Kicking Capitalism Down the Road: Occupy Wall Street and Debt

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The entire point of bourgeois misdirection in this crisis is to convince us that our choices are between debt or unemployment — that is between “growth” and “austerity”, and between taxes and reductions in our pensions, social security, and wages; that is, a choice between “kicking the can down the road”, or “taking our medicine now”.

It is important that the debate be framed this way, because these are the only two options consistent with existing relations of production. Since these choices are both consistent with existing capitalist relations of production, the fascist state does not care which option you choose. Just as Washington does not care whether Obama or Romney wins the next election, it does not care whether this crisis is resolved by debt or unemployment. You are free to make your choice based on what feels right to you — letting people go years without a job, or piling up the public debt.

Your choices are posed in this way because it is assumed you have already accepted the premise of these choices: It is assumed you have accepted the idea that this crisis can only addressed at your expense. You have, therefore, accepted the premise that you must either take the hit to your standard of living now, or in the future. Whether you take the hit now or in the future, you accept that this is the only way forward.

This is why there are so many people running around trying to stock up on guns, beans and gold — assuming the big hit is coming. It is just a matter of time, we are told — shit is going to get funky.

It is absolutely necessary that you never question this premise, and everything is aimed at preventing you from ever questioning this premise. This is not just the message coming from Washington and its servile agents in the media and economics profession; it is also the message delivered on the Left and the Right. On the Right, it is expressed in a demand to end the deficits no matter what the cost, on the Left it is expressed in a demand to end austerity no matter how this ends in more public debt.

It is not just that these contradictory demands appear as polar wings of politics, it is that the demands themselves must be posed as an unbridgeable contradiction. In fact, there is nothing that prevents the Left from adopting the Right’s demand against deficits as well as its own against austerity. And there is nothing that prevents the Right from adopting both a demand against deficits and a demand against austerity. But if this phony contradiction is not maintained, there is no Left or Right — and the point of politics is that there should always be a Left and a Right.

I think this is the revolutionary significance of the Occupy movement’s idea of addressing debt; it breaches this false contradiction. Occupy, which has already clearly taken on austerity, is now adding the question of debt to its argument. With a movement that opposes both austerity and debt, the phony opposition between Left and Right will be ended. Combining a demand against austerity with a demand against debt, announces working people will not pay for this crisis now or in the future. It throws down a gauntlet to Washington and Wall Street in the form of a demand that is not consistent with capitalism or the state.

The significance of these two modest demands against austerity and debt, when combined, are far greater than it may look on the surface. For instance read this quote from David Graeber:

“One realization really startled me when researching the book: that is, the realization that throughout human history, most people have been in debt. Think about it for a second. Could the majority of the human race really be improvident failures unable to manage their affairs, and thus justly dependent on the rich? Of course not. Rather, states and elites have always colluded to ensure that their subjects become debtors; not least, because debt is the easiest way to take a relation of violent inequality, of violent extraction, and make it seem not only moral, but make it seem like it’s the victim who’s to blame.”

How does this describe euro-austerity and the continuing argument that Greece “deserves” austerity now because of its past public profligacy? The fact is the public debt Greece accumulated in the past was just the inter-temporal shift of austerity and nothing more.

And not only private debt, but public debt more so, since Washington can, through its inflationary monetary policy, extend the impact of this austerity throughout the world market. Washington can, therefore, under the pretext of increasing its own debt, impose an austerity on every nation trading in dollars.

Debt, Inflation, Unemployment and Austerity

Consider the problem of debt and austerity from another perspective: In an austerity, unemployment rises, wages and pension are slashed. An increase in debt now is nothing more than the inter-temporal transfer of these same effects over some period of time going forward — wages and pensions are gradually slashed over time. This is accomplished through inflation, and can be made to appear as the result of “natural” forces rather than deliberate policy.

Employment growth slows and persistent high level of unemployment can last for a decade or more. What is accomplished all at once in an austerity regime is, with debt, accomplished over a period of time. All the effects of austerity are still felt by the mass of society, but the torture is extended sometimes a decade or longer.

The state must impose this austerity on behalf of capital because it nothing more than capital organized as the state, but the question is whether the population will accept it all at once, or whether it must be stretched out. This is politics — how much pain can the proles take, and it is a practical question. If people surround the government and demand it resign, this government can be replaced by one “committed to growth”, i.e., the accumulation of even more public debt.

Although this new government only promises to stretch austerity over a decade, instead of imposing it all at once, it is sold as compassion. Twenty five percent unemployment now, or ten percent over the next decade; slashing wages and pensions now, or inflating away their value and compelling people to work longer — make your choice, folks. In either case, the mass of society suffers the effect of unemployment and reduced subsistence through state policy.

Occupy is taking on precisely this policy in both of its possible manifestations. It is combating both an immediate imposition of an austerity regime and an inter-temporal imposition of this regime through debt.

We have to consider also the relationship between unemployment and wages: the reduction of wages is the aim and unemployment is the means. In a market where there is low unemployment, there is less competition among the working class — it has the opportunity to organize itself. Moreover, even where there is some unemployment this occurs against a backdrop where this unemployment is unevenly distributed — in specific sectors or regions of the world market the demand for labor power may even exceed the supply. The impact this has on profits is obvious, and the capitalist class responds to this with all the means at its disposal — introducing new machines, reducing wages, layoffs.

What Keynes explained to the capitalist class is that its typical response to this condition — slashing wages — is counterproductive. Since the Great Depression, profitability cannot be restored simply by slashing wages — as Greece and Spain is demonstrating graphically. What is gained by slashing wages, is lost when the working class goes into the market to purchase goods. The state, Keynes argued, can accomplish the task far more efficiently than capitalists in slashing wages. This is because the method employed — debt — has the effect of subsidizing profits even as the purchasing power of wages fall.

Of course, Kurz explains, this results in the accumulation of debt that cannot be paid off — but that is the can that must be “kicked down the road”. In the long run the debt cannot be paid off, but in the interim it can transfer the product of labor from wages to profits. And, as Keynes observed, in the long run you will be dead after having slaved your entire life away to service that debt.

It is not just private debt that transfers the product of labor from one class to the other, state debt has this very same effect. Your take home pay doesn’t change, but the prices of what this take home pay buys spirals out of sight. In the choice between austerity and debt, debt is actually the preferred option because the state doesn’t provoke people into the streets. As Keynes explained in his General Theory, unions will fight a cut in their wages, but not one imposed through debt and inflation.

“Thus it is fortunate that the workers, though unconsciously, are instinctively more reasonable economists than the classical school, inasmuch as they resist reductions of money-wages, which are seldom or never of an all-round character, even though the existing real equivalent of these wages exceeds the marginal disutility of the existing employment; whereas they do not resist reductions of real wages, which are associated with increases in aggregate employment and leave relative money-wages unchanged, unless the reduction proceeds so far as to threaten a reduction of the real wage below the marginal disutility of the existing volume of employment. Every trade union will put up some resistance to a cut in money-wages, however small. But since no trade union would dream of striking on every occasion of a rise in the cost of living, they do not raise the obstacle to any increase in aggregate employment which is attributed to them by the classical school.” (my emphasis)

I bet you could count the number of major demonstrations against inflation in the past forty years on a single hand — I know of no strikes produced by it. Nobody ever surrounded the congress to demand a reduction in inflation nor fought the police in the streets with firebombs because of it. As a matter of fact, the prima facie silliness of the euro-austerity regime in Spain, Greece, Ireland, Portugal etc., suggests the states and ruling classes of those nations are now trapped and cannot employ debt to meet their aims.

By taking on the issue of debt Occupy is in fact taking on one of the most powerful tools in the state’s arsenal for imposing austerity — debt. Occupy is showing that it is not just a matter of austerity versus debt, but also of austerity through debt. The debt campaign is big because it calls bullshit on both the Democrats and the GOP and can appeal to whatever healthy elements remain in the Tea Party.


As a side note I also want to point out that not one Marxist critic of David Graeber was able to uncover this hidden connection between debt and austerity that Occupy has discovered purely through its practical activity alone. This includes that asshole over at Jacobin, Mike Beggs; that “humanist marxist” Andrew Kliman; Dean, Deseriis, and a host of other imbeciles. Nor does it appear in the writings of Marxists who feel an obligation to repair capitalism, such as Dumenil, Levy, Saad-Filho and that sorry lot.

What good is a goddamned theory if the people using it are idiots.

Oh yeah. And fuck Zizek too!

Author: Jehu Eaves
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I am a "marxist-in-recovery", which is to say, I am someone trying to recover for myself the essential humanist thought of Karl Marx. I understand his writings as a radical, critical, and determined opposition to all forms of social coercion and "laws" of society, including, but not limited to, Labor, Property and the State -- a decidedly negative critique of present society that offers no vision of what replaces it. My somewhat awkward musings on this can be found at I am also on Twitter @damn_jehu
JehuKicking Capitalism Down the Road: Occupy Wall Street and Debt