Profitsee – Future Economic Surivival

Divinations in Forex, Commodities and Economic Patterns

Systemic Collapse: A Theory of Crisis

From: Systemic Collapse: A Theory of Crisis (abbreviated overlay)

BOLD-important points
Cross-Outs – insignificant observations
Italics – The Economyth’s observations

This article on the current economic crisis is a summary of notes I have made from David Harvey’s lectures on Marx’s Capital Vol. 1 and an exploration of his book Limits To Capital (1982). It is also a summary of explanations from various sources regarding different ways of examining the crisis, in order to get myself thinking about the applications of theory about the operations of capital to current events.

The current economic crisis is a combination of structural design and the inherent contradictions between the limitless search for profit, through speculation, and an interest-based economy in which production is dwindling, harbouring an excess of credit. The logic of the market, combined with neo-liberal doctrines, have brought it to the point where it is buoyed up on faith alone: capitalism is form of monotheism with its own attendant myths. The danger then comes then not when the fictitious bubbles burst, but when the very real infrastructure is sold off and dismantled. The threat is no longer fictitious, but historically realised through privatisation – a degradation of the social sphere and dispossession of people’s rightful common assets. (end para 1)

This is systemic, due to various documentable factors, not so much greed, as a naivety and faith in partially understood market processes. What has changed between now and since the mid-seventies is that risks are more evenly spread so that devaluations are visited on the poorest and least able to bear them. The middle-classes, co-opted by conservative rhetoric and in cahoots with finance, divested the working-classes during previous profit squeezes. In effect, they saw them as the principle barrier to profitability during previous contractions and in effect abetted a return of power to the ruling-classes, rather than see a more horizontal distribution of wealth end of para 2

Firstly, we should understand the system as an organic one, that mutates spasmodically to circumvent crises brought about by its own internal contradictions. It is a process of motion and fluidity and moreover it’s a system of relations. Capital is no longer capital if it is not moving; it becomes inert. And when things stop, value disappears. Money, most importantly, is the lubricant of this exchange (liquidity). end of para 3

It is not a lack of money that causes a crisis, but on the contrary, it is the crisis that causes a lack of money. Liquidity and capital are not the same thing. There is a crisis in the overaccumulation of capital (as represented by the habouring of an excess of bad credit in the system, and as we know: bad money drives out good). It is exactly because of the ‘flood’ of finance capital of unknown quality that there is a crisis of liquidity. The crisis of overaccumulation brings about limits to the flow of capital, i.e. stasis in the money markets.

The liquidity crisis is very real and is causing, or about to cause, a huge shortage in the means of payment. All loans and debts are being called in, in return for money. The next phase — as banks refuse to extend lines of credit to businesses in the real economy and the demand for loanable funds drives up interest is that ordinary working people get sacrificed on the altar of capitalist irrationality. Then comes inflation as a form of devaluation and the subsequent wage struggles that precede a rise in class consciousness.

This crisis will not remain in the world of finance for very much longer.


Filed under: Research

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