The idea that the current crisis is a secular crisis has some currency in several contemporary Left currents. I reckon the analysis that underlies this is too often premised on a philosophy of history, rather than a complex historical analysis. The result is often too optimistic — the crisis is a secular crisis that by its own means will lead to the collapse of capital, not a drawn out periodic crisis endemic of a regression to a type of capitalism that parallels the 19th century. Both of these views are well represented in a debate between Robert Kurz and Michael Heinrich published sometime ago on Principia Dialectica. I reproduce Heinrich’s comments below because I think they are pertinent criticisms of this idea of secular crisis, particularly the points he makes about the the financial crisis qua the capitalist material relations of production:
One has to see the current crisis within the context of the crisis processes of the last ten to fifteen years. In the 1990s we had currency crises, the Asia crisis, and after the turn of the millennium the New Economy crisis, then the financial crisis of 2008 and now the euro crisis. In these crises, it became clear that an inflated financial system had emerged which in its extent no longer fit the so-called real economy. In the last thirty years, there was a whole series of processes of redistribution between capital and labor, between state and business, there were international current account deficits. On average, capital gained quite a bit worldwide. It is the victor of these distribution struggles. That has led to a situation that Marx described as an excess of money capital, which has flowed into a multitude of financial securities. For the functioning of capital, an adjustment of these securities is necessary. Claims have emerged which can no longer be realized. A part of these financial claims has to be written off and devalued.
If that happens, not one single factory is destroyed. That doesn’t cause a baking oven to stop working. This process of devalorization and adjustment won’t be a gentle process. If it comes to bank collapses, if interbank trading collapses, then that will have an effect on lending to businesses. Some businesses will file for bankruptcy. A collapse of the financial system can certainly lead to an economic crisis, in which we won’t just have a fall in economic performance of five percent like in Germany in 2009, but rather 10 or 20 percent, with an enormous rise in unemployment and a massive decline in living standards. We can see all this already in Greece. But that doesn’t mean the end of capitalism.
Capitalism, and here I would agree with Robert Kurz, is a process with a trajectory. It is not simply the repetition of the eternally same. There are developments, not just the development of the means of production, but also the thorough capitalization of new spaces, geographically as well as in terms of depth. If the health care system is privatized, then that means it is subsumed to the process of the valorization of capital. There are always processes in which something historically new happens, but in terms of talking about a point of culmination, I don’t see the arguments that could substantiate that.
We always have such decisive points. The dollar crisis of 1969, Nixon’s abolition of the gold standard in 1973, even then one could say: we have never before experienced such a currency crisis and such changes – this is now the great culmination point. But in fact, it was a turning point: one capitalist model was replaced by another. The strongly regulated, Fordist, Bretton Woods capitalism of the 1950s and 1960s was replaced in the 1970s by post-Fordist, neoliberal capitalism, which brought capitalism the enormous gains on which it is now choking. So it’s a process with a trajectory, but this process is much more complicated than just saying it’s reaching a tipping point, as if to say: “first things go up, as if one were climbing a mountain, and then on the other side they go down again.”
In the financial crisis, we’re seeing that on the one hand the state plays a role as a financial actor, it takes on debt, it creates money and credit by means of the central bank, and it also plays the role of regulator. It’s connected to these developments at various levels. At the moment, it’s also decisive that state entities have so far not been able to implement what would be necessary for capital in the long term, in order to secure its valorization.
In order to secure this, the state would have to ensure a regulated devaluation of all these different financial claims. The question arises as to what form this devaluation will take: a completely unregulated, chaotic form, which would leave in its wake plenty of crisis-laden breakdowns, which would be substantially more powerful than those we’ve been used to in the last few years; or in a form characterized by competition, meaning that a few countries have to bear almost the entire burden, and others hardly any; or even in a cooperative form, where even Germany recognizes that one cannot ruin sale markets if Germany wishes to remain the global export leader or the runner-up export leader. The form in which this devaluation occurs is unclear, but it does not merely concern questions of competition. We’re dealing with a far-reaching bottleneck of the political system, in the EU as well as in the USA.
Heinrich: Maybe a mixture of both. I’ll try to make clear the main difference between me and Robert Kurz. I think you’re too oriented towards Fordism and post-war Wirtschaftswunder capitalism. And you correctly say there’s no starting point for something like that occuring again the near future – a long the lines of: “we have a structural crisis, but soon everything will take off again, like in the 50s and 60s.” I agree with you up to that point.
But then you draw the conclusion: if there is no possibility for something like that occuring, then capitalism is about to collapse. But Fordism and the “economic miracle” of the fifties and sixties were not the peak of capitalism, but rather an exceptional situation historically, the economic and political preconditions of which can be exactly stated. Accumulation will continue to proceed, even if bumpily. Even if all these financial claims are devalued, that doesn’t destroy a single factory. Maybe this or that enterprise will go bankrupt, but then it will be bought cheaply by a competitor and will continue to produce. With regard to your argument that production processes are set in motion that owe their existence to deficit flows, I can only say: so what? Then some creditor will go bankrupt. That doesn’t mean that everything will collapse.
Kurz: Well, the productive enterprises themselves will go bankrupt.
Heinrich: But what’s that supposed to mean, go bankrupt? Either they will be bought out cheaply by others, or overproduction will be shut down, and that means greater profitability for the remaining enterprises, more profit. Employment, the number of wage-laborers, continues to rise globally. There is no indication that capitalism is coming to an end, quite the contrary.
Heinrich: […] I’d also say, that capitalist development in the next few years will remain very crisis-ridden. We will be dealing with a capitalism that can only maintain its consumer promises for relatively small groups of the population. The majority can react to this in a progressive or reactionary way. Very unpleasant times await us, economically as well as politically. But the capitalist machine will continue to run.
Heinrich: Capital accumulation occurs, but the consumer promises made by capitalism in the capitalist centers are only realizable for a minority. Both things go together. Capitalism will no longer bestow upon us what our parents still hoped for.
Heinrich: But that’s always the case. That is in fact the same old, same old. How were the railroads constructed in the 19th Century? On the basis of an enormous credit and stock market swindle. With your argumentation, the collapse of capitalism would have already had to have come at the end of the 19th Century, since enormous infrastructure projects only came about on the basis of deficit flows. Immense processes of redistribution occurred. Small savers lost their savings, because they bought railroad shares at the wrong time. So there were enormous losses, but ultimately capitalism was pushed along by the deficit flows of the 19th Century. It seems to me that something very similar is happening right now in China.