Thursday, October 24, 2013

can capitalists afford recovery: economic policy when capital is power


bnarchives.yorku | Economic, financial and social commentators from all directions and persuasion are obsessed with the prospect of recovery. The world remains mired in a deep, prolonged crisis, and the key question seems to be how to get out of it. The purpose of our paper is to ask a very different question that few if any seem concerned with: can capitalists afford recovery in the first place?

This question does not come out of the blue. Over the past several years, we have published a series of papers on the crisis (Bichler and Nitzan 2008, 2009; Nitzan and Bichler 2009b; Bichler and Nitzan 2010; Kliman, Bichler, and Nitzan 2011). Our basic argument in these papers is that this is a systemic crisis and that capitalists have been struck by systemic fear: fear for the very survival of the system.
"From now on, depressions will be scientifically created."
Congressman Charles A. Lindbergh Sr. , 1913
This fear, we have further argued, is objectively grounded. Our reasons, though, are very different from those given by heterodox political economists, particularly Marxists. Whereas for the Marxists, the crisis is the symptom and culmination of weakening accumulation, for us it is the consequence of its unprecedented strength.

The two views are anchored in very different cosmologies (Bichler and Nitzan 2012b). Liberals and Marxists see capital as an economic entity and capitalism as a mode of production and consumption, so for them the accumulation crisis is anchored in the economics of production and consumption. By contrast, we see capital as a symbolic representation of power and capitalism as a mode of power, so for us, the crisis of accumulation is a crisis of capitalized power.

According to our research, the accumulation of capital-read-power might be approaching its asymptotes, or limits (Bichler and Nitzan 2012a). The closer capitalized power is to its asymptotes, the more difficult it is to augment it further. Capitalists, though, have no choice. They are conditioned and compelled to increase their capitalized power without end, and that relentless drive breeds conflict. It forces capitalists to increase their threats, escalate their sabotage and intensify their use of force – and this intensification is in turn bound to trigger stronger resistance, contestations, uprisings and more.

By the early 2000s, capitalists began to realize the unfolding of this asymptotic scenario. They started to sense that their power is nearing its limits and that accumulation is becoming ever more difficult to achieve and might be reversed. And given that capitalization is forward-looking, the result has been a major bear market.

The present paper contextualizes and examines this process from the viewpoint of economic policy. The analysis is divided into three parts. The first part deals with the mainstream macroeconomic perspective. This approach claims to have already solved all the theoretical riddles, so the main emphasis here is on the practical question of how to engineer a recovery. The second part deals with the Marxist view. Marxists stress the inherent contradictions of accumulation, so the question for them is the very possibility of sustained growth. The third and final part takes the view of capital as power. Capitalized power hinges not on growth, but on strategic sabotage. So from this viewpoint, the key question is not how capitalists can achieve and sustain a recovery, but whether they can afford it in the first place.