[-empyre-] Debt Culture--types of debt

[Annie McClanahan]

Thanks, Brian. I take the claim about the ultimate intractability of crises
in surplus value extraction from the long tradition of Marxist political
economy; contemporarily, I'd recommend post-'08 essays by folks like Gopal
Balakrishnan and Robert Brenner, among others; the German *wertkritik* school
is also producing some very useful scholarship on these issues and new
translations are due to be issued of their work any day now.

Re: Duncan, I would want to distinguish a bit between post-gold-standard
money/monetary policy and the securitization of consumer and corporate
credit. I take securitization (as the most significant aspect of
financialization more generally) to be the counterpart of the "knowledge
economy" in the sense that both were the effect of a looming crisis of
overaccumulation in the mid-70s: that is, excess capital with nowhere
profitable to go given a rapidly falling rate of industrial profitability
needed an outlet, and securities and the stock market provided it. I'm not
sure what you mean by your description of the contemporary economy as
having "a tremendous amount of productivity" but I feel quite confident in
asserting that whatever limited or metaphorical "productivity" is present,
it's not the production of sufficient *surplus value* to sustain a global
economy of this size. Thus I have a rather different level of confidence, I
think, in the capacity of this crisis to be staved off merely by the
printing of money or the selling of govt bonds. A lot of the demand for US
T-bills has been driven by China (itself spurred into unsustainable GDP
growth not only by its own debt-financed stimulus but also by the cycling
of US "QE" and "QE2" funds into and through Asian markets), and I don't see
how the entire global economy can continue to be financed largely by one
(slowing!) national economy. Instead, the limited profitability currently
possible in financial markets is the effect basically of the re-circulation
of this money through the global financial system (e.g. to take my example
above, the US economy needs stimulus, it institutes money-printing policies
like QE2, that money discovers few outlets for investment in the US and
thus goes abroad to Asia where it spurs things like property bubbles in
Hong Kong, where housing is about 45% overvalued, etc.--profits to be made,
for sure, but only in a temporary and entirely zero-sum manner). In any
case, I would hazard that those in Europe are a lot less sanguine today
about the odds that this crisis is going to somehow magically resolve
itself. Even here, we haven't really seen any improvement in the US
employment market in *five years*--indeed if you look at statistics beyond
the government's profoundly questionable unemployment rate, it looks a
helluva lot *worse* in the last couple years--and I take that to be both
the symptom of an entirely unresolved crisis in real value production *and*
the sign of deeper contradictions and contractions to come.

I think, in short, that it's more than merely parenthetically true that
"the pyramid of credit is built on the idea that individual debtors will
pay." If anything, didn't the financial crisis teach us that despite the
ostensible virtuality and abstraction of economic forms like CDSs and MBSs,
they were ultimately backed by real assets and by real debts, and that when
those debts weren't paid, the system was going to go down hard? Without a
doubt the US government had, in 2007 and '08, enough power and credit to
bail 'em out: but would be possible today if, for instance, the 1 trillion
dollar student loan market collapsed, especially given that there is no
asset collateral in that market that can be seized and resold (or at least
counted as an asset while the bank waits to resell it)? In other words, for
me what's important about this point about the difference between
"fictitious" as a system of ideology and belief and "sham" as a distinction
between real and unreal forms of value is that it allows us to see that a
"creditist" capitalist economy actually cannot be propelled infinitely just
on the creation of more money and more debt--there has to be new *surplus
value* (as distinct from profits) created, and that happens in production.

Thanks to all for a great discussion, and apologies if this digression into
economy geekery has failed to be of interest! :) I look forward to the next
conversation on the list.

Warmest,
Annie

On Sun, Nov 25, 2012 at 5:41 PM, Brian Holmes
<bhcontinentaldrift at gmail.com>wrote:

> Annie, this is a good discussion and I'd be curious to read what you've
> already written on these topics. Are there some articles?
>
> > credit in
> > the current system plays the role of crisis manager (i.e. securitized
> > credit and the whole apparatus of financialization was deployed to
> > resolve intractable crises in industrial profitability) /but can only
> > play that role for so long/.
>
> Well, I'm not so sure. Richard Duncan's whole point is that we have not
> been operating with "sound money" for the last forty years. Instead, fiat
> money created by the state has driven the whole vast machinery of
> globalization, the cabling of the world, the industrialization of Asia, the
> modernization of resource extraction in the Middle East, Latin America and
> Africa -- a gigantic capital expansion all told. Elites in the US adopted
> the strategy of the knowledge-based economy in the belief that they could
> manage all that very profitably, and to solve the lingering territorial
> problem -- that is, to provide for the consumption of the population and to
> continue profiting from that consumption -- they came up with the predatory
> solution of bank credit. For sure, the pyramid of credit is built on the
> idea that individual debtors will pay. When they don't, with $14.5 trillion
> of US mortgage debt outstanding in 2008, then there is a crisis. But look
> what happens when people can't pay the banks: the Fed bails out the
> financial system (not the individuals), while asset prices (homes in
> particular) lose value and start to look worth buying again. Meanwhile
> Treasury bonds are still sold in record numbers and at very low yields,
> because none of the other state-capitalist regimes wants to see what
> happens when the house of cards actually falls. This has been going on
> since the summer of 2007 when the banking crisis started. Now that the
> European Central Bank has started bailing out the Eurozone with its own
> freshly created fiat money, it seems like it could go on for quite a while
> longer. In a heavily industrialized world where there is a tremendous
> amount of productivity -- too much, in fact -- the mobilizing and
> organizing power of this illusion or "schein" called credit is very great.
>
> All that said, we're still in a crisis. Institutions, among them the
> university system, are changing before our eyes. A crisis is a period of
> chaotic change where the outcome remains uncertain. There are undoubtedly
> new and dramatic episodes to come. I reckon the interstate-capital nexus
> will eventually find some solution that does not involve either a return to
> the discipline of "sound money" (gold, in short) or a collapse into rival
> blocs -- because the consequences of *that* were made all too clear to
> everyone by WWII. The question is which solution, and what kind of "new
> deal" for the people on the ground? The US emerged from the crisis of the
> 70s through Reagan's debt-financed military build-up, which led on to the
> tech boom and financialization. That solution has been disastrous. Souldn't
> we push for something much better today?
>
> > Might it not be the
> > case that we have knowledge and understanding in abundance, as the
> > financialization of everyday life turns us all into organic
> > intellectuals of a kind? In other words, I guess I'm saying that the
> > current crisis in capitalism is happening without us having to do much
> > to make it happen (i.e. it's a structural/systemic crisis) but it's also
> > a moment in which capital tends not to hide its face (i.e.  we actually
> > do already understand this system, in much of its complexity, because it
> > doesn't bother much anymore to make itself invisible--or to hide, for
> > instance, it's reliance on the state, whether by "state" we mean the
> > federal reserve or the cops who will come to evict you if you don't pay
> > your mortgage to the bank).
>
> I think that's right, it's what makes this period so interesting. As a
> formerly middle-class person you now have to deal directly with kinds of
> violence that were formerly held at a distance by prosperity. Yet the
> system reacts to these crises, that's been its whole dynamic since the
> 1930s. The study of earlier crises shows that great efforts will always be
> made to reintegrate the future middle managers. Exactly such a process of
> reintegration is what led to the neoliberal social consensus -- or
> hypocrisy -- which "tolerates" all kinds of horrible things. Well, now that
> consensus is finally breaking down and there is critique and unrest at
> every level of society. I think it's worth trying to subvert and transform
> the educational system before a new formula of crisis management is found,
> one that will pay relatively large numbers of people well enough to manage
> a society with yet greater levels of gross inequality, including unequal
> exposure to climate change. Because that's what we're headed for if nothing
> is done.
>
> Of course, transformative influences can also come from other sectors of
> society, and I don't think it's really possible to become a force of change
> without getting out of your own skin and engaging in both direct action and
> cross-class solidarity. Yet there is a tendency for educated people to
> believe that the change must come from the other classes, from some raw
> revolutionary force of the dispossessed. That idea seems dubious to me in
> such a complex world, where both scientific and cultural knowledge
> translate so readily into power. I think that going beyond awareness of the
> system's ills, and towards an actual shift in the way society is
> articulated, would require taking over the existing institutions -- the
> ones we work in, however precariously -- and repurposing them. Otherwise
> I'm afraid there are always organizational and technological solutions for
> unrest. That is, if the middle managers who are charged with implementing
> those solutions can continue to "tolerate" them.
>
> let's not, Brian
> ______________________________**_________________
> empyre forum
> empyre at lists.cofa.unsw.edu.au
> http://www.subtle.net/empyre
>
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