False Causes Given for the Economic Crisis


 "Although the company partly blamed the snow for the poor result, it conceded that underlying demand for its CDs, DVDs and games was weaker than hoped, and also pointed to 'well-reported consumer headwinds as we enter 2011'." -- BBC News online article: HMV to close 60 stores as sales and shares slump, 5 January 2011.

This story was rather buried amongst many others putting on a brave face and reporting more positive, though less factual news.
Let's list a few of these other causes for the crisis, apart from the inclement winter (!) weather:
Sub Prime Mortgagees
Property Developers
Benefits Scroungers
Lazy Workers
Lazy Regulators
The Chinese
USA Republican politics
USA Democratic Politics
UK Labour Party Politics
UK Conservative Party Politics (etc)
Old People
Loss of Confidence
Human Greed
Complex Financial Instruments
Information Technology
Bloated Public Sector
Bloated Government/Administration
The Greeks
The Irish
Greek Spinsters
Bad Luck
What is easy to forget amongst this barrage of media spleen (or its attempt to channel and vent the spleen of its readers, viewers and listeners, who are without any doubt angry) is that these ideas of who or what is to blame for the crisis, when not completely daft, are all effects rather than causes, and that the capitalist crisis is generated by the capitalist system itself. This is why there is no single cause that can be held to originate this present massive crisis, and why every cause put forward, even in the form of an admixture, also had causes, in other words systemic antecedents, in the cycle of economic activity (even Nobel Prize winning economists fail to note this inter-connectedness in order to take only one side of the contradictions that are presented, and as I shall disclose below).
Certainly we can see that some practices and factors are more responsible for the character of this crisis than others (e.g. the credit boom or bubble), but these characteristics are themselves governed and produced by the system. And this all occurs regularly, from boom to slump and back again, as we recognize.
It might be more accurate to say that 'capitalists' or the bourgeois class created the crisis, but even this is not quite correct: While the bourgeoisie function to uphold and maintain this economic system, which is 'their system', the class itself has no particular interest in a massive crisis, given only sections of it may profit from these conditions. No, the fact is that the aim of the capitalist system is to produce and expand capital, and only that. It is not (even) for the enjoyment of the capitalist or the benefit of the people, the former is merely incidental while the latter is extremely rare given they are of necessity exploited by the system.

Profit is gained from surplus value (the unrecompensed labour time of workers) and not from the crude (and ideological) view that it derives from some arbitrary and mysteriously external add-on to the price of commodities, an idea which arises from the feelings associated with the process of competition in the market which presents an inverted aspect of these actual internal relations.

The increasing development of the social productiveness of labour involves an increasingly large mass of total capital to set in motion the same quantity of labour power and extract the same quantity of surplus-labour. In this crisis we see the falling rate of profit that this inevitably gives rise to and the effects of its contradictions on a global scale: This law essentially expresses the very simple fact that the economic system must invest in itself, and re-invest in itself, in order to be reproduced in time. To do this capitalism (in particular, to make capital) must inevitably use the existing value of capital as a means of increasing this value, and to the maximum degree. In a sense this represents a kind of slow fusing short circuit: The gradual growth of constant capital in relation to variable capital must lead to a slow fall in the general rate of profit, as long as the rate of surplus value or in other words the intensity of exploitation of labour by capital remain the same. It means that a progressive drop in the rate of profit can exist alongside an increase in the absolute profit, the mass of capital, and an increase in the labour force (in fact a surplus population of labour regarded from the capitalist position). There are ameliorating factors that slow down this tendency, such as the greater intensity of exploitation of workers, the repression of their wages, foreign trade advantages, and increases of stock capital, but it cannot be stopped, for all of these have finite limits which cannot be changed, at least without preventing the system as such from carrying out its goal, which is the expansion of capital, and therefore its ceasing as a system.

In fact it can and does and has done this, and it has recently reached its culmination point with the current crisis. The fall in the rate of profit is no longer being compensated by the mass of profit: This sudden fall, and it is in fact and appearance sudden, is due this time not to the development of productive forces but to the structural change in the composition of capital, because of the rise in the money-value of the variable capital and the reduction in the proportion of surplus labour, which generates the surplus value, to necessary labour. This has lead to the crisis which has now become visible and palpable to all.

In one sense therefore the system is something like a machine in which human subjects are relatively unimportant, and often disposable, but are nevertheless necessary for it to continue to function. The ruling class is actually as disposable to it as the working class, but there are far more workers than the ruling class and these workers have much less organised social protection. This machine is, in a way, self-destructive (rather like a classic Dada Jean Tinguely sculpture), it is, as we have said, a closed system which must reproduce its own conditions in time, but it also can be viewed as an open system when it reaches its crisis point, because at this stage it has reached an end and any end is also an opening to another possible condition (revolution, other/new/alternative economic systems). Yet the ‘openness’ of this system at this point (its own destruction) is ironically fought by those very capitalists who hitherto argued for the ‘free’ and unfettered nature of the same system (just as US President Bush did); they no longer want a ‘free market’, they want a controlled, albeit temporary, ‘meltdown’ in which however their particular interests (and capital) are the ones that survive. Certain aspects of their defensive actions at this point seem to be socialist policies: The debts are ‘socialized’ and shifted to the workers while the bourgeoisie is bailed out with social wealth. In fact this is the reverse of socialism, in which social wealth is gained and retained by the producers, but in a strange twist this means that ‘socialism’ may be added to the list of those things to blame for the capitalist crisis.

This crisis is a very severe one, as we know. It is reminiscent of the 1930s.

The necessary destruction of a proportion of old capital has become a necessity for the system to survive and renew itself. It calls for a stoppage in the means of production, and in fact actual damage to this means, given it must be prevented from acting as capital. But this now, as it did to a lesser extent in the 1930s, involves entire nations and its peoples at risk of insolvency and which are in the firing line for being ‘left fallow’ (Greece, Ireland). Now, even though the mass of capital is totally enlarged, bloated we might say, there are few places for this wealth to be invested or reinvested, this is becoming as true in China, the current champion of growth, as it is already in most of the advanced capitalist countries. In the latter we are at the stage where the big capitalists, having practically decimated the smaller businesses and shifted debts as much as they could onto the working classes, are and will be looking for ways to ensure that some large capital 'takes the hit' to reduce value overall, though they keep putting off the bad moments. This 'hit' is in order to allow new capital in. This is the only way within capitalism that its crisis, which is a crisis in growth, can be 'managed', and growth restarted in a 'normal' way. But of course it is not 'managed'. Its ‘management’ by those entrusted with the task, such as the ruling class politicians, is wilfully chaotic and 'free', it is ad hoc, after the event and with crossed fingers, and it does little more than hope that all will be well in the end.

The extra ‘problem’ today for the defenders of a return to the normality of steady exploitation is perhaps the increased stability in law of the social safeguards (e.g. welfare states) in the older advanced capitalist nations, which act as a hindrance and preventative to the ‘restructuring’. And so a propaganda war ensues over the legitimacy of the old conditions, and increasingly unlawful acts and frauds are carried out against these old regulations, at first surreptitiously but later almost willy-nilly, by the very authorities commanded with maintaining the law, and new laws are hurried in to replace old ones, while other laws are simply overlooked (as can be seen with the EC regulations and the crisis of the Euro and various treaties). By these acts law itself begins to take on a tarnished appearance, and seems to be too flexible at one time, and at another too extreme. In this sense the case of Madoff is noteworthy, since it points to extremely lax regulatory authority, but the full weight of the law is brought down on the individual at its focus (bringing the suicide of his son). Thus the capitalists who formerly shared in the profits of a rampant market now face each other as enemies who don't want to share in the losses, and whose only agreement is over who and what to blame for the crisis: The list above, but especially the poor.

Photo by AFL-CIO, cc by 2.0

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