Hillel Ticktin, or, is there an economic crisis ?
bendien at tomaatnet.nl
Sat Aug 30 07:30:39 MDT 2003
I think that when Ticktin opposes "economism" he means that the "economic
crisis" is only a crisis for the working classes, the unemployed and the
poor. But there is no economic crisis, for those with plenty of capital.
That is, economism presents a crisis picture, which abstracts from the
different situations of different social classes.
If you were to do a careful, rigorously systematic quantitative analysis of
the international economic data, then you would easily see that there exists
a plethora of capital in the world, in that sense, a capitalist crisis
simply does not exist at all, that is just middle class anxiety. Thus, the
total value and volume of world trade in price terms, exceeds the value of
world GDP in price terms by many times (GDP refers only to the value added
within the sphere of production). The total value of securities and
financial derivatives etc. in price terms exceeds the value of world GDP in
price terms by many times. In a country like Luxemburg this reaches
A global financial circuit has therefore developed, which is semi-autonomous
from what happens in production, but feeds on it. This makes it possible to
get filthy rich today, on the basis of claims against production that will
occur sometime in the future. Thus, a larger and larger portion of capital
is not utilised very much in expanding production, rather it is tied up in
trade, financial activity, securities, real estate and that sort of thing.
We are talking here about circuits of money capital and circuits of
commodity capital, not circuits of production capital, i.e. not M-C-P-C'-M',
but M-C-M' and M-M', and C-M-C' although you can say that the latter
circuits are linked to the first-mentioned, and you could write more
expressions accordingly to show this. Robert Went makes an abstract analysis
along these lines in his book "The enigma of globalisation".
This is the effect of the playing out of a contradiction in capitalism since
the beginning of the 1980s.
- If profitability is higher in non-productive activity, and in
rationalising already existing productive capacity, rather than expanding
production in total, then an increasing portion of total capital hives off
into non-productive activity.
- If the level of uncertainty and risks involved in committing capital
long-term to expanding real production are unacceptable, again an increasing
portion of capital hives off into non-productive activity.
- If you can make more money quicker through financial deals rather than
through producing something tangible, employing workers, again an increasing
portion of capital hives off into financial deals.
- If there is a high degree of monopolisation and monopoly pricing within
economic sectors, it becomes much more difficult for new entrepreneurs to
start off new businesses in the sphere of production, because that
production is already dominated by a few giant corporations who have
"rationalised" the whole sector, and the entry-costs in that sector plus
legal restrictions make new entrepreneurial activity difficult.
If you just focus on total GDP figures like a stupid economist, you will not
see what is going on, here. Rather you would need to study sectoral GDP
figures and you would need to study international financial transactions,
investment patterns and foreign trade patterns. And you would need to look
at the development of the international division of labour, i.e. sectoral
and occupational employment patterns.
The neoliberal policies which destroy all restrictions on capital mobility
makes these trends not only possible, but encourages them. The more mobility
the capital becomes, the less restrictions there are, the more it tends to
seek out the most lucrative investment opportunities worldwide. "Lucrative"
here means making the most money in the shortest time with the least risk,
but productive investment requires a long-term commitment, responsibility
and certainty. But, the faster capital spins around the globe, searching for
lucrative opportunities, the more uncertainty grows, because the more
unpredictable and risky the game becomes.
So the "uncertainty" that Greenspan talks about in his Kansas speech is a
deliberately manufactured uncertainty, which did not exist before, it is
just that by removing all restrictions on capital and money movements,
gigantic amounts can transit very quickly around the globe, and you lose the
control over economic processes that existed before. You cannot rely anymore
on the idea, that today's capital will be there tomorrow, because it might
be somewhere else, in a different country. And if the capital does indeed go
somewhere else, then the economy of the place where it leaves, might cave
Then the result of that is
(1) more unemployment, because you can make more money faster with less
employees. More unemployment exerts a downward pressure on the incomes of
the mass of the population, and that results in a reduction of aggregate
effective demand. That means the market shrinks and structural overcapacity
develops, there is even less incentive to expand production. Technically
speaking, you could raise real output enormously, but you cannot sell that
extra output, because the demand is not there.
In addition, there is:
(2a) a growing class differentiation in the structure of aggregate market
demand. The working class buys only perishable and durable consumer goods,
they cannot buy anything else, and their ability to borrow is limited. The
rich buy luxury goods and services because they have the money for it, and
they can borrow more. But there is little incentive for significantly
expanding investment in fixed equipment in industries, because you already
have structural overcapacity, productivity is already in excess of market
So then (2b) the only two lucrative circuits within "tangible" production
that remain, ultimately, are luxury goods and weapons, and whatever other
production hinges on this. In the case of luxury goods, the demand is formed
by the bourgeoisie itself, because they have the money. In the case of
weapons, the main demand is formed by taxpayers money, collected by the
state. The corporations want the state to reduce taxes. But if the state
reduces taxes, then the market demand represented by taxpayers money is also
reduced. Therefore, corporate taxes are reduced, but not wage-earners taxes,
and you hope that military production will prime the pump. But if
unemployment increases, then tax revenue falls as a result. In that case,
another source of profits is to privatise state assets and rationalise them.
And so it goes on, in an endless spiral of more and more social inequality
and more and more capitalist hierarchies.
(3) an increase in hierarchical feudalism, because what you get is a
capitalist, a business, or a corporation which monopolises a productive
resource, maybe world wide, and this person or entity has an enormously long
chain of hangers-on who all depend for their income or capital on a fraction
of the surplus-value generated by the workers who produce that resource or
extract it. Those who actually control the real value-generating asset are
"king", and then around that develops a whole clientele, a whole coterie,
providing services to the king, all sorts of servants and slaves and
suppliers. The kings direct what "culture" shall be, according to their
consumption. The question then becomes: what is the best culture that money
can buy ?
(4) an increase in debts. The ability to borrow depends ultimately on
strength (cultural, military, cognitive, productivity-wise etc.) and
perceptions of strength. In the case of the USA, there was a massive sexy
spending spree in the 1990s and an explosion of luxury consumption... at the
financial expense of the rest of the world. Americans know this but they
argue they provide the world with a superior civilisation and superior
technology, and so we are quits. The name of the game is really, how you can
shift the debt burden to somebody who is weaker than you are, and because of
the extremely sophisticated facilities provided by two decades of
liberalisation, it is almost always possible to shift the debt burden
somewhere else, provided you can keep asserting your own strength. Timing is
also crucial in this, because you always have to be one step ahead, today's
wealth must always be reaped against a claim to production sometime in the
future, and depending on how strong you are, you can project claims to
future wealth, further and further into the future. The problem however lies
in the perception of strength. Strength may not be real strength but just a
confidence trick. And there you have the cutting edge of bourgeois political
economy, because a confidence trick which is exposed for what it is, might
have massive financial consequences, people lose certainty, perceptions of
risk multiply, and so on.
That is the basic picture. Ticktin therefore says that the operation of the
law of value is weakened or non-existent, because
(1) if the amount of capital tied up in circuits outside the real of
production is much larger than the capital tied up in the sphere of market
(2) if the sphere of production is itself dominated by giant monopoly
then there is no "free market competition" in the sphere of production, and
then production is no longer regulated by the operative principles which
Marx specifies, labour values have very little to do with it anymore.
Ticktin wants to say that the increase in profitability in the 1990s is the
result mainly of cooking the books and restructuring things internal to the
corporation itself, but this restructuring has nothing to do with the
systematic logic of the law of value, he claims.
But, if Ticktin carefully studied the international statistical information
that he is so skeptical about, he would come to different conclusions,
because that would show, that a competitive process is occurring
internationally, which previous occurred mainly nationally. Sale at
production price is still the basic condition of supply, and the tendency is
for global production prices to be formed. The more financial capital
rationalises the sphere of production, the higher the level of labour
productivity and the higher the rate of surplus-value. The increase in
profitability in the 1990s is therefore not spurious, but reflects a real
increase in productivity and a real increase in the rate of surplus-value.
But, the outcome of rationalisation, is lower incomes for workers and fewer
jobs, to which I referred before. This means a relative stagnation of the
capitalist system overall. But that just makes the quest for efficiency in
labour time even more furious. If consumers have less money to spend, every
bit of labour time rationalised becomes more and more critical to sales. You
don't have much control over the prices of the fixed equipment you have, the
only way you can cut costs is by rationalising labour-time.
If you examine corporate restructuring within the corporations themselves,
again you will see that the law of value operates: the imperative is to
reduce costs, increase sales, and maximise profits, and that is precisely
that the Marxian concept of ""production price" is all about. Just because a
corporate empire has to deal with many more factors than just economic
factors, doesn't mean that this doesn't remain the ""bottom line". It does,
and one of the reasons it does, is that financial parasitism exerts a strong
force which creates the imperative for cost-tunning, for expanding sales,
and for profit-maximising, even if the precise strategies devised for this
are not immediately obvious. Thus, if the corporations get to luxurious or
wasteful, there is still a financial discipline, because a fight breaks out
over the distribution of surplus-value.
Rather than obscuring the law of value or cancelling out its operation. the
credit mechanism just reveals very clearly how the law of value operates:
everything, everything depends here on time, timing is crucial, the ability
to appropriate time from somebody else is crucial, and this is reflected in
popular culture, the whole trick is, how can I appropriate time from
somebody else ? Gambling with time becomes a sport of its own, the motto is
"don't look back to the past, look to the future", because the future is
where the money is, at least if you play your cards right, now. A human life
is viewed as a durable consumer product in which everything has to be timed
correctly and sequenced correctly, planned correctly to maximise
opportunities for wealth appropriation. As Marx says, "all economy reduces
to the economy of labour-time". That is more true today, than it was ever
Some people live on borrowed time, the time appropriated from somewhere
else, somewhere else in the world. In some parts of the world, the average
lifespan of a person decreases, in other parts of the world, the average
lifespan of a person increases, and this reflects relative levels of the
porosity to exploitation and the ability to resist or reduce exploitation,
in turn this is a question of strength. A Turkish taxi driver with whom I
discussed the Turkish economy grasped this very well. He said, the Turkish
business people just keep on borrowing money that they don't have, but it
really isn't such a problem, because "the Turks are very strong people,
they're tough". The more you privatise state activities, the less the state
is able to mediate the operation of the law of value.
Thus, the meaning of modern wars is chiefly to demonstrate who is the real
strong guy around here, to demonstrate, that the claimed strength is not
fake, but real, and if people start to doubt it, then we have to assert that
strength, test it, just in case people get funny ideas. Because if people
get funny ideas, this creates extra volatility and uncertainty in the
markets, a perception problem develops, people worry about risks, this can
spin out of control. The idea is
(1) to contain the scope of financial crashes, and if you can do that,
production can be continuously re-oriented, and the final showdown can be
endlessly postponed, and
(2) contain the scope of social disintegration which results from mass
unemployment and poverty, and that is where socialists can be of assistance,
if they help organise the poor and civilise them, and
(3) keep beating down revolts that could escalate, and threaten the
enormously sophisticated world system of financial claims that has
But of course students of Marx would know that there are absolute limits to
the game, and a specific analysis shows precisely where those limits are.
Ultimately extreme inequality becomes an obstacle to repaying the debt, and
then you get Argentina's and Liberia's. In military warfare, you know that
you must never create excessively long supply lines, because they are
vulnerable to attack. If the supply lines do get very long, then you will be
So in conclusion, whereas Ticktin made some valid points about the law of
value as regards the USSR and about bureaucratic planning, he doesn't really
grasp the operation of the law of value in the world economy today. But that
is not his fault, because Marxian economists haven't developed the analysis.
Brenner makes schoolboy errors when he claims that manufacturing GDP in the
USA determines what happens in the world economy. It simply does not. It is
just a false, sexed-up perception of strength Americans have.
Ticktin is correct in saying that oil in itself is only one factor in the
situation, not the total situation, but the important thing is to see how
oil specifically relates to the packet of requirements for the reproduction
of the social system as a whole, how oil relates to the total picture.
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