In the comments to yesterday’s post, DMF posted an interesting, albeit short article published yesterday by Yanis Varoufakis on the topic—appropriately enough—of stagnation. The bulk of piece deals with what Varoufakis considers to be the myth of the single, floating, real (that is, one adjusted for inflation) interest rate, that concept so central to what we might describe as ‘neoliberal governmentality’ (though I must add that, as time goes on, I find the term ‘neoliberal’ and the politico-economic histories associated with it to be suspect). Such a thing cannot exist, he argues, for if it did capitalism would never stagnate – unless a meddling government or self-seeking trade union damaged its dazzling machinery”. Varoufakis then proceeds to lay out three reasons for why this is not true:
- The ‘real interest rate’—what Varoufakis calls the “magic number”—does not exist.
- Even if it did exist, there is no rational mechanism that would drive things towards that convergence point.
- Capitalism has a relative tendency that sees the market “usurp[ed]… via the strengthening of what John Kenneth Galbraith called the cartel-like managerial technostructure'”.
A key pivot for Varoufakis is that capitalism’s absolute tendency is not towards a roaming equilibrium, but towards stagnation. It is the universal law of development, occulted by the rhetoric of the free marketeers and the complexity of the global financial markets. He correctly notes that investment is lagging, and that insofar as firms are doing something with their cash reserves, it is mergers and acquisition and financial instruments that rule the day. We thus encounter a forking path:
…capitalism has only one natural tendency: stagnation. Like all tendencies, it is possible to overcome by means of stimuli. One is exuberant financialization, which produces tremendous medium-term growth at the expense of long-term heartache. The other is the more sustainable tonic injected and managed by a surplus-recycling political mechanism, such as during the WWII-era economy or its postwar extension, the Bretton Woods system. But at a time when politics is as broken as financialization, the world has never needed a post-capitalist vision more. Perhaps the greatest contribution of the automation that currently adds to our stagnation woes will be to inspire such a vision.
There are several points, all of which are in need of further elucidation, I would like to make:
- The positioning of stagnation as the absolute tendency, as opposed to a relative tendency, is a dubious maneuver. Similarly, the implications, as far as governmental policy is concerned, for stagnation to be posed as the absolute is that the need for stimulation becomes ubiquitous and diffused across the whole of developmental history writ large. This too is dubious, and runs roughshod over the highly bounded character, historically speaking, of such forms of state management.
- A proper analysis of the role of stimulation must unfold alongside the proper positioning of the state—which, after all, is the bourgeois state—not as some transcendent figure standing in some Archimedean point outside the capitalist mode of production, but as fully enmeshed within the matrices of that mode’s historical epoch.
- The analysis of state managerialism, of which fiscal stimulus is just one tool, needs to look the interrelationship between the paradigm-shifting productive technologies, uneven socio-economic development relative to those technologies, and the moment of institutional recomposition. Similarly, we would do well to head the avenue of approach staked out by the Regulation School, in which the content of managerial forms—which really alludes to the formal and informal coordination (or lack thereof) of increasingly sophisticated specialization—is bound to changes in the way that relative surplus value is realized.
- The Galbraithian technostructure is best understood through the lenses of the program advanced in point no. 3, and thus its operations tend not to prevent capitalism’s slippage into stagnation from an exogenous position, but one that is endogenous.
- There is an implicit identification of capitalism with the market in Varoufakis’s essay. This can be challenged, not only on Marxist grounds, but on Braudelian one as well: capitalism understood via the unity of anti-markets (which, for Braudel, is really what capitalism is about) and markets— or, more properly, the capture and subsequent redeployment of markets forces by anti-market entities.
Also relevant: Adam Tooze’s excellent reflections on Bretton Woods, and why calls for a ‘New Bretton Woods’ are profoundly missing the point.