Housing development Ciudad Jardin Soto Real. 312 empty houses, 1169 houses not even built. 1

Radical interpretations of the present crisis

New York University
November 26, 2012
Platypus Review

..Loren Goldner | David Harvey
Andrew Kliman | Paul Mattick


Last autumn, chapters of the Platypus Affiliated Society in New York, London, and Chicago hosted similar events on the theme of “Radical Interpretations of the Present Crisis.” The speakers participating in New York included Loren Goldner, David Harvey, Andrew Kliman, and Paul Mattick. The transcript of the event in London appeared in
 Platypus Review 55 (April 2013). What follows is an edited transcript of the conversation that PAS-NYC hosted on November 14, 2012 at the New School.

Preliminary remarks

Loren Goldner:
The title of my talk tonight is “Fictitious Capital and Contracted Social Reproduction.” It is important to note that as we convene tonight, there are general strikes across the southern flank of Europe, the miners’ strikes in South Africa, and at least 50 strikes a day in China. While we convene to talk about the crisis, there are people in motion trying to do something about it.

Marx writes in his Grundrisse, “Capital itself is the moving contradiction, [in] that it presses to reduce labor time to a minimum, while it posits labor time, on the other side, as sole measure and source of wealth.”[1] Unpacking that one sentence can get us very far in understanding the crisis and the history of at least the last hundred years.

Capital can be broken down into Marx’s categories: surplus value (s), variable capital (v), and constant capital (c). Within constant capital there is a breakdown into (i) fixed capital, which refers generally to machinery and tools, and (ii) circulating capital, which refers to things such as raw materials.

With these categories I would like to address the question of fictitious capital, which I define as claims on the social wealth and social surplus that correspond to no existing social surplus. The origins of fictitious capital are the advancing productivity of labor in capitalism, which is an anarchic system, one that is constantly devaluing the constant capital invested by the capitalist class. Capital volumes 1 and 2 describe a pure capitalist system, in which there are only two social classes: the wage-labor proletariat and the capitalist class or the bourgeoisie. Other classes enter the picture, for instance peasants, in the long historical chapter on accumulation. But Marx is trying to set up a pure model and then move on to the more everyday appearances of the system.

Value is defined in Marx as the socially necessary labor time of reproduction; I want to emphasize the “re-” in reproduction. For, in the opening chapter of Capital, Marx talks a lot about the value of a commodity as the socially necessary labor time embodied in it, but later moves to social reproduction. There he is talking about an expanding system in which the early definitions are superseded.

Capitalists themselves tend to have only a vague idea of use-value. As they are running a society into the ground, say in the contemporary debates on infrastructure, capitalists come to a recognition that use-value plays some kind of a role. But, by and large, individual capitalists are interested in profit of which use-value is a mere by-product. One aspect of recent capitalist history that is important to emphasize is that the tremendous incomes that a part of the capitalist class gets from the sale and rental of buildings of all kinds has long superseded the total amount of profit directly derived from industry. This is important to understand for the contemporary situation.

There is another category that doesn’t attract the attention that it should: what I call “capitalist consumption.” Capitalist consumption does not refer to the consumption of the capitalists themselves, not the yachts in the Hamptons and the Malibu lifestyle, but the consumption of all the hangers-on of the capitalist class. Marx has a colorful formulation, in which he refers to king, minister, professor, and whore, as different embodiments of the hangers-on. But I would expand this category quite a bit to include state bureaucrats — let’s not forget that 35–40% of U.S. GDP goes to state expenditure at the local, state, and federal level. In 1950 there were ten workers for every manager; today there are three. The military police, prison system, and the biggest single group the so-called FIRE (Finance-Insurance-Real Estate) sector, which represent the interest and ground siphon of surplus value, all of these elements enforce capitalist social relations. We also have the total wage bill, which is comprised of more than the pay packets or checks, but also everything that goes into education and training. The military has increasingly assumed this role over the last thirty to forty years in the U.S. with the collapse of a lot of vocational schools.

Though an incomplete picture, all the above points to different ways in which capital in crisis transfers variable and constant capital to a surplus, as a way of saving itself. In the United States and most countries in crisis over the last 40 years, we see the non-reproduction of labor power — just think of the fact that almost 40% of all high school students in NYC don’t ever finish high school.

Also important, perhaps more important, is primitive accumulation. This Marx defines as the separation of petty producers from the means of production. There is a lot of debate about whether Marx simply meant the expropriation of the English peasantry in the late-17th early 18th century. But I think primitive accumulation is a permanent feature of the capitalist system. In this respect, I follow aspects of Rosa Luxemburg’s The Accumulation of Capital, which included chapters with examples of this process from the nineteenth century. I don’t think one has to go along with all of Luxemburg’s reasoning to recognize the mobilization by modern capital of labor power outside of the subsectors of the world economy, more specifically the peasantry of India, China, Latin America, and Africa. All kinds of people who are not wage workers are recruited to the wage labor system, after another subsector has paid their reproduction costs.

In short, what keeps this proliferation of fictitious capital afloat in all the forms that I have just described, is a general process of non-reproduction: both of labor power and of aspects of constant capital, such as infrastructure — concerning which, for instance, the American Society of Civil Engineers estimates that it would cost 2.3 trillion dollars just to bring things to a standard level.

David Harvey: I had an interesting experience in May when I was in Istanbul, where I was giving lectures and hanging out with social movement people. Istanbul is a boomtown and it is quite incredible what is going on there. Turkey is growing around 7% a year. There is talk of a new bridge across the Bosporus, and the population of Istanbul will grow from 18 million to 40 million in 10-15 years. Meanwhile, Athens, two hours away by flight, is a catastrophe. Argentina was a disaster in 2001–03, but by 2004 it had reneged on its debt and has been booming ever since. China in early 2009 had lost close to 30 million jobs due to cuts to export industries. Yet by the end of the year it recorded a net loss of 3 million jobs, which means that they created 27 million jobs in nine months, through expansive urbanization — basically, a huge infrastructure project. The bankers in China obeyed the orders of the Central Committee to lend. The huge labor absorption in China stands in contrast to the 7 million net jobs lost in the same year in this country. Why? For one thing, you have this stupid form of austerity here, whereas, in effect, there was a Keynesian expansion program in China. Argentina did very well, too, because it started selling all its agricultural commodities to China. It is now one big soy plantation for the China trade. How are we to create a theoretical apparatus that can encompass these incredible differences, as well as the dynamics that created them?

I tried to do a little of that in the Enigma of Capital, analyzing the ways capital flows. As Marx puts it, every limit and barrier has to be overcome. But as you surpass one crisis, it just manifests somewhere else. It has moved from the U.S. and the property markets, impacting consumers in China, and then spun over to the financial sector, creating sovereign debt problems, as in Spain. It is in Iceland, then Dubai, and then Greece. If you don’t have a theoretical framework that can understand the rapidity of these moves then you cannot really encompass what is going on. The crisis tendencies of capitalism are never resolved, but simply moved around from one space to another and from one sector to another. Continue reading