The Economic and Financial Crisis
Economic problems are often trivialized as "bumps in the road" to divert attention from the systemic and structural contradictions of late stage capitalism. The market is not self-healing. The economy should serve humankind, not vice versa. Investment is not speculatiopn. Businessmen are not the only ones who understand growth and development.
Ernst Lohoff and Norbert Trenkle comment on the economic and financial crisis, on fictitious capital and consequences of austerity.
Making Every Central Bank a Bad Bank: Ernst Lohoff and Norbert Trenkle Discuss the Economic and Financial Crisis - Part 1 of 3
link to www.krisis.org
Questions by Reinhard Jellen , Translated from the original German by Joe Keady , Originally published in: Telepolis  on August 1, 2012, Part 2 of this interview is here ; part 3 is here 
Black clouds on the horizon: With economies in Europe threatening to fall like dominoes and the end of the euro in sight, the political countermeasures  seem to be increasingly ineffective despite their absurd dimensions (Germany, for example, is currently committed to an overall liability  of € 644 billion ).
Every solution to the problem seems to discretely transform into an even bigger problem while exacerbating and deepening the economic, debt, and financial crisis even further. With the end of the final remaining financial bubble, namely sovereign lending, together with looming inflation, the current crisis  could make the period following Black Friday in 1929 look like a pleasant stroll on a bright Easter Sunday. The following is a conversation with Ernst Lohoff and Norbert Trenkle , whose book Die große Entwertung  (The Great Devaluation) locates the historical limits of the bourgeois economy in our time.
Richard Jellen: How does Marx help us understand the present crisis  better than other theorists?
Ernst Lohoff: To answer that, first we have to look at the conversation around the present crisis, which is characterized by a remarkable discrepancy. On one hand it's an established fact that this is a crisis of "historical proportions" and every couple of weeks there is a new summit meeting that ends with the most important heads of state announcing that they have just saved the global economy from destruction. On the other hand, the explanations that are being offered for this dramatic development are extremely meager. The official discourse around the crisis is being conducted at the level of an amateur plumber who fixes a pipe here and there while the basement fills with water. Every kind of finance-technological maneuver is being discussed, but nobody really knows what will come of them because there is no theoretically grounded analysis of the ongoing crisis process.
Meanwhile, economic theory's more thoughtful representatives are openly conceding the bankruptcy of their discipline. Harvard professor and former IMF  chief economist Kenneth Rogoff, for example, recently told the German business paper Handelsblatt  that the highly elegant economic models that have dominated academia for decades have, in practice, been "very, very unsuccessful. When the big shock came, they turned out to be worthless."
RJ: What caused that total failure?
EL: We think that it goes back to the very questions they're asking in the first place. The fundamental question of our crisis era is really quite obvious: Why does a society with absolutely explosive material productivity, one that can produce material wealth endlessly, have to conclude that it is apparently "living beyond its means"? We can find the answer to this question in Marx - provided that we read him critically and not along the interpretive models of traditional Marxism or the so-called Marx Renaissance that we're experiencing now.
Material Wealth vs. Abstract Wealth
Marx's Capital doesn't begin by contrasting capital and labor but with the "elementary form" of capitalist society: the commodity. Marx shows that the basic contradiction that explains capitalism's tendency toward crisis in general and the current crisis in particular is built into the commodity itself. It is the contradiction between two different forms of wealth: material wealth, as expressed in the production of goods, and abstract wealth, which is categorially represented as value and reified in the form of money.
Under the conditions of modern commodity production, meaning within a capitalist society, material wealth is only ever produced to the extent that it can also be represented as value, meaning to the extent that it contributes to the valorization of capital. So the production of goods is always a means to an external end: the end in itself of turning money into more money. Any time this end cannot be achieved because the valorization of capital has ground to a halt, material wealth also stops being produced. Goods are even destroyed because they can't be sold despite the fact that needs are left unmet on a massive scale. People have to live in tents while their houses sit empty, for example, simply because they can no longer pay off their credit.
RJ: What characterizes economic crises in bourgeois society in comparison with other eras?
Norbert Trenkle: Basically we can say that crises in capitalism don't arise from scarcity but from and amid abundance. This is a basic insanity that economics can't explain because it naturalizes the production of abstract wealth: It presents commodity production as a sort of innate form of human economy. For that reason, it doesn't pay any attention to the internal contradictions between the production of material and abstract wealth and it is blind to the deeper causes  of the ongoing crisis.
"Structural crisis in the production of real value"
RJ: What kind of economic crisis is the current one?
EL: Marx distinguishes between collective and particular crises, saying that, "In world market crises, all the contradictions of bourgeois production erupt collectively; in particular crises (particular in their content and in extent) the eruptions are only sporadical [sic], isolated and one-sided."  No crisis in the history of capitalism has really deserved to be called a collective crisis so much as the one that has become manifest since fall 2008. It is an entire system of partial crises that mutually create, overlap, and build upon one another.
Above all, two main layers have to be looked at separately. First there is a structural crisis of real value production. This has been ongoing below the surface since the 1970s, has never been overcome, and in fact cannot be overcome because is it caused by the fact that productivity since then has been too high to keep the process of capital valorization going. Capital has to reproduce itself because otherwise it ceases to be capital and for that purpose a continuously growing workforce has to be utilized to produce commodities. But at the same time, competition is driving an unstoppable productivity race that at its core leads to the permanent replacement of labor with physical capital . That is the fundamental internal contradiction in the capitalist mode of production that ultimately has to turn on the mode of production itself. Specifically, if productivity is so high that huge masses of labor power are made superfluous, that jeopardizes the very basis of capital valorization. That is precisely what is at the core of the fundamental structural crisis that the global capitalist system has found itself in since the end of the postwar boom.
RJ: What is the other essential component of the crisis?
NT: The crisis that we just described has been covered up by the bloat in the financial markets for decades. On the level of our entire society, capital accumulation went back into overdrive after the crises of the 1970s and the global economy managed to start growing again. That growth was no longer supported by actual production of value through the use of labor, however, but by explosive increase in capital within the finance industry. While the finance industry was circulating more and more property titles (debts, stocks, derivatives, etc.), it managed to transform the sleight of hand known as future value, meaning value that has not actually been produced yet and may never be produced, into abstract wealth.
But this reproduction of capital through anticipation of value, which has long since reached astronomical proportions, has itself fallen into crisis. Although the permanent increase in property titles, which capitalism can no longer survive without, is operating in the same way that it always has and is even picking up speed, that's only because that job is now being done by governments and above all by central banks. States drive up their debt and central banks guarantee private banks excessive credit at what amounts to zero interest while simultaneously buying up government bonds that no one else will buy. In fact we're slowly reaching the limits to this, the euro crisis  being one example.
"Central banks assume the risks"
RJ: How has the role of central banks changed over the course of the financial crisis?
EL: Above all, the term "fictitious capital" conjures the fictitious capital formed by actors in the private sector; commercial banks' claims against their borrowers; and stocks and bonds that are held by insurance companies, bond funds, or private investors. But to the extent that currencies have been removed from the gold standard, there is another actor that has become important in the creation of finance capital in the finance industry: the central bank. Monetary policy means nothing if not the influence of a currency's custodians' on the extent to which fictitious money capital is created. That can happen indirectly, for instance by setting minimum reserves that commercial banks are not allowed to lend.
But there is something else that is much more important. Central banks themselves are entering the financial and capital markets as market participants and accumulating fictitious capital. So-called "money creation" consists of central banks guaranteeing credit to commercial banks, which means buying payment promises. When central banks reduce the interest rates on that credit, it fuels the creation of fictitious capital. Increasing the prime rate has the opposite effect. That interest policy has been essential to overcoming previous crisis slumps in the era of fictitious capital. It even managed to jump start private accumulation of fictitious capital during the serious crisis of the New Economy at the turn of the millennium by drastically reducing the prime rate.
The real estate bubble, which also reignited the flagging real economy, was fed by cheap credit. But the current crisis looks different. To prevent the financial system from collapsing, the central banks have to successively take on more and more toxic assets and guarantee credit on a grand scale where no one else would do so in addition to maintaining a zero-interest policy that will provide the raw material for new bubbles. During the acute crisis phase in the fall of 2008, it only replaced the paralyzed interbank market. Ordinarily, international banks lend each other money that they aren't currently using at a moment's notice, but they were so mistrustful of one another after Lehmann Brothers went under that that form of liquidity dried up and the private banks only received credit from central banks.
What's even more serious than that short-term rescue action is the fact that the central banks have to buy up government bonds on a grand scale in the meantime to prevent the market for those securities from collapsing and setting off a chain reaction of government bankruptcies. But the banking crisis is still smoldering and the central banks are taking on the risks there as well in that they are providing distressed commercial banks with long-term credit that would obviously have to be written off in the event of bankruptcy.
Be it the Fed in the US or the European Central Bank, this is turning every central bank into a bad bank . They're wildly pumping money capital into the banking system while the quality of their currency reserves is rapidly deteriorating because they are increasingly made up of unmarketable toxic assets. The last four years' worth of emergency purchases of payment promises may have prevented the financial system from collapsing, but they have only postponed the necessity of devaluation and, in doing so, nationalized it.
"The question is not if there will be inflation but when."
RJ: How likely do you think it is that inflation will set in?
NT: Monetary stability is threatened from two sides: On one hand, the central banks are feeding more and more money capital into the banking system. As long as the banks and their customers reuse that money capital as capital, meaning as long as they buy property titles or invest it productively, there are no serious consequences for monetary stability. That changes, however, when it flows into product markets and is treated merely as extra money against the commodities that are being traded. Once that happens on a large scale because of a lack of capital investments, the bloat in the financial superstructure will have to be transformed into a currency devaluation, which means inflation. At the same time, as we've already indicated, sooner or later this will lead to an open devaluation of monetary reserves. So a hyperextended supply of money will be met with reduced demand.
In this context, the question is not whether there will be inflation but when it will start and just what course it will take. So far inflation, at least here in Germany, has been limited to precious metals and real estate, which function as safe investments in the world of material goods. In everyday life this is already apparent in the form of increasing rents. But it can hardly stop at that.
Incidentally, in a way that means a return to the state that the global economy was in before fictitious capital really took off. In the 1970s, the central capitalist countries were marked by a phenomenon that economists called "stagflation:" Weak growth was accompanied by annual inflation of around 10%. But the dimensions have really slipped in comparison with the proportions of that period. Weak growth may lead to a manifest depression and inflation to hyperinflation. Postponing crisis has a price.
In Part II  of this interview, Ernst Lohoff and Norbert Trenkle comment on fictitious capital and the consequences of austerity.
  Marx, Karl: Theories of Surplus Value, Part II, pg. 725, Prometheus Books, 2000.
The Economic Crisis and Fictitious Capital: Ernst Lohoff and Norbert Trenkle Discuss the Economic and Financial Crisis - Part 2 of 3
link to www.krisis.org
Questions by Reinhard Jellen , Translated from the original German by Joe Keady , Originally published in: Telepolis  August 2, 2012, Part 1 of this interview is here ; part 3 is here 
While both neoliberal  and Keynesian  theorists prefer to interpret the crisis as a problem of supply- or demand-side valorization, Ernst Lohoff and Norbert Trenkle claim that the bourgeois economy suffered a heart attack with the onset of the IT age when the increasing replacement of human labor with technology crowded exponentially larger numbers of people out of waged labor than it took in while retaining labor as the fundamental source of profit. It is a change that they say can only be compensated with speculative capital, or what is known as "fictitious capital." The quantity of property titles traded on the financial markets whose value can only be realized in the future but that are traded as capital in advance, such as derivatives, futures, options, etc., has increased dramatically in recent years and exceeds the value produced by the real economy many times over.
But this displacement of accumulation from production into the sphere of speculation does not eliminate the valorizationproblem. Instead, it moves the problem to a more profound level - with all the more serious consequences. If faith in the realization of future value should collapse because it is foreseeable that the real-economy basis that the property titles correspond to has eroded then, in the view of the authors of Die große Entwertung  (The Great Devaluation), the entire chain letter-style system will also collapse. Part 2 of our conversation with Ernst Lohoff and Norbert Trenkle about the economic and financial crisis.
Reinhard Jellen: What caused the present crisis?
Norbert Trenkle: When we look at the causes, we have to distinguish between the two major layers of the crisis. The base level crisis of the valorization of value is, as has already been said, a result of the acceleration of productivity development, which makes labor increasingly superfluous. The third industrial revolution  is playing a critical role in that. While there were also powerful drives toward rationalization in earlier phases of capitalist development, for instance in the 1920 and '30s when Fordist  production methods were introduced, new sectors of industrial mass production were also opening up at the same time and they required massive additional labor. That expansion of commodity production into new fields compensated for the rationalization  effects so that ultimately even more labor what used than before.
But in the third industrial revolution, this compensation mechanism isn't working anymore because restructuring the production process based on information technology means shifting a society's productive power to the level of knowledge  or, more precisely, to the application of knowledge to production. The foundations of capital valorization  are called into question as a result because this leads to an absolute displacement of labor power across every sector of value production that can no longer open up new industries to make themselves competitive.
RJ: So what is fictitious capital and what is its role in the current crisis?
Ernst Lohoff: Fictitious capital is essential for understanding the second layer of the crisis. It is a term that Marx introduced as distinct from functioning capital. He showed that capital doesn't just transform the production of potatoes, steel, textiles, etc. into commodity production in the course of its development but that money capital itself also becomes a tradable commodity.
What happens in that process is astonishing. The initial capital suddenly gains a dual existence as a result of the sale. On one hand, the initial capital is now held by the borrower or the company issuing the shares, but at the same time the creditor or the shareholder holds a mirror to the initial capital, namely a property title (loan, share, etc.) that represents a momentary claim. This doubling is no mere fiction, as the term "fictitious capital" may seem to suggest. It doesn't just exist in people's minds. It acquires an objective social existence in the form of securities as long as the certified claim appears to be redeemable. That is a claim to future value and it represents capitalist wealth in exactly the same way as the value that is squeezed out of the functioning capital of labor.
This kind of increase in capital through preliminary capitalization of future value was marginal to the point of irrelevance to the long-term development of capital accumulation in Marx's time, but over the past 30 years it has become an actual source of capitalist wealth. In order to maintain capitalist production despite the fact that labor is being made increasingly superfluous due to gains in productivity, larger and larger portions of future, fictitious value have been pumped into the present. As a result, the structural crisis of valorization has been postponed for the time being.
RJ: And where is that getting snagged?
EL: Unfortunately, a system based on anticipation of future value production can only function like a chain-letter system and as such it is squeezed from two sides: On one side, the longer this insane form of capitalism keeps reprocessing itself, the faster the toxic assets of a capitalist future that has already been consumed will pile up skyward. The debts of the past cannot disappear without consequences. Either they have to be refinanced or social capital will be destroyed through the nullification of fictitious capital.
"The debts of the past cannot disappear without consequences"
On the other side, the rising tide of ever newer property titles can only find a market if it somehow seems plausible that the promise to pay and the profit outlook on the part of borrowers and other property title sellers can be fulfilled. When that cannot be guaranteed anymore, the bubble bursts and there appears to be a "financial crisis" when in reality the only thing that has failed is the mechanism that has allowed the structural crisis of valorization to be postponed for decades. If you understand that, you know that the current crisis is far more dramatic than it is perceived to be. It is a systemic crisis in the strictest sense of the term: a crisis that genuinely calls the capitalist system of wealth production into question.
RJ: What will be the consequences of the austerity policies that are being implemented by the financial and political classes as a solution to the crisis?
NT: Two things have to be kept separate when we talk about austerity policies. Austerity in the sense of setting official goals, specifically as a path toward budget consolidation, is a Fata Morgana. So new debt will have to continue on its own because states have been left with no option other than to continuously pump untold billions into the banking and finance system in order to postpone its collapse for as long as they possibly can. They do this because there will be catastrophic consequences if they don't. But these billions can't come from real value creation. They can only be raised by repeatedly anticipating future value.
"The consequences for most of the population are devastating"
So states have to do everything in their power to ensure their creditworthiness and to do so as if they were in a position to consolidate their budgets over the long term. And that is exactly what they are demonstrating through brutal austerity policies with respect to every social sphere that is considered pure ballast from the perspective of fictitious capital: welfare systems, public services, education, etc. The official version of this story is actually quite revealing in the distinctions they are making between sectors that are "systemically relevant" and "not systemically relevant." The fact that the consequences for the majority of the population and for material wealth production are devastating needs no further explanation. It's enough just to look at Greece and Spain, where what is being implemented is exactly what sooner or later will threaten the countries that haven't been quite as seriously affected by the consequences of the crisis yet.
RJ: Why are they opting for this policy of impoverishment?
NT: They're not doing it, for instance, to create a "sustainable" society or to avoid leaving excessive debts for "our children," as the self-righteous, pathetically insincere political jargon puts it. They're doing it just to continue the accumulation of fictitious capital. The price of that keeps getting higher, however, because this is no longer a matter of keeping the abstract-wealth production machine running by sucking in future value even as that machine is ground to a halt by high productivity. Above all else, what has to be prevented instead is the collapse of the towering mountains of irredeemable payment promises. For that reason, most of the newly created fictitious capital flows back into the financial sector directly and less and less of it enters into circulation in the real economy.
"Towering mountains of irredeemable payment promises"
Consequently, demonstrative austerity policy is reaching a point where it is becoming counterproductive even for the narrow-minded purpose of accumulating fictitious capital. Where it is taken to its extreme, as in Greece and Spain at the moment, it is leading directly toward economic depression - and that also affects the banking and finance system. That is slowly dawning on the hardliners among the German and European austerity tsars. For that reason and, of course, because of the massive protests, new growth and stimulus programs are now being discussed, but it remains to be seen whether or not those programs will be implemented in time, before the deluge starts. Hopefully they will be given that they might at least slow down the impoverishment drive.
Of course even in the best-case scenario this would only create a delay because those programs are subsidized by the same fictitious capital. It follows, then, that their supporters, such as France's new President Hollande, are not challenging austerity as such at all. They just want to give it a slightly different form. They're also chasing after the illusion of a balanced budget and are ultimately willing to demand that the populace make every possible sacrifice for that fiction. From that perspective, we can expect loads of cruelty from a possible red-green governing coalition in Germany in the coming year.
RJ: n your book, you write that, "Sooner or later there must come a point when the level of productive power is longer compatible with the capitalist form of wealth." But aren't there always tendencies that counteract a crisis while it is ongoing or else afterwards?
EL: Marxian crisis theory links two elements together. On one hand, Marx supports the theory that capital is heading toward an insurmountable historical limit due to the development of productive power. On the other hand, he also examined the course of periodic crises that interrupt the progression of capital accumulation over and over. In his crisis theory, both of these elements are bound together in that the basic problem of capitalism, the subordination of material wealth production to the sorry objective of valorization of value, always appears during those periodic crises.
"A Buddhist way of understanding crises"
Even more so than in other areas of society, the discussion on the left is dominated by a marked tendency to downplay the present crisis. Accordingly, the problem of periodic crises is viewed in isolation and the possibility of a historical limit is simply crossed out. The result is a kind of Buddhist way of understanding crises according to which crises are nothing more than pure "self-correcting crises." The come and go for all eternity and ultimately they only strengthen capital. This also comes up in Marx - where he has something entirely different to say about the periodic crises. "The crises are always but momentary and forcible solutions of the existing contradictions. They are violent eruptions which for a time restore the disturbed equilibrium."  For him, the overarching element is the constant intensification and accumulation of new contradictions.
Our argument in the book directly picks up directly on the Marxian idea of a historical limit and places it in the third industrial revolution. The fact that the destruction of capital in times of crisis restores the profitability of the surviving capital and can therefore become the starting point for a renewed accumulation drive is not a reference to the problem of the historical limit but strictly to periodic crises. It assumes that a new drive of self-sustaining capital valorization can start after the overcapacity has been corrected. But that is exactly what is fundamentally ruled out under the conditions of the third industrial revolution.
Part III of this interview can be found here .
  Capital, Vol. III, pg. 249. International Publishers, New York: 1967.
Neoliberalism Turned into the Godfather of the Finance Industry: Ernst Lohoff and Norbert Trenkle Discuss the Economic and Financial Crisis - Part 3 of 3
link to www.krisis.org Questions by Reinhard Jellen , Translated from the original German by Joe Keady , Originally published in: Telepolis  August 6, 2012, Part 1 of this interview is here ; part 2 is here .
During the Keynesian era, the state established itself as an active supporter of economic life through direct and indirect interventions. However, the basic inconsistency between material output and its abstract and crisis-prone valorization in the bourgeois economy was never questioned. As a result, the fundamental dilemma remained: an increase in productivity with unchanged or stagnant rates of accumulation accompanied by a tendency to cut jobs and the increasing erosion of the basis for real accumulation.
When the Keynesian recipe stopped having a positive effect on private investments in the late 1970s, it was replaced by neoliberalism, which guided untapped investment capital into the speculative sphere of the finance industry. This led to the real economy's growing dependence on the impulses of the financial markets, which negatively impacted its economic base, in turn causing periodic bubbles in unfunded financial securities. Since the New Economy and the housing bubble burst, the extent of the crisis has gradually become clear with the erosion of public finances. Part 3 of the conversation with Ernst Lohoff and Norbert Trenkle, authors of Die große Entwertung  (The Great Devalorization). [Translator's note: The book is excellent and I would highly recommend that an English-language publisher in the critique-of-capitalism biz find a decent translator and get that thing out there. Just saying.]
Reinhard Jellen: You link the respective victories of Keynesianism  and neoliberalism  with various phases of the economic valorization  dynamic in capitalism. Can you explain that?
Norbert Trenkle: Keynesianism's relative success during the postwar boom era was linked to specific structural conditions that were beyond its reach, meaning that it had not and could not have created them. Keynesian regulatory and redistribution policy was entirely functional as long as mass industrial employment expanded and acted as the engine for a self-sustaining boom in the valorization of capital. The expansion of welfare systems and an increase in real wages  not only contributed to social pacification but also stabilized the economic upswing because it strengthened mass consumption. The expansion of public infrastructure was at least as important. Without that, ubiquitous industrialization and the commodification  of everything in society could not have functioned. Cars would not have been able to drive without a dense network of roads, electrification of households required a sufficient supply of electricity, and a good, wide-ranging education system was necessary for educating a skilled labor force.
So the state took on a central role and that fed the idea that it was also in a position to keep economic development running, to guide it, and to stabilize it over the long term. But when the postwar Fordist  boom came to an end, that turned out to be an illusion because, to the extent that valorization of capital ground to a halt as more and more workers were laid off due to the rapid increase in productivity, it was not just the financing sources for state activities that ran dry. Even more serious was the fact that it could not manage to start a new surge in self-sustaining valorization of capital despite massive credit-financed stimulus and growth packages.
From our perspective, there is nothing remarkable about that because, while the state can intervene in the market's mechanisms to a certain extent, it has no access to the basic process that is driven by the internal contradiction of capitalism. To put it another way, Keynesianism was helpless in the face of the across-the-board rationalization that followed the third industrial revolution, which ultimately eroded the foundations of valorization of capital. Every attempt to lead the real economy out of stagflation failed miserably.
That was the deeper reason for neoliberalism's victory. While it did not have a plan for revving up valorization of capital either, it laid the groundwork for the economic dynamics to be shifted to the "finance industry" and consequently for the crisis to be postponed for the next three decades. The critical factors here were, on one hand, consistent liberalization of the financial markets and, on the other hand, the Reagan administration's increase of the national debt, which in a way served as financing for the postponement of fictitious-capital accumulation on an enormous scale. The destruction of Fordist structures through the disempowerment of unions, etc. did the rest because at the same time the privatization of the public sector opened up new fields for financial investment, for example the transformation of state pension systems into private life insurance.
RJ: What role does the IT revolution play in all of this?
NT: In the same way that Keynesianism backed up the expansion of industrial mass production, neoliberalism became the godfather of the "finance industry." It is an irony of history that it simultaneously helped the third industrial revolution  break through as a result. By itself it would have suffocated on its own productivity. But the accumulation of fictitious capital created the leeway that was necessary for a broad installation of information technology. It was possible to temporarily override the powerful rationalization  effects that brought about a massive displacement of living labor from the core valorization sectors by taking on future value. The result, however, is a progressive erosion of value production that is only really becoming noticeable in its full scale now in the crisis of fictitious capital.
RJ: In your book, you compare economics to an "art school that prescribes an eraser as the only instrument of portraiture." What do you mean by that?
Ernst Lohoff: That leads us back to the question from the beginning of part one of the interview. Economics, regardless of which school, cannot understand the crisis because it obliterates the basic distinction between the two forms of wealth: material and abstract. The opening chapters of economic theory books always say that the purpose of economics is the satisfaction of needs and the optimal provision of goods to people and that only the market economy under conditions of advanced division of labor can achieve that.
So the market economy is described as functioning according to the principle of the simple exchange of commodities just as it would in an idealized village marketplace where shoes are exchanged for pigs and eggs for balls of wool. This systematically cuts out what is actually completely obvious, which is that under capitalist conditions, what is produced is only what will turn money into more money and that the goal of production is the reproduction of abstract wealth and the commodity is simply a medium for keeping this self-referential system in operation. To put it differently: economics uses the eraser right at the level of its basic assumptions and erases what is specific about the capitalist mode of production. It is no wonder, then, that it is incapable of recognizing the causes of the crisis.
RJ: You regard the personified criticism of speculators and bankers as anti-Semitic and racist mechanisms. Why is that? The criticism directed at bankers since 2008 has not been built on anti-Semitic cliches, unlike in the 1920s, for instance, when caricatures were laced with anti-Semitic images. Or have I missed something?
NT: For starters, we fundamentally distance ourselves from any personified criticism, which is currently out of control in every possible form. The crisis of fictitious capital is also a crisis of the euro. And how is it being addressed? It is because of the "lazy Greeks" who allegedly squandered "our hard-earned money." This personification doesn't just insanely overlook the fact that a society has been impoverished in the middle of abundance simply because all wealth has to be forced through the needle eye of commodity production. What is worse is that the rage over this miserable state is projected toward specific, constructed collective subjects so that now it is in fact open season on them.
Open season on collective subjects
Placing the blame on bankers and speculators is by itself "only" one such personification. But there is a hint of something else within that and it is usually an unconscious thing. That particular personification is largely congruent with a basic model of anti-Semitism that constructs an opposition between "constructive" capital and "money-grubbing" capital - and the latter is identified with "the Jews." We can see that model again today in the widespread idea that the real economy has been destroyed by some greedy speculators and what matters is that they are put in their place.
That does not mean that everyone who lashes out against bankers and speculators is an anti-Semite. What it does mean is that this projective model of processing the crisis is completely compatible with the anti-Semitic mania. It's no coincidence, then, that the metaphorical language drifts in that direction again and again, for instance in the notorious term "locusts," which German Social-Democratic politician Franz Müntefering popularized, positioning himself as a critic of capitalism. The phrase "they attack us like locusts" comes from the Nazi propaganda film Jud Süß and anyone who wants to be like these greedy pigs needs no further explanation. Other images recur as well, such as the popular depiction of finance capital as an octopus with the world in its tentacles. This one also turns up in an almost identical form in the Nazis' anti-Semitic propaganda. We need to be extremely careful about this. There is still a taboo in Germany about transitioning into open anti-Semitic agitation, but the tendency is becoming noticeable and it is very dangerous.
RJ: What political and theoretical practices concretely arise from your theoretical model?
NT: Well for one thing a totally fundamental rejection of austerity. It is just completely insane to claim that we have lived beyond our means and have to tighten our belts in the face of enormously high levels of productivity. The opposite is true. If we were to make full use of the possibilities of modern productive power, every person in the world could have a good life and would only have to spend a fraction of their lifetime producing material goods.
The compulsion to produce abstract wealth
The only reason that doesn't happen is because the company, of course, obeys its compulsion to produce abstract wealth, because it adheres to the notion that material wealth is only recognized insofar as it represents "value." And this is not simply a kind of missed opportunity or a possibility that went unnoticed. Adherence to the logic of value production at the current state of productivity is simply catastrophic because it leads to the exclusion of enormous numbers of "superfluous" people who are sacrificed at the altar of the systemic imperative to maintain the flow of fictitious capital from the future into the present.
But if we free ourselves from the seemingly obvious idea that goods can only be produced as commodities, then whole new perspectives open up. Specifically, we could ask how and in what form the existing potential could be meaningfully used for the general welfare without having to think about financial viability, marketability, or profitability. Instead, we would have to assert the perspective of material wealth and concrete needs. This already happens in the practices of social-movements, for instance when evictions are prevented because people don't see why anyone should have to live on the street or in a tent simply because they can't pay their mortgage or their rent anymore or when people just say no to privatization of public agencies in cultural or social spheres. Those are first steps that point in the right direction. When they are linked with a radical critique of the form of abstract wealth, whole new perspectives of social emancipation open up.
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