I recently came across a translation of a debate, held in 2012, between a handful of excellent Marxian economists and theorists—Michael Heinrich, Robert Kurz, Thomas Ebermann and Joseph Voegel. Of particular interest (to me, at least) is the dispute that occurs between Heinrich and Kurz over the current phase of capitalist development and its implications for potential future trajectories (or lack thereof). Generally I find Kurz’s project to be more fascinating and relevant than Heinrich’s, but in this case it was clear that the latter bested the former. For Kurz, the capitalist mode of development is currently in a terminal phase, with catastrophic collapse being the existential threat that is rapidly become an actuality. To put it simply: with the end of Fordism, a structural decoupling of finance capital from the physical conditions of production (from investments in infrastructure and productive forms to the circulation of non-financial instrument commodities) occurred, engendering a situation in which a ballooning mass of wealth is produced without recourse to labor and the production of value. While the detachment of financial from industrial production is a recurrent factor in the cyclical development of the capitalist system (signalling, as Arrighi and other world-systems theorists have shown, the interchange between ‘systemic cycles of accumulation’, which plays out in the transfer of power between global hegemons), for Kurz this simply cannot occur at the present stage. Even China, ostensibly the next great zone of productive growth—not to mention the country likely to serve as the next ‘capitol of capital’—is not free from this, having resorted to building ghost cities and the like to keep GDP afloat. He continues:
Something is happening now at the level of “normal” capitalist reproduction on a large scale that previously only happened in wartime economies: direct financing through the money presses. Up ’til now, that has not been transformed into real demand at a large scale; rather, it has merely absorbed bad loans. But that solves nothing. They’re still there. If the economic cycle dips, then the states and the world economy have no other option than to finance real demand by turning on the presses. That is the inflationary potential. In Great Britain, there’s already five percent inflation. In the eurozone and the USA three percent, in China six percent. The politicians will probably regard inflation policies as the lesser evil. But that would devalue money, the end in itself.
For Heinrich, however, this gloomy outlook is less than warranted:
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.
Heinrich, alluding to the massive acceleration of industrial production and wealth in the Pacific and Southeast Asian regions of the globe, points out that capitalism is expanding. For Kurz, however, this growth, if it is occurring at all, is at best untenable and erected upon exceedingly shaky foundations:
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.
to which Heinrich offers the following fatal blow, which ends the debate (or at the part of the debate that has been translated into English and published):
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.
Part of the problem with Heinrich’s treatment of Marx is that he swamps the various tendencies or laws that Marx poses into states of indeterminacy, most importantly that of the tendency of the rate of profit to fall. In a 2013 essay for Monthly Review on the topic of crisis theory, he argued because Marx determined that countervailing factors would push re-inflate the ratio of constant capital to variable—and thus reverse, however temporarily, the falling rate of profit—the so-called law could not be treated as a law as such. This should be no surprise, even to theorists who accept the existence of the falling rate of profit (and I am, of course, including myself in this category); after all, there is a clear distinction to be had between laws and tendencies. For Heinrich, however, the ultimate conclusions that this tendency ultimately calls forth is an erroneous proposition: insofar as the tendency exists, it always stands to be beaten back (for a roundtable discussion on Heinrich’s interpretation of the tendency of the rate of profit to fall and crisis theory more general—as well as a response by Heinrich—see here). It is this opposition that stands at the root of Heinrich’s critique of Kurz in the above: if the objective tendencies do not exist, then the claims we base upon them fall away.
Kurz, on the other hand, remains committed to the theory of objective tendencies, and further offers an analysis of capitalism unfolding in stages. Fordism was one such stage, and what came after (post-Fordism or however else one might describe it) is another; these are splayed out across the oscillations of the rate of profit. The other benefit that Kurz has over Heinrich is the careful attention paid to the industrial basis that underpins growth and which serves as the attractor for investment capital. When speaking of the contemporary, he noted the distinction the high industrial capitalism of Fordism and the more contemporary regime organized around “micro-electronic” commodities and systems, and the way in which this shift (which corresponds precisely to the subsumption of Fordist capitalism by post-Fordism) has triggered not only a quantitative, but qualitative transformation in the nature of production.
In a 2010 interview on the topic of crisis theory, Kurz elaborated on how this epochal shift plugged into the greater arrangement of tendencies and counter-tendencies identified by Marx:
…productivity never increases value, but always diminishes it, as Marx demonstrated in the first volume of Capital. Anyone who claims the contrary confuses the social level with the level of the economy of each entrepreneur, or the totality of capital with individual capital. The individual capital that first increases its own productivity in isolation from its competitors achieves an advantage over its competition. It can offer its individual products at a cheaper price, and thus succeeds in selling more commodities and, precisely for that very reason, realizes for itself a greater part of the social mass of value. What appears from the point of view of the economy of the individual entrepreneur as growing profits and therefore as a growing “creation of value” leads socially, however, to the diminution of value, and indeed to the detriment of the other individual capitals. If the productivity gains are generalized, the innovating individual capital loses its advantage over the competition. This by no means, however, represents a return to zero or to a previous starting point. To the contrary, the increased productivity now becomes the new general standard. An hour of labor, as the basic unit of abstract labor, is always the same, since it cannot by any means have different “levels”. The new, higher standard of productivity, however, causes fewer of these always-equal hours of abstract labor to be necessary for an increasing mass of products. If capital is devalued and destroyed in the crisis, the already-attained level of productivity nevertheless remains, because it is inscribed in the totality of knowledge and know-how. We have to be clear about this: capitalism cannot go back from the level of microelectronics to the level of the steam engine. A new increase of value is becoming ever more difficult in the face of increasingly higher levels of productivity and, consequently, with an always diminishing substance of abstract labor. In the past, the constant reduction of value was only relative. With the increase of the standards of productivity, the individual product can represent ever less abstract labor and, therefore, ever less value.
Elsewhere, he suggests that part of the ongoing crisis arises from the contradiction between the actual possibilities latent in micro-electronics and the capitalist context in which they are being deployed: “[m]icroelectronic productive forces… have made a high potential of productivity utilizable on a small scale, but also remains imprisoned within the categories of commercial rationality”. This corresponds precisely to the what Postone and others have identified as the primary contradiction of capitalism—the increasing capacity for the producing immense volumes of material wealth and the simultaneous collapse of value imparted to the individual units that make up this mass.
Kurz’s model of the contemporary epoch is thus one characterized by a dual-faced crisis. On the one hand, there is the situation, the one anticipated by Marx, in which the capitalist mode of production is shaken apart by its own feverish drive to maximizing mechanical efficiency, bringing into play waves of overproduction and crisis. On the other hand, however, is this question of financialization, in which a tension between the direction of technological development (towards miniaturization) and the infrastructure of the world-capitalist system (still largely framed by that of the Fordist era) gives rise a situation in which the primary means of accumulation. M-C-M’ is short-circuited into M-M’—
As global finance evacuates the territory and begins to exchange, by itself, in an orbital, virtual dimension the city is abolished as a commercial centre.
—and the whole system begins to swing out of joint with itself. With anything short of a revolution that not only anti-political, but also anti-economic, Kurz sees an apocalypse (albeit one that unfolds in slow-motion) rising up on our horizon:
A collapse would mean that everything that can no longer actually be financed will be brought to a standstill. And we’re already experiencing that, but up ’til now the shock has been absorbed. Now, if in the dimension reached thus far a crash occurs, then things will come to a standstill in the real sphere of reproduction. Starting with the state sectors of infrastructure, healthcare, education all the way to industrial production and private services, everything.
And thus we return to Heinrich’s critique of Kurz, but with a bit more clarity. When it comes to the question of China, Heinrich is undoubtedly correct: the financial flows fueling the country’s industrial growth replicates a pattern that stretches back across the past five hundred. As alluded to earlier, Arrighi’s model of ‘systemic cycles of accumulation’ is instructive here. For Arrighi, these cycles are something like the M-C-M’ loop blown up to a macro-scale level and used to explain the transition of between hegemonic powers. By cleaving M-C and C-M into two very distinct but unified phases, he poses two phases to the cycle: the first, corresponding to M-C, is the industrial mobilization of industrial mobilization and the circulation of physical commodities, while the second, C-M, is the detachment of finance capital from this material substrate. There are two paths at this point: the recursion into an auto-amplification of financial growth (via M-M’), or the searching for greater returns elsewhere. Understood as a geopolitical process as much as a techno-industrial one, the first part of the cycle constitutes the acceleration of industrial power attached to a rising hegemonic state, with the second being its peak and ‘autumnal’ (as Braudel might say) phase. At this point, the ‘searching’ character of finance capital begins to engender the new wave of expansion elsewhere, within a new hegemony.
This is, of course, separate from Kurz’s issue, which is the problem of deficit spending—but the issue is exactly that these deficits must be contextualized within this wider shift of trans-territorial supremacy. And indeed, while China has kept certain limits on foreign direct investment (limits which, in the face of the US-China trade war, are slackening), it has been a vital aspect of China’s growth. None of this is to say that the dawning of a ‘Chinese century’ is guaranteed; as Arrighi says, “[a]ll previous hegemonic transitions were characterized by long periods of systemic chaos”, with highly variable outcomes—but at this stage, it seems highly likely (particularly as evidenced by the simmering tensions radiating from the United States, which itself in undeniable decline).
Setting this aside, another issue arises when considering Kurz’s argument and how it aligns with that of Marx. The entire line tracking into the increasing efficiency of ‘microelectronic’ production follows along the structure of the argument concerning the rising organic composition of capital—with one key exception. Kurz’s outlook was, at the end of the day, stagnationist, if not catastrophist (though by acknowledging the increasing efficiency of technology it cannot be classed as a decadence theory in the mode of the I.C.C., among others). For Marx, this was not the case. It was accelerative, compressive, and dynamic, with the modes of retrogradation—manifesting as overproduction—being annihilated by sharp, repetitive and increasing crises. The picture that is being offered here instead, where everything things shutdown one by one, does not correspond to this diagram, and likewise, neither does this vision of industrial disjointedness (which resembles more than anything the structure of historical development offered by Lewis Mumford and its more recent resurrection by Kevin Carson, of which much more will be said soon enough). If there is validity to this vision of stagnation, then we must consider a capitalism that, in the West at least, no longer corresponds to that tendential structure offered by Marx in Capital. It would mean that something else is going on.