You Said You Wanted Jobs
The Economic Path from Industry to Speculation to Fascism
Capitalism is currently facing a convergence of crises: of overproduction, financial instability, and ecological catastrophe. Yet they can’t ease up on production, but continue to forge ahead. It reaches such irrational proportions that in China, there are 12-24 massive cities built each year that have no people living in them. This was recently covered by “60 Minutes.” At the same time, 80% of that country’s rivers no longer support life.
Industrial/extractive expansion is causing global, terminal ecological crisis. If unchecked, pollution, water shortages, nuclear radiation, soil depletion, global warming and geo-engineering could wipe out all life on Earth. But the internal structural economic crises are, for capitalists, even more urgent than the ecological crisis. The ecological crisis is simply collateral damage, an effect or consequence of their main pursuit. The capitalist growth imperative cannot be denied.
There is conflict within the capitalist class over the character of growth: concrete surplus value extracted from labor power on the one hand, vs., on the other hand, forms that are increasingly unstable (such as debt, deficits, and fictitious or inflated value based on speculation). As industrial production has surpassed the capacity of markets to consume its products, the pressure of too much capital to invest has forced states to relax regulations and allow more fictitious value into their economies, leading to the current global dominance of the financial/investment sector.
Massive amounts of money pouring into stocks, commodity markets, metals, bonds, credit, currencies, and other instruments of speculation (Bitcoin – how abstract can you get?!) has been causing instability as the amount of fictitious value in the economy increases. As investors begin to acknowledge that their investments aren’t based on real value, this fictitious value becomes toxic. Financial crises occur as investors sell off their worthless investments. After prices collapse, the risks once again become attractive and buying begins anew.
Governments attempt to regulate and stabilize crises while doing everything possible to stimulate economic growth. Growth based on real, concrete value can fundamentally only be achieved by constantly increasing the rate of exploitation (the extraction of surplus value from the working class). The global “structural adjustment” measures they’re currently imposing are attempts to shift back into more industrial production, which produces the real, concrete value on which their entire economy ultimately rests.
But the crisis of faith in the financial sector is also impacting industry, because the two forms of capital have become so intertwined. Industry has come to depend on credit at every step: to capitalize itself, to operate, and to facilitate the consumption of goods (plus they’ve become dependent on the inflation of the speculative value of their companies – their stock price). Cycles are becoming more volatile: credit dries up, then pressure builds until it must be released again into the economy, but these measures must be ever more extreme (such as the Fed dropping interest rates to near 0%), which undermine the system overall even more.
As industrial capital declines relatively in power, and the financial sector experiences ever-more volatile boom-and-crash cycles that reverberate through the global economy, banks have fewer options they can exercise in response, because they’ve already implemented whatever they can do to facilitate growth (they can’t go below 0% interest rates). These current forms of capital are reaching their ultimate limits.
To deal with this, capital has begun to be increasingly diverted into private/state hybrid enterprises. This is a way to force more commodities into the economy and to increase production for its own sake (for immediate destruction rather than for use). These enterprises include wars, foreign “aid,” geo-engineering, disaster response, and government subsidies (such as for farming). In addition, there is an increasing flow of public funds to private hands through the privatization of public institutions (prisons, detention centers, schools, military), the increased commodification of more social needs, and the creation of ever-more toxic “needs” (such as pollution creating the need for more health care and insurance). The state will mandate and/or partly fund the masses’ increased involuntary consumption of all of these (through our taxes, through laws such as Obamacare, and through increased numbers of people being forced into institutions of various types).
As capital puts increasing pressure on wages while profiting off the warehousing of populations, the working class will be pushed into virtual slavery through prison labor and work-for-food arrangements (both of which are on the increase worldwide).
State control over production and over the allocation of resources, in conjunction with privately appropriated profit, plus the socialization of losses, is an economic aspect of fascism. Slave labor is another aspect. This trend is still emerging but is gaining strength. It is being attacked by some sections of capitalists for now; while at the same time they are competing to enter it, and are pushing for its expansion in order to ease their own entry into it. They recognize it as one of their only options of survival as capitalists.
There is an intensifying contradiction between short-term and long-term viability, and there’s a need for a major shift in how capital reproduces itself. In the current conjuncture, capitalism must destroy toxic value and restructure the whole economy. In this transition, their long-term needs as a class clash with their immediate imperatives as individual competing capitals/blocs.
It may seem irrational that capitalists can’t work together to solve their common problems without all the drama and crisis. They can cooperate to a certain degree, and they do, but the relationship between them is essentially antagonistic. Capital’s laws of motion–specifically its primary mechanism of competition–supersede the interests of individual capitalists. When forced to deflect immediate catastrophes, they do manage to act collectively through the political representatives of the particular sections of their class (Republicans and Democrats), and through the state as a whole, which represents their class as a whole. (A recent example is their raising the debt ceiling barely in time to remain solvent another day).
Obama is doing his best to manage the immediate conflicting needs of different blocs of capital as he implements policies that lay the basis for the long-term viability of the system – putting in place the political and economic structures for fascism and facilitating the transition of capital investments into alignment with it. The fact that he’s a Democrat encourages the compliance of the masses, directing their demands into channels that will benefit capital as a whole and closing off all other options. Until a real alternative becomes available, they’re trapped between politicians who pay lip service to their needs while crushing them, and others who openly don’t care about them at all.