Quoted from the piece: "Money and credit capital consequently shift into the more profitable financial forms of investing, causing an increasing divergence and imbalance between speculative financial investing and real asset investing over the course of the business cycle."
This is a very traditionalist conception that does not see money and credit as central mechanisms of the capitalist mode of production, but rather as extraneous elements superimposed upon the "real" economy. The late Robert Kurz had been making a similar argument for years -- that the explosion of the financial sector in the last decades is indicative of some underlying ill-health of the capitalist mode of production, or even its imminent collapse, as Kurz was always arguing. I thought Michael Heinrich answered him quite well in a debate from a few months ago: Gremliza: So either the big bust-up, or 500 more years? Heinrich: Maybe a mixture of both. I’ll try to make clear the main difference between me and Robert Kurz. I think you’re too oriented towards Fordism and post-war Wirtschaftswunder capitalism. And you correctly say there’s no starting point for something like that occuring again the near future – a long the lines of: “we have a structural crisis, but soon everything will take off again, like in the 50s and 60s.” I agree with you up to that point. But then you draw the conclusion: if there is no possibility for something like that occuring, then capitalism is about to collapse. But Fordism and the “economic miracle” of the fifties and sixties were not the peak of capitalism, but rather an exceptional situation historically, the economic and political preconditions of which can be exactly stated. Accumulation will continue to proceed, even if bumpily. Even if all these financial claims are devalued, that doesn’t destroy a single factory. Maybe this or that enterprise will go bankrupt, but then it will be bought cheaply by a competitor and will continue to produce. With regard to your argument that production processes are set in motion that owe their existence to deficit flows, I can only say: so what? Then some creditor will go bankrupt. That doesn’t mean that everything will collapse. Kurz: Well, the productive enterprises themselves will go bankrupt. Heinrich: But what’s that supposed to mean, go bankrupt? Either they will be bought out cheaply by others, or overproduction will be shut down, and that means greater profitability for the remaining enterprises, more profit. Employment, the number of wage-laborers, continues to rise globally. There is no indication that capitalism is coming to an end, quite the contrary.[...] Heinrich: […] I’d also say, that capitalist development in the next few years will remain very crisis-ridden. We will be dealing with a capitalism that can only maintain its consumer promises for relatively small groups of the population. The majority can react to this in a progressive or reactionary way. Very unpleasant times await us, economically as well as politically. But the capitalist machine will continue to run. Kurz: I haven’t said that the collapse is something that you can watch on TV, and it’s over the next day. And then we either wake up in a liberated world or in a devastated wasteland. It’s a historical process, not a one-time occurrence. […] But what about capital accumulation? It has reached a certain historical level, and it can’t drop below that level. Heinrich: Capital accumulation occurs, but the consumer promises made by capitalism in the capitalist centers are only realizable for a minority. Both things go together. Capitalism will no longer bestow upon us what our parents still hoped for. Kurz: But capital accumulation has long been dependent upon mass consumption. Fordism was not an exception, but rather a stage within its trajectory of development. It was necessary in order to really do away with the economic crisis. Now if another level isn’t reached on the basis of this already achieved level of Fordist capital accumulation, then accumulation itself will crash. It is not the case that capital accumulation can occur at an arbitrary level. Then one could also say, eventually capital accumulation is only occuring on the Cayman Islands, and still capitalism is in good shape. Heinrich: But nobody says that, and that’s not the case. Today, we have more wage-laborers than ever before in the history of capitalism. You just can’t say that capitalism is limited to the Cayman Islands, not at all. Kurz: My point was the historical level of accumulation, and that can’t fall behind that of Fordism, but rather has to go beyond it, if a new accumulation model is going to come along. And anyway, how are things looking with these enormous masses of wage-laborers? On the one hand, at a global level there has been a change in statistical methods: in all central countries, but also in the periphery, non-productive workers – for example, grocery baggers in the supermarket – are included. If one wants to count the additional masses of wage-laborers, one has to take these changes into account. Heinrich: Things aren’t that different, since the industrial basis is also expanding, not contracting. Kurz: But on what foundation? And here we come back to the deficit flows: on what foundation has Chinese economic growth occurred? Solely upon the basis of the Pacific deficit flow; without this, there would have been no industrialization of China. That means, it has feet of clay. Heinrich: But that’s always the case. That is in fact the same old, same old. How were the railroads constructed in the 19th Century? On the basis of an enormous credit and stock market swindle. With your argumentation, the collapse of capitalism would have already had to have come at the end of the 19th Century, since enormous infrastructure projects only came about on the basis of deficit flows. Immense processes of redistribution occurred. Small savers lost their savings, because they bought railroad shares at the wrong time. So there were enormous losses, but ultimately capitalism was pushed along by the deficit flows of the 19th Century. It seems to me that something very similar is happening right now in China. Source: http://www.principiadialectica.co.uk/blog/?p=5893 [ENDS] _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
