Remarks on the Crisis of 2009
Lessons from two years of global economic crisis
The crisis of worldwide, capitalist business is entering its third year. It began in the summer of 2007 as a disruption of a specialized segment of the U.S. financial sector, when the devaluation of securities in which home mortgage and other debt had been used as speculative business items led to the insolvency of the special-purpose vehicles constructed for the purpose of creating and marketing these items. The crisis consequently spread further and further. The collapse of trading in this one sector of the derivative markets, as well as of the issuers of the business items traded there, damaged both customers and designers of the securities. The losses suffered by a good number of financial institutions, including the bankruptcy of some of them, paralyzed additional branches of the capital market. And the breakdown of business in these markets ruined additional investors and issuers. Meanwhile, large financial companies all over the world are practically bankrupt, while some have actually been liquidated. The value of securities written off by the affected companies runs into the hundreds of billions of dollars, and the value of those that might still have to be written off — securities that are “poisoning” the balance-sheets of their holders — is estimated to add up to a multiple of this amount. Furthermore, this sum isn’t really being reduced by the write-offs already carried out; instead, it is showing a tendency to rise, because the decline in the securities portfolios of financial companies makes them less willing and able to resume trading with this speculative commodity and thereby furnish it with a market value again. For over a year, they have been hoping that the consequences of this ongoing process of asset destruction could be confined to certain “highly speculative” segments of the global financial market , or at least kept from affecting the “real economy”; but this has long since proven to be an illusion. The “recession” has arrived — and on a scale that hasn’t been seen in a very long time. Even old and important companies from the homelands of global capitalism are declaring bankruptcy. Welfare and unemployment offices, where they exist, are registering a steady rush of unemployed, organizing “short time work” across the board, and documenting a sudden increase of “precarious employment.”
As of this writing in the summer of 2009, prospects for the future are mixed at best. On the major stock exchanges, stock prices are rising again, even for weeks at a time; the largest surviving banks are reporting ten-figure dollar or euro profits; and orders are on the rebound for various companies in the export industry. On the other hand, private and commercial debtors are threatened by insolvency, which in turn not only threatens new losses for their creditors, but also further disclosure of the worthlessness of derivative securities. That is why lenders, for their part, are imposing stricter conditions and investors are raising their standards — which will likely lead to more bankruptcies that will again react negatively upon the financial sector, reducing its business capacity and volume, and so on. Admittedly, money and goods continue to circulate through the economy, but only because the governments of the major global economic powers are saving their financial industries from insolvency with billions in guarantees and “capital injections” reaching dizzying heights, thus securing the continued operation of their society’s payments system. If money is again being made and profits reported in some branches of finance and industry, this is only because the states that can afford it are creating business opportunities with debt-financed “stimulus” programs and the issuing of the corresponding bonds. Both the rescue of the financial system and the “stimulation of the economy” by means of state debt are viewed as absolutely necessary, though only so effective, as their success is doubtful and a new problem is certain: the billions that states are creating, in the form of government bonds for financing their crisis budgets or directly through their central banks purchasing worthless debts, are endangering these states’ credit ratings and justifying worries about the reliability of such bloated currencies. Even a radical reduction of debt by means of a currency reform is no longer considered completely unthinkable. In the meantime, the surviving financial companies are carrying on just as they did before the crisis, with sums of money the state is answerable for. They have come in for criticism on this, but without anyone being able to say what other business they should get into besides speculation on promised returns, price trends, and their business partners’ need for money. And just like last year, worldwide hunger is increasing again at a rapid pace, because the speculation business has once again discovered a means for its own business in the energy needs of the major global economic powers and in large-scale industrial agriculture. It has calculated its futures transactions accordingly and driven food prices to exorbitant heights beyond the reach of the hungry peoples of the world.
The whole thing is as disgusting as it is instructive. Every element of the crisis — its course, its current stage, its political handling and public discussion — casts an extraordinarily glaring light on the practices, requirements, and necessities of the normal business life of the market economy, and thus also on the absurd principles of its construction, so harmful for ordinary people. In other times, these connections are automatically checked off as the “normal course of events,” if they are taken notice of at all. Of course, a crisis doesn’t automatically, of its own accord, shed any light on the workings of the market economy — no more than does the everyday life of the market economy that the crisis has disrupted in such an instructive fashion. The “fourth estate” within the state, the free public sphere, interprets current economic events for the public as the consequence of negligent or even culpable violations of the rules. It thereby certifies the normal state of a market economy — stumbling a bit at the moment — as being beyond reproach, just because everything functions then as it should function in a market economy. This exceedingly affirmative view of things is met with approval because it ties into the practical habits of a conforming lifestyle, making the everyday life of the market economy — earning and spending money, saving and going into debt — appear self-evident and without any alternative, while complementarily representing the crisis as a deviation from the rule rather than its consequence. The discontent that regularly accompanies such habitual acts of conformity may be forgotten in light of the much greater harm inflicted by the crisis. Anger about the effects of the crisis finds moral satisfaction in the successful search for the guilty parties who have plunged “us all” — i.e., the fiction of a mutually supportive community of crisis victims, from reputable financial institutions down to the newly unemployed — into what is, thank God, only a temporary misfortune. Anyone who wants to know more about the crisis gets buried in information about the technology of high finance, information that meets all the requirements of the Counter-Enlightenment as far as the reason and purpose of finance is concerned. At any rate, neither the rule nor the exception get explained, not to mention the connection between the deplored and decried deviations and the rules that, firstly, ensure that even the normal case of a functioning market economy takes place at the cost of the economically dependent majority, and, secondly, that themselves regulate the course of the crisis.
So that is what remains to be explained. As instructive as the crisis is, it doesn’t spare its victims the effort of (re-)learning.
We begin with the main point, i.e., the source of income that the large majority of people in the free market system indeed have to rely on without alternative. In a crisis, significantly more people than usual get to experience — and the rest also get it first-hand — how insecure it is to obtain a livelihood by working for an employer in exchange for money. Of course, even in normal times, this is not unknown, and the reason for it is no mystery: there is money for work only if it pays off for the employer, that is, for the profits of a company, although public employers don’t calculate any differently in the end. That is why companies demand as much work as possible for as little money as possible. And when nevertheless a workplace like that doesn’t pay off for the employer, the workforce, and with it the money it had been earning there, is cut down on. People know this and, somehow and always at their own cost, reckon with it. Yet whenever, as is now the case, layoffs pile up and firms stop hiring, whenever even wage concessions and overtime in the context of contractual “job security programs” no longer help and the hard-earned “middle-class existence” falls apart, then there is widespread private fear and loud public lament. And it becomes obvious that people, while willing to conform, don’t really believe, or at least don’t really take seriously, what everybody actually notices and knows: an employee can actually only work for a living as long as the employer’s calculations work out. People cling to this “as long as” as if there really was the “one boat” in which the firm and its employees were all together in a tight spot, and they refuse to recognize that this “as long as” stands for a “because” and an “in order that”: money for work takes place only because and in order that the firm thereby makes money for itself. In a market economy, the opportunity to acquire the necessities of life is not an end in itself but, once and for all, merely a means — to the ends of the employer. The universal moaning and groaning about “lost jobs” and the “harsh fate of the individuals” that “lies behind” them maintain the sham that is part of the basic equipment of a bourgeois existence : somehow and in the end, the free-market system just has to be, or at least has to be also, about those who depend on wages and about their being able to earn the wages they depend on. And yet the lesson is unambiguous: it is not a crisis when a large segment of the wage-dependent population gets into serious existential difficulties, while the remainder can no longer be certain of their income. It is a crisis when profit making no longer works. Then livelihoods get sacrificed across the board, because in the free-market system, they have no economic justifiability other than through the benefit that a company gains from the use of labor. In a crisis, that doesn’t even get glossed over, but at the same time, nobody simply wants to accept the clarification.
This is least of all the case for union employee representatives, of all people, who have been offering ways of getting the profitable exploitation of wage-dependent people back in full swing and holding the layoff of workers on a massive scale in check with pay cuts and unpaid work and giving up free time. And nobody notices, least of all the unions themselves, that their offers only confirm what nobody wants to believe, namely, that employers’ business interests, brought to the point of ultimatum in a crisis, are irreconcilably opposed to employees’ subsistence necessities and security requirements. With these offers, unionists and shop stewards declare, in the name of their clientele, their willingness to organize this antagonism, despite everything, in a conciliatory fashion — wholly at the cost of wage earners. And even that doesn’t get them anywhere. A crisis thwarts every last hope of compatibility between the necessities of making a living and the laws of doing business in line with market requirements. Of course, firms do indeed demand wage cuts and overtime of their workforce when they run into difficulties; they readily accept offers to that effect. Even in normal times, however, that goes not toward “creating jobs,” but to lowering costs and making workers redundant. And once profit-making stagnates across the board, both income and income opportunities are slashed — voluntary impoverishment won’t “secure” a thing.
And how could it? After all, wage-dependent workers weren’t the ones who brought about the crisis, the collapse of free-market business, with excessive wage demands, insufficient work effort, or even by refusing to work. Its organizers and beneficiaries managed that all by themselves. And from the outset, it wasn’t even the companies with the unjustly good, but anyway false, reputation of creating jobs for everybody that were at the center of the affair. First and foremost to stall were the business transactions that banks, investment funds, insurance companies, and other financial firms are accustomed to concluding with each other: the trading of securities, on which the issuer notes promises of returns of the most varied sort, from plain vanilla interest payments to gains from so-called financial bets, and in which investors have put lots of money, both their own and others’. These papers typically were and are sold by financial companies, to their peers and the rest of the money-owning business world as capital investments. This trade was gradually halted or cut back; the no-longer traded papers lost their market value because the speculators involved lost a very notional, but apparently crucial condition of business: their confidence in the willingness and ability of their business partners to vouch, as agreed, for the investments they had issued and marketed. Mistrust injures this business and devalues its business object; devalued papers and collapsed markets increase the level of mistrust; the downward spiral cannot really be stopped; and the volume of “toxic” investments is hard to estimate. And what can we learn from that? In hindsight, the experts claim to have known all along that the volume of financial transactions successfully concluded for years was actually unsustainable and doomed to fall from the start. They entertain the public with background reports on more or less fraudulent machinations. But for the most part, finance is “looking forward,” setting their sights on new, secure investments, and demanding that government overseers furnish solid material for speculation …
There is something else to take notice of, namely, something about the nature of a business that must have had an upward spiral under its belt if, for the past two years, it has been spiraling downward so consistently. Obviously, the normal functioning of the market economy includes a form of professional enrichment without the firms involved busying themselves — by employing paid workers — with producing and selling useful things. Their business article consists solely in the power of disposal over everything for sale, in the private power of command, residing in money, over commodities and wage-dependent personnel. This power of access and control is what a commercial borrower is after. He pays money for it in order to boost his business with a greater quantity of it. The lender, the firm that provides the loan, seeks access to the money income its client makes in this way. Both sides of the transaction get to the heart of the “logic” of the market economy. Its entire purpose lies in increasing money; the necessary and — depending on circumstances — sufficient means for doing so is enough money. The borrower borrows money in order to put his financial assets to work as a source of money on the requisite scale, and, implicit in this, with the desired force. The lender makes his money productive, i.e., a source of additional money, merely by lending it. However, lenders don’t wait to see what a debtor does with the money transferred to him and then take a share of the profits he has made. The borrower commits in advance to make payments out of the yield of the sum of money whose productive power he takes for granted. The creditor doesn’t post the credit given out as money given away, but as an increasing asset. In this way, both sides treat debt as capital; this metamorphosis is neither a mere promise nor wishful thinking, but possesses its own solidity in the securities trade of financial institutions. The money given away actually exists as an object of value in the hands of the lender, an object whose use-value is to function as a source of money, as a lump of financial wealth with built-in growth. It can be kept, or resold with due proceeds and increases in value pocketed. Conversely, the borrower steps out of the role of mere debtor: he doesn’t merely ask for money, but presents his own interest in others’ money as an offer to share in the growth he intends to bring about with the requested sums of money. The two sides thus face each other as issuer and investor, as economic figures who both absolutely take for granted that the same sum of money functions for both sides as money capital. Their blatantly speculative confidence that the promises of growth they have made will work out turns their transaction into an act that creates capital — a crisis supplies a negative test of this: by destroying the act of confidence, capital gets destroyed as well.
Financial institutions make money out of providing credit and transforming others’ debts into their own money capital. And that is why they aren’t at all timid about going into debt themselves. On the contrary, it is only by obtaining others’ money for their lending and financial investing that their business really gets into full swing — money from small savers, who hand over their right of disposal over it for a bit of interest, as well as from major investors, to whom the financial firms sell their own securities, or peddle, as brokers, the securities issued by their major clients. The current crisis lays bare in a drastic fashion the crazy dimensions this business has assumed: a worldwide trade with investments and speculative instruments of all stripes, carried out by financial companies that alternately and simultaneously act as lenders and issuers of securities, as brokers and investors. And in this lies a lesson with a certain educational value, even, and especially, for ordinary people, who hardly find themselves in the predicament of joining in this circus. One can see in the way the pros of finance deal with money what money is really for in a market economy ,what its true and proper use is. For the well-informed elites of this system, money exists simply for the sake of becoming more money. It consists in the power to act, solely through lending, as its own source. Its most proper use, what allows it to act in this way, lies in investing it in objects of value whose sole content is the right to more money, and which objectify this right as an accomplished fact. In the realm of finance, this purpose dominates so completely that money is either a source of money or nothing at all. Once the transformation of debt into capital can no longer be made credible by the originators of this trick, due to lack of business success, once it is questioned from all sides or even explicitly revoked — as at present on a large scale — then money is itself gone. Debt becomes in fact nothing but money given away, and thus money no longer existing. Where financiers once operated with capital assets, now a deficit yawns. As the crisis teaches, continual acts of confidence in the power of money to increase itself, released through lending, are crucial for its existence.
This connection between the growth and the existence of a sum of money is in no way restricted to the synthetic products and the spiraling business practices of the financial industry. It holds in general for the money of society; that is what the financial crisis has really spelled out to a briefly frightened general public. For a few anxious days in the fall of 2008, after the bankruptcy of the big American bank Lehman Brothers, the fate of the major German mortgage bank Hypo Real Estate (HRE) was under discussion by the major players of the German banking industry and the political managers of the crisis. As the German federal government made vividly clear to a parliamentary committee a few months later in the run-up to federal elections, it was not only additional portions of the financial world’s securities assets that were, in all seriousness, at stake, but also the creditworthiness and the ability-to-pay of the sector’s most important institutions — not only in Germany — and thus also the continued existence of the monetary wealth of society and the circulation of money within the country and beyond. Thanks to a massive intervention on the part of the ultimate powers — a feat their managers pride themselves on to this day — this free-market doomsday scenario was averted. We discuss directly below what that reveals about the intimate relationship between the private power of money and the power of the bourgeois, constitutional state. At any rate, this near catastrophe itself emphatically demonstrates that the banking industry indeed takes all the money earned in society and parked temporarily in the form of checking, savings, money market, and other accounts, and uses it as raw material for its lending and capital investment business. What it credits to its customers and puts into circulation on their order for all kinds of payments — debiting and again crediting — are no more and no less than tokens acting for their money property. The money itself, this universal means of access, has long since been sent out on its capitalistic mission as the operating capital of the financial world for just the kind of transactions whose sudden and complete annihilation would have been inevitable had HRE been allowed to go bankrupt. According to the criteria of the banking industry, all the money that runs through its hands — hence just about all money — exists as money only because, and provided that, the business between financial institutions based on speculative trust goes according to plan. The average wage-earner may imagine that at least his own hard-earned money is safe, and draws interest as a reward for his putting some of it aside; but at its peak, the crisis teaches him that all money including his own has long since become a derivative of a successful debt economy, and as such ceases to exist as soon as financial institutions’ doubts about the success of their investments become rampant. Money is its own source or it is gone — that is ultimately true even for the little bit of money that the wage-dependent population has earned for itself and needs for its livelihood.
That, of course, is from the start all the more true for that sphere of business in the service of which those dependent on employment earn their money. Nothing gets underway there, and whatever has gotten underway invariably comes to a standstill, when banks don’t provide loans and the capital markets show no interest. The worries over a rash of bankruptcies in the “real economy” due to a lack of financial investments bear witness to this, as do the political authorities’ exhortations to the banking world not to hold back by any means on financing. Apparently, debts are the absolutely indispensable means of production, not just for the financial industry, but for all sectors of the market economy. The material means of production such as factories and machines, and also especially the workforce that knows how to properly operate the equipment, computers, and assembly lines, may be available in abundance; but without money, or rather, as the crisis demonstrates and all the experts announce without reservation, without borrowed money to set them in motion, they are all completely useless, doomed to remain idle, the material elements of production decaying, and the human factors of production becoming impoverished. In a market economy, what matters is not the useful articles with which people eke out their existence, but the power of private ownership over these articles, the power of command that is materialized in money and that only really unleashes its full potential when the financial sector provides it in the required amounts. This refutes once and for all the notion that loans and investment funds are somehow practical means for facilitating production and consumption; instead they are the determining factors. The increase of principal through interest payments is an intrinsic right of a loan, and the right to an increase is the economic property that makes an investment a capital investment: these rights (pre-)define the economic purpose of the entire, so-called market economy. It is through money, which already entails the purpose of self-expansion, that people and material are put into operation, so that putting them into operation means instrumentalizing them for the predetermined increase of the commanding power of money. So the same “law” — i.e., the interest in increasing money that has hardened into an objective necessity — that applies to finance capital and its securities trade also applies to the “real economy”: here, too, either debts are turned into capital or else nothing at all happens. Everything leads again and again to the same clarification: work is performed in order to let credit act according to plan as capital, i.e., in order to put into effect, certify, and, on an ever greater scale, reproduce the power of invested money and its right to increase. The material life-process of society is an instrument of money’s rule over labor, taking place only in order, and to the extent, that it enables the rule of money to grow.
Whether and to what extent work performs this service is in turn not at all because of work, let alone in the hands of those who perform it — with the one exception the “proletarians of all countries” have never decided on, that is, knocking out of the hands of capital its command over themselves, their labor, and their livelihoods. As long as they accept the market economy, the power of money decides whether and to what extent the instrumentalization of social labor is useful to it, i.e., as a source of money. This free-market rule, too, is illustrated strikingly by an exceptional crisis situation. On the one hand, the temporary collapse of the global debt business demonstrates how unconditionally dependent commercial firms are on successful lenders and functioning capital markets. The negative consequences attest to the fundamental identity between the interests of the “real economy” and the banking industry. At the same time, a crisis spoils this fine relationship, breaking up the identity of interests. The symbiosis between firms that need others’ money to succeed in competition on goods markets and institutions that readily earn money by satisfying this need suddenly turns into financial difficulties on the one side and tighter credit conditions on the other — be it from calculation or from a lack of mobilizable funds. The result is a conflict that, in the current crisis, has become so intense that it has destroyed important companies in the spheres of production and trade through the negative decisions of finance capital. The exceptional case thus confirms the rule that the involvement of lenders and investors is what enables industrial and commercial firms to employ means of production and labor-power in their competition over market shares. And it teaches an additional drastic lesson: in a crisis, finance finds its commercial debtors guilty of having failed to satisfy its demands. Finance capital finds that the past and present use of societal labor as a source of profit does not fulfills its legal rights, does not live up to the expectations of returns entered in the books as capital investments. It accuses industrial or commercial capital of failure in the fulfillment of its criteria of success and orders the reduction or discontinuation of their business activities. At the same time, the conflict of interests that here sets finance capitalists against the firms they credit reveals to what extent this antagonism, or rupture in times of crisis, exists within one and the same economic party, within an interest common to both sides. After all, lenders and investors are only judging in a critically demanding way and, in a crisis situation, negatively, what firms seeking financing do anyway, only with greater effort and intensity when insolvency looms. Both sides apply the same criteria when training their sights on what result nonfinancial employers get from their employees at what wage. Both sides arrive with instinctive certainty at the same conclusion: whatever else, the firm is saddled with too many employees. And both sides also understand well that their chance to get the firm back on track rides on the labor factor or not at all — in a crisis more likely the latter. In any case, it is this “factor” that does not satisfy both capitalist fractions: wage labor fails before the demand to produce enough profit for the successful transformation of the company’s debts into the capital already entered as certain into the books. So the conflict between financial institutions and the industrial and commercial capitalists in whose enterprises the banks have invested their money clearly reveals the role of labor in the capitalist system: its use must bring about what employers and their financiers expect and need. If it doesn’t, then capital — least of all the fraction of lenders and investors — doesn’t limit its demands to the amount that can be made from paid labor given martket conditions. It’s the other way around: the demands of finance capital and the calculations of employers responsible for meeting them lead to their limiting the use of paid labor, i.e., limiting the extent to which labor is still performed at all to the amount in which it still fulfills its specific function, namely, doing its part to transform the debts of those who exploit labor into growing financial power, into capital.
Much remains unresolved in a crisis as far as this free-market business purpose is concerned — after all, that is what a crisis consists in anyway. This concerns not just the limited capability of the labor factor, but, above all, the asset titles that financial firms have created, put into circulation, and hoarded in their own portfolios and those of their customers — not for financing companies in the “real economy,” but for speculative purposes of a higher and derived kind. Large amounts of these papers are devalued, and even larger amounts are threatened with devaluation. But none of these assets simply get thrown away — unlike the inventories of insolvent industrial and commercial companies, and quite unlike what happens to paid workers whose work is no longer sufficiently profitable. Capital does not part with wealth consisting in any kind of securitized right to monetary returns from debts as easily as it does from use-values whose exchange-value has little prospect of being realized in a sum of money, or from factors of production — especially the human kind with their pay demands — that yield no profit. Speculative papers that have lost their market value because nobody wants to buy them anymore are instead stored up for better times — when revived speculative interest makes these papers “value” again. In the midst of the crisis, there are even speculators who are buying up notorious “toxic” papers, speculating on such better times coming.
And the current crisis also teaches us that before the wealth accumulated by finance in paper-form is annulled, before the monetary wealth of society that finance has invested in it becomes endangered as a whole, the state goes into action.
It is strange indeed. All over the world, the financial sector was sliding ever deeper into crisis; large banks were all but bankrupt, and some did in fact go bankrupt; the globalized market economy as a whole was threatened with insolvency. And then all it took was a meeting of political leaders with the heads of various financial institutions and representatives of the central bank; all it took were a joint resolution, a governmental assurance, and a stroke of the pen — and money was there in abundance, the solvency of the banking sector and the liquidity of the business world was secured, and the deposits and savings accounts of the public were saved. Lending and earning money, investing and speculating, and even producing — on a reduced scale — could continue. One word from the authority — considered by all economic expertise as economically incompetent and urgently implored to keep out of the economy — one word was required and completely able to replace lost speculative confidence in the future of profiteering, and to protect crumbling capitalist wealth from total destruction at the hands of the market actors who had previously created it and enriched themselves on its accumulation.
And what does this teach us?
We learn mainly that the public’s sense of justice has apparently been offended. All of a sudden, the public sphere is swarming with advocates for the “little guy” complaining — not in the sense of presenting a serious demand, of course — that the state isn’t reserving a bit of this generosity for its other, so important tasks that have long since been subject to economizing: education, “the future,” maybe even higher unemployment compensation… Expert lovers of free-market justice tell stories of “moral hazard,” systematic irresponsibility on the part of decision makers in banking encouraged by government rescue efforts. Others are already thinking of the next boom, when the billions currently being created will inevitably fuel inflation — which, however, is not to be confused with a critical attitude toward the companies that will first have to raise their prices to bring it about. The politicians in charge defend themselves by pointing to the “systemic importance” of the banks, claiming that the financial institutions they have provided with such enormous sums and credit guarantees are “too big to fail” — which doesn’t in the least disqualify the “system” whose maintenance is so expensive, but rather justifies the expenditure. Actually, they are much more right than they want to admit as far as the free-market system is concerned. After all, they spell out to their critics and to the people what their system of “democracy and free enterprise” is systemically and systematically all about: the splendid “growth” of capital in all its forms, for which all other elements of the life of society have to prove their worth. That is why the political class doesn’t just permit a systemically necessary amount of impoverishment, but organizes a system of useful poverty that is just as “systemically relevant” as finance capital and its rescue.
Hence politicians respond to the crisis by now placing the restoration of the banking industry — that is the special feature of the rescue package — on the agenda. Apparently, neither the market nor public opinion, neither “self-healing powers” nor business expertise is in a position to accomplish this, rather, only the custodians of political power. For when the heads of governments sit down with their central bankers and, in consultation with the heads of the private financial sector, decide on a multibillion or trillion dollar rescue package for the financial sector, then of course it’s not just the goodwill of a handful of experts and democratic leaders that goes into action. The decisions they make take effect because a complete machinery of state power stands behind them. In order to help free enterprise — bogged down and in the process of ruining itself — get back on its feet, the ultimate power steps into action, a power whose legal orders everyone must obey, even the super-rich elite, who normally refuse to tolerate any government meddling in their private enrichment. And that reveals quite a bit about the real foundations of the entire system of economic freedom, because if this freedom can really and only be saved by an act of state power, then it is also based on it. The exceptional measures taken by the ultimate authority illustrate how, and on what sole basis, the market economy normally functions at all. The system requires an undisputed machinery of power that not only dictates how its society is to go about making a living, but also specifies the “material” everything runs on: the money that is currently being lost instead of accumulated by its professional, large-scale users. The private power of property materialized in money — this epitome of economic liberty — needs a sovereign power to authorize it. That can be inferred from the re-authorization of a financial system facing a declaration of bankruptcy and the restoration of its solvency by state edict. And this also means that capitalistic wealth, counted and realized as legal tender in money, is itself nothing more than a relation of force, and that capitalistic business activity is nothing other than the exercise of the power of disposal and command that the state — by virtue of its all-encompassing rule — vests in property and in property’s material, legally defined money-form. The phrase “systemically relevant,” taken seriously, doesn’t just mean that the state regards the banking sector as being somehow more important than other branches of the economy and other acknowledged social needs. With its emergency efforts, the government teaches a lesson it certainly doesn’t grasp itself, but which nevertheless leaves nothing to be desired in terms of clarity: a market economy is the execution of power relations decreed by the state, codified in property rights, materialized in money, and staged and overseen by the banks.
This lesson contains a second part that is just as remarkable — the inhabitants of a system in which speculative debt transactions are “systemically relevant” to its continued existence certainly don’t know what to make of it, either. It’s one thing that the money with which business is done on all sides embodies a power relation established by the state. Conversely, the power of the state that subjects the economic life of its citizens to its rules and laws exists in money, that is, as the private power of disposal over work and wealth, destined to function as the source of its own accumulation. This applies so categorically that the state itself exercises its power in conformity with the very rules and capitalistic use of private property it universally enforces. Even in an acute crisis situation, when it rescues money and credit from self-destruction by decree, it expects capitalist businesses to make use of state guarantees and funds according to their own calculation of advantage, even leaving this to their discretion. Not even when its power is exercised directly in the form of conditions and means of business does the state intend anything other than re-empowering finance and the rest of the business community to turn state-guaranteed debts successfully into capital again at last with their calculations, their business techniques, their speculation, and their right to command. If necessary, the state even nationalizes banks, forcing the self-accumulation power of property to become productive again and the normal debt economy to get going again.
Just how seriously a modern state takes this purpose is illustrated by the remarkably substantial element of powerlessness it condemns itself to: it really can’t control the economic consequences of its crisis interventions, to say nothing of the consequences of its everyday work as guarantor of capitalist conditions and the number one capitalist means of production, money. At the same time, political figures competing for positions of power in the nations that dominate the world economy like to present differing opinions as to how far the regulatory power of the state should go. Some like taking the absurd stance that a state rescue of the banks is close to socialism, and aggressively deny that the state is responsible for the desperate situation into which the crisis has plunged a large portion of the capitalistic rank and file, and deny that the government is capable of fighting poverty other than by fostering the economy that produces it and, in a crisis, multiplies it. Other politicians prefer the air of authority to issue directives also to the highly-paid agents of capital, which doesn’t change the fact that state rescue efforts are, and bring about, something other than the necessary restoration of finance. After all, when the state intervenes — under any leadership soever — it doesn’t violate the fundamental distinction between true capitalist wealth, which fulfils its “systemic” purpose by growing capitalistically through an extensive debt economy, and a guarantee for monetary assets, which, virtually as a substitute performance, conceal more than offset the temporary failure of this economy. With its power and suitable orders, the state can indeed contain the negative consequences of general speculative distrust within the banking industry and prevent the annullment of capitalist wealth from reaching critical proportions. However, the state doesn’t want to change anything regarding finance capital’s acting as the motor of the national economy through free speculation and confidence in successful speculation. Rather, it wants to make that again the normal state of affairs. It intends that only that wealth that the financial industry derives from uncertain, future monetary yields and invests in corresponding legal rights is to continue to constitute true societal wealth, because only then does the self-expanding power of money have a chance for success in accordance with the system. That is why state power can guarantee the commanding power of money, but cannot substitute for its productive use.
The modern state is so interested in a money economy that functions according to its own criteria that it wields its sovereign authority to enforce the system of private enrichment as the prevailing political economy — which can be seen in the crisis policies of the leading world economic powers. This interest takes for granted the tangible grounds for the state’s economic raison d’état — something the politicians in charge of economy and order declare their support for in their own way when they swear time after time by the market economy as the superior economic system What the state is keen on are the achievements of capital — the exploitation of every economically relevant stirring of life for the growth of abstract wealth, the utilization of the power to get at all kinds of labor and commodities, and the unconditionally consistent use of this wealth as its own source to the point of its own critical self-destruction. It is so keen because it draws the means of its rule from this wealth, and with incomparable efficiency. It feeds on capitalistic wealth; and when finance initiates, sets in motion and directs the growth of this wealth, then the political power knows no better kind, and certainly no sounder kind of “value creation” than all the forms developed by the community of speculators through credit. For the benefit it draws from this financial activity, the state is more than willing to accept certain contradictions. Thus, in the current crisis, the state thinks nothing of rescuing finance capital with a multibillion payment and placing the requisite expenditures, i.e. the debt it must include in its budget, at the disposal of the same finance capital as a source of income. Capitalist states aren’t simply printing money — at least not without the private credit business getting the sweetest chance for success between the ministry of finance that is selling interest-bearing papers on a massive scale and the central bank that, on an equally massive scale, is transforming “toxic” securities from the banks’ portfolios into fresh money. In this way, finance is enabled and encouraged to earn money on its own rescue. That implies that the banks are authorized to evaluate the billions worth of debts that accumulate for this reason in public budgets, as well as the currency in which these debts are denominated, according to all the rules of critical, speculative assessment. And financial companies aren’t hesitating to do what they are allowed and supposed to do. They aren’t letting the chance to do business with the national debt pass them by. But at the same time, the volume of government debt — especially its capitalistically unproductive use in fending off the collapse of their own business and not for “stimulating” a new surge in growth — is giving them nothing but reasons for concern about the capitalistic solidity of the plethora of the very government securities they are profiting on by marketing as in the best pre-crisis days. The state is rescuing the financial industry; the banks are in turn using the creation of the required funds as a source of profit, while at the same time warning of an excessive proliferation of a business article based on nothing more than the will of the state to rescue them — a fine punch line to the lesson on the profound unity of national rule and finance, on the meaning of political economy.
The state’s authorization of a private money business implies the license to compare the debts of the various nations, like all securities, according to yield and soundness, and, in their trading of money, to subject the nations’ currencies to a critically comparative examination with regard to their usefulness for financial transactions. Since in a crisis — and in view of the volumes of credit and fresh money the state has created — this evaluation turns out to be especially critical, the political leadership including expert advisors and the nation’s public sphere take an interest in its current state, its progress, and its results, i.e., in the rank and status accorded the credit and the money of their own nation. Nothing could be more obvious to them than the standpoint of competition: all nations know they are affected by it and do not want to know they are the ones that make it.
From a less patriotic perspective, the comparison of nations brought to a critical point at the peak of the crisis by finance capital and the competitive measures taken by the administrators of the national locations for capital provide some additional, noteworthy hints. For one thing, they offer up yet another lesson on the situation of the wage-dependent majority in the competition of nations in a crisis: they are pawns pushed to the sidelines in great numbers as superfluous labor power and, as needed, pulled back under intensified conditions. From the standpoint of the political community, the crisis emphatically and explicitly lends their precarious existence, in addition to their free-market purpose of life, an especially good, patriotic meaning: according to the guidelines of the public overseers, the economic crisis leads to an increase in virtue, in willingness to adapt and sacrifice and to side with the home location. This would actually be an occasion to part with any patriotism, all the more given the aggressive comparison of nations so beloved by politicians that makes clear the benefits they expect from the value-creating efforts of their capitalistic elite and a nationalistic-minded rank and file.
When the governments of the leading world economic powers declare that in the current crisis nothing would be worse than mutual “walling-off,” and nothing more important than keeping borders open (for commodities and capital, of course, and not for the growing hoards of starving wretches), they are being somewhat hypocritical: when it suits them, those states that can afford it certainly know ways and means of fending off or eliminating unwanted competition. But they are quite serious about having their own industries, financial and otherwise, continue to earn money in other countries, and maybe even profit from the crisis in the long run if they can only hold out longer than the competition. And they are all the more serious about their power, founded on their economic strengths and others’ weaknesses, to instruct other countries, place their governments under tutelage, and get control of their markets and material resources — all that is on no account to be endangered by foreign “protectionism.” This is how, for example, “we are fiercely determined to emerge from the crisis stronger than we entered it” — as chancellor Merkel declared in the first person plural for her Germany. The decimation of capitalistic wealth, together with the impoverishment of large portions of the population, is thus regarded as a competitive opportunity for the nation — on the one hand, such a declaration shows the cold-bloodedness of democratic leaders, but in this case as well, the character of the leadership of a world economic power is a consequence of the reason of state they are the agent of. And this reason of state obviously demands that the critical condition of the nation be followed up immediately by an attack on the competitive positions won by other nations. So anyone looking for solid reasons for distrust and rivalry between members of the worldwide “family of nations” can find them right here. At any rate, the crisis makes especially apparent that the friendship among nations that distinguishes this “family” is nothing but the hypocritical ideal that accompanies the relentless rivalry of states over the source and scope of their power — a small lesson on imperialism to boot!
The crisis ’09 — this is nothing but opportunities to get to know the nation better.
Too bad it seems as if they are being passed up.
© GegenStandpunkt 2010