Systemic Collapse: A Theory of Crisis

This article on the current economic crisis is a summary of notes I have made from David Harvey’s lectures on Marx’s Capital Vol. 1 and an exploration of his book Limits To Capital (1982). It is also a summary of explanations from various sources regarding different ways of examining the crisis, in order to get myself thinking about the applications of theory about the operations of capital to current events.

Systemic Crisis

The current economic crisis is a combination of structural design and the inherent contradictions between the limitless search for profit, through speculation, and an interest-based economy in which production is dwindling, harbouring an excess of credit. The logic of the market, combined with neo-liberal doctrines, have brought it to the point where it is buoyed up on faith alone: capitalism is form of monotheism with its own attendant myths. The danger then comes then not when the fictitious bubbles burst, but when the very real infrastructure is sold off and dismantled. The threat is no longer fictitious, but historically realised through privatisation — a degradation of the social sphere and dispossession of people’s rightful common assets.

This is systemic, due to various documentable factors, not so much greed, as a naivety and faith in partially understood market processes. What has changed between now and since the mid-seventies is that risks are more evenly spread so that devaluations are visited on the poorest and least able to bear them. The middle-classes, co-opted by conservative rhetoric and in cahoots with finance, divested the working-classes during previous profit squeezes. In effect, they saw them as the principle barrier to profitability during previous contractions and in effect abetted a return of power to the ruling-classes, rather than see a more horizontal distribution of wealth.

Firstly, we should understand the system as an organic one, that mutates spasmodically to circumvent crises brought about by its own internal contradictions. It is a process of motion and fluidity and moreover it’s a system of relations. Capital is no longer capital if it is not moving; it becomes inert. And when things stop, value disappears. Money, most importantly, is the lubricant of this exchange (liquidity).

It is not a lack of money that causes a crisis, but on the contrary, it is the crisis that causes a lack of money. Liquidity and capital are not the same thing. There is a crisis in the overaccumulation of capital (as represented by the habouring of an excess of bad credit in the system, and as we know: bad money drives out good). It is exactly because of the ‘flood’ of finance capital of unknown quality that there is a crisis of liquidity. The crisis of overaccumulation brings about limits to the flow of capital, i.e. stasis in the money markets.

The liquidity crisis is very real and is causing, or about to cause, a huge shortage in the means of payment. All loans and debts are being called in, in return for money. The next phase — as banks refuse to extend lines of credit to businesses in the real economy and the demand for loanable funds drives up interest — is that ordinary working people get sacrificed on the altar of capitalist irrationality. Then comes inflation as a form of devaluation and the subsequent wage struggles that precede a rise in class consciousness.

This crisis will not remain in the world of finance for very much longer.

Who Controls the System?

Who controls the system? The system controls capitalists, that’s to say the search for profit, which is capitalism’s raison d’être, regulates and disciplines those who seek to set money in motion. It dictates they must continually set their capital into circulation, no matter how damaging that may be (accumulation has a limit to its usefulness). Hoarding is important, in order for private individuals to appropriate social power, but that can cause monetary famine and problems in liquidity. That’s why greed is neither here nor there — you can be as well-meaning a capitalist as you like, or totally greed motivated — it matters neither way. The ‘coercive laws of competition in the market’ will discipline you to extract the maximum surplus value (profit) from any given situation. The pursuit of profit is a ‘social necessity’ of capitalists; if you don’t obey these coercive laws, you will eventually be forced to by the iron discipline of the market. The imperative is to exploit. It is a mechanism that disciplines individual capitalists and oversteps all moral limits (allowing greed to flourish). This is how successively more penetrating forms of capital have come to dominate previous forms, until we come to finance capital, the form that disciplines all others.

Under the dominance of finance capital credit (the monetization of everything), debt and interest cycles do have a conspicuous part to play. Increased material living standards in advanced capitalist countries have actually increased workers’ dependency on capitalism, but similar mechanisms drive these cycles (particularly due to 30 years of wage-stagnation and the substitution of easy credit in order to maintain consumption levels). Also, at an international level, if the State attempts to stabilize the monetary system within its own borders similar principles to those outlined above will punish it on the world markets.

Much of the current debate about the economic downturn tends to ignore productive labour, which we understand the hidden location from which surplus value (profit) is created. In fact, it’s the only part of any of these processes where it can be found, hence the importance of unions and threat of withholding labour during wage struggles. That is not to say that financial capital is unimportant — it maintains a very real relationship with manufacturing and the ‘real’ economy — in a sense, it has its own reality; fictitious capital can have very real effects.

Value and Fictitious Capital

In order to understand the current crisis and how fictitious capitals come to distort the market it is useful to discuss where value is often erroneously thought to reside. How did finance capital and credit money come to dominate the economic landscape?

The fixation on money/gold (in which no actual value inheres) and property (where value is often imaginary) confuses the origin of value, which is now often extracted through exploitation overseas. The principle reason that gold is not even considered to underwrite currency any longer, is that it’s not a stable commodity. There was an attempt to institute petro-dollars for a time, but that proved prone to instability and variable production factors; so now we have money related to commodity markets (GDP’s/commodity bundles), based on further fictions of imaginary value. Credit money was seen as solution to these problems.

Value only inheres in any commodity in the abstract, but ultimately obfuscates where value actually lies (i.e. labour). Some commodities are more stable than others. Gold is historically fetishised because of its rareness and inert qualities, it was then used as universal equivalent becoming the ultimate money commodity; all prices are then pegged to this commodity. This commodity only works as the medium of circulation as long as it is stable. Problems then arise when new supplies of that commodity are discovered (such as during the California gold-rush or when the Conquistadors plundered the New World) and the market is flooded, causing devaluation and another money commodity to be sought. In the Seventies you get a separate problem with gold, one in which the principle gold producers are the Soviet Union and South Africa, so it becomes a political problem to base the world’s currencies on unreliable suppliers. Petro-dollars were then tried and according to MI5, the United States threatened to invade Saudi Arabia in 1973, in order to stabilise supply.

We have to remember that it is the money form’s capacity to lubricate exchange that is important, to keep capital moving. It has to effectively represent exchange. So the universal equivalent just has to be agreed upon and trusted. Money, therefore, is created by social decision, one of convenience, rather than one of inherent values.

If you choose gold you’ll need a gold reserve (Fort Knox), to underwrite all other commodities and keep them circulating in the market and to underpin world currencies. This only works as long as you have a monopoly on the world reserve and supply. If you can’t guarantee that then your currency will suffer and you reach a historical dilemna, as you can’t guarantee the quality of national currencies on a world market. The dollar represented the universal equivalent for so long, because the United States held the world’s reserves (fixed under Bretton Woods). This ended in the Seventies, due to fierce competition between international currencies (particularly of Japan and West Germany) causing dollar devaluation and the end of the Bretton Woods dollar standard. So gold, as a standard of universal equivalence, is massively problematic.

What follows is the institution of credit money as the universal. Credit money’s advantage is that it can supposedly be expanded and contracted at will, and is much more transportable than gold (in fact, it’s electronic). It is not without significance that the introduction of credit money and interest capitalism, coincides with massive deindustrialization and the loss of actual production. Now money focuses even more heavily on money, further mystifying where value is actually created (even more so that gold), and exacerbating capitalism’s internal contradictions.

Credit money is a natural evolution from gold as a currency basis, yet more worrying as it represents an even more extreme phase of capitalism. Neither gold, credit or property really address where value is created or extracted, or where the real opposition to capitalism lies. Conversely, labour is a unique commodity with a distinct and peculiar content tied to the production of profit and birth of capital itself. Only those who concretely produce surplus-value (profit) can block its accumulation. That is why the productive working classes occupy a privileged political territory and why homeowners don’t.

Property, or land in its broadest sense, has use and exchange value which rests on labour. The value from property doesn’t grow out of the ground and it doesn’t come directly from the resources embedded within it or the buildings built upon it. The value is produced in the form of speculation on future rents, it is interest-bearing, which we already understand to rest on labour…the hidden location from which value is produced. In that sense, the appropriation of rents is a form of exploitation. To say otherwise is to endow property and land with magical properties, that’s to say, a form of fetishism.

Value is only in property because it’s derived from labour (hence abstracted). Not past labour, but future labour through the form of rent. That is why a plot of land in the centre of Manhattan is more valuable than one in the middle of nowhere. It is a form of fictitious capital — like futures investments — a claim upon future profits and a claim upon future profits from the use of land, or more directly a claim upon future labour. In fact, the case of future rents is the basis of one of the primary forms of ‘insane speculation’ of the credit system. This can cause massive market distortions.

We know that when you buy land, you don’t in fact buy the land, you buy the title to the ground-rent yielded by it. No? It is equivalent to an interest-bearing investment. You buy the land in order to acquire a claim on future revenues, namely a claim on the future fruits of labour. Therefore, the title of the land is a form of fictitious capital. And hence, a speculative element is always present in land purchase.

Profit from building itself is relatively small, so the emphasis is always on rent generated through the title, which we have established is derived from future labour. In order the appropriate future rent, the owner must advance his capital again to purchase the labour to develop his land. So again, value is extracted through labour (although more directly in this case).

So in that sense land-ownership is a form of production reliant on labour. And properties of land are then two-fold: firstly, as financial asset and secondly as a use value (through the appropriation of rents). The landowner/landlord is coerced to capitalise on his property, through usage — like all other speculative capitalists — otherwise it’ll be a profit opportunity foregone. He has the choice essentially to sell or rent. Rent and private property are therefore socially necessary conditions of land ownership and capitalism itself. When we talk about favouring capital over labour, creditors over debtors, finance over the real economy, property is certainly the one area where this logic is most manifest.

Property, and the error of thought that value inheres in it, is commonly understood through John Locke, but this really only describes a baseless and solipsistic liberal misunderstanding of property, which generally posits that individuals enter into ‘free’ market relations with each other. This is idealism in the most degenerate configuration of 17th century thought.

Locke says that the landowner mingles his labour with the land, thus appropriating it. This is idealism in the sense it doesn’t actually occur in reality, other than in exceptional cases. And therefore models nothing. In general the landowner extracts value from his property through the labour of others. He acquires this in the labour market (an exchange that is not equal and masks class-relations). He appropriates the value of the property through the work of his employees. Locke’s recourse to work as a consequence of freedom of choice ignores the concrete understanding that labour is in fact the necessity of the worker in order to subsist. Sure, it is freedom for the landowning classes that Locke is defending, but that’s about it. Only the comparatively wealthy have that choice.

Anyone who works for someone else understands this relationship implicitly and also understands that he/she is never able to appropriate the product of his/her own labour; receiving wages instead. The worker is merely ‘free’ to exchange those wages in return for consumer goods, which they then use to maintain their daily life. This is the ‘company store’ conception of reality for the vast majority of workers under capitalist command.

History of the Latest Round of Dollar Devaluation

So how have we reached this latest round of dollar devaluation and why is the denial of labour power is key to this new instability? Why is there this current threat to the US as the world’s principal financial aristocrat?

Throughout the 70’s, 80’s and 90’s, due to the programmatic dismantling of production stateside, the US had to and chose to assert its dominance economically. This occured through finance and the use of the IMF as a lever to force open international markets, in order to seek workforces offshore. This was all part of the neo-liberal orthodoxy, that had usurped Keynesian economics when it had foundered. The Keynesian doctrine of full employment was abandoned in favour of battling inflation. So there is a trend away from production, towards financial institutions; again denying the importance of labour in the cycle of the creation of profit.

In fact, finance was now instrumental in confronting labour institutions, most memorably when Reagan confronted the organised labour power of the air traffic controllers, putting the unions on notice. So in a sense, we see the ‘devaluation’ and disciplining of collective labour and a shift globally of production to geographical locations where labour is unorganized. In this way, finance found new places to invest its surplus capital. Production could now be geographically mobile and seek out the worldwide labour forces in which wages could be driven down and more surplus value (profit) could be extracted. At home the US suffered wave upon wave of deindustrialisation, whilst abroad hyper-mobile finance was probing new labour markets.

The benefit to the US was cheaper consumer goods at home, whilst undermining internal manufacturing. This brings about certain trade asymmetries that need to be protected through political power in order to repatriate foreign profits and keep capital flows directed towards the States (IMF structural readjustment programs were key to this, allowing for financial raids on Latin American and South East Asian economies). The IMF and the predatory activities of finance capital asserted dollar dominance worldwide and maintained Wall Street as the principal centre of capital — here we see the growth of the ‘Washington Consensus’ throughout the 90’s, based around the Wall Street – Treasury complex. So the US held power through its huge consumer markets and overwhelming financial power (all militarily backed).

Consumerism is essential to the US in maintaining the nation’s internal peace and cohesion, in the face of a lack of broader social unity; hence the financial emphasis on it.

Unfortunately, this spectrum dominance through finance and ability to impose its will without limit or restraint, left the US strangely vulnerable. So why was it vulnerable? In effect, it created its own oppositional forces in the very sources of production that it required for its massive consumer market. China, along with Singapore and Taiwan, whose economies were based primarily around production/manufacturing and highly disciplined labour forces, began to subtly shift trade balances. This reveals where real economic power lay, and had always been, in manufacturing. Although, this had been masked through finance: hidden, in fact.

By the end of the 90’s the ‘new economy’ began to falter, with the realignment of surpluses and new centres of accumulation arising. The bursting of the dot-com bubble and massive financial corruption all undermined the credibility of Wall Street, threatening another round of dollar devaluation. Remember, speculation and other fictitious forms of capital accumulation are based on faith, so credibilty is fundamental. This was a jolt to the system, even before 9-11. And the US was now running out of markets to lever open and a new fault-line of massive instability was appearing, due to this reliance on finance as an accumulator. The far eastern central banks are now lending to cover US deficits (and possibly to fund the war), because their manufacturing bases are threatened by dollar collapse. Dollar support from abroad is something in the order of $2 billion a day, but that help will not last forever, with increasing signs of a switch to the Euro. The irony of all this being, that if this was happening to any other country they’d be forced to enter into an IMF austerity program and undergo readjustment strictures. But the hegemony of US financial power has allowed it to ignore all the normal forms of accounting (the balance of payments and a watch on personal/private indebtedness) making it distorted and unstable.

The Wall Street – IMF – Treasury Complex (the Washington Consensus) is a power circuit of very narrow national self-interest, but paradoxically has left the US economy vulnerable and threatens this very self-interest. This move to financialisation could be seen to be a sign of loss of World leadership (of which Iraq is a symptom; market coercion by absolute force, but we’ll come to the financial necessity of imperial war a little later). Internal reorganisation and a new industrial manufacturing strategy could correct this, but it would mean a massive self-disciplinary reworking of class structures and an emphasis on labour power that would not sit comfortably with neo-liberal economics or the ruling classes.

The rise of Asian economic leadership is the US’s main headache at the moment, and it probably won’t go away until the US cedes to the Far East economies. They could ameliorate the current financial circumstances by defaulting on their debt, devaluing their currency, allowing asset prices (property included) to drop, and ultimately admit the ascendancy of the Asian economies by stepping aside to recognise their financial dominance. Devaluation would have an immense benefit to exports and be a major boost to internal manufacturing. There is a potential positive opportunity here. With economic contractions do come certain regulatory and rationalising principles, which could allow for more modest expansion. Unfortunately, this rationalisation is usually visited in the form of lay-offs and a mopping-up of the market by monopolies.

‘Bail-Out’ and The End of the Free Market?

What we are seeing is a crisis triggered by a series of failures that has shaken confidence in fictitious forms of capital; even more exaggerated by the financial concentration of money on money, impacting on the quality of various credit moneys, which in turn extends and threatens to break the vast chain of the circulation of capital. This is the main problem that Fannie Mae and Freddie Mac faced: the holding of a huge amount of bonds held in dollars (currently falling), whilst the quality of that credit is unknown. Which is a kind of interesting point, now they have been bailed, as to whether this signals a total lack of faith in the free-market by a Republican government; a final admission of its mythical grounding.

Nationalisation is one way of describing the socialisation of these costs; the spreading of the burden across society as a whole (see Fannie Mae/Freddie Mac). But the most important point of all this ‘bail-out’ activity, which I imagine we’ll see a lot more of soon, is that it heralds a certain ideological shift in faith in the free-market. It comes with a specific admission that capitalism — heightened by its present financial form and marked by phases of overaccumulation, stagnation, recovery, credit-based expansion, speculative fever and crash — brings about these cycles through its own contradictions, which are internal and inherent to itself. This puts paid to Adam Smith’s notions about the self-correcting ‘invisible hand of the market’ by demonstrating that the State must intervene to stabilise the series of over-corrections and ever-accentuating wobbles brought about by market mechanisms. The State is therefore forced into a mediatory function and has to act to wipe-out investors as an act of self-preservation.

Crisis Delayed

The beginnings of this current recession and potential slump dates back to 1997, when the rate of profit earned in all sectors peaked. With the dwindling of labour markets, in which wages could be driven down, further extraction of profit could only be intensified through the investment in higher forms of technology and labour-saving plant machinery, in order to keep a market-competitive edge. This move to a higher technical composition of industry required huge amounts of investment capital. So there was a necessity to find new sources of investment in order to achieve this (ironically, this move in fact impedes the rate of profit, whilst the mass of overall profit rises).

So there then comes the hi-tech boom of the late-nineties, which culminates in mild recession after the stock-market crash of 2001. Despite this the process of the raising of investment capital continued apace through investment into ‘unproductive’ areas such as finance and property (and if we remember from the Eighties, pensions were ‘liberated’ in a similar fashion). The property boom now cushioned a fall in productivity in other areas of the economy, but to achieve this there had to be a huge expansion of credit money (now available in the era of pure finance capital, in which credit can expanded and contracted at will). But the net result was a giant mismatch between shares/property/bonds compared with profits from the actual productive sectors (i.e. manufacturing, transportation etc,). The growth of this huge swathe of fictitious capital proceeded at something like 25% a year of the first few years of this decade, compared with a maximum of 5-7% annual growth in real production. Increased money supply from banks then fed the need for increased loans. By 2006 credit rose, which had been growing by 15% a year, 140% larger than the profits from world production. With finance now contributing 30% to the profits of the whole US economy.

And whilst this expansion of credit delivered a certain bump to employment and incomes, the source of this expansion was primarily unproductive and did not actually produce any value that could be used to reinvest in real production needed to really drive the economy forward. At best, all it could do was mitigate and delay recession. The more the markets sucked up profits, the less was available for industry, improved technical composition and re-skilling of labour forces.

Now credit is contracting fast, with a global synchronised downturn, and overall failure of capitalist planning of productive forces. A return to serious political and economic analysis seems overdue.

Fictitious Capital and Speculation

It is important to maintain that the current crisis is systemic even to the point of being accidental. This rests on the fictitious nature of credit moneys. There is no incoherence in that. I’ll briefly attempt to explain why.

When capital exists as money it has all the virtues of exchangeability. It’s flexible and uniquely mobile. Interest-bearing capital, of which credit is a form, accentuates this mobile capability and retains the co-ordinating functions of money as long as it retains this flexibility. Unfortunately, it can only do this if remains outside of production and uncommitted to specific products. Any lender must give up a certain amount of this flexibility when they are waiting for a return or interest payment. During this wait their investment loses its co-ordinating power and gets tied to specific uses and products. So it runs up against certain barriers.

In order to overcome the barriers erected by fixed capital constraints, this investment capital is required to become somewhat fictitious. It is a necessity. Fictitious capital is therefore associated particularly with credit money.

For example, a producer can receive an advance on an unsold commodity from a lender, which he can then reinvest into fresh labour or means of production (machinery). Unfortunately for the lender, all he holds is a credit slip for an unsold and possibly unproduced commodity, whilst the producer has something concrete. This piece of paper (bill of exchange) is therefore entirely fictitious. Commercial credit is therefore imbued with fictitious values. The problem therefore arises when there bills of exchange circulate as if they were money (namely credit money). We therefore begin to notice a ‘gap’ between the fictitious, composed of imaginary value, and ‘real’ moneys tied to specific commodities. If this credit is then loaned, it is then most definitely fictitious.

The creation of this fictitious capital can be therefore, more or less, be viewed as accidental. This accident is converted into a necessity (as with much of the activity of capital, reliant on market laws). The credit money is now not backed by any firm collateral, which in turn creates more serious barriers to the use of credit moneys, which can ameliorated through the certain market-practices such as the conversion to stocks, shares, investment in government bonds and other speculative forms, which only serve to institutionalise the fictitious monies, and generate some serious confusions. The paper duplicates of ‘real capital’ take on a life and value fluctuations of their own (not necessarily fixed or related to the conditions of real productive capital). So we have a distinct divergence of real and credit money. It is worth noting that government debt is perhaps the ultimate form of fictitious capital.

Fictitious credit moneys then become the ‘fountainhead’ of all manner of insane and exotic forms of speculation. This is currently most evident in the exposure of the banks to debt/asset backed securities in the sub-prime market, where we have discovered debt itself has been bundled and sold as if it was in fact a commodity (and a highly valued one at that). The credit system reaches the height of distortion in such cases, where value is entirely phantom, if not a negative.

Any correction to this would have to take into account that marketable claims on future revenues are not a form of real capital and in its most distorted instances threatens the value of real money and productive forces themselves.

Profit and the Accumulation Cycle

What is the tendency to profit and accumulation all about? What drives it? Why does a particular individual capitalist seek to reinvest the revenue from the profit he extracts from the labour process and put it back into production?

The capitalist could, for instance, consume all that surplus; spend it on yachts and French maids etc,. Well for starters, there is a limit to an individual’s luxury consumption, but moreover he is compelled to reinvest it in his enterprise, by purchasing fresh labour and expanding his means of production. He does this for the simple reason that he is compelled to expand.

Expansion is the drive of all capitalists; otherwise they forego profit opportunities. In effect, the capitalist is capital personified; he is the living embodiment of the values that drive him. He is intent on the valorisation of value (i.e. an absolute drive to self-enrichment). Competition compels him to keep extending his capital in order to preserve it and in so doing, accumulate and retain social power. If hypothetical entrepreneur A doesn’t reinvest his capital to preserve it, hypothetical entrepreneur B certainly will and make sure he puts him out of business. If hypothetical capitalist A ceases reinvesting, he ceases to be a capitalist and ceases to maintain his appropriated social power.

Of course, most capitalists try and make a virtue out of what is essentially and fundamentally a social necessity. They claim a moral high ground from something they are compelled and even coerced to do. Capital is therefore only about accumulation for the sake of accumulation, production for production’s sake. Which in turn leads to other problems, such as overaccumulation with its attendant liquidity problems and overproduction with its creation of market gluts. Even the most bourgeois classical economists understood this.

The consequence of this moral interpretation of the coercive laws of the market is that we invent the credo: Growth is Good. This is where Gordon Gekko gets it slightly wrong, as greed is neither here nor there. It is the principle of accumulation and a tendency towards an increasing profit rate that is held as a virtue. The irony of which is that these tendencies ultimately cause the rate of profit to plateau. Expansion and growth are therefore structural necessities within the capitalist economic system. In a sense we are all locked into this system, whatever our roles within it.

It might be healthier for us to think about different ‘roles’ within capitalist economics. It prevents you falling into Us vs. Them conceptions and is altogether less alienating, whilst still being aware of the lines of force that class antagonism aggregates along.

Theory of Crisis

These rhythmic cycles of overaccumlation are determined by certain inflationary forces. These in turn effect movements in the prices of production of commodities. The cycle is usually marked by the initial phase in which stagnation depresses prices, then rising gradually and accelerating during a boom. But a return to a monetary basis during the crash phase forces a price collapse. The State then usually expands its paper money production at that time, so that it can keep price falls in check. The problem now is that, by printing money and increasing the money-supply, money no longer adequately represents the cost of labour. And furthermore, the extra supply of money is not enough to tame the crisis. Disequilibrium in the system is then further obscured, as we have seen of late, masked by the accidental and eventually necessary creation of ficticious capitals, ahead of real accumulation (see above).

How does the expansion of central bank money relate to all of this? The circulation of this expanded money can be utilised in two ways: It can heighten speculative fever and feed fictitious capitals (most usually property titles) or it could be converted into effective demand for commodities (as John Maynard Keynes argued and Gordon Brown is effectively endorsing). This is the fiscal stability argument, over the monetary stability argument. Either way, the production of new paper money overcomes the barriers that capitalists face in converting their surplus accumulation into commodities or land titles. A disastrous consequence of this is the increased demand for loanable funds, driving up interest, almost to the point of ‘extreme usury’, impacting on Industrial and Commercial functions (although not capital-banking itself). This forces the very devaluation that it initially sought to avoid.

What we effectively have is a mechanism of support of one fictitious capital for another: property/land titles by expanded state-backed money. Problems are then stored up as this floating credit system needs to be realized at some point. Devaluation is inevitable unless the money can be thrown back into circulation within a certain amount of time. This can only occur through production: all exchange is contingent on production.

So, the printing of money cannot cure the problem (as it only has bearing in the sphere of the exchange). Disequilibrium is worsened and technological fixes that add further instability are encouraged due to the falling rate of profit. Overaccumulation then becomes even more exaggerated as financiers and capitalists extend more credit to each other and insane aspects of the system run amok…manifested as generalised inflation.

Whilst devaluation begins as a private affair between competing capitalists — individual firms going bankrupt, as we saw with XL and Alitalia airlines in Europe, who couldn’t secure credit for fuel — it ends up having more generalised social implications through the transformation of devaluation into inflation.

The socialisation of devaluation (nationalisation) reduces the impact of the aforementioned events on the accumulation cycle. Potentially damaging bankruptcies of individual corporations are either avoided or absorbed by bail-outs, tempering any social damage and fall-out. This is again necessity in order to prevent the whole system crashing. The outcome is often a more ‘mild’ inflation that limits social damage.

What could be argued, is that state failure to plan productive forces effectively (i.e. manufacturing) lies at the root of inflation/devaluation. This is perhaps what the subsidisation of GM and Ford is a retrograde attempt to fix (although this blatantly favours US firms, not the Asian ones that have relocated there). The consequence of this understanding is that nationalisation of certain sectors is the only way to mitigate and avoid these damaging inflationary cycles. Either way it doesn’t bode too well for the future of free-market economics based on these fundamental irrationalities.

The Function of Imperial War in the Cycle

One of the dangers of devaluation and the business cycle is that systemic necessities can drive imperialistic expansion and imperial warfare within the capitalist system. Lenin highlighted this through his critique of Kautsky and Hilferding. War is a direct consequence of the erroneous belief that the internal contradictions of capitalism can be externalised beyond national borders and cure the various malaises brought about by market mechanisms. In effect, devaluation can be borne by other countries under the auspices of imperial power. Anything perceived to be the cause of devaluation can be visited overseas, through interregional rivalry. Any imperial nation, through the predominance of its military force can export unemployment, inflation or idle productive capacity. It can also lever open new markets for investment of its surplus accumulation.

This can be brought about financially or in an overtly military manner through trade wars, surplus dumping, interest rate wars, sanctions (the restriction of capital flow and foreign exchange), immigration policies, colonial conquest and finally, the physical destruction and forced devaluation of a rival’s capital through imperial warfare. This occurs financially, politically (through State Power) or aggressive military force. So in effect, capitalist nations seek a fix through omnipotent power (the Military-Industrial complex). What we have then is a degeneration of economic struggles into overtly political ones, playing its part in the stabilisation of long-term capitalism, providing it destroys enough surplus capital en route.

Jinogism, nationalism and patriotism are therefore just a cover for the devaluation of capital and labour, a necessity brought about internal contradictions and surplus accumulation, for which a ‘spatial fix’ is sought. Internal regional underdevelopment is just an internalisation of the imperial logic within a nation’s own borders, coherent to the exploitation of extra-national imperial concerns. So ghettos act as internal neo-colonies and the ‘War on Drugs’ mirrors externalised military doctrines, such as the the ‘War on Terror’.

Imperialism is really the external expression of the internal contradictions of national financial systems and the irrationalities that they are undoubtedly prone to. Under the threat of crisis and devaluation each nation attempts to use others to alleviate its own financial pain and export it abroad (to spatially displace it). The upper echelons of repressive financial, political and military power come into play here and they are vital in the preparation for any displacement of the costs of devaluation (IMF/Washington/Military-Industrial Complex).

Unfortunately, there can be no ‘ultimate’ spatial fix for domestic financial woes, although necessity may force a government to act in an imperialistic fashion.

The danger from imperial war is inter-imperial or global war, which is invariably the result of imperial expansion and crisis may precipitate an even more unstable world. We have seen this historically in the 20th Century resulting from Britain and its colonies and expressed as German expansion into the Russian steppe, Japan into Manchuria, Italy into Africa. We later see US imperial wars in Vietnam and the Soviet Union expanding into Afghanistan; all seeking a spatial fix to internal economic contradictions. The current war in Iraq is almost a textbook expression of the displacement of surplus, destruction of rival capital and appropriation of another nation’s wealth by primitive means (see also recent Russian adventures in Georgia).

The terrifying and powerful weapons that achieve this destruction are all paid for with the surplus of capital and labour, which must be put to use, under the logic of capitalism which accumulates for the sake of accumulation and produces for production’s sake.

Laissez-Faire Economics and Off-Balance-Sheet Accounting

Laissez-faire is exactly the right term to describe how Washington had allowed itself to be lobbied for slacker controls and more internal self-regulation by financial companies themselves — with AIG lobbying government to the tune of $10M last year, in order to get more control over their self-regulatory powers. Such is the corrupting influence of lobbying, in that money directly distorts law and promotes market anarchism by letting off-balance-sheet accounting to become the norm (most famously practiced by Enron).

Self-regulation is the fundamental principle of laissez-faire capitalism (with all its wretched understanding of the Theory of Value and its attendant Ryandian ‘objectivism’). And with the most capitalist administration ever, manifested by a socially conservative but economically anarchistic Whitehouse, such corruption has been prolific. Under Bush investment banks and financial concerns have had an attentive ear, allowing them to further mask and render invisible their actual credit and debt situations, with little or no intervention from the state (a gross dereliction of the state’s mediatory function in the case of the current crisis). It has been a speculative orgy. The situation in London may actually be even worse, under Gordon Brown, with the City having been turned into tax-free slosh pit/casino for world surplus capital, whilst one-third of UK GNP is created by finance alone. The really big news for the UK is inflation, prices now being pushed by the rise in costs of food and energy commodities. This is where the financial storm touches down in the real economy. Meanwhile, the banks concentrate on hoarding as they desperately try to recapitalise; the expansion of the money-supply by the Fed is predictably having little effect.

The lack of adequate regulatory powers is now becoming visible as financial fires break out all over the shop, and there aren’t enough regulators to assess the situation and unpick which derivatives are causing the maximum harm. A friend of mine that works for the Bank of England recently told me that all financial regulators secretly aspire to work in investments, such is the pay differential.

Belief in the market is over. Everything we were told about the free market turned out to be false. Regulation is coming. At least capitalism can manage that for itself and the relief is palpable. Meanwhile, millions will lose their jobs and become poorer (personally, I don’t really care about ‘wealth creators’ slaughtering each other). On the upside, now is the time to try alternative economic models, now that the money-fixated laissez-faire free market has eviscerated itself. The dream of the Chicago School is unwinding in a spectacular fashion and Bush knows that (even to the extent he is implementing a Keynesian solution of sorts; although we can safely say Paulson is lying when he says the system is sound and the market will come right). Countries like Brazil and the Gulf States have commodities to sell and China has a high personal savings rate, in contrast to private/personal indebtedness of the United States. The US is clearly disadvantaged.

The dangers are, as social unrest occurs, the rise of the reactionary right (historically manifested as anti-semitic/anti-immigrant) and a plunge into the rhetoric of fear and scapegoating.

What we are seeing today is the product of the free-market fundamentalism, begun in the late Carter administration and continued ever since. Laissez-faire is an anarchic form of economics, which exaggerates the worst and cruelest traits of capitalistic excess. It works on a series of, and perhaps convenient, misunderstandings of market exchange, which it presumes to be ‘free’ (this is demonstrably an error). The rhythmic cycles of disequilbrium in the market are brought about through capitalism’s own inevitable tendency to profit. If you put that tendency on a pedestal, as the current US and UK governments have, then you are in for serious trouble (perhaps explaining why most of the main events in the crisis so far have been an Anglo-US affair). Like Mary Shelley’s Frankenstein it produces something that inevitably returns to destroy us. In that sense, it is an inhuman ‘alien’ force. The state should under normal functioning circumstances — which are conspicuously absent of late — be an agency that acts as a counter-force to capitalistic dysfunction. This is a responsibility that has been willfully abdicated by the Bush administration.

Only under laissez-faire regulatory oversight could all the top investment banks be leveraged to the monumental scale of over 35 times the value of their assets. That is to say, does it seem necessary to increase that level of fictive value, by having less regulation or indeed corporate self-regulation?

Capitalism is inimical to human welfare and produces the crises that undermine the system itself (both Marx and Durkheim — who is socially much less radical than Marx and could be broadly categorised as reformist — were saying this in the 19th Century). The socialisation of the dysfunctions of capitalism are a better direction to head in, in my opinion, rather than plunging further head-long into a more and more cut-throat economy, in which only the plutocrats will prevail. That’s why laissez-faire is a form of economics for the rich, whilst giving the poor (who it characterizes as immoral and lazy) the finger.

The other main problem with laissez-faire capitalism is that it seeks market solutions for everything, even to products it is ill-suited: schools, healthcare, infrastructure etc,…and in no way does it make up for the lack of conscious state planning, particularly in the vital productive areas of the economy, such as manufacturing. This is seriously short-sighted and perhaps indicative of the capitalism’s flawed lack of historical perspectives.

The Importance of Economic Critique

The interesting thing about crises is that they confirm or deny great ideas, hence the need for historical perspectives. Economics doesn’t really concern the majority of us too directly in times of boom or stability. We treat it like the weather, a force external to us. It’s only when these things threaten our daily lives that it becomes in effect ‘real’. Similarly, an academic critique of capitalism it doesn’t seem to exert much bearing until it becomes realised by events. In a way, we all become politicised during something like a serious economic downturn, because we all become more noticeably subject to it. This is when we actually find that ideas can have a material basis, or at least lay the foundations of some sort of material basis of reality. This could be perceived as the Superstructure Argument, which puts forward the conception of ideas having a material force (rather than just being airy-fairy abstraction).

This is an argument about ‘forces’ (i.e. political organisation/power). As we understand it, capitalism operates via force. Between issues of equal rights — such as the antagonism between assembly-line workers and factory owners over issues of rights (e.g. the workers need to limit the length of the working day vs. the owners drive to extend it) — historically, the greater force prevails. So that implies there is necessity for labour to organise, in order to confront the mutual raft of the capitalists that constitute the ruling-class (who, whilst being in competition, are naturally aligned). So therefore, you get the unions, reformist parties, labour-rights activists and so forth, that class antagonism ‘brings forth’…and it is a unique conundrum for the left alone to resolve. A poor economic situation might bring about sharper realisations of class and who you are aligned with. Certainly, in the UK we are about to see a whole wave of public sector and union strikes.

Marx would contend, perhaps erroneously, that all talk about rights is limited to bourgeois discourse if force always prevails, but he did understand that cumulative reform could precipitate effective and transformational change.

The Edifice of Money Pt. I

Often there is an argumentative stumbling-block of all economic discussions, in that the mutual raft of capitalist concerns are somehow in conspiracy; a cabal of shadow bankers in league with each other. This confuses the surface appearance of the hegemonic blocs of the institutionalised bourgeoisie (the bankers, ultra-rich, etc) with the dynamics of the process of circulation of interest-bearing capital (i.e. finance capital).

In such cases we have two distinct conceptions of finance capital (as outlined above), which tend to get isolated, but neither is entirely adequate, and they need to be brought together in a single explanation. So the two conceptions of finance capital:

Conception one:

The surface appearance of organized power is impressive and awe-inspiring. It is super-complex and this edifice of sheer complexity enhances its own mystification. These internal contradictions go even further, to the point there is an essential contradiction between finance capital and the state (as manifested by the central bank.. This conception encompasses the intricate world of central-banking, remote international institutions (the World Bank, the IMF), a whole complex of interlocking markets (stock exchanges, commodity futures markets, mortgage markets, etc.) and financial institutions (pensions and insurance funds, merchant banks, credit unions and savings banks). And also we have an array of incredibly powerful private banks, who are in competition with each other (BoA, Credit Agricole, Barclay’s etc.). Bankers and their cohorts shuttle between the world banking centres, making decisions that clearly effect millions of individuals (capitalist and worker, alike), as well as effecting HUGE corporations and powerful governments. This surface appearance or image achieves greater credibility when even that aspect of the state that is in command of money operations — the central bank (Fed, Bank of England etc.) — always eludes democratic control. The average citizen (you/I) lapses into a total state of awe at the sheer magnitude of money power that resides in such institutions and the sophistication of the ‘higher-ups’ that run them. All of this generates a ‘mystique’. This mystique is an easy breeding ground for conspiracy theories, through which the average citizen sees conspiracies to divide up the world, strategies for global domination and plans to be executed by a powerful cartel of banks, corporate giants and their political lackeys.

Conception two:

It is the task of science is to demystify and reveal all of this, to reveal the compelling and often contradictory logics that flow through the veins of the system, to expose the vulnerability of what appears on the surface to be totally controlling and hegemonic power. This requires a combination of solid theory and historical investigation (i.e. a method of inquiry). Empirical inquiry runs obvious conundrums such as: if there is a conspiratorially minded elite with all the instruments of the fine-tuning of accumulation at its fingertips, then how can slides into crisis be explained? Or how can financiers simultaneously appear as sober guardians of an ‘orderly’ process of accumulation, operating as a class, whilst at the same time as being in competition with each other based on venal and excessive appropriation, insane speculation and all manner of parasitic practices that threaten to throw society in to chaos.

Therefore it is down to a solid method of inquiry to understand finance capital as contradiction-laden flow…a process rather than a thing, that starts to allow us to separate the world of appearances from the dynamics of the process through which we can finally observe as capital in motion. This helps us understand why instability arises. We glimpse this beneath the power-bloc conception of the surface image.

How do these conceptions meet, if at all?

On some level these two conceptions do necessarily meet. A few extraordinarily wealthy families can and do accumulate a mass of wealth (money power/social power). Institutions can also function in this manner. Sometimes, powerful families coordinate both these functions (such as the Mellons/Rockafellers). They centralize the control of the strategic centres of interest-bearing capital. Excessive centralization of such power is however inconsistent with the proper exercise of money’s coordinating functions. That is to say, competition within the financial sector must be maintained. Mega-monopolies need to be avoided if overaccumulation is to be minimised and capital is to flow freely and correctly (as I stated earlier: overaccumulation of wealth can work against the interest of the rich). Whatever happens, capital must not be allowed to stop flowing! So there are counter-forces that fragment and disperse this sort of centralization of financial money power, usually through rivalries between competing financial dynasties, as well as through legal requirements that ensure the dispersal of such overaccumulation. So there are centrifugal and centripedal forces at work (obviously the state has an important function here). Also, just because wealth lies in the hands of the few, it does not mean they are actively using that money. This fragmentation of overaccumulation can be carried out through various dispersal mechanisms (it can be done on their behalf and through nebulous and varied interests; hedge funds are clearly a case in point).

On the other hand, total fragmentation and decentralisation of money can also be detrimental. For instance, paper money must be backed by a central institution that has monopoly powers over all other competing banks (otherwise you’d have no social agreement on the universal money form).

So there is certain amount of tension between centralisation and decentralisation, within the financial power bloc itself (the ‘elites’). We see this demonstrably in the United States, with a highly diverse and complex decentralised financial system (essentially anarchic and chaotic, yet held to together by irregular piecemeal legislation), whilst at the same time you have immense concentrations of individual and inherited wealth, centralised and concentrated amongst a few families operating through large-scale institutions. The contradictions are self-evident, especially in banking where banks from are simultaneously in competition with each other, whilst forming and alliances (conspiratorial cabals) in order to accumulate sufficient concentrations of money power, so that they can deal with long-term and large-scale aspects of finance.

This is highly confusing and in appearances, contradictory, but once you understand the empirical principles that govern the flow of capital, the appearances give way to deeper understanding. Hopefully this allows us to make a little more sense of things, by revealing how capital expresses itself under the image of appearances and how the tension between the centralising and decentralising forces of financial money power are not totally incompatible. There is both a unity and antagonism at the heart of finance capital itself.

The Edifice of Money Pt. II

Secondly, there is a slight level of complexity beyond the idea of tension between decentralising and centralising forces, that shows further contradictions within finance capital, demonstrating that it doesn’t act in a united conspiratorial fashion.

This additional complexity relates specifically to banking and industry (by this I mean the largest industries or Big Business), who at certain times in the accumulation cycle act in unity and whilst at other points in total opposition to each other. So when they are antagonistic to each other, you’d have a hard time proving that they are part of the same conspiratorial power-bloc. Obviously, banking and industry share a symbiotic relationship: large corporations need the services of the banking sector in order to conduct business, whilst banks are desperate to command the fire-hydrant of capital that large corporations generate through their productive activities (such is their innate understanding of the value producing qualities unique to labour). They are essential and necessary to each other.

But this is merely a ‘working’ unity brought about by their specific functions, in order that both parties can get purchase on the accumulation process. As we look closer this working relationship begins to shift during the accumulation cycle. Why does this happen? This relationship changes due to a shift in the relative weights of commodities versus money within the accumulation process:

(1) In early phases of the cycle industry is in the driver’s seat, because commodities are what counts.

(2) This shifts as the cycle evolves (during the boom stage, to be exact), when banking and industry unite to promote credit-based expansion. They find equilibrium in the motion of capital.

(3) Yet when we come to the crisis phase money is all that matters (just look how hoarding is occurring right now as the world’s banks attempt to recapitalise).

In the crisis phase industry has its hands tied because it has surplus commodities that it can’t shift and convert into money. During this phase commodities are at a massive disadvantage, as there is only a demand for high-quality money (the ‘safe-havens’ of gold or central bank money). Money is all that matters as it can be exchanged for any commodity, due its unique flexibility, unlike poor-old commodities.

Of course, the accumulation process can be significantly altered by government interventions. But existing antagonisms between Big Business and High Finance cannot be completely eliminated. Even within massive conglomerates, in which some financial functions are internalised within the company, there is still a irresolvable tension. And here you get conflict within the corporation itself. If companies seek a financial solution for problems that require a restructuring of production, then they are pretty much screwed. Therefore, the debate over whether banks control corporations or vice-versa, is really dependent on where we stand in the cycle of accumulation and is by no means always clear. It is more a case of perpetually shifting power relations between industrial and banking capital. Moreover it could be said that the basis of their partnership can’t be reconciled.

So far I’ve outlined two ways in which finance capital progresses in contradictory antagonism and unity with other apparatuses of capitalism, which ultimately precludes the possibility of an all-powerful conspiratorial power-bloc. These internal contradictions go even further, to the point there is an essential contradiction between finance capital and the state as manifested by the central bank.

The Edifice of Money Pt. III

There is also a third level of complexity this operates at, which should finally disabuse us of the idea that the surface appearance of a hegemonic bloc of totalising power is anything more than a perceived image that leads to its own mystification (with its attendant conspiracy-theory myths that mask the actual flows and process of capital, i.e. the fluid dynamics of the system).

This further contradiction operates at the level of finance capital and the state. This is obviously where finance capital integrates with the state in a synthesis of cross-interests. The state obviously has a vested interest in the channels through which capital flows, which it fixes through legal and institutional frameworks. It fixes the flow of capital through interest-rate differentials, and so forth. We also know that it modulates the degree of centralisation and decentralisation of money (wealth/power) that might threaten the system. It regulates taxes, redistributes wealth and creates fiscal policies that effect inflation for similar purposes. And it also absorbs some interest-bearing capital as ‘state debt’ (in the process creating a particular form of fictitious value). At the centre we have the coordinating central bank, controlling the regulation of the quality of money.

So, we can see that, at a certain level the institutions of the state interact and form relationships with finance. A necessary unity is therefore established that mirrors the capitalist process, whatever the political allegiance of the state (even socialist governments conform to the needs of capital at this level). We see a synthesis here between the needs of capitalists, industrialists and bankers that from the outside gives the appearance of massive conspiratorial collusion.

BUT, as ever this unity carries within it a huge contradiction. A sometimes fierce antagonism erupts when the central bank is forced to discipline errant industrialists and bankers, in order to curb their threatening of financial stability through excessive accumulation. This is exactly the conflict that is opening up now with this wave of nationalisation (the socialisation of risk) and talk of regulation. It is evident in times of crisis that the state apparatus clashes openly with factions of capital. And when the state is really just trying to mend the accumulation process, and set it back on its feet, it demonstrates an ultimate sovereign power through its capacity to regulate and control capital. As well as this, in differing degrees, states have a dual-obligation to finance and workers.

Again, like the relationship between finance and industry (based on the fundamental incompatibility between commodities and money), we see a contradiction between the finance capital and the state. They are problematic and antagonistic partners within the highest power-bloc and the state’s love-affair with finance often cools to outright indifference at times of crisis. And as demonstrated by the Bush administration, even the most sympathetic and bourgeois capitalist government cannot overcome these contradictions and is forced to regulate by necessity, in order to preserve itself.

Furthermore the state is controlled by and controls finance — particularly globally as finance spreads its net across the world. In can be disciplined by financial forces external to it, or it can use finance as a competitive instrument to ‘wage war’ on economic rivals.

So the question of which force dominates is once again dependent on exact circumstances, but what remains clear is that the state and interest-bearing capital (finance) can be seen to be countervailing forces in distinct instances. What we have again is a unity within a contradiction that prevents any conspiratorial ‘elite’ from existing, except in the imagination of those dazzled by the inter-locking complexity of the edifice of the money system, putting ‘conspiracy theories’ into their place.

The Return of Systemic Collapse and Long-Wave Theory

In this article, I’ve tried to discuss alternative ways of viewing the crisis in terms of the business cycle. There are however other theories on this, beyond Marxian/Keynsian analysis. If you really wanted to get detailed you might want to look at Schumpeter or perhaps, if you really fancied getting macro-economic, Nikolai Kondratiev with his theories of grand-supercycles (PRDI: prosperity, recession, depression, improvement). Kondratieff theorised the predictabilty of phases of the cycle, known as Kondratiev Waves, which relate to technological developments that precipitate growth and eventual bust. This seems especially relevant if look back at the dot-com boom of the late-nineties, which marks a particular phase of the cycle, and the importance of hi-tech development to the ‘New Economy’. Once we understand that technological fixes and the clustering of innovations, brought about in response to stagnation, ultimately cause the rate of profit to level, we can then understand why growth plateaus, leading to the trough of the crash.

What are Kondratieff Waves (K-waves)? And should they be taken seriously? They would certainly seem to be a useful tool in understanding the systemic nature of capitalist accumulation and how crisis predictably returns over the long-wave of his cycle.

Kondratieff, through a historical and economic analysis of the PPI (Producer Price Index) and credit/debt accumulation, formulated a theory of 60 year-long grand supercycles; inflationary as well as deflationary. And he then theorised about certain symptoms that appear at certain phases of the cycle, such as war near the peak of the upswing. He also points out the introduction of combined technologies around the same time as the rate of profit becomes impeded , during the stagnation ‘season’. Kondratieff divided the four parts of the cycle into seasons, relating summer/autumn and winter/spring to prosperity, recession, depression, improvement (PRDI). The bull market, for instance, is directly related to the autumnal phase of the S-shape.

These theories become relevant now, as we enter the autumnal/winter phase of the K-wave, particularly as he studied developed western capitalist economies exclusively (1789-1926). The S-shaped wave of his long cycle can be quite convincingly be mapped onto subsequent inflationary/deflationary cycles and actual wholesale prices. Apparently, George Soros has extrapolated Kondratieff’s ideas to devise his own theories about ‘superbooms’, which by all accounts are considerably more gloomy in their outlook. Alan Freeman has also updated these cycles with theories relating to non-equilibrium economics. Kondratieff’s cycles see to correspond to Marx’s theories on the cycle of crisis and differing relations between the state, finance and industry during different moments in the cycle. He also expands Marx’s ideas on the implementation of technology to increase the margins of extraction of surplus value (profit), as all other variables, such as wages, are driven to their bottom limit. He elaborates on ideas regarding the deployment of technological fixes, as the competitive playing-field is levelled, eventually impeding the rate of profit, after the initial spike of the boom.

For example, in West Germany during the Seventies, strong unions caused industrialists to turn to technology (via automation of the assembly line, etc. ) as a way of increasing profit margins, as the lower wage-limit was fiercely defended and contested. The upshot was a higher level of industrial technical composition that put many out of work and sent unemployment rocketing. Vorsprung Durch Technik. This shift to higher technical composition also occurs in the States at the end of the nineties, with the dot-com and hi-tech boom of the new economy as an attempt to instensify profits. Similarly, Britain sought become an ‘information economy’ around the same time.

Stagnation brings about the phenomena of war (Civil War, World War I, Vietnam, Iraq) at a specific moment of the cycle, which fits well with Lenin’s writing (which he derives from a critique of Hilferding and Kautsky) on imperial wars and the necessity to destroy surplus capital during the upswing of the the accumulation process. The main anomaly in Kondratieff’s schema is the occurrence of World War II, appearing in the deep trough of the late-thirties winter/spring phase. This might be explicable by accounting for the rise of the forces of conservative reaction during the downturn phase, but why this occurs is by no means certain, viewed in purely economic terms. And there perhaps lies some short-coming of the model.


If we follow the K-wave, we are currently about to drop off the precipice of the autumn period into economic winter. And whilst the Kondratieff Wave shows that the cycle is predictable due to the endogenous forces within capitalism itself, the nature and circumstances of the return of crisis are never identical. There is also some disagreement in leftist thought as to whether systemic disequilibrium returns with equal or cumulative force. That is to say, does the amplitude to the K-wave increase over time?

Resources and Further Reading:

Giovanni Arrighi: Towards a Theory of Capitalist Crisis

Robin Blackburn: The Subprime Crisis

Paul Virilio on the Crisis (Le Monde)

Badiou: Financial Crisis (Le Monde) via Infinite Thought

Jacques-Alain Miller: The Financial Crisis

Mario Tronti: Politics at Work


About andrewosborne

Andrew Osborne has recently completed his MA in Contemporary Art Theory at Goldsmith's.
This entry was posted in Capitalism, Crisis, David Harvey, Karl Marx, Uncategorized and tagged , , , , . Bookmark the permalink.

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