Everythiing under Control on the Sinking Ship

Everything under Control on the Sinking Ship

Over-accumulation, Indebtedness Crisis and “Politics”

By Robert Kurz

[This article is translated from the German on the World Wide Web, http://www.giga.or.at/others/krisis/r-kurz_alles-im-griff_mk6-1989.html.]

Since the middle of the 70s, the signs of a grave reproduction crisis of the goods producing world system have multiplied. Falling or stagnating growth rates, a “structural” base mass unemployment in the developed OECD countries and at the periphery of the world market largely uncoupled from the business cycle, increasing protectionism and flickering moments of a “trade war” between the US, Japan and Europe and the smoldering “debt crisis” of the Third World mark a crisis phenomenology that cannot be denied which is superimposed by the dangerously growing crisis of the eco-system on the planetary scale: from the “ozone hole” in the earth’s atmosphere to the destruction of the rain forests in Africa and Amazonia, from the spread of wilderness to the poisoning of the food chain, from the destruction of internal ecological systems like the North Sea, the Alps and the Mediterranean sea to the irreversible contamination of the soil and the drinking water and so forth.

Simultaneously “command socialism” as a pseudo-alternative to this destructive system of goods production though in reality flesh of the same flesh has entered into an even sharper crisis. Stagnation and cultural sclerosis, an increasing decline in productivity compared to the West, national unrest and separatism are characteristics of this crisis as well as a rapid destruction of the environment, perhaps the only area on which the “western standard” was not only reached but surpassed.

However both degenerate systems always seem to continue “somehow”. The person accustoms himself to everything, even seemingly to his own downfall. While cheap moralizing apocalypses were in fashion for a while, the diverse crisis prophets today are treated like those lying shepherds who triggered a false wolf alarm many times and whom no one believed any more when the wolf really came. For a long time, nothing was as taboo and out on the left as the suggestion of any theory of collapse. Capitalism appeared more flexible and resistant than ever… New phenomenon in the development of capitalism shows much greater constancy than originally assumed. The accumulation of capital seems to perpetuate through all crisis phenomena. People accustom themselves to “relative” mass unemployment. The Third World sinking in absolute impoverishment and de-industrialization still pays more and more. The historically unparalleled crash of the stock markets in October 1987 seems hidden without a trace or consequence. Chernobyl itself is forgotten and lost like a wicked feverish dream… “Everything under control on the sinking ship.” The doomsday atmosphere has long seemed boring since the ship is not yet submerged… Crisis consciousness like social criticism was minimized to a carnival hit. Across all political-ideological camps, a far-reaching crisis management competence is entrusted to the worldwide capitalist management.

Nevertheless the conditions or “fundamentals” have not improved one iota but have even become more negative. The crude beer table empiricism which happily makes the easy “belief” in catastrophic defeats of worldwide capitalist reproduction vanish is strongly shown up in its incredible short-sightedness not blurred by any logic. This empiricism is the hereditary element of middle class-positivist “fact” orientation which lives like a child with an enormously abridged horizon of time. Because the form of its own socialization is neither understood nor under practical control, its dynamic is experienced like an outward natural process or an unknown power. A few months before “Black Monday” in October 1987, middle class economic journals mocked all “gloomy or depressing predictions about the imminent ruin of world trade, the banking system, the stock exchange and the whole economic order generally… In an attack of honesty, Wolfram Engels, the editor of “Wirtschaftswoche”, wrote: “The chancellor appears like a Tolstoy general or strategist who makes wrong decisions on account of wrong information but because they reach the troops at the wrong time are beneficial. When the decision subsequently turns out right, it can at least be sold as the result of a wise prediction.”

This ghostly humor casts a strange light on the supposed crisis management competence of capital or its figureheads and character masks. In reality, capitalist crisis management have nothing “under control”, according to “informed circles”. The fundamental contradictions of worldwide goods production are still executed more than ever “behind the backs” of subjects made into commodities in the West and the East. The dangerous and destructive fetishism of commodities joins both systems into a whole. Both societies are based on abstract work, “values”, goods and money which is the common ground of their crisis even if the specific blind mechanisms of commodities are different and historically modified.

If the crisis is presently dramatic in the East, its inner dynamic starts from the West. The deep accumulation- and world market crisis were deactivated by the previous “postponing measures” of the G7 and also driven to dizzy heights. The real culmination of crisis is still in the future. Whether the possibilities of “postponing” have not already been hopelessly exhausted could be asked. To understand the actual situation in its whole range, the logic of the conditions, the nature and superficial phenomenon in the most recent stage of development of capitalist relations must be described.

The Crisis of Capital Accumulation

After the two world wars essentially swept aside the residual pre- and early capitalist sectors of global reproduction (the colonial system as well as forms of traditional subsistence economics, family bonds, inflexible class structures and so forth) as obstacles of further capital accumulation and totalization of the world markets, the “Fordist” post-war accumulation rose with the mass production of automobiles as a “key industry” along with home electronics at historically unparalleled growth rates. Between 1951 and 1965, growth in West Germany amounted to 7% with peaks of 11.8% (1955), 8.8% (1960) and 6.6% (1964). The bases for all these earlier epochs of exaggerated accumulation which seemed like “miracles” after the long depression and stagnation of the 30s leading to the Second World War were not only the expansion of the world markets and the opening of borders under the dictates of US supremacy or the maturing of new products and technologies for mass production or mass needs but the ability of capital to soak up enormous multitudes of workers in the centers of productive commodity industry (from a strict accumulation theory perspective).

“Aggregate capital” has become immediate world capital, not national or “economic” in the old sense. The “coercive laws of competition” drive capital into forcing rationalization and scientization… The accumulation of aggregate capital is nothing but the expansion of the abstract utilization of labor power… Thus the forced rationalization- and scientization process can intensify the tendency of over-accumulation and the crisis potential. This has already happened. The “release” of labor, the transformation of “full employment” into mass unemployment that includes pressure on wages and working conditions, cannot be reduced to an aggregate capital’s capacity for expansion. The self-dynamic of the scientific-technical rationalization process is irreversible. A level of technology, organization of work processes and so forth cannot be questioned any more for capital. When the competitive pressure intensifies through the forced scientization- and rationalization process, the pressure of operational logic also increases to madness and intolerability, often concealed behind sophisticated “motivation” strategies of management. The operational ruthlessness toward the natural foundations of life necessarily grows simultaneous with this pressure. Despite recognized dangers, all governmental and non-governmental counter-measures fall helplessly behind the brutal economic pressure for results. The destructive potential against the natural environment initiated and developed in the Fordian post-war boom is unleashed more and more. Technologies, which are inadequately analyzed in their consequences, are rushed through in an almost suicidal way.

The chances of a new historical expansion of capital in a “post-Fordian” and “post-crisis” capitalism are probed. The official optimism of all the figureheads, faith healers and careerist “bearers of hope” was preached for years. Fluctuating between fear and hope, this official optimism clings on one side to monetary forms deeply anchored in the mass consciousness while on the other side seeing the light in the tunnel in a supposed mitigation or moderation of the crisis phenomenology. That a great depression did not occur after the October 1987 crash of the stock market encouraged rash prognoses of capitalist happiness in a new accumulation era. “Pendulum swings to optimism – the world may be entering a new era of growth”, the “International Herald Tribune” declared. However a “new era of growth” can only be derived from new historical capacities for utilizing labor power on a large scale. In other words, the process of the scientization of production must overcome the logic of one-way rationalization and the successive elimination and technological substitution of labor power. Where are the conditions of the possibility of such a solution? How did capitalism overcome its accumulation crises in the past?…

The creation of new capitalist branches of production is necessary, whether as capitalization and industrialization of previously non-capitalist (skilled trade or rural) production or as the genesis of completely new branches of production and mass needs from industry itself. The best examples are the key- and growth industries of Fordism, automobile manufacture and budget or home entertainment products (video and audio equipment).

The analysis of new modern technologies like microelectronics, computerization and “artificial intelligence” (AI) in their concrete relation to the future of the capitalist commercialization process can explode all these nebulous hopes like soap bubbles. Unlike all earlier innovative technological advances, these new supportive technologies involve automatization potentials, which in contrast to the Fordist automobile industry do not show the renewed capacity of capital to absorb labor power on a large scale. This distinguishes the new technologies from all earlier industrialization epochs of capitalist history. These technologies will never soak up great amounts of paid labor either in their own production or in their consequences for the “older” industries or non-industrial production. Rather human production work will be substituted and eliminated geometrically across all sectors of social reproduction.

Whoever blindly trusts a new upswing of industrial accumulation through “new technologies” will be taught something different today by information science… For most scholars in this area, this brewing technical revolution is so clear that I cannot understand why a sociological study is not commissioned to investigate these potential regroupings or shifts in the social structure.

This actual prognosis repudiates the stereotype of abstract over-accumulation theoreticians with their supposedly imminent “renewal of accelerated capital accumulation” as an “eternal law” just as the false empiricist causal logic of the “long wave” theory is disclaimed with its allegedly inevitable connection of new technologies and new long-term accumulation cycles, the notorious “upswing” prognoses of middle class business cycle pundits. The real “law” today is that on one side the secular logic of the capitalist development process begins to directly collapse with the absolute inner limit of capital accumulation and with the acute historical over-accumulation on the other side. In other words, the “laws” of the development of productive power must irrevocably and irreconcilably crash together with the laws of capital utilization…

The New Physicians at the Sickbed of Capitalism

When the left and middle class crisis theory ultimately leaves the connection of the development of productive power and capital utilization undefined as a “black box”, this is not only because these leftists are empiricistically blinded up to today by the relatively short-term historical experience of the unparalleled Fordist post-war boom and neglect to critically work out the inadequacy of earlier theories of collapse. This respect for the supposedly unlimited reproduction capacity and elasticity of capital did not first start on the derived plane of crisis theory but with a delusion in the uncritical fetishistic understanding of commodities on the most elementary plane...

The motley collection of incredibly trite phrases of a reformism promises the moon without worrying theoretically about the inescapable logic of the commercialization of “value”… This tautological drivel pushed to meaninglessness which stammers about a “politization of all political decisions” only signals the bankruptcy of all “politization” strategies of the new left who altogether remain attached to the concept of middle class subjectivity … The theoretically unfounded flight into “politics” is the common denominator in which the faded academic Marxists of the new left agree. Instead of understanding that the constituted sphere of “politics” is completely obsolete together with the fetish of “value”, a process that can be paraphrased today as “state weariness”, these leftists clutch at the straw of “political” subjectivity as though this could immanently overcome the absolute limits of capital accumulation.

The key term of this absurd balancing act making a mockery of the facts, a veritable topos of left-socialist and neo-reformist theory of the last years, is the “accumulation model”…

Capitalism as an aggregate process and political form defined in its internal historical structures always includes structures of politics and the economy… The worldwide economic crisis produced Keynesianism. But the political “regulation model” of Keynesianism did not overcome the crisis and “politicized” the post-war boom. The growth in the goods production process reappeared in the generalization of labor-intensive Fordist mass production of a new type. A “post-Fordist” model of accumulation must also be derived from such immanent processes of goods production, not from vague rules of a mere “regulation” renewal that strictly speaking would be like a fish without water…

The crisis in all its manifestations is not a reason for a fundamental criticism of the destructive abstract value economy but for a paradoxical reflection that makes a “new functioning” of the capitalist way of production the prerequisite for “fundamental changes”: the classical part of the “physician at the sickbed of capitalism”! “Sooner or later, the model of long waves opens up a meaningful perspective for the further development of industrial society… a new perspective for a solid long-term economic development…” (Huber)

The diverse left-socialist and neo-reformist movements are not only compatible with one another but develop in convergence to the dreams of middle class economists of a “new era of growth”. However such an era will never occur. “Capitalism loses its face.” In this real perspective as seen from a critical analysis of the processes of worldwide goods production, there is no kind of “automatism” of a transition to socialist forms of reproduction but rather the transition to barbarism, military dictatorship and social and ecological catastrophes. Humanity will not escape this by sticking its head in the sand in disoriented illusionism in view of the potential destruction of the dying economic form. The left-socialist preachers of an absurd “radical reformism” who accept the fetishism of the goods producing society should dress warm.

The Independence of Financial Capital

The crisis of capital accumulation is the basis of a comprehensive crisis process that will spread to all social sectors. Alongside the ecological and welfare state crises, the medium of commodity reproduction and its end-in-itself, money, falls into crisis. Over-accumulation appears on the surface of society. In this connection, we return to the problem of realized surplus value and its re-investment.

Under the pressure of over-accumulation of social capital, the part of realized surplus value no longer transformed in expansion investments is in no way completely absorbed by increased rationalization- and science investments…

The notorious “debt crisis” of the Third World has its origin in the over-accumulation and apparent independence of financial capital. To overcome the increasing onslaught of financial capital seeking interest-bearing investment, the international credit system was enormously expanded. “The increase of the liquidity of the international credit system is… the reverse side of the real accumulation of capital” (Altvater, 1987). A considerable amount of this financial capital was lent to countries of the Third World that was gratefully accepted at first with very low interest-rates. However only a very trifling part of this financial capital was used industrially or in a real productive way. These countries cannot withdraw from worldwide pressure on growth rates. The base of the world cycle exists in the developed capitalist countries themselves, not in the periphery. Secondly, a considerable part of these funds seeped away in unproductive prestige- and military projects (as in Brazil) or in the corruption quagmire where it was promptly transferred back with interest to the international banking system. The national central banks could have influenced this artificial inflation of the credit system through regulation (without abolishing the underlying problem of over-accumulation). Nevertheless a large part of this process occurred outside the national monetary regulatory power in a phenomenon paraphrased with the term “Euro-dollar market” or “Euro-banking system”. This phenomenon of the “Euro-dollar” had its origin in the fifties when the US spend a vast amount of dollars in Europe through industrial investments, stationing troops and tourism…

This unproductive uncoupling process of financial capital from industrial real accumulation can in no way be merely reduced to the transfer of “petro-dollars”, the profits of the OPEC cartel from the oil business in the seventies but involves the accumulation of realized surplus value that is no longer re-invested in the core capitalist countries themselves. A vicious circle began which dramatically escalated within a few years. Since the independence of interest-bearing capital cannot be separated in the long run from real accumulation, this process necessarily appears as a “debt crisis”. As in the historical credit explosions after the credit substance was blown, the escalating interest burden quickly became a crushing and insufferable problem. In 1982, Mexico was insolvent for the first time. Since then, the credit crisis swells and flickers (including several “command socialist” states like Poland and Rumania, to say nothing of Yugoslavia bankrupted years ago).

The “self-contained” process of the international over-accumulation crisis could enter a new phase of interest explosion that logically follows the unproductive credit expansion. The former low-interest level could not be maintained under the influence of the growing credit demand that only served more and more interests and compound interests…

The liquid funds from surplus value that are no longer re-invested flow into the international credit system and produce an “investment” pressure while the Third World collapses under the interest pre4ssure and exports itself to death. Simultaneously developed OPEC countries under the pressure of over-accumulation make themselves mobile against this export pressure through protectionist barriers so that the interest level altogether remains high.

The world commodity economy is hopelessly caught in this vicious circle of slow real accumulation and indebtedness escalation forcing up interests. The indebtedness of the Third World is only the tip of the iceberg that has become acutely visible. The entire indebtedness process on the world scale reaches much deeper. It covers the constantly increasing state debt in all countries as well as the private and business indebtedness in the developed countries themselves that have not yet entered their acute crisis stage. However all the global indebtedness processes since the middle of the eighties are surpassed by the enormous state debt of the US (forced up by Reagan armaments to an historically unparalleled extent). The explosiveness of the US debt is that it can hardly be financed by domestic savings on account of the extremely low US savings rate unlike the other industrial countries but depends on the permanent and growing influx of foreign financial capital. Thus the US has become the “vacuum cleaner” which sucks up the liquid financial capital from the whole world in an escalating process, competes with the Third World and in this way aggravates the whole situation. The gigantic balance of trade deficit of the US only represents the reverse side of the indebtedness process in foreign financial capital. This state of the world market euphemistically called “imbalance” (the surplus countries with their credits to the US set their own export records) can only end in a complete disaster that is no longer very distant.

The credit system, a powerful level for triggering capital accumulation, capsizes into a powerful potential crisis since indebtedness can quietly expand nationally and internationally as long as real accumulation also expands. However its limit is reached with the limit of the commercialization process that is powerfully expressed after an incubation time as the collapse of the money and credit system. The apparent independence of interest-bearing capital, the uncoupling of the credit system from real accumulation, has been a side effect of over-accumulation in all great historical crises of capital and ultimately has always led to the monetary “crash”. This was true for the crisis at the end of the 19th century and for the worldwide economic crisis of 1929-33…

The key for the problems of re-scheduling and new indebtedness lies neither in the subjective “profit-seeking” of bank capital nor in the mysterious intrigues of any villains as commonly assumed by the raging and silly moralism but in the objective laws of the capitalist commercialization process “behind the backs” of the subjects themselves, laws that completely evade any grasp within the system of goods production…

“The indebtedness crisis involves deeply anchored international structures of rule in the real and monetary segments of the world market. These rule structures became obstacles of productive worldwide accumulation. Neither the indebtedness crisis nor the stagnation tendencies of the world economy can be overcome without a political decision to change these power structures, thus the hegemonial position of the US” (Schubert).

Can this “stagnation” be overcome in the framework of the existing order with more operational destructive growth? What really “rules” in this world is money as an expression of the “automatic subject” (Marx) as a dying social fetish-abstraction that has become deadly for human reproduction… An (expected) loss of hegemony of the US as a political form of the worldwide over-accumulation crisis can in no way overcome the “stagnation tendencies of the world economy” or affect the real causes of the “debt crisis”…

If a new historical upswing of accumulation, a “new era of growth”, is assumed (and there are no reasons for this assumption), the rotten expansion of the international credit system, speculation and the global swindle must first detonate in a “devaluation crash”. Despite the October crash of 1987, this avalanche has not descended although no way ultimately avoids it.

To assume that the cup of monetary collapse and the ensuing disastrous depression could be passed through “correct” decisions within the logic of money in the capitalist world economy is part of a vulgar omnipotence mythology of capital or its national and international “political” representatives. What these representatives can do in the present situation can only be “wrong”. The mild proposals that Schubert, Altvater and Co. devised are marked by an adventurous naivety. “The US or the US government must initiate a broad international negotiation process which decisively changes the world market position of poor countries and gives global impulses for social renewal in the Third World” (Schubert). It would almost be better to begin a prayer initiative with Mr. John Paul since such subjunctives belong on the Christmas list of a well-behaved child who writes to the infant Christ but not on the summary of a theoretical analysis connecting over-accumulation and the monetary world market crisis.

While the autonomous declared during the 1988 IMF meeting in Berlin that “no discussion is possible with murderers” (would it be different if good, kindly persons acted as character masks of the fetish economy?), Schubert in 1984 urged a strengthening of the IMF legitimated by democratic decisions (!) as a central institution of the international monetary- and credit system instead of a weakening and a revival of those ideas from the founding of the IMF in 1944. These were always capitalist and imperialist ideas but hardly played any role any more. The incredibly hollow and stereotypical “democratization” drivel rattled off like a prayer wheel against every crisis as a “political” flight of neo-reformists backwards to the abstract ideals of the middle class emancipation movements from the Enlightenment to the middle of the 19th century only reflects their hopeless fetishistic confusion in the destructive abstractions of goods production.