|Quoted from the piece:
"Money and credit capital consequently shift into the more profitable financial forms of investing, causing an increasing divergence and imbalance between speculative financial investing and real asset investing over the course of the business cycle."
This is a very traditionalist conception that does not see money and credit as central mechanisms of the capitalist mode of production, but rather as extraneous elements superimposed upon the "real" economy.
The late Robert Kurz had been making a similar argument for years -- that the
explosion of the financial sector in the last decades is indicative of
some underlying ill-health of the capitalist mode of production, or even its imminent collapse, as Kurz was always arguing.
I thought Michael Heinrich answered him quite well in a debate from a few months ago:
Gremliza: So either the big bust-up, or 500 more years?
Heinrich: Maybe a mixture of both. Iíll try to
make clear the main difference between me and Robert Kurz. I think
youíre too oriented towards Fordism and post-war Wirtschaftswunder
capitalism. And you correctly say thereís no starting point for
something like that occuring again the near future Ė a long the lines
of: ďwe have a structural crisis, but soon everything will take off
again, like in the 50s and 60s.Ē 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 ďeconomic miracleĒ 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 doesnít 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 doesnít mean that
everything will collapse.
Kurz: Well, the productive enterprises themselves will go bankrupt.
Heinrich: But whatís 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: [Ö] Iíd 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.
Kurz: I havenít said that the collapse is something that you can watch on TV, and itís over the next day. And then we
either wake up in a liberated world or in a devastated wasteland. Itís a historical process, not a one-time occurrence. [Ö] But what about
capital accumulation? It has reached a certain historical level, and it canít drop below that level.
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.
Kurz: But capital accumulation has long been
dependent upon mass consumption. Fordism was not an exception, but
rather a stage within its trajectory of development. It was necessary
in order to really do away with the economic crisis. Now if another
level isnít reached on the basis of this already achieved level of
Fordist capital accumulation, then accumulation itself will crash. It
is not the case that capital accumulation can occur at an arbitrary
level. Then one could also say, eventually capital accumulation is only occuring on the Cayman Islands, and still capitalism is in good shape.
Heinrich: But nobody says that, and thatís not the
case. Today, we have more wage-laborers than ever before in the history of capitalism. You just canít say that capitalism is limited to the
Cayman Islands, not at all.
Kurz: My point was the historical level of
accumulation, and that canít fall behind that of Fordism, but rather has to go beyond it, if a new accumulation model is going to come along.
And anyway, how are things looking with these enormous masses of
wage-laborers? On the one hand, at a global level there has been a
change in statistical methods: in all central countries, but also in the periphery, non-productive workers Ė for example, grocery baggers in the supermarket Ė are included. If one wants to count the additional
masses of wage-laborers, one has to take these changes into account.
Heinrich: Things arenít that different, since the industrial basis is also expanding, not contracting.
Kurz: But on what foundation? And here we come
back to the deficit flows: on what foundation has Chinese economic
growth occurred? Solely upon the basis of the Pacific deficit flow;
without this, there would have been no industrialization of China. That means, it has feet of clay.
Heinrich: But thatís 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.