Seventeen Contradictions and the End of Capitalism (35 page)

The problem of the uneven development of devaluation and of geopolitical struggles over who is to bear the cost of devaluation is significant, in part because it frequently relates to the spread of social unrest and political instability. So while devaluation does not work very well as an antidote to compounding growth worldwide, its geographical concentrations do have a significant bearing on the dynamics of anti-capitalist sentiment and struggle. The two ‘lost decades’ of development throughout most of Latin America produced a political climate of opposition to neoliberalism (though not necessarily to capital) and this has in turn played an important
role in protecting the region from the worst impacts of the global crisis of devaluation that broke out in 2008. The differential imposition of losses on, for example, Greece and southern Europe more generally amounts to a geographical version of the redistributions of wealth occurring between rich and poor.

Conversely, privatisation of public assets, the creation of new markets and further enclosures of the commons (from land and water to intellectual property rights) have expanded the terrain upon which capital can freely operate. The privatisation of water provision, social housing, education and health care and even war making, the creation of carbon trading markets and the patenting of genetic materials have given capital the power of entry into many areas of economic, social and political life that were hitherto closed to it. As an outlet for compounding growth these additional market opportunities have been significant, but, as with devaluation, I do not believe they constitute enough potential to absorb compounding growth, particularly in the future (they did, I believe, play a significant role in the 1980s and 1990s). Besides, when everything – but everything – is commodified and monetised, then there is a limit beyond which this process of expansion cannot go. How close we are to that limit right now is hard to judge but nearly four decades of neoliberal privatisation strategies have already accomplished a great deal and in many parts of the world there is not much left to enclose and privatise. There are, in addition, many signs of political resistance to the further enclosure and commodification of life forms beyond where we are now and some of these struggles, against, for example, water privatisation in Italy and genetic patenting, have been successful.

Consider, thirdly, the limits that might be encountered with respect to final consumption and the realisation of capital. One of the ways that capital has adapted to compound growth has been through radical transformations in the nature, form, style and mass of final consumption (aided, of course, by population increases). Economic limits to this are set by the aggregate effective demand (roughly, wages and salaries plus bourgeois disposable incomes). Over the last
forty years that demand has been strongly supplemented by private and public debt creation. I focus here, however, on one important physical limit which is set by the turnover time of consumer goods: how long do they last and how quickly do they need to be replaced?

Capital has systematically shortened the turnover time of consumer goods by producing commodities that do not last, pushing hard towards planned and sometimes instantaneous obsolescence, by the rapid creation of new product lines (for example, as in electronics in recent times), accelerating turnover by mobilising fashion and the powers of advertising to emphasise the value of newness and the dowdiness of the old. It has been doing this for the last 200 years or so and concomitantly produced vast amounts of waste. But the trends have accelerated, capturing and infecting mass consumption habits markedly over the last forty years, particularly in the advanced capitalist economies. The transformations in middle-class consumerism in countries like China and India have also been remarkable. The sales and advertising industry is now one of the largest sectors of the economy in the United States and much of its work is dedicated to the acceleration of the turnover time of consumption.

But there are still physical limits to how fast the turnover of, say, cellphones and fashions can be. Even more significant, therefore, has been the move towards the production and consumption of spectacle, a commodity form that is ephemeral and instantaneously consumed. Back in 1967 Guy Debord wrote a very prescient text,
The Society of the Spectacle
, and it almost seems as if the representatives of capital read it very carefully and adopted its theses as foundational for their consumerist strategies.
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Everything from TV shows and other media products, films, concerts, exhibitions, sports events, mega-cultural events and, of course, tourism is included in this. These activities now dominate the field of consumerism. Even more interesting is how capital mobilises consumers to produce their own spectacle via YouTube, Facebook, Twitter and other forms of social media. All of these forms can be instantaneously consumed even as they absorb vast amounts of what might otherwise be free time. The consumers, furthermore, produce information, which is then appropriated by the
owners of the media for their own purposes. The public is simultaneously constituted as both producers and consumers, or what Alvin Toffler once called ‘prosumers’.
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There is an important corollary here and this broaches a theme that we will encounter elsewhere: capital profits not through investing in production in these spheres but by appropriating rents and royalties on the use of the information, the software and the networks it constructs. This is just one of several contemporary indications that the future of capital lies more in the hands of the rentiers and the rentier class than in the hands of the industrial capitalists.

These transformations in the field of consumption are what Hardt and Negri seem to be after when they propose a grand shift of capital’s operations from the field of material to immaterial labour.
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They argue that the relation between capital and consumers is no longer mediated by things but by information, images, messaging and the proliferation and marketing of symbolic forms that relate to and work on the political subjectivity of whole populations. This amounts to an attempt by capital and the state to engage with the biopolitical manipulation of populations and the production of new political subjects. It has always been the case, of course, that the kinds of people we are have been shaped by the commodity world we inhabit. Suburbanites are a special breed of people whose political subjectivity is shaped by their daily living experiences in the same way that the imprisoned Italian communist leader Antonio Gramsci envisaged what he called Americanism and Fordism producing a new kind of human subject through factory labour.
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The contemporary production of ‘new’ political subjects through everything from subliminal advertising to direct propaganda undoubtedly forms a vast field for capital investments. To call this ‘immaterial labour’ is a bit unfortunate, given the vast amount of material labour (and the crucial importance of material infrastructures) underpinning activities of this sort, even when they take place in cyberspace and produce their effect primarily in the minds and beliefs of persons. A vast amount of material social labour is involved in the production of spectacles (like the opening ceremonies of Olympic Games, which,
you will have noted, have become grander and grander over time in ways quite consistent with the argument being made here).

These ideas now circulating about an internal revolution in the dominant form of capital accumulation parallel much contemporary commentary about the rise of an ‘information society’ and the development of a ‘knowledge-based’ capitalism. There is, it seems, an urgent need for many commentators to demonstrate how capital has changed its spots in recent times. It is perhaps comforting to explain away the recent stresses within capital as if we are confronting the birth pangs of an entirely new capitalist order in which knowledge and culture (and biopolitics, whatever that is) are the primary products rather than things. While some of this is undoubtedly true, it would be an error to imagine any radical break with the past and a double error to presume that the new forms escape the contradictions of compound growth. Spectacle, for example, has always been an important vehicle for capital accumulation and when was there ever a form of capital in which superior knowledge and information were not a source of excess profits? When was it, furthermore, that debt and finance were irrelevant and why is this phase of financialisation so different from that which occurred at, say, the end of the nineteenth century? So while it is true that the consumption of spectacle, images, information and knowledge is qualitatively different from the consumption of material commodities like houses, cars, bread and fashionable clothes, we would err if we failed to recognise that the rapid expansion of activity in these spheres is rooted in the futile (and I will explain why I use that word shortly) necessity of escaping the material constraints to compound growth. All of these alternative forms are captive to capital’s struggle to absorb the necessity of its permanent compound growth.

It was, I think, no accident that the limits on money creation set by tying it to money commodities like gold and silver broke down in the early 1970s. The pressure of exponential expansion on what was in effect a fixed global supply of metal was simply irresistible at that moment in capital’s historical development. Since then we have lived in a world where the potential limitlessness of money
creation can prevail. Before the 1970s the main avenue for capital was to invest in production of value and of surplus value in the fields of manufacturing, mining, agriculture and urbanisation. While a lot of this activity was debt-financed, the general presumption, which was not incorrect, was that the debt would ultimately be recuperated out of the application of social labour to the production of commodities like houses, cars, refrigerators and the like. Even in the case of the long-term financing of infrastructures (such as roads, public works, urbanisation) there was a reasonable presumption that the debt would ultimately be paid off out of the increasing productivity of the social labour engaged in production. It could also be reasonably assumed that all of this would generate increasing per capita incomes. The interstate highway system built in the United States during the three decades after 1960 had a huge impact upon aggregate labour productivity and paid off handsomely. This was, in Robert Gordon’s account, the strongest innovation wave in capital’s history.
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There have always been significant circuits of what can be called ‘fictitious capital’ – investments in mortgages, public debt, urban and national infrastructures and the like. From time to time these flows of fictitious capital got out of hand to form speculative bubbles that ultimately burst to form serious financial and commercial crises. The legendary railway booms and busts of the nineteenth century, as well as the land and property market boom in the United States in the 1920s, were past examples. In promoting these speculative activities, financiers frequently came up with contorted, innovative (and often shady) ways to assemble and channel fictitious capitals so as to realise short-term gains (hedge funds, for example, have long existed) even when the long-term investments went bad. All sorts of crazy financial schemes flourished as well, which led Marx to speak of the credit system as ‘the mother of all insane forms’, while characterising Emile Pereire, a leading banker in Second Empire France, as having the ‘charming character of swindler and prophet’.
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This is not a bad description of the masters of the universe on Wall Street, men like Lloyd Blankfein, CEO of Goldman Sachs, who claimed they were
only doing God’s business when being criticised by a congressional committee for not doing the people’s business properly.

The liberation of money creation from its money-commodity restraints in the early 1970s happened at a time when profitability prospects in productive activities were particularly low and when capital began to experience the impact of an inflexion point in the trajectory of exponential growth. Where was all the surplus money to go? Part of the answer lay in lending it out as government debt to developing countries – a very particular form of fictitious capital circulation – because, as Walter Wriston famously put it, ‘countries don’t disappear, you always know were to find them’. But states are not geared up to being productive enterprises. The consequence a few years later was a grumbling Third World debt crisis that stretched from 1982 well on into the early 1990s. It is important to note that this crisis was finally taken care of by exchanging actual debt obligations that might never be repaid for so-called ‘Brady Bonds’ backed by the IMF and the US Treasury that would be repaid. The lending institutions, with a few exceptions, decided to take the money they could get rather than hold out for the full amount on the never-never. The bondholders in this case took a ‘haircut’ (usually between 30 and 50 per cent) on the fictitious capital they had circulated.
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The other path was to invest the surplus capital not in production but in the purchase of assets (including debt claims). An asset is simply a capitalised property title and its value is set in anticipation of either some future stream of revenue or some future state of scarcity (for example, of gold or of Picassos). The result of investment flows into these fields was a general rise in asset values – everything from land and property, and natural resources (oil in particular of course) to urban debt and the art market. This was paralleled by the creation of wholly new asset markets within the financial system itself – currency futures, credit default swaps, CDOs and a whole range of other financial instruments that were supposed to spread risk but which in fact heightened risks in a way that made the volatility of short-term trading a field for smart speculative gains. This was fictitious capital feeding off and generating even more fictitious
capital without any concern for the social value basis of the trading. This disconnection could flourish precisely because the representation of value (money) became increasingly distant from the value of social labour it was supposed to represent. The problem was not the circulation of fictitious capital – that had always been important to the history of capital accumulation – but that the new channels down which fictitious capitals were moving constituted a labyrinth of countervailing claims that were almost impossible to value except by way of some mix of future expectations, beliefs and outright crazy short-term betting in unregulated markets with no prospect of any long-term pay-off (this was the famous Enron story, which was repeated in the collapse of Lehman and the global financial system in 2008).