Seventeen Contradictions and the End of Capitalism (36 page)

Much of the compound growth realised until the financial crash of 2008 was achieved by way of speculative gains out of successive asset bubbles (the dot-com boom and bust of the 1990s followed by the property market boom and bust of the 2000s in the USA). This speculative froth concealed, however, some very important real transitions occurring in investment behaviours after the 1970s. Some of the assets being purchased (land and property, natural resources) were secure and grounded and could be held for long-term gain. This made the booms and the busts particularly helpful to long-term investors, who could purchase assets at fire-sale prices in the wake of a crash with the prospects of making a long-term killing. This is what many of the banks and foreign investors did during the South-East Asian crisis of 1997–8 and what investors are now doing as they buy up masses of cheap foreclosed housing in, for example, California to rent out until the property market revives. This is what the hedge funds do, though under very different conditions, when they short-sell in fictitious capital markets.

But what this means is that more and more capital is being invested in search of rents, interest and royalties rather than in productive activity. This trend towards a rentier form of capital is reinforced by the immense extractive power that increasingly attaches to rents on intellectual property rights to genetic materials, seeds, licensed
practices and the like. Small wonder that the US government has fought so fiercely through international institutions to protect and forcibly impose an intellectual property rights regime on others (by way of the so-called TRIPS agreement within the framework of the World Trade Organization).

But is all this really sufficient to absorb compound growth? Theories that rest on a wholesale shift to immaterial production sell a dangerous illusion that endless compound growth can be accommodated without any serious material difficulties. Increasing quantities of capital now circulate in fictitious form and the creation of electronic moneys is in principle limitless (it is just numbers on a screen). So there is no barrier to limitless growth there. The economy of spectacle and of knowledge production as a form of realisation of capital plainly reduces the rate of expansion of demand for material goods and resources. But the extensive physical infrastructures required, along with the need to generate more and more energy in usable form, militate against the idea that production can ever become immaterial. If consumption is limited to this immaterial form, then money power cannot be released to low-income populations, who require basic material goods in order to live. It has to be concentrated within a relatively small fraction of the population able to consume in this fictitious way. A repressive oligarchy would likely be the only political form that capital could assume. This is where emerging markets, of the sort that flourished in the wake of the financial crash of 2008, have a distinctive advantage: the markets that form consequent upon rising output and incomes in middle-income countries focus far more on tangible wants and needs of an expanding population. The turn towards immaterial production and spectacle is, as André Gorz long ago remarked, more like a last gasp of capital rather than the opening of a new horizon for endless accumulation.

So where does this leave us, faced with the necessity of compound economic growth for ever without any clear material basis to support that growth? There are, as we have seen, various adjustments under way, but the more closely these are examined the more they appear as symptoms of the underlying problem rather than as signs of or paths
towards long-term solutions. Of course, capital can construct an economy (and to some degree has already done so) based on a fetish world of fantasy and imagination built upon pyramiding fictions that cannot last. One final Ponzi scheme to eclipse all others is a possible scenario. Ironically, the innovations that are available to us in these times are most easily applied to increase rather than dampen speculative activity, as the case of nano-trading on the stock exchange illustrates. Such an economy will, before any ultimate denouement, be subject to periodic volcanic eruptions and crashes. Capital will not, under this scenario, end with either a bang or a whimper but with the sound of innumerable asset bubbles popping across the uneven geographical landscape of an otherwise listless capital accumulation. Such disruptions will almost certainly merge with the outbreaks of popular discontent that bubbles just beneath the surface of capitalist society more generally. Episodic volcanic eruptions of popular anger (of the sort seen in London, 2011; Stockholm, 2013; Istanbul, 2013; a hundred Brazilian cities, 2013; etc.) are already much in evidence. The discontent, it must be remarked, does not simply focus on the technical failings of capital to deliver on its promises of a consumer paradise and employment for all, but increasingly objects to the degrading consequences for anyone and everyone who has to submit to the dehumanising social rules and codes that capital and an increasingly autocratic capitalist state dictate.

There is, however, one particularly dark side to this account that rests upon the contagious impact that compound growth will most likely have on many if not all the other contradictions here identified. The impact upon environmental contradictions is likely to be huge, as we shall shortly see. The ability of capital to rebalance relations between production and realisation, as well as between poverty and wealth, becomes less agile, while the gap between money and the social labour it supposedly represents becomes ever wider as more and more fictitious capital has to be created at a far higher risk premium to sustain the compounding growth. It will likewise be extremely hard, if not impossible, to reverse the commodification, monetisation and marketisation of all use values without severely
curtailing the terrain for capital accumulation. The reckless push towards speed-up and consequent devaluations through increasing volatility in uneven geographical developments will be harder to contain. And so it goes! Far from constraining each other’s excesses, as has sometimes happened in the past, the contradictions are far more likely to explode contagiously with the rising pressure of a necessary compounding growth at their back. Use values are bound to become an even more trivial consideration against the background of an explosion of exchange value considerations in speculative fevers. And from this some rather surprising results may derive.

There is, for example, one thread of a threat that may be a minor footnote to my argument, but which has a curious resonance with the fears expressed about the future of capital by the political economists of long ago. Capital will end, said Ricardo, when land and natural resources become so scarce that all revenues will be absorbed either by the wages needed to cover the high price of food or (what in the end amounts to the same thing) as rents by an all-powerful but unproductive rentier class. This unproductive class will so squeeze industrial capital as to make the latter’s productive operations impossible. A parasitic class of rentiers will suck industrial capital dry, to the point where no social labour can be mobilised and no value produced. Without the production of social value, capital will come to an end. In making this prediction, Ricardo relied heavily on Malthus’s erroneous assumptions of diminishing returns to labour on the land. For this reason later economists generally dismissed the idea of a falling rate of profit (though Marx tried to keep it alive by appeal to a quite different mechanism). Keynes, for example, living under very different circumstances, optimistically looked forward to the euthanasia of the rentier and the construction of a state-supported regime of perpetual growth (the possibilities of which were partially realised in the period after 1945).

What is now so striking is the increasing power of the unproductive and parasitic rentiers, not simply the owners of land and all the resources that reside therein, but the owners of assets, the all-powerful bondholders, the owners of independent money power
(which has become a paramount means of production in its own right), and the owners of patents and property rights that are simply claims on social labour freed of any obligation to mobilise that social labour for productive uses. The parasitic forms of capital are now in the ascendant. We see their representatives gliding through the streets in limousines and populating all the upmarket restaurants and penthouses in all the major global cities of the world – New York, London, Frankfurt, Tokyo, São Paulo, Sydney … These are the so-called creative cities, where creativity is measured by how successfully the ‘masters of the universe’ can suck the living life out of the global economy to support a class whose one aim is to compound its own already immense wealth and power. New York City has a huge concentration of creative talent – creative accountants and tax lawyers, creative financiers armed with glitteringly new financial instruments, creative manipulators of information, creative hustlers and sellers of snake oil, creative media consultants, all of which makes it a wondrous place to study every single fetish that capital can construct. The fact that the only class in the world to benefit from the so-called economic recovery (such as it is) after 2009 is the top 1 per cent, and that there is no visible protest on the part of the rest of the population left behind in the economic doldrums, is testimony to the success of their project. The parasites have won the battle. The bondholders and the central bankers rule the world. The fact that their success is bound to be illusory and that they cannot possibly win the war for capital’s survival scarcely raises a sliver of doubt. After days spent ‘conscience laundering’ with their philanthropic colleagues in attempts to correct, as Peter Buffett puts it, with their right hand the damage they had earlier created with their left, the oligarchs may sleep well at night. Their inability to see how close they are sailing to the edge of disaster reminds one of King Louis XV of France, who is reported to have prophetically said: ‘
Après moi, le déluge
.’ Capital may not end with a deluge. The World Bank is fond of reassuring us that a rising tide of economic development is bound to lift all boats. Maybe a truer metaphor would be that exponentially rising sea levels and intensifying storms are destined to sink all boats.

The idea that capitalism is encountering a fatal contradiction in the form of a looming environmental crisis is widespread in certain circles. I consider it a plausible but controversial thesis. Its plausibility largely derives from the accumulating environmental pressures arising from capital’s exponential growth. There are four main reasons to cast doubt on the idea.

First, capital has a long history of successfully resolving its ecological difficulties, no matter whether these refer to its use of ‘natural’ resources, the ability to absorb pollutants or to cope with the degradation of habitats, the loss of biodiversity, the declining qualities of air, land and water, and the like. Past predictions of an apocalyptic end to civilisation and capitalism as a result of natural scarcities and disasters look foolish in retrospect. Throughout capital’s history far too many doomsayers have cried ‘wolf’ too fast and too often. In 1798 Thomas Malthus, as we have seen, erroneously predicted social catastrophe (spreading famine, disease, war) as exponential population growth outran the capacity to increase food supplies. In the 1970s Paul Ehrlich, a leading environmentalist, argued that mass starvation was imminent by the end of the decade, but it did not occur. He also bet the economist Julian Simon that the price of natural resources would soon dramatically increase because of natural scarcities: he lost the bet.
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Because such predictions – and there have been many of them – turned out wrong in the past does not guarantee, of course, that a catastrophe is not in the making this time. But it does give strong grounds for scepticism.

Second, the ‘nature’ we are supposedly exploiting and exhausting and which then supposedly limits or even ‘takes revenge’ on us
is actually internalised within the circulation and accumulation of capital. The ability of a plant to grow is incorporated, for example, into agribusiness in its pursuit of profit and it is the reinvestment of that profit that has the plant growing again the next year. Natural features and elements are active agents at all points in the process of capital accumulation. Money flow is an ecological variable and the transfer of nutrients through an ecosystem may also constitute a flow of value.

While matter can neither be created nor destroyed, its configuration can be radically altered. Genetic engineering, the creation of new chemical compounds, to say nothing of massive environmental modifications (the creation of whole new ecosystems through urbanisation and the fixing of capital in the farms, fields and factories on the land), now go well beyond what has been a long history of humanly induced environmental modifications that have remade the earth in aggregate into a far more hospitable place for human life and, over the last three centuries, for profitable activity. Many organisms actively produce a nature conducive to their own reproduction and humans are no exception. Capital, as a specific form of human activity, does the same, but increasingly in the name of capital and not of humanity.

The ‘domination of nature’ thesis that has broadly held sway both in scientific writings and in the popular imagination since the Enlightenment (from the writings of Descartes onwards) has no place in this conceptual scheme. This poses some problems for thinking through the capital–nature relation. Cartesian thinking wrongly constructs capital and nature as two separate entities in causal interaction with each other and then compounds this error by imagining that one dominates over (or, in the case of nature, ‘takes revenge’ upon) the other. More sophisticated versions incorporate feedback loops. The alternative way of thinking proposed here is at first not so easy to grasp. Capital
is
a working and evolving ecological system within which both nature and capital are constantly being produced and reproduced. This is the right way to think of it.
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The only interesting questions then are: what kind of ecological system is capital, how is it evolving and why might it be crisis-prone?