5. The recovery of capitalism is no longer possible
Kurz’s overall analysis of the crisis that emerged full blown in 2008 consists of four fundamental bullet points:
First, in the course of capitalist development Marx’s theory states there is a rising composition of constant capital to variable capital; this rising composition of capital compels an increasing dependence of productive capital on interest yielding capital, i.e., on debt.
Second, this rising composition of capital is also a declining ratio of variable capital to constant capital that compels the total capital to find new outlets. This dependence can, at first, be satisfied through outward expansion into new markets, but ultimately can only be met by the growth of an unproductive service (or tertiary) sector.
Third, based on the above two developments, there is an increasingly paradoxical (self-contradictory) dependence of productive capital on profits derived from debt of the non-productive sector that consists entirely of a dependence of productive capital on fictitious claims to its own future profits.
Fourth, this third paradoxical, self contradictory, dependence can only be resolved ultimately through the dependence of this entire increasingly fragile structure of accumulation on the consumption and debt of the fascist state.
In the first instance, the increasing dependence of the total social capital on the state is made necessary by the fact that the state becomes essential to the expansion of the total social capital into new markets through the means of imperialist wars and predations. But, this dependence really only comes into its own when the state becomes the consumer and debtor of last resort. In the final analysis the growth of a non-productive sector must be dependent on the growth of the fascist state as consumer of last resort. And this latter, if it is to maintain existing commodity production relations, must be dependent on expansion of the public debt. This is true because only the state can decide what serves as money within its territory and what means are used to pay its debts. It can, therefore, pay its debts with “money” it creates out of nothing, simultaneously “satisfying” this debt and evaporating its value.
Michael Heinrich objections to Kurz’s argument
However, the political scientist, Michael Heinrich, has challenged Kurz’s notion of an imminent collapse of capital. Heinrich argues there have been a number of crises over the past 30 years over what has amounted to a struggle over distribution of the social product between the two classes. In these struggles, capital has emerged victorious leading to an excess of money capital which will have to be devalued. But this devaluation of money capital, Heinrich claims, can take place without having more than a passing impact on productive capital. The result can be a massive depression on the order of the 1930s, but it does not of itself imply the end of capitalism.
This point ignores the heart of Kurz’s argument and presents a less than serious challenge to his conclusion. Kurz made the argument the Great Depression cannot happen again since it occurred within a system of accumulation that no longer exists. That system of accumulation was characterized by “Fordist” rationalization of labor and mass consumption that supported this. Kurz takes great pains to show how and why this system of accumulation was ultimately over-run by the post-war explosion of entirely unproductive consumption. This unproductive consumption was nothing more than a mass of values that could no longer find productive employment within “Fordism”. Add to this the impact of the digital revolution and the disintegration of national economies under growing international trade, and he thought we were facing a recipe for a social cataclysm.
But this is not all Kurz claimed was going on. In addition to the unproductive sector, Kurz also argued there is a mass of present profits that is now fictional in the absolute sense — profits totally derived from claims to future profits that can never be realized under any realistic scenario. These claims to future profits were necessary to finance both the productive and unproductive sectors within the system of accumulation. In 2011, Kurz argued:
“In a manner that is unprecedented in the history of capitalism, the future creation of surplus-value is already mortgaged. Capitalism has already used up its future to such an extent, that a recovery is simply no longer possible. There is now, step by step, a process in which this unreal, anticipated value creation is realized as a crisis development.”
Kurz was making an argument as late as 2011 that capital was now so leveraged up on fictitious claims to future surplus value it could no longer tolerate the structural crisis of a normal depressionary episode. This point by Kurz is extremely important: It is not just a question of the impact a financial crisis has on industry directly, but also the impact such a crisis has on the vast unproductive sector on which industry is extremely dependent as its market. This unproductive sector adds nothing to the accumulation of value within the capitalist mode of production and thus cannot pay for itself. It can only be financed by unrealized claims to the future surplus value of the productive sector, which would evaporate in a depression.
To take Kurz’s argument one step further: In a depression, the entire edifice of accumulation would rest on the willingness and/or capacity of the state, as debtor and consumer of last resort, to continuously flood the world market with ex nihilo currency. This, as must be obvious, would depend on the capacity of the state to undertake such a function, raising the likelihood of a massive depreciation of the purchasing power of the currency.
Comparing Kurz’s prediction to the actual crisis
There is, however, one critical element of the present crisis that did not unfold according to Kurz’s prediction — the American dollar, rather than losing its validity as world money, actually became more important in this role. I believe there is a simple explanation for this: if productive capital ultimately comes to be dependent on the state as consumer and debtor of last resort, it seems to me much of the way the crisis plays out has to reflect the capacity of the state to fulfill these functions. In this case, however, the state is not a general state over the whole of the world market, but a number of competing states within the world market. What matters here is not the capacity of the state in general to respond to the crisis, but the capacity of specific states to respond.
For instance, Greece suffers from the defect that it has surrendered its sovereign power to determine what is money in its territory — this is true also of Spain, Italy, Germany etc. But it is not simply a matter of formally reclaiming this power — international trade has already made each country dependent on the rest. As Kurz explains in Part 5 of his essay:
“The much-discussed globalization of financial markets and of production, the international dispersal of the productive processes and the global competition to offer more profitable locations for production, are now beginning to break down the cohesion of national economies themselves.”
If Kurz is correct, the euro was the necessary result of the inability of separate states to control their economies, not the cause. Greece can no more regain control of its national economy by leaving the euro-zone than it could before it entered the common currency — arguably, it has less capability now than it had before it joined the common currency, since so much more of its debts are now denominated in a currency it does not control and barriers to the movement of people and capital have been abolished.
As a sovereign power, the Greece state has already ceased to exist and no round of parliamentary elections can change this outcome. Elections in Greece have as much meaning politically as the purchasing power of the Mozambican metical has for the purchase of commodities on the world market. What is missed in most analysis of the present crisis is that international prices are denominated in dollars — even Kurz overlooks this.
On the one hand Kurz wrote:
“it is no longer Society which feeds the State, so that the latter assumes responsibility for “overhead costs”, but it is the State which, to the contrary, must feed Society with “fictitious capital”, so that the latter can maintain itself in its now-obsolete form of a system of commodity production.”
On the other hand, he seems not to understand the significance of his own statement, when he later writes:
“The United States has succeeded in and continues to succeed at—although it should be economically impossible—going deeply into debt to foreign capital while simultaneously having very high trade deficits, for the simple reason that the dollar played and to some extent still plays (in a diluted form) the role of world money.”
The evolution of the crisis since 2008 suggests Kurz underestimated the significance of the dollar’s function as world money; it is precisely the fact that the dollar plays the role of world money in Kurz’s analysis that should have alerted him to the necessity this crisis must favor Washington against all other competing national capitals. The role of the dollar within the world market is in large part determined by the willingness, even necessity, of export nations to price their exports in dollars. Given this, what a state can do in the case of each national capital — emit debt payable with its own fictitious currency — the US can do to all other national capitals. To an ever increasing extent, national capitals need Washington’s printing press if they are to expand the markets for their commodities.
The dependence of capital on Washington
Taking into account that this is now a necessary condition for the capitalist mode of production globally, national capitals must become ever more dependent on Washington ceaselessly feeding the world market with fictitious capital in the specific form of its own value-less currency. What is “economically impossible” in this crisis, is for the total social capital within the world market to be dependent on dollar liquidity without this having fatal consequences for all other currencies, i.e., without the eventual collapse of the other currencies.
The problem posed, for instance, by the euro crisis is, I think, not a problem that can be solved by Greece, Spain, Germany or the European Central Bank, but by Washington. It is essential for the Left to understand, the Greece and Spain states cannot survive without becoming mere appendages of Washington; the EU cannot survive except on the same basis. Euro-debt is now basically being passed up the food chain in fits and starts until it will reside at the ECB, who will then find it necessary to seek a bailout from Washington. The European sovereigns cannot become responsible for the financial mess of Europe’s banks without this landing at the doorstep of the ECB eventually and driving it into bankruptcy as well.
Eventually, European finance capital will go hat in hand to Washington seeking a bailout. At that point, what is playing out in Greece, Ireland, Spain, Portugal, etc. will play out across all of Europe — and we should be ready. The crisis will expand not just beyond the capacity of the less solvent nations of Europe, but beyond Europe itself to control. There is already no possibility that German surpluses will fix this crisis, even if that were politically possible; that it is not even possible politically, only quickens the arrival of the final collapse of the euro. If Kurz is correct in his main argument, Germany surpluses can serve only if the expansion of deficits elsewhere increase still more rapidly; and this expansion hinges on the expansion of fictitious capital being fed into the world market by Washington on a still greater scale.
This, however, only looks at one side of the ledger. from the standpoint of the euro-zone credit crisis — that is, as a monetary problem. What Kurz’s argument suggests is that the euro-banking crisis cannot simply be understood in terms of balances on a ledger. So, for instance, it is not just that Greece needs so many billions of Euros in the near future to pay its obligations. German mercantilism requires not just that Greece’s obligations be paid, but that these obligations grow faster than they are paid. The irony is that the present solution whereby Greece curtails unnecessary expenses to pay its debts demands even more unproductive expenditures; no matter what Greece does to reduce the expenditures of unproductive labor, it must end up increasing these expenditures.
This implies that no matter what the rate of collapse of employment in Greece overall, the collapse of productively employed capital must exceed even this rate. It is entirely possible that Europe as a whole begins to experience African and Eastern Europe levels of unemployment. Already, single currency members Spain, Greece, Portugal, Ireland and Slovakia are among the 20 countries with the highest official unemployment rates in the world; the only countries with a higher level of official unemployment than Spain are located in Africa.
Kurz’s unarticulated strategy
Kurz’s argument is important to understand, because as the autonomist writer, Tronti, explained, theory can serve as a means of anticipating what must take place, and make it possible for us to lay an ambush on capital. Knowing how the euro-crisis must develop, at least tentatively, presents us with just this sort of opportunity.
Unfortunately for us, Kurz’s never articulated a strategy for the Left based on his argument in this essay. Such a strategy, his analysis implies, must not simply include a demand to end the bailouts for the financial sector and the growth of state debt, but must include a determined effort to reduce hours of labor. Why Kurz never articulated this strategy is beyond me, and represents one of the perplexing aspects of his analysis. Having identified the connection between the growth of public debt, and the growing unnecessary expenditure of labor, as well as the dependence of the two on the state’s control of the money supply, Kurz ends his analysis without explicitly carrying the connection to its logical conclusion in a demand for a reduction in hours of labor.
This is the same limitation that can be seen in Moishe Postone’s work, Time, Labor and Social Domination, where, after having carefully reconstructed Marx labor theory of value, Postone cannot seem to arrive at the logical implications of this reconstruction that, in the words of Karl Marx, capitalism “posits the superfluous in growing measure as a condition – question of life or death – for the necessary.”
In both cases, I think, the writers, once facing the obvious bankruptcy of the workers movement, and the limitations of political demands, see no clear path beyond this impasse. It really raises the question in my mind if, perhaps, there is no way beyond it, and we must suffer through a catastrophic collapse. Kurz seems to embrace the necessity of a collapse when he writes:
“… the theoreticians of the left and the former left), all of this may seem like a fantasy, because they will only believe in the absolute crisis when they have to scrounge for food in dumpsters or when they are menaced by artillery fire”.
Looking at the state of the Left today, I can say his lack of faith the capacity of the Left to figure it all out in 1995 was fully justified by events as they have unfolded in the present crisis. It is absolutely astonishing to me that even in the face of this crisis, many on the Left continue to hope for a revival of the fascist mini-states of the 1930s, in the face of all evidence to the contrary. Not one movement has emerged in either Europe or the United States that appears to understand, based on experience in the crisis, what Kurz predicted.
Civilization has collapse again and again throughout history, but this is the first facing collapse for a reason that is entirely within its means to solve: overwork.
Perhaps what makes this crisis so easily misunderstood is that never in human history has mankind been threatened by its own capacities. Even the idea of overwork seems ridiculous to our experience, since it appear our lives as individuals can be improved by working longer. But we are already familiar with this in its inverted form: Keynesianism rests on the idea that one firm can cut wages and so improve its bottom line, but if all firms do so together, catastrophic depression results.
I am really not satisfied with this examination of Kurz’s argument, without nailing down why he felt it necessary to leave it unfinished. I am not altogether sure it is correct to see this “unfinished” quality of his piece as unintentional or accidental — rather, it seems quite deliberate. In one sense it seems, Kurz may be making an argument that all attempts to create a subject must fall to commodity fetishism. The very idea of a demand for a reduction of hours of labor, for instance, immediately begs the question: To whom is this demand made? The very idea of reducing hours of labor at this point presumes labor is unnecessary and need not be performed at all.
Kurz’s analysis suggests people could stop working at any point they wanted, without material consequences — much like the implosion of the Soviet System. This results in a puzzle very much like the rise of fascism itself, where the working class, despite Marxist predictions to the contrary, chose to act within commodity relations. That event, in the middle of the Great Depression, has never been properly explained by Marxism. Likewise, in the present crisis, it is difficult to explain why so many continue to work long hours when labor itself is impossible for so many others.
The phony question of Collapse versus Transcendence
So what becomes of the so-called “transcendence” of capitalism? I have suggested elsewhere that people do not consciously alter their activities in the middle of a crisis. Their first response is to try to reconstitute their activities as they existed prior to the crisis, rather than use the crisis as the basis for a fundamental change in these activities. A crisis does not necessarily convince people to alter their activities, but it does nevertheless force them, on pain of catastrophe, to alter them. (Kurz’s dumpster scrounging Marxist academics come to mind here.) This suggests to me that the transcendence of capitalism versus its collapse is a meaningless issue — wage slavery will end when it becomes impossible to continue.
The problem with Kurz’s lack of a programmatic expression for his argument however, is probably best expressed in the words of Marx himself. In the Communist Manifesto, Marx writes: “Now and then the workers are victorious, but only for a time.” Marx seemed to have no problem with the idea that the working class could expect no permanent victories as long as capitalism existed. While Kurz was willing to make a distinction between, “the collapse of capitalism, and the transcendence of capitalism” in his argument, he seemed ready only to make this distinction without touching on the relation between the two. Of course, Kurz does admit, “the conditions of critique can intensify and change, as can practical critique through crisis developments”, but this is only a theoretical admission insofar as he advanced no concrete demands capable of giving voice to this practical critique. Such a practical demand no more need aim to “transcend” capitalism, than did the ten points listed in the Manifesto; it need only aim for what the Manifestos own programme aimed: namely, to accelerate the process of capitalism’s own collapse in this crisis. Marx seemed to have no problem with the idea that the working class could expect no permanent victories as long a capitalism existed. So he was entirely comfortable with advancing those demands that he thought would, at best, only hasten capitalism’s demise.
The fact that Kurz did not articulate a simple set of demands that express the underlying necessary connection between state debt (or austerity) and unnecessary labor must be judged a defect in an otherwise magnificent argument on the nature and prospects of this crisis.