[A-List] Profit without End: Capitalism Is Just Getting Started

["Yoshie Furuhashi" <critical.montages@xxxxxxxxx>]

<http://mrzine.monthlyreview.org/heinrich280707.html>
Profit without End:
Capitalism Is Just Getting Started
by Michael Heinrich

Debates concerning the "Socialism of the 21st Century" are
experiencing an upswing at the moment.  However, this century will
initially be rather one of capitalism than socialism.  Not because
there is once more an economic recovery.  Prosperity and crisis
alternate constantly in capitalism, but behind this up-and-down
process are tendencies towards an extension and further development of
capitalism, which is nowhere near its end.

The Economic Miracle as an Episode

Modern industrial capitalism began in the 18thcentury in England.  The
developmental catch-up process in France, Germany, and the United
States of America already called English hegemony into question at the
end of the 19th century.  In the first half of the 20th  century,
capitalism also developed in Latin America and Southern Europe,
whereas with the Russian Revolution and later the Chinese Revolution,
a substantial portion of the globe withdrew from the direct
intervention of capital.  Statist developmental dictatorships in those
countries pressed ahead with a process of industrialization which did
not involve a lesser number of victims than the development of
capitalism in the West.

After two World Wars, a global economic crisis which eclipsed all
previous crises, and after National Socialism and the Holocaust, the
USA established itself as the hegemonic capitalist power with the
Soviet Union as its antagonist.  Exceptional economic and political
circumstances in Western Europe and North America led to a prosperity
without precedent in the years between 1955 and 1974, which also
contributed to the capitalist development of Japan.  During the period
of this "economic miracle," real income increased dramatically, and
welfare state expenditures were expanded.  Capitalism, at least in the
metropolis, seemed to have transcended crisis and poverty.

However, in the late seventies and eighties it became clear that the
global economic crisis of 1974/75 did not merely constitute an
interruption of this economic miracle.  Capitalist development
remained prone to crisis, and as usual escape was sought in increased
exports and accelerated technological development, above all in an
increased exploitation of the forces of labor.  Real income stagnated
or declined, welfare state expenditures were continually reduced.

The period of the economic miracle was merely an episode in the
development of capitalism.  However, its influence dug deep into the
collective subconsciousness, above all in Germany.  Within the rather
leftist part of the political spectrum there still exists the belief
that, with the "correct" economic policies, full employment can be
conjured up; "unchained" capitalism must simply be properly regulated
again.  But the period of the economic miracle also dominates the
perceptions of the more radical left, as the development of capitalism
since the miracle is perceived as a plunge towards a final crisis, or
at least as a period of decline for capitalism -- as if it were ever
the purpose of capitalism to spread full employment and welfare among
the people.  Crisis and unemployment are in no way a sign of
capitalist decline; they are capitalist normality.

The expansion of capitalism continued vigorously, above all in East
Asia.  The rise of the four "little Tigers" (Taiwan, Hong Kong,
Singapore, and South Korea) in the seventies and eighties was followed
at the beginning of the nineties by the four "little dragons"
(Thailand, Indonesia, Malaysia, and the Philippines).

Global Competitive Capitalism

With the collapse of the Soviet Unionthe geopolitical system of
coordinates was altered.  On the one hand, western capital now had
direct access to Eastern Europe and Russia.  On the other hand, the
East Asian emerging economies were no longer useful as bulwarks
against "Communism."  As a massive speculative bubble burst in 1997/98
and substantial industrial overcapacities were evident, the crash of
these economies did not disturb the leading capitalist countries.
There no longer existed a geopolitical opponent into whose hands the
crash could play.

Against this background, a global competitive capitalism emerged in
the nineties, which was spurred by an internationalized financial
system that had developed in the seventies and had continuously grown
ever since.  Not only were new markets opened up globally;
possibilities for increased profit were exploited via international
valorization chains.

At the same time, the neo-liberal credo of a lean state without debt
reached the high point of its effectiveness.  In constant tax-cut
rounds, business and upper income groups were relieved and state
budgets subject to a permanent imperative of austerity which demanded
the cutting of social services and the privatization of state firms.

For capital, the conditions of valorization improved, and new spheres
of investment opened up: not only privatized state businesses, but
also privatized care industries (health insurance, elderly care).  The
"individual responsibility" constantly demanded of citizens ultimately
meant that they had to pay more, so profit could be made in new
sectors.  The further development of capitalism, the subsumption of
new spheres of existence under the logic of profit maximization, is
already underway in the developed capitalist countries.

Poverty Capitalism in the 21st Century

With China and India, two new capitalist powers became clearly
noticeable in the 1990s which, with 1.3 and 1.1 billion residents
respectively, comprised more than a third of the global population.
Both countries had experienced enormously high rates of economic
growth over the years.  Whereas in China the mass of the forces of
labor were exploited under conditions resembling those of early
capitalism so that the world market could be flooded with cheap
products, India has managed to bring about, via enormous investments
in the educational system, a great deal of highly qualified and
nonetheless cheap forces of labor (engineers, software developers,
pharmacists) which are particularly attractive for foreign investors.
At the same time, income disparity as well as differences in regional
development in both countries has increased sharply.

The capitalist development of India and China is at its very
beginning; it may have a substantial influence upon global economy and
politics in the future.  If in the course of the next few decades a
middle class with purchasing power emerges -- albeit comprising merely
20 to 30 percent of the population, with the rest living in poverty --
in them, that alone would constitute a market of 600 to 700 million
people, far larger than the expanded European Union.  At the same
time, the massive army of poor people ensures a stream of cheap labor
for the decades ahead.  For capital, all manner of things might become
scarce in the 21st century, but cheap labor will not be among them.
The rate of surplus value will increase worldwide -- relative surplus
value increases with technological development, absolute surplus value
with the extension of the working day and the sinking of real wages.

That even in the midst of economic upswings workers will be forced to
accept a lengthening of the working day and cuts in wages, as is
currently the case with employees at Deutsche Telekom, will no longer
be an exception in the future.  It will simply not be noticed as much.
 In Germany, the largest growth of jobs has occurred in the temporary
labor sector.  In order to impose deteriorations in working
conditions, one no longer has to change collective bargaining
agreements and fire workers.  It's enough simply to not renew
employment relationships.

Insecure employment conditions are expanding, but the talk of a
"precariat" presumes a non-existing commonality of interests.  A
non-skilled woman who commutes between a "mini-job" at the supermarket
check-out stand and various cleaning jobs doesn't have much in common
with an academic temporarily employed in various privately-financed
research projects.

Inequalities will increase not just within nations but between them.
Poverty in Western Europe will mean something different in the next
few years than the slum quarters of the emerging economies.  In
countries like Germany, superfluous laborers will perhaps be held
above water by an "unconditional minimum income": an income at the
level of the current Hartz IV reforms1 but without the costly
"entitlement checks," which will be used to justify the dismantling of
all further welfare state services.

Currency Competition and Eroding American Hegemony

The USA as the sole remaining superpower is faced with a number of
emerging intermediate powers: the BRIC states (Brazil, Russia, India,
and China), as well as the sometimes more, sometimes less, unified
European Union.  In international institutions such as the World Trade
Organization, conflicts have already led to a partial paralysis; the
International Monetary Fund has also undergone a substantial decline
in importance in the past few years.

But competition does not occur solely over scarce resources such as
oil, but also over global currency.  The dollar as a global currency
has allowed the USA a massive indebtedness which not only contributes
to its welfare but has made possible a military budget which is as
large as that of all other countries put together.  The role of the
dollar can then in turn be supported by economic strength and the
threat of military force.

With the euro, whose importance as a trade and reserve currency has
increased strongly, there is for the first time a potential competitor
to the dollar.  The largest dollar reserves worldwide are held by
Japan and China because of their gigantic export surpluses.  Even a
partial conversion of these reserves into euros would substantially
weaken the dollar and undermine the hegemonic position of the USA.  A
collapse of the USA would not suit the Asian and European
export-oriented economies, but a weakening of its power would.  But
the hegemon will not just submit to such a process.  Already the last
Iraq war was not only fought for access to cheap oil, but also in
order to defend the dollar as an oil-trading currency.


1  Series of reforms enacted in Germany in 2005 and named after the
former director of Volkswagen's labor relations department, Peter
Hartz.  The neo-liberal reforms represented the most drastic change to
Germany's post-war welfare system by, among other things, reducing the
period of entitlement for short-term unemployment insurance and by
abolishing long-term unemployment insurance in favor of an entitlement
(so-called "Arbeitslosengeld II") that provides a bare existential
minimum of benefits.

Michael Heinrich is a mathematician and political scientist in Berlin.
 He is managing editor of Prokla -- Journal of Critical Social
Science.  The following article originally appeared in German in the
July 12th, 2007 issue of the leftist  newspaper Jungle World.
Translation by Angelus Novus, who blogs at
<negativepotential.blogsport.de/>.

-- 
Yoshie