In its hour of need, the capitalistic community has many supporters; not only those who want to rescue the economic system and give capital a helping hand to revive. A faction of the left announces it would like to rescue the community from the derailment of capitalism. This is not a refusal of the thing, but a leftist concern that “it” may go on and “the economy” again function as a basis for the livelihoods of the masses. A point of view, in any event, which is engaged neither intellectually nor practically in the bailout of the banks is found “absolutely irresponsible” to a do-gooder from Attac (Pedram Shahyar, Nuremberg, November 15, 2008). When it comes down to it, those who always preach another world is possible commit themselves to the economic world which exists here.
I. The prefatory criticism of capitalism: The system is to blame for the crisis!
Leftists' requests to speak on the subject differ from the bourgeois in one regard: they insist on the necessity of crisis – and hence its periodic recurrence – as a consequence of the capitalist system. They accept the excuse “accident” just as little as the popular reasons given for the crisis of “greed” and “individual wrongdoing.”
The reality is that the causes for the crisis do not lie in the “failure” of the bankers, boards of directors or even in the failure of the bank regulations. The former only used the realities and the possibilities of the system when financial speculation was expanded ever more. Capitalism has generated the disastrous consequences of this crisis … Crises belong to the capitalist system. (Statement of the German Communist Party, in: Capital & Crises, supplement in Junge Welt, October 29, 2008)
One more example of many:
The actual crisis is not only the work of the uncontrolled speculators and money-greedy investment bankers who by better regulation would be led back again to the path of virtue. The endless financial froth feeds from reservoirs which lie much more deep. It flows from the lifelines of an economic system which only produces and invests if the profit is right for the investors, and therefore wages, social security contributions or even corporate taxes are nothing but annoying cost factors which have to be gotten rid of as much as possible. In this fixation on profit instead of need lies the last cause of all imbalances, instabilities and crises which even a better regulated capitalism will generate over and over again, not to speak of an unrestrained and uninhibited one. (Wagenknecht, Madness with Method, Berlin 2008, p. 188)
When, however, authors across the left spectrum – from young members of the Social Democratic Party to Attac to the Left Party and the Communist Party – then explain how the system generates financial and economic crises, they half retract their assertions and fully retract the anti-capitalism heard even so in the accusation that this economic system treats people as annoying cost factors. The authors avow criticism of the system, boldly appeal to Marx, in order to then end up more or less with Steinbrück [the German Federal Minister of Finance] and alternative state bank bailout plans. For Sahra Wagenknecht, chairperson of the communist platform in the Left Party, for Joachim Bischoff and Elmar Altvater, Marxist political scientists, criticism of capitalism and improvement suggestions for a money economy that will be more stable in crisis are apparently one and the same.
1. Incorrect opposition between finance capital and the real economy
“Completely detached!”
What's the reason behind the impact and the duration of the financial crisis? We are not confronted simply with the consequences of somewhat larger speculative transactions. Rather, the financial system has long decoupled itself from the real value expansion process of capital. (Joachim Bischoff, 100 Years of Crises of Capitalism in: Socialism, Nov. 2008)
With “decoupling” Bischoff and others have found their formula for the characterization and criticism of financial capitalistic accumulation. On the one hand, they notice that profit-making by the banks and investment houses runs differently than where it makes use of the production and selling of commodities. At the same time, they deny the character and emancipation of the financial business with their verdict that it has decoupled itself from its base: the real added value creation from which it cannot be decoupled at all. On the one hand, they give the paradoxical information that the growth of finance capital has generally nothing (more) to do with the so-called real economy; on the other hand, however, it must as a result retaliate terribly on it. The relation of financial accumulation to the rest of the economy is not at all unknown to them: financial investors in the stock exchanges speculate on the success of their investment objects, on the stocks of industrial enterprises as well as on other banks and insurance companies; designers of securities bet on the continuous flow of interest from loans when they base ever new securities and derivatives on it. Bischoff and company know that the construction, selling and buying of securities is a speculation on the future of a business which is obviously not measured by its actual volume of sales and proceeds. Still, they measure the whole sector by this and accuse it, in so far as it goes beyond it, of unreality: Sahra Wagenknecht informs us in detail about the techniques of financial capitalistic profit-making; but completely in the tone that it is not, in the end, at all possible, that it is based on illusion, on fraud, deception and self-deception.
So where is the money machine which allowed the banks to strew such absurd amounts among the people? ... The model only works if someone is willing to also buy the securitized loans in the end ... The responsibility for ensuring that even the most dubious home loans and corporate loans, bundled and securitized, enjoyed an enthusiastic demand on the free market, were a number of acclaimed financial innovations that made it seem possible to make gold from dross, or at least let the dross look like gold.
The core of the celebrated financial innovations consisted of transforming high-risk loans into an apparently safe investment vehicle, opening up thereby completely new groups of investors and so ensuring for as inexhaustible a stream of liquidity as possible. The special purpose vehicles were doubly beneficial for the banks: they got rid of their loans and were able to assign new ones without committing additional capital, and they still continue to profit through the conduit of the interest income derived from the loans. It was no surprise that more and more banks went over to adding such miracle weapons, some had several.
For many investors, the expected increase in value of the CDOs, and with it the profit that could be drawn from their resale, was probably the prime reason to sink money into these flimsy products. Because completely apart from the amount of long-term revenue they promised or did not promise: so long as there is always still one more person who could acquire the CDO tranche at a price higher than they had paid themselves, the investment was worthwhile ... The important thing is the prospect that there is still a greater fool who buys one's stuff at a higher price than one paid oneself. (Wagenknecht, Madness with a Method, pp 31-54)
The same will go for securitization, special purpose vehicles and CDO instruments. Wagonknecht only has predicates left over for the rest of the entire business sector, however, like “absurd,” “from dross to gold,” “transforming high-risk loans into an apparently safe investment vehicle,” “miracle weapons,” “fools.” This is plausible only on account of one fact: in the meantime, this part of the financial market and then the whole financial market itself has crashed. Now, but also only now, the buyer of such papers looks like a fool, and the ostensible gold has turned into dross. The leftists who always gloomily predicted that this financial hype could not go well see themselves confirmed in their judgment by the breakdown of the financial market – Wagenknecht talks of “finance monopoly, the nice false world of fictitious financial incomes” (ibid, p. 222). All nice and well, but what was up before the crash? Before then, these incomes were not fictitious, but very real and made some people quite rich. Even so, the above-mentioned authors date the beginning of this financial capitalistic boom to the suspension of the gold convertibility of the dollar and the end of the Bretton Woods currency system (1971), or alternatively to the beginning of the Reagan and Thatcher era (from 1979); this “fictitious” enrichment has generated, over the various ups and downs of half a century, real riches and real assets which can be used for everything that can be done with money. One would have to explain this power of money to self-valorize, instead of explaining it as – even if extraordinarily effective – imaginary.
Marx's analysis of so-called “fictitious capital” from the 19th century will also confirm the financial crises of the 21st century: each claim, whether it is solid or flimsy, becomes the basis for a new security that as an asset triggers a new securitization of claims, until this pyramid of fictitious capital shows its fictitious character – when it collapses. (Elmar Altvater: Not dead, Karl Marx's analysis of so-called “fictitious capital.” In: Freitag, March 20, 2008)
For Altvater, the crash delivers the first definition of what finance capital is and always has been: a fiction. [1] Very wisely, he does not apply this figure of thought to the respected real economy, which breaks down precisely in a tempo never seen before. Does the destruction of “real value” also prove that there has previously been no exploitation, no profit and no real economy? All the same, the breakdown in the financial sector proves for Altvater, in any case, that here nothing breaks down except untenable fantasies.
The global financial markets appear to be decoupled from production. Economic laws count, many believe, only in production. Global financial market returns of more than 20 per cent have left the single-digit profit margins in the real economy far behind. They also exceed the real economic growth rates by far.
However, the decoupling of the monetary from the real economy is owed to a great illusion, the fetishism of money and credit, the dazzling appearance – as if the high returns from financial dealings originated from themselves, could be taken from the bank vaults and would not have to be produced in the real economy. (ibid.)
A second definition of financial capital follows from it:
One cannot eat securities. All these products have a hard core: their owners have a claim (in the form of interest) on the results of the overall economic earnings. The forms of unearned income had reached a multiple of its annual distributable results from the real economy. Before the beginning of the crash in the early summer of 2007, the financial superstructure, this artificial work of art over the global real economy, was in terms of value almost four times too large. It was long overdue: the pyramid of claims collapses before our eyes. The current correction in the markets boils down to a downsizing or destruction of property titles (= claims on parts of the social wealth). (Bischoff, 100 Years of Capitalist Crises)
Bischoff explains the highest forms of speculative value creation according to the model of simple loan capital – and if he runs into the difference, he lays it on the object instead of noticing the mistake of his identification. He holds securities of any design to be claims to interest which must be paid from the “distributable results from the real economy” – and cannot be paid from the mass of circulating securities. There are indeed “claims in the form of interest” on industrial and mercantile enterprises, but only if the “financial superstructure” has previously given them a loan which they use in the interest of the expansion of their business or the increase of their competitiveness. If they exploit more workers with the help of the loan, put more profitable products on the market, make more profit, they can divide their surplus with the bank in the form of interest. However, where financial institutions sell stocks or securitized loans to each other, in the process achieving capital gains or moving ever bigger sums of credit with less and less of their own capital and thus increasing their yield, they create their surplus by themselves, pay each other rising prices for their “assets” and thereby enable themselves to invest in increasingly expensive securities. These increases are never presented to the “real economy” as a claim on interest which it has to pay out of its profits.[2] Bischoff even assumes, when he enumerates the “forms of unearned income” – of all things, enrichment without having worked should be specific to finance capital in contrast to real capital! – that “a multiple of its annual distributable results from the real economy” had been reached before the crash, hence were apparently paid, although they could also not be paid from it at that time. If this went on, why could it not go on? Why should the crash have been “overdue”? As a reason for it, Bischoff pulls out of a hat a law of proportionality between the real and the unreal economy, with which he introduces again a different measure of both departments of capitalism. Now the talk is no longer of the – unredeemable – interest claims, but the whole size of the produced values amassed over the years in relation to the “artificial finance superstructure”: it is bigger by a factor of four than the real value – and this, according to Bischoff, is simply too much.
What do these dimensions generally have to do with each other, so that a disproportion could express itself in their relation? Here Bischoff knows a deep truth: “One cannot eat securities!” – and suggests that this is also its defect and contradiction. Really, however, nobody wants to eat them, not only in the ridiculous literal sense; at most, pensioners and small savers transform securities back into consumer items. Real investors would not think of doing this to seal up their capital. Even now when financial assets are being destroyed in the trillions, they do not want to exchange their assets for produced goods. They fail rather in the attempt to save their property as capital assets, i.e. to disconnect them from unsafe forms of investment and to transfer them into secure ones. Their purpose is not consumption, but the possession of capital, the means of appropriation and source of future wealth. There is no place where financial value would be confronted with the produced commodity value and disgraced by it – and not possibly because both kinds of value would circulate in separate worlds. Investors continuously compare the real economy to the financial sector according to profit and security as alternative forms of investment – and not by those products one can eat. Bischoff simply performs the thought experiment of exchanging the entirety of financial assets into commodity products to demonstrate that it is impossible. As if that was a secret: everybody knows that stocks are no longer worth anything if all stockholders want to get out and sell all at once. These titles are only assets provided that someone who wants to re-transform his capital into money finds somebody else who wants to turn money into capital and steps in the place of the other as stockholder. This does not hinder stocks from being the form in which the great fortunes of this society exist.
These fortunes have the mission to increase; they do not compete for how much commodity value generated yesterday is already on the market; and if, like now, they collapse and devalue themselves, then it is not because they are ahead of the value produced at this time. Bischoff's picture is quite inappropriate, that in the crisis financial values would be measured in the quantity of really created values and “redimensioned” in the measure justified by them – healing, so to speak. It behaves the other way around: in the competition over the rescue of the respective capital assets in a crisis, over the preservation of the power of property over the sources of wealth, material wealth is sacrificed to its capitalistic purpose, the highly respected “real values” are devalued. Unsold goods are squandered and production plants made idle are sold off for cheap – only to save monetary property and capital power.
Bischoff and all his friends see financial property just as wrongly “fictive” as they see the industrial and mercantile capital and its values generated by the exploitation of labor as wrongly “real.” They deny the reality of the financial sector's power to self-valorize, its ability to create capital advances and with it to command all the powers of value creation; by contrast, they hold produced commodity value to be objectified labor and so a good and sturdy thing. In doing so, they forget that its economic meaning is not in use value, but value – and this is not a natural thing, but a social relation which is based on force: value is the quantity of private property which is in a product, the state protected, exclusive power of ownership over the product of labor and thereby the power of access to the product of others' labor. As values, commodities are not products of usefulness, but of abstract labor: the useful qualities in the product are only a basis, but not the measure of its economic worth. It depends on how much labor must be expended for the production of a product, and indeed not how much real, individual labor, but labor as it must be expended in the social average for a product of that kind. The real, privately executed labor effort must – by successful sale of the product – still line up the proof whether it generally, and in what measure, represents socially average necessary labor. The price paid by the buyer certifies to this effort, quantitatively measured, its social necessity. That is why “real” value is nothing to celebrate: if other manufacturers can create a product with less labor, or if there are too many manufacturers in a branch so that all together too much labor is spent on a type of commodity, or the demand backed up by purchasing power shrinks, then the value of the already produced commodity also sinks. Value is all the more nothing to celebrate when it is active as capital, is spent and advanced to come back expanded. If this operation does not succeed, the value of the invested capital is destroyed, even if the production plants, buildings and machines may also continue to be materially intact. Bischoff only contrasts “unreal” finance capital to the oh so real value created by labor, while he identifies value – of all things – with use value. The same applies to it: not only can't one eat securities, one also can't eat commodity values!
The power of financial assets is based on the same yardstick of state force as the value character of the labor products: on the guarantee of the owner's power of possession over his property. The whole finance business is based on an updating of property to the law of obligations: the power of the creditor over the debtor is entirely founded on nothing but the force of the authority which enforces promises of payment and executes them in a pinch against the debtor. Only on this basis can debts work as capital, promised future payments as an actually usable property.
Wrong on both sides, Bischoff's demarcation betrays how much he holds productive profit-making good in contrast to finance capital: like his bourgeois opponents, he holds consumption to be the ultimate purpose of business in this system and the sum of goods produced to be the whole and true wealth. Financial values are for him goods coupons which turn out to be unredeemable as soon as they should be redeemed.
The yield of the barren finance capital is an unbearable burden on the real economy
Where Bischoff stresses more the fictitious financial capitalistic claims which must disgrace themselves, Altvater warns about the unjustified access to real value which these fictions exert.
Were the profits only part of an immaterial, virtual economy, it would make no difference to us where the financial-market gamblers' profits actually come from. Because its image is: the financial system is self-referential, money profit comes from money, money generates more money. M – M'; Marx called the circulation character of money capital “meaningless.” (Altvater, Not Dead, in Freitag, March 20, 2008)
Altvater rejects, like everyone who deals with this subject, the hard nut to crack which the accumulation of finance capital presents to the mind. He states the hard to understand fact that the financial system creates new capital from returns and creates returns from self-created money capital. He intellectually finishes this challenge by denying the thing to be explained; he wants to have learned from Marx that all this exists nowhere except in the mistaken conceptions of the financial market gamblers. But with their conceit that they could make money into more money purely by financial operations, they become dangerous: their high flying, removed from the real economy profit desires indeed develop power: they can appropriate what they demand so that nothing at all is left to the poor real economy of its value product. This is the third definition of finance capital: imaginary wealth which slips away from the real.
On the liberalized and increasingly globalized financial markets, banks and funds must trump one another in competition to entice or keep a rein on investors. They unscrupulously force up yields realizable in financial investments compared to real profits. Competition requires this. The deplored greed of managers that is spreading had systemic causes and was not merely a mental defect. Capitalism changed into "finance-driven" capitalism. The profit rate for industrial capital fell in the past decades as all empirical studies show while the profit on financial investments was high. Whoever realized less than 20 percent on his own capital from investments was regarded as a loser until the outbreak of the current crisis.
Financial investments are claims that must be served. The higher the profits and the more extensive the demands, the more profits must flow out of the globally produced social product to the financial sector.
Wall Street or – as some say today – “Fraud Street” lies at its center. Here new investment strategies were developed, complex structured securities invented (like conduits) and institutions unknown up to then founded to draw new customers into their financial spell and guide the highest possible profits into the financial sector with new methods. From where? From the real economy. The surpluses from the real economy do not match the high profits and therefore do not satisfy the “greed.”
No new assets (as in grandma's sewing machine capitalism) are created with the investments financed from the banking sector. Rather assets produced with the help of structured financial products are redistributed. ...
Sometime or other, the substance is no longer enough to satisfy the ever-greater claims on the global financial markets. (Altvater, The American Patient, Freitag 40, March 10, 2008)
Altvater himself would not be able to say how with an ABS paper one diverts real economy “produced value” into the finance sector. He also does not at all want to. It is enough for him to draw a picture of a sector of capital which produces no value itself, but acquires created value produced somewhere else unauthorizedly and without anything in return. In addition, he looks at the whole financial sector with its stocks, securities and derivatives as if its property was nothing but interest claims on the real economy and all its yields transferred interest from there – at the same time, however, without a credit having flowed in advance and the power of the capital advancer having passed into the hands of the credit taker; thus without generally interest claims having arisen against the real economy. As always, one should imagine the injustice in detail which happens here; that it is an injustice and a systemic mistake, Altvater wants to bring out: in the middle of capitalism he distinguishes the deserving and socially justifiable profit of the industrial exploiters – slightly ironically called “grandmas sewing machine capitalism” – from this unproductive and unearned appropriation by the speculators.
The nice capital which grows in the financial sector is missing in the real
Wagenknecht directs attention to another side of the finance capitalistic injustice: the profits of this sector not only fulfill the facts of the case of real capitalistic exploitation; Wagenknecht sees the entirety of capital engaged there running away from its true task, flatly explaining it to be withdrawn from the real. All growth in the finance sector is – according to this law of communicating vessels – either an expression of missing growth opportunities in the real economy [3] or the cause of missing growth.
In this situation [wage cuts on a broad front] in order to increase profit, extension of capacity was not announced, but capital destruction. This was served by countless corporate takeovers and mergers, which always entailed closing down existing capacity as well as employees being dismissed and in the end companies with lower fixed costs and less competitive pressure could cover a bigger market.
It is understood that the incentives set by such a system are profoundly hostile to production and innovation. Because in companies in which ever larger parts of available funds – be it out of profits or borrowing – are wasted on fully unproductive purposes like takeovers or the repurchasing of their own shares, less and less is left as a rule not only for the extension of capacity, but also for investments in technical innovations or research and development.
The stock markets hum, while real investment has been less and less ... and a side consequence of this corporate strategy is therefore an ever higher house of cards, fictitious values which tower over a stagnating or even declining manufacturing base. (Wagenknecht, p. 217-220 )
The image of capital shortage poorly fits Wagenknecht's own point that finance capital possesses the quality “of generating income and property by itself and in nearly boundless circumference”; the ability to invest wherever profit beckons. But should one point out theoretical mistakes to a woman who so consistently takes a bias for “production” when only a few pages before she said it is only a means for profit and treats labor power as a cost factor to be minimized? They pitilessly opt for “innovations” which one otherwise knows as “rationalization.” By that, labor saving technology is not used to save work, but in order to save the company wages and to make the company thereby richer, so that the workers take a smaller part of their product home as wages. In this case, Wagenknecht generously ignores the economic purpose and is glad for the “technical innovations” which “somehow enriches society” (p. 184). As soon as it again occurs to her that this “enriches” the capital yield and does not increase the number of jobs, she does not hesitate to call the consequences and means of this innovation – capital concentration with closing production plants – a “destruction of capital.” She explains the finance capitalist corporate strategies whose competitive benefits are absolutely known to her – merger by acquisition of a majority of shares of a takeover candidate or enlargement of its own market capitalization by repurchasing shares – to be a senseless waste of good money, which is then missing for “meaningful” production and work.
2. Friends of productive capital
In unison, leftists trained in Marx explain the “real economy” to be the victim of finance capital and the object of concern which gets their sympathy. It does not matter that the economic purpose of the real economy differs in no way from that of the reviled financial vultures: producing and selling is also a matter of making more money from money. The production of refrigerators, medicine, oatmeal – all these are equal alternatives for investing money, provided that the same profit is to be achieved on the capital advance. The commodities are produced if it is profitable, and their production is stopped as soon as a more profitable activity is found for the precious money. The movement of capital between products and branches proves how without prejudice capitalists are in judging production as a means of their monetary increase. And if they use labor for the production of profit-laden commodities, they do it in such a way that profit also results: low wages, long working hours and a high work intensity provide for the difference between the costs and the retail prices, which is what matters.
All that is forgiven and forgotten as soon as these leftists intend to discover a contrast between the financial and the productive branches. Then these practical people know on which side they stand. Because socialism does not yet stand on the agenda of history, or finally no longer does, they opt for the next best thing and defend real capitalism against the unreal financial swindle. They reserve the critical attributes of capital which they once knew for this faction of capital: it follows an unlimited growth mania and desire for enrichment, it appropriates the fruits of other's efforts without its own effort, it is ruthless towards the economic potential of its sources. In contrast, real capital which produces “real value” receives a lot of positive qualities: that it produces and sells products for its profit, exploits wage labor in order to do it, subsumes the material life process of society and makes it dependent on the success of its enrichment – its admirers twist all this into a service by real capital for the livelihoods of the society: it produces useful things and creates jobs.
In the course of this, it also does not disturb them that the precious real economy is affected by the breakdown of financial speculation because its business is based on credit. The fact is well known to its defenders, who consider it just as natural as it is reasonable. Do they not know that credits are used for exactly the same unlimited desire for enrichment for which they reproach the financial sharks? For every entrepreneur, the capital he does business with is too small; each one wants to invest and expand more capital than he owns or has already acquired, i.e. by the success of previous exploitation. Every company accelerates its capital turnover with the help of credit and does not wait until its advance again flows back from the sale of the produced goods; each one anticipates successful sales – which it therefore speculates on – and uses its capital again for a new round of production and exploitation before it has completed its circulation.
Therefore, the left critics wrongly blame the crash on a – unstable and unauthorized – sector from which the damage should have then spread to the other, healthy, real sector of the economy. [4] The crisis reveals that the working capital of industry and trade itself consists of all possible forms of credit; thus not only in the loan capital provided by the company's main bank, but likewise in self-issued loans as well as in the ownership of a substantial stock market value. Every better company has discovered the advantages of speculation, has organized itself as a joint stock company and has sold shares on itself. Some incorporate themselves as a bank as well. Respectable productive companies present themselves to the community of money investors as an object of speculation and do everything for their confidence in the future of their business in order to ensure themselves the financial power to advance capital in any size required. Companies view their real economy incomes as unused and wasted if they do not make them the basis of speculation and thereby duplicate them. The breakdown of the financial markets is at the same time the ruin of the real economy because its capital power is itself a product of speculation.
When the cited authors uphold “production” which creates real value, and juxtapose it to the “unearned income” of the “financial market gambler” who “redistributes” value created elsewhere into his safe deposit, they notice the meeting point with a certain historically discredited criticism of finance capital from which they distance themselves: their opposition of sectors must not be confused with the distinction between “creative capital” which feeds the people and “rapacious capital” which starves it. However, this easily happens, because the difference from the fascist criticism of rapacious capital has no economic content: here good capital, because it produces products, there undeserved profit because without effort – in this, the right and the left are in agreement. They differ in the political reference point of the criticism: the left sees the profit striving of the money capitalists damaging the social interests of the little people in capitalism: their possibilities of earning wages and getting jobs, which industrial and merchant capital mercifully place at their disposal, are endangered or destroyed by financial speculation. The right sees the people as a whole injured, the nation, i.e. the claims of the state which manages them. The working class also has its place in this political worldview; not as the putatively ultimate goal of the state and the economy, as for the left, but as the supporters of the state and source of its power who must be able to live in order to do their service for the state. This difference between the “little people” and the people may seem unimportant, but it is not: it defines the opposite extremes of politics in the capitalist state and it turns on whether the systematically exploited class stands up for their interests in order to make the society their means, even if this doesn't work; or whether proletarians and other citizens are convinced they can live only if the state authority radically makes all the classes its means and demands their service to the state. [5]
Economically not so different from their opponents on the right, the left critics do not want to end the exploitation of “production” by the “unearned” incomes of finance capital by abolishing it, but – much more modest – by again fixing the lost, healthy relation of both sectors of capitalism, which the system by itself does not keep in order. They think of the blessings which the bad capital would be able to donate as a financier “of production” and of all the social benefits which could be possible with credit-financed growth. They find the finance business worthy of criticism only because it does not – like every business in capitalism – serve its customer, real capital, but uses the real economy for itself and rules it instead of serving it.
What is really the core of the economic system which we are dealing with? And here I would say in the old Marxist tradition, the core – this is really the production economy, not the financial markets, which if seen in their economic function have a subordinate function. They should finance industry, services, and so on – more or less. This has shifted dramatically since the ever stronger financial markets dominate the production economy, indeed terrorize it. (Rudolf Hickel, When the Sky Collapses, an interview in Freitag, No. 39, September 26, 2008)
He wants to have learned from Marx, of all things, that the production of useful things would be the core of capitalist economics, and the financial branch of the “production economy” has to help with this. Hickel has probably also learned from Marx that credit helps with the labor. In fact, “financing” is no means of production or labor, but only the resource of the capitals: in credit, the command power of money over labor and other productive forces becomes a commodity which is bought by the credit-taking capitalist. This side of finance capital pleases its critics. They find credit useful for real capital – not in the sense in which it really is useful: for the enrichment of the accumulating capitalist, but in the sense of the social whole. They appreciate the credit which the banks give to the real capital, but not their business with the debts which they thereby acquire. They call for the financing of growth, and condemn the re-financing of the awarded loans by which the banks pursue their own growth; and this, in the end, only because an autonomous growth emancipated from service to real capital is not stable and has now collapsed: the sector has been found guilty of its service only in the crisis. The true criticism of the finance capitalistic high-flying is its susceptibility to crisis.
The susceptibility to crisis of today's financial markets is not therefore a problem because crises can destroy the property of some multi-millionaires. It is a problem because a functional and stable financial system belongs to the basic conditions of a stable economy. The financial markets of our times do not exactly do what their task should be: to steer the savings of society into those investments which make the economy more productive, more environmentally friendly or richer in any other way. Instead, they direct thousands of billions in financing ludicrous financial wagers and highly speculative investment vehicles that are economically as superfluous as the Vienna Opera Ball.
And the hyper-liquid investment monsters are not only superfluous, they cause damage. They force the orientation of the real economy into their own, extremely short-term time horizon and put pressure on entrepreneurs to cut wages and roll back investment in research and innovation, and increase the payout to shareholders, thereby increasing the asset bubble further. Today's financial system is – literally – a public danger. (Wagenknecht, p. 184)
Altvater defines the border between the functional and stable financial system which we all need and the maniacal investment monster who ruins us. The transition from good to evil is decided by the amount of interest.
Marx assumed as self-evident that the produced surplus value for all capitals – industrial, mercantile, and interest-bearing capital – would be sufficient ... In principle, the industrial profits are sufficient to satisfy the monetary claims on the produced value product ... Interest rates must remain below the rate of profit. So capitalism stays in shape, because all can win in a positive sum game: the entrepreneurs profit, the owner of financial assets interest, the workers and workers' employment and wages, the public sector tax revenue. But: the positive relationship between profits and interest has always been fragile ... In the late 80s came a structural increase in real interest rates ... the only way to profit was if surplus value could be increased at the expense of wages ... monetary debt service overwhelmed the real economy. (Elmar Altvater, Globalization of Insecurity, Münster 2002, p. 174f)
We understand quite well: as long as the interest rate remains below the profit rate, capitalism is a “positive sum game” in which everyone wins. Without any reservation, the Marxist professor confesses to the capitalistic idyl in which everybody agrees on what is entitled to them: profit for the rich, interest for the coupon clipper, taxes for the state and work and wages for the poor. This system of distribution is destroyed by an increase in interest and suddenly a conflict arises in the harmonious relation of wage labor and capital: now profit is at the expense of the wage – and the nice economy of all the people goes to its knees because too much is demanded by irresponsible forces which apparently can do that.
3. Crisis – the Achilles' heel of capitalism
Criticism of the system and of capitalism, which the cited authors so strongly declared at the beginning, is not revoked with all this; but refined. They just do not look at the circumstance that this economic system is not about the preferably low cost creation of products for all, but about the continuous progressive growth of capital, thus about the constant increase of the owners' power of property over labor. These critics do not find it wrong that working humanity is subsumed to capital accumulation, and therefore must work for a long time for their bread and butter and still always remain poor. However, they think it wicked that the collaboration of real capital with its workforce periodically grinds to a halt and goes to pieces through the exploitative access of finance capital. They find capitalism really worthy of criticism for its crises, in that exploitation no longer pays off; the phases in which companies rescue themselves by cutting back or discontinuing production, laying idle huge amounts of labor power and strangling the life process of the community. Even so, that capitalism does not function reliably is no accident, but a design flaw of an otherwise quite efficient and innovative system: it distributes economic power inequitably, permits a preponderance to the owners, especially the great financial powers, over the other interests involved in the economic process. Because the financial powers can get what they want, the system tends to move away from its real base and to distribute more than has been produced. This, however – here the admirers of real value know their stuff – ultimately won't work. On its own, the capitalistic economy is unfair and therefore unstable; or vice versa: unstable and therefore unsocial.
II. The political-practical diagnosis:
The blame for the crisis is neoliberalism!If the protagonists of left opinion have long enough held the system, with its fatal inclination to move away from its real wealth base, responsible for the financial crisis and the economic crisis, they unload the same blame once again on neoliberal economic policy. They begin with “systemic causes” and end with the accusation of economic mistakes.
The neocons grandiosely brought the economy into the most serious financial crisis in 100 years, to a deep and wide abyss. At first, it seemed they had found a wonder-weapon against the stagnation tendencies of monopoly capital. Monopoly capital is the title of an influential book by Paul Baran and Paul Sweezy from the 1960s. Financial markets were deregulated to catapult private profits to astronomical heights. This began in the 1970s when the exchange rates were released and speculation on price fluctuations was possible. Prices were no longer set politically by central banks, governments or the IMF but were “left” to the markets – literally private banks, funds, insurances and monetary divisions of transnational corporations.
Margaret Thatcher triumphantly inaugurated the neoliberal age with the “big bang” of liberalization of the finance markets. From that time, the formation of interests and profits on financial investments devolved to private corporations. Governments and central banks lost “interest sovereignty” which is so important for an independent jobs-oriented economic policy. (Altvater, The American Patient, No. 40 Freitage, October 3, 2008)
The instability of financial markets is an inherent feature of capitalism in general and of neoliberal capitalism in particular. (Bischoff, Global Financial Crisis, VSA, 2008, p. 89) … After the Great Depression and World War II, the expansion of property titles and with it the claims to the annually produced social wealth had been strongly prevented by taxes and other regulations. With the policy of deregulation or the unleashing of capital, an accelerated accumulation of money and credit capital started once again. In recent decades, new forms (derivatives, securitization) and new actors (financial investors) have been produced which have ultimately stamped a whole new face on the capitalist economy. (ibid. p. 42)
What next, one would like to ask: is the system bad or are these only bad economic concepts? Does capitalism need to be abolished or better managed? One asks here, however, the wrong question. From the point of view of these authors, the contradiction does not exist. The flaw for which they reproach the system exists in nothing other than its need for correction and regulation: they give cheers to capitalistic surplus value production as a necessary and effective “real economy” which lays the bases for general prosperity, and complain that its nice possibilities are gambled away by an unfair distribution; so much so, that even the continuity and stability of production are damaged. Such systemic criticism is one single call for the correcting state power which has to insulate the good sides of the mode of production against its inherent danger to itself and to wring public benefit and stability from the asocial competition system.
Capitalism itself does not interest the left. It just exists, its defects are old hat – it depends on what policy does with it. By contrast, they find interesting “types of development” and “regulation models” [6] of capitalism, which they seldom address without specifying epithets: they condemn “pure,” “unrestrained,” “unleashed,” “finance-driven,” “casino” and “turbo” capitalism, and differentiate it from “tamed,” “social,” “Rhenish” capitalism, which they find in retrospect quite satisfactory. All the differences which interest them lie in alternative strategies for the state to bring its capitalism into bloom. They are engaged in these alternatives, and these decide for them whether horrible exploitation is present or a tolerable class compromise. Regulation is leftist. The enemy of the left is a policy which strives to stimulate capital growth – which is also necessary according to leftist opinion – by conceding expanded freedoms and opening profit opportunities for the capitalists to the detriment of wages, social security and tax revenue. They call this type of regulation, not completely rightly but in harmony with their neoliberal opponents: “deregulation.”
The social accusations which they direct at neoliberal economic policy – impoverishment of the unemployed, sinking wages, a layer of “working poor” – for many years found no hearing among the governing parties which promote the country in the international location competition and play the impoverishment of the working class as their real trump card in it. Now, however, the left feels confirmed by the crisis: the socially cold neoliberalism damages not only the poor in whose name they speak, but the whole capitalistic nation; it has strengthened the inherent crisis defects of our problematic system instead of dampening them. The capitalists in their boundlessness need to be reined in, otherwise they damage everyone – and not least themselves. The social victims of “untamed capital” have not done much to line up an objection against the politics responsible for it; but no longer will the voters or the politicians be able to close their eyes to the question whether “unrestrained capitalism” undermines in the long term its own success. If the social argument does not sting, then surely the national one does! Now one must listen to the leftists who offer themselves as experts on capitalism's lack of functioning.
The current neo-liberal orientation of state economic regulation with its deregulation and liberalization of markets, as well as a large-scale privatization of public goods, has significantly improved capital utilization, but at the same time it created the conditions for a giant bubble ... With this form of government regulation, the much-praised neoliberal policies, the state is co-responsible as representative of the interests of big capital for the current debacle in the financial world. This has contributed to the financial sector having become, as an essential functional condition of the economy, the hub of an uncontrolled capital power with non-transparent business and wild lending.
In fact, we are dealing today with a significant turning point in the development of capitalism, with a great instability of the whole system. The time is ripe for a new mode of regulation of the economic and the financial systems ... The Left Party ... should push forcefully in public for a radical change in government regulation, in which the more powerful groups do not determine the direction and is not based on the old, outdated financial-capitalist foundations. (Gretchen Binus, Junge Welt, October 17, 2008)
The professor of the political economy of capitalism grants an achievement to the neoliberals: she does not want to deny them “a significantly improved capital utilization,” but calculates a bigger negative mark against them: the burst speculative bubble. In view of its national-economic failure, neoliberal regulation turns out to be historically outdated. The left must no longer make social and idealistic demands, “the time” itself requires alternatives. Leftists' regulation will make everything better and capitalism more stable because they do not listen to the disgraced banks and companies, but to the union representatives of the employees who set on the success of their companies in the competition and on the success of their nation on the world market.
Sahra Wagenknecht leaves out all the finance-economic intricacies for a newspaper contribution and reduces her crisis theory to an easily communicable kernel: state promoted greed and social recklessness cause a national-economic disaster.
Ultimately, the current financial crisis is nothing other than the result of neo-liberal redistribution: those record profits, which subsequently were lost in speculating in the financial markets in the search for ever higher profits, resulted from reducing corporate-, property- and high income tax rates, as well as a policy of wage and social dumping. (Junge Welt, October 15, 2008)
Unsocial redistribution brings record profits to the capitalists. This is unfair. But it is at least as bad that in their greed they have nothing better to do with their wealth than gamble it away and thereby damage the community – and themselves! The state must not suffer self-inflicted injury; particularly as the remedy is so obvious:
This means conversely that a redistribution in favor of employees, pensioners and the unemployed is also the best way to prevent future financial crises. (Ibid.)
Now this is a strong communist argument for a better remuneration of the industrious poor: it keeps finance capital from over-speculation, smooths out the economic cycles and promotes the stability of our order. Jungle World offers this nice thought, once again quite suitable for children:
If the capitalists are allowed too much freedom, they undermine the foundations of their economic system. They act like little children at an ice cream stand. A four year old wants a scoop of everything and to eat five scoops of his favorite flavors. If he is granted his wish, he gives himself a stomach ache. If he goes back a few days later to the ice cream stand, he recalls the stomach ache, but because there is a lot of ice cream, he wants to have scoops of everything. Someone has to ensure that he gets only three scoops. The child sulks, but secretly he is grateful, for he suspects that he could not resist by himself before getting a stomach ache ... The capitalists would moan, but secretly be a little grateful because they suspect that they as a class with unlimited freedom are unable to stabilize the economy. (Jörn Schulz, Jungle World, 39/2008)
III. The political fight for the new political regulation
First we save capitalism...
In the short term, the wage earners have nothing to gain from a financial collapse, because that would mean the end of credit. And the end of credit means the impossibility of financing the real activities of the production of goods and services, thus a dramatic acceleration of the social crisis. Therefore, there is no fundamental reason to oppose the rescue of the banks. (Cédric Durand, Ligue Communiste Révolutionaire, in Junge Welt, October 29, 2008)
That's how it is with revolutionary communists: they see themselves as representatives of the not at all revolutionary wage earners. And “wage earners” who want to remain as such have nothing to expect from the collapse of the financial system but crisis and unemployment. So their political advocates direct the message, primarily to other leftists, that the bailout of the banks is in the short term a real need for the working class. They do not claim that workers and employees are involved in the success of the banks, beneficiaries of the granted credits or participants in the proceeds of the “real economy,” by which they mean the production of goods. The success of the superordinate interests is of no concern to the wage earners, but they get to feel its failure. And because of this negative dependence, the leftists from France champion the rescue of the banks. The first programmatic point of their revolution is the restoration of capitalist normality.
The common ground of the revolutionaries' agenda with Merkel and Steinbrueck admittedly has its limits. Already a “coalition against the 'power of the banks' is forged by members of Attac, GEW [German teachers' union], IG Metall [German metal workers' union], the Left Party, Frankfurt Social Alliance, Anti-Nazi Coordination, the German Communist Party and others” to keep the powerful in line. Because in the unquestionably necessary rescue of the banks, the disgraced neo-liberal elites who now hypocritically adopt the slogans of the left – regulation, control, “greater role for the state in the economy” – are also busy rescuing the privileges of the big corporations and the finance capitalists. In order to balance this, the left wants to rescue capitalism in the interests of the poor, not in the interest of the capitalists.
... then we ensure social justice in the rescue of the banks!
The left already recognizes the bad intentions of the governments by how much money they mobilize overnight for the banks, while they save every cent on recipients of social welfare and say that this is required by empty state treasuries.
The EU governments do not take the existential crises that are close to their heart seriously, but they do everything for the banks! The left trusts the political power with the freedom and the duty to fairly allocate resources, and they see this duty violated by the preferential treatment of the banks. The enormous sums that the governments deploy are not seen by the left as indicating an existential crisis of capitalism, although they also agree with its political guardians that it is one and that there is no alternative to this rescue. Instead, the high stakes of the rescue is for them testimony that, although the powerful have always claimed that no money is there for social purposes, it has been there the whole time and could have been issued for social purposes. “In any case, it is clear that all the assertions that there would be no money for social benefits were not credible.” (The Left Party, leaflet, October 19, 2008)The governments of the EU could fork out more than 1,600 billion euros for the banks, at the same time the money isn't there for solving existential crises (poverty, hunger, environmental disaster). (Attac pamphlet, October 30, 2008)
In fact, the money was never there and is also not now simply “there.” The governments donate fresh capital to the banks and give guarantees which, when they must advocate and pay for it, blow up every national budget and the national debt to whole new levels. The euro-states sacrifice the solidity of their budget management and use all their financial power and the force of their communal money because they have to avert a systemic crisis. This just can't be said of the existential crises of the social welfare recipients; the system creates and needs their poverty, it does not endanger it. The left judgment, which imperturbably thinks in categories of distributive justice, misjudges the system question as a question of – politically falsely set – priorities in the distribution of freely available state funds. The bank bailouts teach then not the incompatibility of the requirements of this order with the interests of the working and unemployed majority, but vice versa: social hardships would actually be unnecessary in this society in which there is plenty of nice money that one could put to beneficial use.
In this sense, hard to believe, the left develops political fantasies, ideas and suggestions, as to how the restoration of finance capital would be socially, fairly, democratically dealt with; e.g., a harmonious and elegant way out of the financial crisis by which the banks and at the same time their victims, the bankrupt mortgagors, would get well.
There are alternatives to this (U.S.) bailout. Say, by refusing to buy the bad loans of the banks which speculated irresponsibly. The state should instead give a hand to those who would, even after such an action, still be in a jam – namely the highly indebted mortgage holders. If they were subsidized, they could pay their loans and keep their house. (Junge Welt, October 1, 2008)
This is the royal road: the over-indebted mortgagors are to be put in a position by the state to service their debts. Then they can stay in their homes, the banks indirectly but nevertheless get the money distributed by the state, and if the debts are serviced again, perhaps the immense ABS-credit-superstructure that was erected on its base can also recover. Had Bush's Treasury Secretary been summoned into the brain trust of the German left, they would have been able to give him even more reasons why he may not simply give money to the banks:
The U.S. example shows why the trillions in help were in vain: the banks use the government subsidies to plug holes in their balance sheets, rather than to make loans to individuals and businesses. (Jürgen Elsässer, Neues Deutschland, October 24, 2008)One must force the banks, their holes unplugged, to leave their overdue payments unpaid and to instead assign plenty of new credit. That's leftist statecraft.
In addition, they ensures for fairness by distributing the costs of the bank bailout on all shoulders and also making the rich do their duty. The minimum is a “prompt charge on the millionaires through a millionaire tax.” Its amount determines leftist radicalism: should the state take away 1.5, 2.5, 5 or 10% of their assets? Here one is meant to calculate: if the demand is too high, one is disgraced as unrealistic; if it is too low, one is possibly overhauled from the federal cabinet left. A moral compensation is also demanded of the rich. This will surely rescue the financial system, and if not, at least the public spirit. “At least for 1 year they should live under the conditions on Hartz IV. Then they would feel firsthand what it is like if one has to consider before participating in a public event whether one can afford the streetcar trip there.” (G. Long, Alliance Against the Power of the Banks, November 1, 2008)
For the future we take away from the capitalists
the toy with which they only make mischiefBecause since the mid-eighties there were hardly any offensive class struggles, the corporations could appropriate an ever larger share of surplus value, but they didn't know what to do with all that money. Different investment hypes followed, now the financial market has become so complex that many bankers admit they themselves no longer understand it. (Jörn Schulz, Jungle World, September 2008)
That's interesting: more aggressive class struggle would have spared the movers and the shakers of the system a lot of problems. Why for the longest time didn't anybody come up with the idea that money would have capitalistically functioned better in the hands of the poor and the workers? They could use the floods of money in ways that will not again lead to flooding.
Measure No. 1 a return to the fight of the trade unions for a strong increase of wages and salaries is necessary. Also other demands for raising the income level, especially of the poor ... and higher taxation on profits, higher incomes and property always touch the question of the monetary disposal of the mass of capital and the wealthy and are suitable for drying out part of the excessive flooding of money. (Conrad Schuhl, September 2008, Disarm the Markets)
Finally, we prohibit the crisis
Social control is the magic word with which all the evils of capitalism can be turned to good. There never could have been the banking crisis and bad speculation if honest transactions had been executed under the watchful eye of society. How far the social control reaches and who represents “society,” which has the mandate to control, differs again in leftist ideas. The demands of Rudolf Hickel, who would like to move up in the Advisory Council of the Federal Government, lie realistically close to their projects. After all, he finds the regulation of the rating agencies, which Merkel wants, a very popular formulation:
We need strict regulation. This should apply to financial products themselves: whoever as a bank presents these mortgage securities and sells them worldwide must hold at least 20% themselves. Then many are likely to be very careful. Finally: we need an inspection authority. Why is food inspected, but not ailing financial stocks? (R. Hickel, Freitag, September 26, 2008)
“We,” this national collective group, simply need financial products with inspection stickers; then we're better off. Nice, it's also radical: the Left Party calls in addition to inspection a control of investment banking and indeed a strict one.
Ensure sufficient and low-interest lending ... specifically for small and medium sized companies, extensive restriction on the activities of banks in deposits and lending; tough rules; a permanent ban on short-selling, retention and strict control of investment banking, public oversight of rating agencies, a financial inspection authority. (The Left Party Executive Decision, September 29, 2008)
A public ratings agency which awards AAA as super-trustworthy to those financial transactions which “we” leftists have wanted – for example, loans to medium-sized capitalists. That's about it! No, says the more radical Communist Party. It sees “the statements of the party program adopted in 2006 confirmed in a dramatic way” and the gravity of the situation calling for revolutionary reforms: as an immediate step they want to preserve the status quo: “Protection of the savings banks, public banks and the community as a whole from privatization.” (Declaration of the German Communist Party, October 29, 2008) Next, they set their sights on the socialization of the private banks. Banks in people's hands! Interest and speculation in the interests of the working class! My God, that's communism!
[1] Altvater and Bischoff refer to the economic category “fictitious capital,” by which Marx however by no means signifies imaginary in contrast to real property, but characterizes a certain kind of capital. With this, a given sum of money laid out for production and trade does not throw off an increase by the exploitation of wage labor; vice versa, with “fictitious capital” the original sum accrues from a forecasting or “capitalization” of the expected yields, from whatever source these yields may originate. Such legal titles on an increase are made a commodity in the finance sector, are traded and thereby get a price. So the market value of a stock arises from the competition of the buyers and sellers over the possession of the legal claim to a – uncertain – future dividend; the market value of a fixed-interest bearing security arises from its estimated reliability as well as the amount of its interest in comparison to other investments. In the world of finance capital, prospective, yet to be redeemed promises of realization or claims to a part of future profits are an actual property; debts are there capital. This capital is fictitious in so far as it exists only in the form of the price of a security: the stock, e.g., counts as a proprietary title on a company, has however nothing to do with the capital invested in and realized in the company, but exists independently beside it and leads its own existence apart from the company; the value of all the shares of a company – its stock market capitalization – has nothing to do with the value of the capital engaged in it. Fictitious capital is a speculative size, eventually expected, by no means certain profits are treated as interest, from which one projects the capital which it throws off. Hence, its growth comes about under the always skeptical examination of the dependability and tenability of the promise of profit; securities are revalued on the stock exchanges daily, thus fluctuating in value. The money value, however, which is redeemed by its sale or is borrowed on its possession is as “real” as it only can be real. And if it is destroyed in the crisis because the money capital retransforms itself into problematic debts in which nobody wants to invest, which rather all at once must be repaid and cannot be repaid, then capitalistic wealth and real monetary power breaks down. This anyway is in Marx: “This fictitious money capital is enormously reduced during crises, and with it the power of its owners to use it to borrow money in the market. The reduction in the money value of these securities on the stock exchange list, however, has nothing to do with the real capital that they represent. As against this, it has a lot to do with the solvency of their owners.” (Marx, Capital Vol. 3, Ch. 30 Money Capital and Real Capital I, Penguin, p. 625).
[2] Sarah Wagenknecht does not participate in this identification of financial income with interest claims on the rest of the economy, by the way, and distinguishes between “real and fictitious financial income” whose respective sources she defines: “real financial incomes are based on the redistribution of real value creation, thus on values which have originated outside the financial sector.” She mentions paid interest and dividends on industry and trade. “In contrast to the real, absolutely no real economic processes underlie fictitious financial incomes, rather they are created by speculative financial transactions or purely fraudulent invoices ... Indeed, such an explosive growth in the financial sector and financial assets is only possible because today's financial markets have the capacity to generate their own power and virtually an unlimited amount of income and wealth which are not based on purchases and sales of real goods, but, strictly speaking, purely fraudulent invoices.” (p. 127) However, the distinction does not help if finance capitalist income and assets are then conceived to be only a fiction, a fake and bubble that can do nothing other than burst; and not in the power of this sector to let its “fraudulent invoices” act and circulate as money capital.
[3] Gretchen Binus stresses more this side of the disproportion. She certifies that the decades-long policy of wage cuts and liberalization of the labor market have been counterproductive. The policy of impoverishing broad stratas has indeed increased the returns of the companies – that's what capitalism is all about – but in ways that have made the production of mass commodities less profitable, and thus damaged the growth of production – as if production would be the purpose of the capitalist economy. “In consequence of the thereby shrinking purchasing power, demand for the increased profits of the corporations in the real economy no longer offered profitable prospects. There became an over-accumulation of money capital. Huge amounts of money wandered around in the financial markets.” (Gretchen Binus, Change course!, Junge Welt October 17, 2008)
[4] Next to and in the middle of the philippic against finance capital, which overcharges and weakens the real creation of value with its profit claims, Altvater sets the opposite and just as wrong assertion: crises always have their cause in real overproduction! He probably holds this statement to be orthodox and must mention it in the cited article because it is dedicated, nevertheless, to the memory of Marx.
(The subjects are) the recent financial crises in Argentina up to the subprime crisis in the U.S. ... The crisis is thus owed to overproduction (mass demand lagging behind) and over-accumulation (falling rates of profit). This is one of the great discoveries of Marx – and even today not yesterday's news. The crisis is reflected precisely in the fact that there is too much of everything in the world: too much Chinese electronics, too many camel-hair coats from North Africa and cashmere sweaters from India, too many German and American cars, too much beef from Brazil, too many textiles from Bangladesh and much too much monetary liquidity in the accounts of the wealthy money owners in Frankfurt, London, Zurich and New York who are looking for highly profitable investments. The “world market storm” has its origin in the sphere of production, but today its destructive power is developing primarily in the financial sphere. The global financial markets appear to be decoupled from production ... blinding appearance, the fetishism of money and credit ... (Altvater, Not Dead, Freitag 12, March 20, 2008)
Altvater deals with breakdowns in the financial sector and gives as a reason for it – connected with a following “thus” – a too much in no longer marketable commodity production and a too much in productive capital. Instead of explaining how this cause produces this effect; even more: how the given effect (financial crash) can only be due to this cause (overproduction), the author draws a childish picture of what the crisis expresses itself in: and these are not just excessive camel hair coats, etc., but capital in the form of commodities whose sales no longer yield profit and no more profitably useable money capital. Theoretically, one is no further ahead; instead of an argument, the thesis is repeated in new words: origin in the production sphere, development in the financial world. Anyone who has still not understood gets told that is also no wonder: the insidious financial markets do not show that they are only the tail which wags the real economy, they “appear to be decoupled” and also behave in such a way; they are not, however – and this makes them dangerous. By this small detour Altvater, who had to accommodate a supposed Marxist dogma, finds his way back to the main shipping lane of his article.
[5] The left publicists no longer seem to be so clearly the principled political opposition to the extreme right. Altvater differentiates his criticism of finance capital from theirs' with a moral system-thought:
In it is a danger that one can respond to with Marx. For in the everyday consciousness, the financial fetish very often gets a form such as “locusts” which swarm upon a “location” and eat up whole companies, including jobs. With this image, nothing is explained, but rather obscures the basic relationships and makes it difficult to answer the question as to how to regulate the global financial markets. … The fetish of the financial markets becomes truly dangerous when given a face, if suddenly capital is differentiated into “rapacious” and “creative” capital. Only an in-depth analysis of capitalism is able to show the relationship of the apparently independent financial markets to the real economy of work and production and critically appraise the fetish-like appearance of its independence. (Altvater, Not Dead)
The author vaguely reminds of the fascistic practice of making the greed of the money people responsible for the decline of the fatherland, their denunciation as enemies of the people and their weeding out as aliens to the people – a criticism of finance capital which is also content if the Jewish banker is substituted with an Aryan at the head of the financial house. Altvater rejects this accusing and criminalizing, but not because this reproach of sin expresses a lot of respect for the community-serving mission that the finance capitalists have in the judgment of the National Socialists, and because a Marxist professor does not go along with this judgment. No, he also thinks in this way. He himself does not disdain reproaching the irresponsibility of the “financial market gambler” who “heedlessly screws upwards the profits attainable from the financial situation.” However, he then forbids this denouncing and othering: treat people with hostility, one may not do this! It is the fetish which has to answer for the self-indulgence; one may not give it a face, do not personalize it! The actors in the financial markets are not as independent as it seems, but only cogs in the gears too. Altvater remains on the level of moral blame which he himself is not so far from, and maintains the opposite: a general pardon of all actors with the help of the fetish- and system-thoughts which he wants to have found in Marx: his “in-depth analysis of capitalism” saves him from the dangers of fascistic othering by the fact that, except for a fetish, he knows of no interests in economic enrichment and nothing more of subjects who pursue these interests.
Another jack of all trades in every leftist publication, Jürgen Elsässer, no longer knows what once divided left and right critics of the rapacious capital. In the fundamental crisis which threatens the bases of the national economy, the difference between the working people and the people becomes quite insignificant to him. He establishes a popular front in the defense of European capitalism against Anglo-American finance capital. He also does not lack in the paranoia which belongs to nationalistic demonization: he poses the collapse of the financial system, which especially in Great Britain and the USA causes a bit of damage, as a specific machination of the financial aristocracy there to control “us.”
1. The analysis of the crisis by most of the left is wrong because they grossly underestimate the imperialist moment: the actual onset of depression is the result of a deliberate attack by Anglo-American finance capital on the rest of the world. These “financial weapons of mass destruction” (Warren Buffet) are deployed not from the exploitation of workers (“overaccumulation”), but are munitioned from “fictitious capital” (Capital Volume 3). What we have seen were the first skirmishes with these weapons – the main thrust is still to come!
2. In defense against this attack, the nation state plays a crucial role. Supranational bodies in which the aggressor states and their representatives are involved (EU, G8, IMF, etc.) are for the birds. It is important to coordinate the attacked nations.
3. In all countries, including Germany, a growing contradiction is developing between industrial and banking capital. The latter is closely associated with the Anglo-American invaders, the former is strangled in a credit crunch.
4. The main task of the Left is to build a popular front, which includes the national or “old-European” capital-oriented industries. The reduction to class struggle is sectarian nonsense.
5. The main task of the Popular Front is the uncompensated nationalization of the financial sector and the expulsion of the Anglo-American financial elite from Europe in a Eurasian alliance. To explain socialism, thus the push against the system as a whole, as the main task is left-wing bluster or “imperialist economism” (Lenin). (Thesis for the inaugural meeting on January 10, 2009 in Berlin)
Finally, the NPD [German right wing nationalist party] feels understood. But anyone who has never understood how in the years after 1930 the radical left could go over in droves to the Nazis: Elsässer shows how it is done.
[6] They write books about “Fordism” and “Post-Fordism.” They like Fordism. With the memory of Henry Ford, they transfigure the era before and after the second world war, in which the price-reduction of labor for capital by a progressive assembly line-like division of labor and other efficiency measures accompanied such an expansion of business that the released manpower quickly again found employment and paid wages rose in general. They consider this happy historical constellation, which existed in only a few industrial nations anyway, a class harmonizing method of accumulation, which – accompanied and assisted by Keynesian economic regulation – unfortunately one day exhausted its power and was given up by antisocial state leaders. Post-Fordism – the progress of capital is accompanied by growing unemployment and the dissolution of regulated employer-employee relationships – also counts for them already again as an accumulation method and indeed a bad one, socially seen. Its regulation follows the wrong economic prescription book of the monetarists or the neoliberals. Now it is joyfully noted that also this unsightly, but for 30 years historically due, mode of accumulation has worn itself out.