Global Capitalism: Futures and Options
Pundits are describing the global ‘credit crunch’ as potentially the worst crisis to befall capitalism since the Wall Street Crash of 1929 and the Great Depression that followed. We doubt the value of such comparisons, but there is no doubt we need to make sense of the origins, nature and meaning of the current financial crisis. Most important, we need to grasp its potential and its dangers for us. Here we print two analyses. In the first (below), Christian Frings suggests that not only was neo-liberal ‘financialisation’ a response to struggle, but that its crisis is now opening up new possibilities for movements. In the second, David Harvie argues that finance plays a role that goes to the heart of competitive calculation, accumulation and class struggle; the present crisis is thus a crisis of both measure and capital.
Since August 2007, it has been looking bad for capitalism’s futures. Suddenly, in a matter of days and weeks, the crisis of the financial markets spread across the entire globe. What had begun as a highly localised event came to shake stock markets and banks on every continent. And it is not over yet.
The crisis has developed in several waves. After every dramatic culmination, and correspondingly hectic interventions by states and central banks, it was announced that the crisis would soon come to an end. But the downswing has so far been unstoppable. When the figurehead German President refers to financial markets as “monsters”, he is recalling the Frankenstein myth already cited by Marx to describe the mysterious thing-ification of capital: “By incorporating living labour with their dead substance, the capitalist at the same time converts value, i.e., past, materialised, and dead labour into capital, into value big with value, a live monster that is fruitful and multiplies.” The rulers are themselves being ruled by an anonymous force, which they defend but whose logic they do not understand.
Every crisis points towards the historical finitude of capitalism. When the futures imagined by those in power do not come to pass, options for movements from below arise. There is no inevitability at play here. But today, options for movements are incomparably greater than they were 1–200 years ago. What is on the agenda today is not merely an institutional correction, such as the return to a stricter regulation of markets. Despite the fact that this is precisely what many are calling for – including large parts of the left who see the crisis as merely an expression of the excesses of neoliberalism – financialisation was itself only the articulation of a fundamental crisis. And it affected the capitalist system as a global whole, and the way it has developed since World War II.
At the end of the 1960s, the system had entered a crisis, not simply because of the ‘internal laws of motion’ of capital and competition, but moreover as a result of simultaneous pressures exerted by workers all around the world. The rulers shied away from shifting the crisis’ entire weight onto workers in order to restore profit rates. Although today this has largely been forgotten, back then it was the talk of the day. After the Parisian May 1968 and the mass strike, De Gaulle gave up any attempt to return to the gold standard, preferring to allow inflationary wage increases. In Italy, the slogan ‘Workers produce the crisis’ was widespread. Leftwing economists developed the theory of the ‘profit squeeze’ in which wage increases pushed through by militant strike movements were seen as having a decisive impact on the decline of the rate of profit. Others still showed that the bottoming-out of productivity increases was the result of an increased rejection of the monotony of work on the production line and the ineffectiveness of bureaucratic control over labour-power.
The 1970s discovery of the ‘subjective factor’ in Marxist crisis theory was thus not an accident, but the theoretical expression of a practical movement and a real transformation of historical significance. In earlier capitalist crises, during the 19th and at the beginning of the 20th century, workers’ movements had largely been reactions to the crises of capital, which seemed to follow only its own internal laws. Its fetishistic character appeared unbroken, and it was this character that theoretical reflections on crises dealt with. The wave of class struggles of the 1960s and 70s has once again called into question this fetishism. We make history, and our struggles influence the development of capital.
This subversive world-historical subjectivity was once again pushed off the stage by the backlash effected by neoliberalism and state repression against movements, by unemployment and austerity. The power of money and the fetish of capital were given new legitimacy by the boom of the 1990s, but the more fundamental problem remained unsolved. Financialisation was capital’s flight from production and an attempt to create the illusion of a purely monetary valorisation of capital. The flight was accompanied by ever more frequently occurring crises: the 1987 stock market crash; the so-called ‘Tequila crisis’ which started in Mexico in 1995; the 1997 Asian crisis; the twin-crises of Russia and the Long Term Capital Management-fund (LTCM) in 1998; and in 2000, the end of the New Economy hype. The rulers of the world seemed downright surprised that none of these crises dragged the entire global system into an abyss, as had been the case in 1929. This has now changed, and in the US there is already talk of the ‘global slump of 2008–2009’. This is largely the result of the last ten years’ massive explosion in the trade in derivatives and its international interlinkages. This has in turn shown that the search for profitable investment opportunities is becoming ever more desperate, ever more speculative, and ever more daring. The simulation of capital accumulation by financialisation cannot be prolonged indefinitely. It is this fact that is becoming apparent today. This also shows, in a hidden form, the continued pressure of the global working classes that stands in the way of a renewed intensification of exploitation.
Seen historically, capital’s flight from over-accumulation into financialisation is nothing new. Already in earlier cycles of the development of the capitalist world system, governing and organising powers – such as the Netherlands in the 18th and the British Empire in the 19th century – were able to postpone, by 30–40 years, their downfall and continue to reap the benefits of their hegemonic position, even after over-accumulation became acute, through shifting into the financial business. In their analyses, Giovanni Arrighi and Beverly Silver have linked the discovery of the ‘subjective factor’ in the theory of crises to the world historical dynamic of capitalism. This has not involved a mere repetition of the same old story of the eternal rise and fall of the empires of capital, but rather the discovery that the power of the exploited in the world system has tended to increase. With every transformation, their influence on the shape and the social character of the system has risen. What we are experiencing right now is the definitive beginning of the end of a capitalist cycle that, in spite of the barbarisms of the first half of the 20th century, was once again able to develop under US leadership. Nobody can predict how social movements from below will intervene into the crisis over the coming months and years, changing the face of the world in doing so. But we can note that our options and our power to intervene into history have become significantly greater. The initial signs of this are workers’ struggles from China to Eastern Europe and Egypt, and the food riots in the global South, which are already developing at surprising speed and simultaneity against the crisis.
Translated from the German original by Tadzio Mueller and Ben Trott
Overaccumulation, that is, too much capital chasing too few profitable investment opportunities, is one of the key crisis tendencies affecting capitalist economies. Every day, the surplus exploited from our labour the previous day has to be invested somewhere. If, for whatever reason (workers’ resistance, saturated markets, government regulations) capitalists can’t profitably invest that surplus in production for existing markets, they either have to force open new markets, or further bid up the price of existing assets (real estate, stock markets, currencies…). This is the source of the many ‘bubbles’ and financial crises we’ve experienced in the last 15 years.
Financialisation describes the massive expansion of financial instruments, especially ‘derivatives’ over the last 30 years, as well as the growing power of financial institutions (banks, hedge funds, rating agencies) vis-à-vis other social forces.
Christian Frings lives in Cologne and has been working on understanding the development of the capitalist world system, and how the struggles of the global working classes can overcome it.
Tadzio Mueller and Ben Trott are editors of Turbulence.