Clearly, the global economic crisis since 2008 does not foreshadow the end of capitalism. However, it both reminds us of something well known and reveals something new. It reminds us that capitalism is subject to a peculiar sort of periodic downturn: an alternating deficiency of profit or of demand. Episodic over-accumulation of capital, achieved in part by the depressing of wages, entails lower demand Ð as Adam Smith recognised long before Karl Marx.1 Inversely, Keynesian attempts to remedy this crisis by boosting demand can eventually eat into profits and returns on capital.
But the current crisis also reveals that globalisation since the 1970s has so expanded and speeded up the processes of capitalist change as to engender something qualitatively different: not only the need to balance the growth of abstract wealth with demand for concrete commodities, but also a chronic dif- ficulty in sustaining economic growth as such. This was symptomised already in the 1970s by the ÔimpossibleÕ coincidence (in Keynesian terms) of high unemployment and, therefore, depressed demand, with rampant inflation, which should have been an indicator of intensifying economic activity, but clearly was not. Here one had an early sign that the late modern capitalist system so much depends on creating abstract wealth that it is increasingly less able to generate productive capital and genuine goods serving human needs. One indication for this is that global finance uses other peopleÕs money to trade almost exclusively with itself: taking deposits and lending to industry accounts for only 3 per cent of assets on the balance sheets of UK banks, while international foreign exchange trading is nearly 100 times the volume of commerce in goods and services.2
The growing frequency of financial crashes and the recessions they induce suggests that capitalism, taken to its logical extreme, provides only the kind of nominal growth that arises from making money out of money and that is compatible with actual material decline. Thus capitalism simultaneously abstracts from the real economy of productive activities and reduces every- thing to its bare, abandoned materiality Ð a double movement that is central to the capitalist metacrisis (not to be confused with a Ôfinal crisisÕ), which is the focus of this chapter.3
Meanwhile, globalised movements of international finance now severely curtail government freedom of action in a way that places democracy itself in danger. The manner in which excess capital can be transferred from one part of the world to another and back again in a matter of milliseconds has in large part generated the recent economic destabilisation and also expanded the opportunities for outright criminal behaviour.4 In response to the collapse of the sub-prime mortgage market and the 2008 global Ôcredit crunchÕ, national states bailed out transnational banks by taking over their debts in a manner that locks politics itself yet more into this financial logic. In consequence, government has less and less regard for the specifically political ends of human well-being and interpersonal relationships, while the long-term needs of the national polity and society are subordinate to the short-term interests of quarterly returns.5
This growing global economic turbulence sheds new light on the nature of capitalist crisis as such. The maximisation of profits by defeating workersÕ demands in the 1970s and 1980s did not prove effective for very long. Quite quickly, a lot of capital had nowhere to go and there was a need to boost demand again. The increasing speed of capitalist cycles meant that suppos- edly opposite crises started to coincide, delivering a double deficiency of both return and demand, which manifests as ÔmetacrisisÕ the linear tendency of capitalism towards simultaneous abstraction and materialisation. This ulti- mately generates a problem of correlation between money and the material substance of both land and labour-power, as exemplified by the bursting of the sub-prime housing bubble in 2008.
More specifically, such a drastic coincidence has been achieved through financialisation, or the complicity between the speculative loans of the wealthy minority and the debts of the masses. Financialisation seeks first to increase demand through credit, rather than through a more egalitarian increase in wages and distributed ownership. It operates this preference in part for political, class-based reasons and in part because today a productive economy that might supply higher wages and salaries is stagnating. Second, financialisation seeks to exit debilitating cycles once and for all by rendering demand in the mode of credit in a newly positive relationship to profit deriving from speculation. However, it does not thereby resolve the crisis,
AQ: Please check if the sentence that starts with ÒDebts can- not..Ó reads properly.
but further assists that ÔmetacriticalÕ process whereby seemingly opposite crises of insufficient extraction of surplus value as profit and insufficient purchasing-power of demand now coincide. And yet within this coincidence a certain oscillation remains uncured, after all, as we shall see.
Under financialisation, those in debt are socially disempowered and politi- cally weakened as they find themselves shut out from the formal banking system and driven into the arms of dubious mortgage brokers, payday loan companies or loan sharks. The returns that accrue to payday loan companies from charging usurious interest rates (in the United Kingdom between 100 and 4,000 per cent) further anchor wealthy speculation only in order to allow it to become increasingly unmoored from labour-power, which is left abjectly confined to its own resources. In this manner, the triumph of artifice seems to return the mass of people to that Ôstate of pure natureÕ which liberalism first fantasised as a false historical origin (as we argued in chapter 1). Liberal capitalism realises an economic version of the reduction by bio- politics of people to Ôbare lifeÕ.
Thus we are facing a metacrisis of capitalism whereby the simultaneous process of abstraction and materialisation subjects the real economy of pro- ductive activities to combined speculation and exacerbated commodification. In so doing, it further separates symbolic significance, equated with pure exchange value, from material space, which is seen increasingly as just an object for arbitrary division, consumption and destruction. Thereby, it renders social destruction and ecological damage constitutive of our fundamental economic processes. However, financialisation is not Ôthe end of historyÕ. Debts cannot be endlessly offloaded onto more and more fictional vehicles, and so the doubled resort to credit by the few in terms of securitisation and hedging, in order to shore up capital returns in the face of too easy loans to the majority, is not indefinitely sustainable. One cannot really do without the final securitisation of the abstract on the concrete, on real profits and real wages derived from real production and consumption of things with use-value, understood in however generous a sense. Hence our current impasse.
These observations suggest that the supposedly pure economic logic, old and new, at work here, is not the logic of a market economy as such. Far from being necessary or inescapable, it is entirely contingent and avoidable Ð a logic only of capitalism that acts out certain theoretical assumptions, linked to the loss considered in chapter 1 of the psychic as integrating body and mind and the contradictory modern rendering of everything as Ôentirely naturalÕ, yet equally Ôentirely artificialÕ. These assumptions are as follows: 1. That material reality is securely trumped by abstraction. Yet even the
bankers themselves scarcely knew what was going on, because they were speculating in terms of ciphers about ciphers and guesses about other
peopleÕs guesses concerning the future, while assuming that property prices would go on rising forever.6 By these means, they were increasingly entangling us all in the shifting rules of their own game. 2. That the well-being of the corporate firm takes second place to that of the
individuals who run it, and the shareholders who benefit from it, as encouraged by a culture of Ômeritocratic extremismÕ.7 This is best illustrated by the yawning gulf between executive pay and the salaries of ordinary workers (with top-to-bottom pay ratios of around 300:1 in com- panies listed on the London stock exchange and over 450:1 in many US corporations) and the perverse Ôbonus cultureÕ that excessively rewards risky success, mere chance or even failure.
3. And, most fundamentally, that resources are naturally scarce, given the supposedly random character of human desire. Thus axiologically neutral markets are the best means to palliate the agon resulting from fantasised scarcity.
Interrogating these three assumptions will be the later focus of this chapter. But first we will further explore (a) the specific nature of the capitalist sys- tem; (b) its inherent tendency to generate inequality and inertia; (c) its human contingency, as opposed to historical fatedness; and (d) the way in which it is also, and increasingly, itself an intensified liberal politics, besides being an economic process.