Internationalist Perspective

On the Economic Crisis

January 27, 2009 on 3:40 am | In Uncategorized |

Introduction

We are posting this important text by Raoul Victor on the IP blog in order to further the discussion of the significance, impact, and meaning, of the present crisis of capitalism. Raoul Victor has long been active in the left communist milieu, most recently within the Paris Discussion Circle, and the debates within the Francophone left communist network. In this text R.V. raises the question of whether the present crisis is one more recession, that will lead to another period of expansion OR a general crisis, perhaps the first global crisis of a capitalist system that has completed the historical task of the creation of a world market, the limits of which have now been definitively reached. The perspectives for class struggle, as well as the possible responses of capital to this crisis, are directly linked to the answer to the questions that R.V. raises. For our part, IP would like to expand the framework of the discussion, to also raise the question of how — assuming that the present crisis marks the limits of the expansion of the capitalist system and the definitive end of its purported “historical mission” — the “collective worker” might respond; its capacity to overcome the modes of subjectification that capital has imposed on it, to smash the reified social relations to which capital has subjected it, and to smash the ideologies of capital that have bound it to the law of value.

Internationalist Perspective

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On the economic crisis

L’ current crisis/economic recession is the fifth since that of 1974-75, known as the 1st oil crisis. Will this be another recession creating the conditions for a new period of expansion, as occurred after the four preceding recessions?

Crises/recessions permit:

• the “cleansing” of the financial sphere by the massive destruction of fictitious capital, particularly that generated by the speculative fever which develops at the beginning of all capitalist crises;

• the restoration of the rate of profit thanks to the fall of production costs: a drop in the cost of constant capital (factories repurchased for a symbolic dollar) and a fall in the costs of the labor force (caused by unemployment);

• an attenuation of the imbalance between productive capacity and solvent outlets by the destruction and the abandonment of productive forces, by the elimination of the least competitive companies;

• an impetus to the search for new solvent outlets and means of better exploiting old markets.

Graph 1, describes the movement of the “margin of profit” in the U.S. (a measure indicative of the “rate of profit” because it is based on a ratio of the profits to costs per unit,) highlights how recessions (indicated in the graph by gray zones) are always preceded by a prolonged decline in the rate of profit, and are followed by a new period of increase of this same rate. They are the result of the decline and a condition of the increase.

Margin of profit of the non-financial companies in the United States

Ratio of profit per unit to the cost and profits per unit
Before taxes and after taxes

graphique_1.pdf

Source: BEA, Survey off Current Business.
(http://www.bea.gov/scb/pdf/2008/12%20December/D-Pages/1208dpg_d.p

The recession that has just started should not be an exception as regards the outburst of cannibalism between fractions of capital. Many capitalists will lose their fortunes and even some their life (the number of suicides of “business men” reported by the press has already clearly increased). But the most powerful, or the most skilful, those who envisioned that they would survive the storm, salivate already at the sight of the many corpses on which they will be nourished. But, at the end of the ritual sacrifice, will there be a new period of expansion?

Marxist revolutionaries who generally think that a profound crisis of capitalism is necessary so that the proletariat is “constrained” to act in a revolutionary way, “in accordance with its being,” have also a subjective tendency to consider that each crisis of capital is “ the last,” the one that the system will not survive. The four last recessions all were analyzed as such by this or that Marxist group. What is it this time?

I do not pretend to bring a ready answer to this question. But, if one endeavors to engage the innovations of the current recession compared to the preceding ones, it appears rather quickly that the present one should be more serious in breadth and in depth, but also that it can be the first of a new epoch of capitalism. Three principal specificities seem to me particularly significant.

The first is the unprecedented size of the amount of accumulated fictitious capital and the disastrous state of the financial system which engendered it. The financial deregulation of the last decade accounts for much, even if it does not explain it all. The size of the accumulation of debts is exceptional, but the deterioration of the quality of these debts is so too. The inevitable “correction” should be more destructive and more prolonged than at the time of the preceding recessions.

The second innovation is the truly GLOBAL character of this crisis. In fact, it is the first great planetary crisis of capitalism. At the time of the recessions of 1990 and 2000, l’ extent of the debacle was strongly limited by the new outlets opened by China, India and East Asia. Today, these countries are well integrated into the worldwide economy. China became, in 2007, the third world power, behind the United States and Japan. Asia has become part of the problem and the effects of the world recession there are already being violently felt. (1)

One should not underestimate the significance of this new reality. The integration of China and India in the worldwide economy, even if one can see that it is not yet completed (we will return to this point), constitutes an important mark of achievement in the constitution of the capitalist worldwide market. (2) Anton Pannekoek, 60 years ago, saw there the limit of the true expansion of capital and he announced the beginning; of a slow and a progressive “decline”:

“Once it [capitalism] will have inserted in its domain the hundreds of millions of people who are crowded together in the fertile plains of China and India, the essential work of capitalism will be accomplished. (…) Also the expansion of the Capital will thereby meet its end” (3)

I share the broad outlines of this vision. The current recession will not be the last of capitalism but it seems the first of a capitalism at the end of its “historic mission”, a capitalism which has run up against the limits of the worldwide market which it has created.

The third innovation of this crisis is due to the enormous increase in labor productivity during the period that preceded it. The financial crisis which initiated the recession of 2000 had been assimilated to the deflation of the “ Internet” bubble; since then, internet and communications technologies just like those of information/automation of the production processes has spread to the four corners of the planet, entailing an exceptional growth in the “real” productivity “ of labor. (4)

However, the increase in real productivity, the reduction in labor time contained in each commodity, exacerbates two intrinsic contradictions of the system: it reinforces the downward trend of the rate of profit and increases the need for new outlets for production.

To cite the formula of Sander: “Too many goods can be produced too cheaply.”

The needs of capital to overcome the recession which has begun will be all the greater given the exceptional amplification of its most fundamental contradictions during its last cycle.

The social consequences of the recession.

From the ideological point of view, this recession has as a particular characteristic to be relatively more perceptible as a product of the nature of the system of production itself. Seldom before have we seen the media and the politicians speak as much about a “systemic” crisis,” of a problem of “capitalism” as a system. Obviously, they recommend a “reformed,” “regulated”, “rationalized” capitalism, etc. But they do speak of the “system.” At the time of the recessions of 1974-75, and 1979-82 it was all about the first then the second oil crisis. At the time of the recession of 2000-03 it was about the “Internet” bubble. Some tried indeed to speak about a “third oil crisis” early on in this recession, when once again oil prices beat all records, but the financial disaster became so massive that attention could not be diverted from the fundamental mechanisms of the system.

Raoul Victor

Jan 13, 09

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Notes

1. Recent Chinese official estimates speak of 10 million “migrant” workers who already had to return to the countryside because of the closing of thousands of factories, victims of the fall in demand in all the sectors, from textile to automobiles.

2. It is interesting to note that the United Nations describe the displacement, during the last three decades, in China, of almost 130 million people from the countryside to industrial cities as the greatest human migration in history. (International Herald Tribune, 31.12.2008). 130 million; is almost the number of the total active population of the United States.

3. Anton Pannekoek, “Worker’s Councils”, 1941-1945, Chap. VI, ED. Bélibaste, 1974. Translated, commented on and presented by a work team within the ICO. Here are some other extracts of the piece from which the quotation is drawn:

“The alternation of depression and prosperity in industry is not a simple balancing movement. Each new cycle was always accompanied by an expansion. After each collapse, each crisis, capitalism was able to increase by extending its field of operation, its markets, the number of its products, and the scale of its production. As long as capitalism can always extend its domination over the world and increase its dimensions, it can offer employment to the mass of the population. And as long as it can fulfill the first requirement of any system of production, to procure the vital necessities for its members, it will be able to maintain itself, because there would be no inexorable necessity that will oblige the workers to overthrow it. If it could thrive by always expanding, the revolution would be then impossible and superfluous. (…)

The capitalists of Europe, then America, could increase their production with such regularity and such speed because they were surrounded by a vast non-capitalist world, having only a much reduced production, and being, at the same time, the source of raw materials and markets for their products. (…) Capitalism itself, industrial exploitation, introduces itself into these countries and, soon, the former customers become competitors. (…)

But the planet is only a sphere whose surface is limited. The discovery of the finite dimensions of the globe accompanied the rise of capitalism, four centuries ago; considering of the limits of these dimensions shows that capitalism has an end. The population to control is limited. Once capitalism will have incorporated in its domain the hundreds of millions of people who live in the fertile plains of China and of India, the essential work of capitalism will be accomplished. (…)

Also the expansion of Capital will be its failure. Not as if an obstacle were thrown up suddenly in front of it, but, little by little, by the difficulty in selling products and investing its capital. Then the rhythm of development will slow, production will decrease. Unemployment will become an insidious disease. Then the struggle between capitalists for the domination of the world will become keener, with a perspective of new world wars. (…)

Then they [the workers] will have to assume the task of creating a better world left with the chaos generated by capitalism in full decrepitude.

4.”Real” productivity indicates here productivity measured in physical goods or “use-values,” by units of working time; for example, how many computers are produced in one million hours of work. Measurements of this productivity are not really accessible. They exist only in a sectoral way. The usual statistics on productivity compute production as “value added”, measured in money based on the selling price. So they give a quite lower indication of growth. For example, if the price of the computers were divided by two, the same sales figure would not make it possible to give an account of the doubling of the number of computers produced with the same amount of labor.