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State and crisis
by Tomasz Konicz
Sunday Nov 7th, 2021 6:32 AM
Capitalist crisis policy is ultimately in a crisis trap, it can only choose between different paths into further crisis unfolding together with the inevitable devaluation of value: deflation or inflation. The central banks' billion-dollar "quantitative easing" may have prevented the collapse of the world financial system in 2020, but it is only a postponement of the crisis.
State and crisis
The role of the state in maintaining capitalism becomes clearer in the crisis
In periods of crisis, the importance of the state in maintaining the process of accumulation increases. Authoritarian tendencies also increase.
By Tomasz Konicz
[This article published on 10/21/2021 is translated from the German on the Internet, jungle.world - Staat und Krise.]

It is a widespread misconception on the left, mostly cultivated by social democratic currents, to regard the state as an ordering counter-principle to the alleged "anarchy of the markets." The state does not form an antithesis to the market and capital; in its capacity as "ideal total capitalist" (Engels), it is a necessary institutional pole of capitalist socialization, whose apparatus of power maintains society and whose maxim is the optimization of the process of exploitation of capital. Since the market subjects pursue only their narrow-minded profit interests and the fetishistic capital dynamics that unfold through market mediation are blind to the social and ecological consequences of their exploitation movement, the state must set an appropriate legal framework and intervene in various ways so that the system does not perish from its internal and external contradictions.

China's authoritarian state capitalism and Russia's state oligarchy are not models for the future that are being phased out, but rather models that are in crisis.

Capital is also historically inconceivable without the state. The absolutist state monsters that took shape in the perpetual European war contributed significantly to the emergence of capitalism - in the context of the early modern "economy of firearms" (Robert Kurz). The monetization of medieval feudal levies and the establishment of a state manufactory to supply standing armies paved the way for capitalism, as did Europe's genocidal raids in the "New World" or the so-called enclosures, i.e. the transfer of common ownership of land into private ownership.
The state was also the central economic actor of every catch-up modernization effort in the 19th and 20th centuries. Before Germany, Japan or South Korea became propagandists of free markets and free enterprise, the state apparatuses of the same countries sealed off their economies with tariffs to protect their state-directed industrialization process from the overwhelming competition of developed industries.

Especially in times of crisis, the state becomes the central economic actor. It acts as the last resort of capital when the contradictions inherent in the valorization process have once again produced speculation and debt bubbles and ultimately a market collapse. Then hastily enacted cost socialization laws, government stimulus programs, subsidies and central bank money printing must prevent an even more widespread collapse.

The 1930s saw a sharp increase in state economic activity in the wake of the Great Depression of 1929, for example in the form of U.S. President Franklin Delano Roosevelt's "New Deal," as well as rampant global protectionism that exacerbated the crisis. But the financial market-driven neoliberalism that took hold in the U.S. in response to the stagflationary period of the 1970s was also accompanied by enormous right-wing Keynesian stimulus programs, including increased defense spending, which nearly tripled the national debt under President Ronald Reagan.

While the importance of financial markets grew in the 1990s, the role of the state was increasingly pushed out of the public debate. But at the latest with the bursting of the U.S. real estate bubble in 2007, the state, which had been frowned upon in neoliberal discourse, was once again in demand. Economic stimulus programs worth billions of euros were launched, while central banks began buying up junk securities (mortgage bonds) and government bonds in order to stabilize the tottering financial system.

However, the crisis measures of 2007 to 2009 pale beside the government programs of the past year. According to the consulting firm McKinsey, government crisis programs were already around three times as large as those of twelve years ago, with a global volume of around ten trillion U.S. dollars by mid-2020. This time, China, already caught up in the dangerously growing speculative construction boom, held back with economic stimulus measures, but the Federal Republic of Germany, for example, forged ahead with a comprehensive crisis response equivalent to a total of around 33 percent of gross domestic product and abandoned its long-standing resistance to EU economic stimulus packages.
The introduction of transfer and stimulus programs in July 2020 is a lifeline for the eurozone, which had previously been heading for the abyss and was riven by growing imbalances and centrifugal forces. In the U.S., too, the government under President Joe Biden is facing strong pressure to implement, at least in part, the strengthening of social programs promised in the election campaign, in addition to the planned infrastructure plans worth billions.

The increased economic role of the state, which in Germany resulted in comprehensive state loan guarantees for companies threatened with bankruptcy and the announcement by Finance Minister Olaf Scholz (SPD) that corporations could be temporarily nationalized if necessary, is also accompanied by increased isolationist tendencies. The state drive toward protectionism, fueled by the systemic overproduction crisis, was already indirectly expressed in currency devaluation races before Donald Trump's presidency. This policy, in which export surpluses are achieved by devaluing one's own currency, set in after the crisis surge in 2008. Even after the end of Trump's openly protectionist policy, trade tensions between the U.S. and the EU remain, while at the same time there are signs of a further intensification of the trade conflict with China, in which the Biden administration wants to form a common front with the EU and Germany.

For a leading export nation like Germany in particular, this development is disastrous - also domestically, since export dependence has so far set limits to the fascization of the German state. While Western crisis policy formally affirms the maintenance of free world trade, which is also sold as a lesson from the disastrous consequences of the protectionism of the 1930s, more and more informal trade barriers are being erected - for example, in the form of the "climate tariffs" planned by the EU to make it more expensive to import goods from countries with lower climate standards - and bilateral trade agreements are being concluded that exclude those who are not party to them.

The looming energy crisis - with rising energy prices, the first European steel mills are currently demanding subsidies - will also further strengthen the role of the state in the economy. However, as the intensity of the crisis and social dislocations increase, so does the tendency toward authoritarian state crisis management. Building on the groundwork of neoliberalism, which coupled social cuts with the expansion of the surveillance and police state, the last bourgeois democracies of the West - without an emancipatory movement to counteract this - are threatened with the same fate as Turkey, Poland or Hungary. China's authoritarian state capitalism and Russia's state oligarchy are not models for the future that are being phased out, but rather models that are in crisis. Alexander Lukashenko is not the "last dictator of Europe," but the vanguard of an authoritarian state capitalism that can no longer create an ideological consensus in the manifest socio-ecological crisis and must resort to sheer force to support its rule.

State interventionist crisis management is built on sand, even in the centers. The increasing state economic activities - for example, in infrastructure investments and the "Green New Deal" - are financed by the mediated money printing of the central banks. The central banks of the euro area and the USA are buying up government debt in their currency areas with newly generated money. This is what makes growing state consumption possible in the first place, but is meanwhile fueling inflation. Capitalist crisis policy is ultimately in a crisis trap, it can only choose between different paths into further crisis unfolding together with the inevitable devaluation of value: deflation or inflation. The central banks' billion-dollar "quantitative easing" may have prevented the collapse of the world financial system in 2020, but it is only a postponement of the crisis.
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