Europe.
• “Enough is enough!” Often suicides out of desperation triggered broad movements. Probably most famous examples are Foxconn/China and Tunisia, but also the suicides at France Telecom resulted in wider outrage and solidarity.
• In the mass mobilisations against the crisis in France, Greece, England, Italy Portugal and Spain school students and youth played a particularly active role. This is also true for the mass movements and strikes against price inflation, corruption and the government in Tunisia, Egypt etc.
• In summer 2010 we saw the first offensive workers struggles in China since the massacre of Tian'anmen.

  Not only in Europe we expect a hot summer - but what about Germany?

  16) When will the movements arrive in Germany?

  Once more we face a situation where movements kick off all around us, but they do not arrive here in Germany. There have been many smaller struggles against factory closures, there have been massive mobilisations against Stuttgart21 and nuclear power, there is a wide-spread anger towards the arrogance of power. But there hasn't been a coming together in a 'movement'. May be we first have to shake off the last twenty years in order to realise that it might not always be the way it currently is. In 1988 a movement of hospital workers spread from France to Germany. In order to make such things happen we have to overcome the symbolic 'solidarity actions' of small groupings and start from the social relations themselves.

  17) The absence of the political recomposition of the (radical) left.

  The political protests against the crisis in Germany remained focussed on the state – from trade unions to the so-called 'radical left'. The trade unions want to strengthen the state 'against casino capitalism'. Others advocate for working-time reductions and a guaranteed minimum income. The antifascist left only discovered the crisis when the economy in Germany had already recovered. Previously an intellectual leader of the IL (Interventionistische Linke) made use of Heidegger and Nietzsche in order to argue against the social implications of the crisis, and opened a think tank together with the Green Party, the SPD and PDL [Partei Die Linke – former ruling party of 'socialist' Eastern Germany, now a mainstream left party. As part of federal state government, this party enforced a severe austerity program in the federal state of Berlin]. Apart from that the IL restricts its politics to campaigns as 'join-in'-politics for people who do not want to question their own social situation anymore. But a political left, which is able to imagine social struggles only in form of campaigns triggered by their own organisations, is not 'radical' – this would mean to grasp things from their roots and not from the potential to make a good impression in the media.

  18) Starting from one's own social conditions.

  The crisis has intensified the tendency towards individualisation – continuing and aggravating the tendencies existing already previous to it. Nearly everyone has to spend more time dealing with job, studies or other educational efforts, and family. The work and job pressure has reached such levels that people don't even find the time to think about resisting. Comrades from Spain had complained about these tendencies, too – but then a movement started despite of all this which addressed these very same issues: precarious jobs, miserable wages, and the stress to get any kind of job.

  We should try to do two things. Firstly, act more straightforward 'at work' again; when if not now, when in Germany a lot of companies are hiring massively again. Secondly, try to raise, within the 'outraged' mobilisations against nuclear power, train stations or air ports our criticism of social relations: “Will it be any better to be on Hartz IV, once the nuclear power plants are switched off?” According to general experience the leading figures and their 'real(istic) politics' reduce these movements to 'the question of the train station', while most people join the demonstrations as 'whole humans', with their fears, wishes and social aspirations which go way beyond the 'train stations'.

  19) What has to be done!

  We do not position ourselves within the tradition of social democracy or their left variants; we do not have to offer alternative programs. We also do not wait for the total collapse of capitalism. Instead we place our hope on the social learning processes made during the struggles against the crisis and on the power of the working class, which has never been as global as today. We have to deal with the real (internal) class divisions and see what is changing or can be changed. We should participate wherever possible in actions, strikes, occupations etc. Gather information about struggles and movements all around the world and circulate them. First of all establish direct relationships and take part in the discussions. And finally we have to get engaged in the theoretical-political confrontation with the 'left of capital', which offer themselves as the better crisis managers to the ruling class.

  Social democracy and trade unions are historically obsolete; trying to rescue state-supportive trade unions is as hopeless a case as attempts to save 'Fordism' or 'Neoliberalism'. Trade unions in Germany do not represent the millions of unemployed, nor the nearly one million temporary workers. Their strategy to defend the interest of the core work-force by 'sacrificing' the fringes has met a dead-end. We don't shed too many tears over the decay of these organisations; it's enough to think about the role they played during the introduction of Hartz IV in order to overcome the mourning. Much more interesting is the question which kind of new organisational forms and forms of struggle will emerge – and the fact that during the last months they have developed in opposition against exactly these political and trade union representations.

  Criticism of the politics of emergency – Right to proletarian violence!
  Appropriation of the enormous accumulated wealth - No payment of the debts!

  Well we know where we’re goin’
  But we don’t know where we’ve been
  And the future is certain
  Give us time to work it out
  And it’s very far away

   

• 1 a capitalist think-tank
• 2 The 'anti-Germans' are a specific political tendency within the German 'left'. They supported, amongst others, the US attack on Iraq and Afghanistan 'in defence of Israel'.
• 3as even the Main articles in the Financial Times Germany from 12th and 20th of April 2011 described the situation.
• 4See Immanuel Wallerstein and Giovanni Arrighi concerning the question of the need of a capitalist global economy for a hegemonic power; Arrighi makes out four hegemonic powers in capitalist history: Genoa during the 16th century; Holland during the 17th; British Empire up to the late 19th; since then the USA; also see current article by Steve Colatrella: In Our Hands is Placed a Power
• 5 'Chimerica' is a term describing the mutual economic dependency between USA and China, which became the pillar of the world economy
• 6In 2009 the German state paid a bonus of 2500€ to people who would scrap their old car and buy a new one – officially presented as an environmental friendly initiative.
• 7 In 2010 a mass mobilisation emerged in the German town Stuttgart against the construction of a new underground central train station, called Stuttgart21