Prompted by the availability of David Harvey’s lectures, I have been reading Marx’s Capital and am sure to have all sorts of mind-numbing posts about the insights I’ve derived from it in the new year. (Look forward to my close reading of footnote 39 in the chapter about large-scale industry.) But I was glad to read that, like Sarkozy I am part of a current fad for Marx, prompted apparently by the end of capitalism as we know it and all that. The Times of London reported on the Marxmania in October:
Visitors to Karl Marx’s birthplace in Trier have soared – 40,000 so far this year – with many coming from China, eastern Germany, Cuba and Bolivia.“I can’t tell you how many times I have heard people say: ‘The man was right!’,” says Beatrix Bouvier, chief curator of the museum. Alexander Kluge, the film director, is preparing to make a blockbuster film out of Das Kapital. Little wonder, since Marx comes highly recommended. President Sarkozy of France has been seen flicking through the book, while the Peer Steinbrück, the German Finance Minister, recently admitted: “Certain parts of Marx’s thinking are really not so bad.” The Archbishop of Canterbury, Rowan Williams, gave him a decent review last month: “Marx long ago observed the way in which unbridled capitalism became a kind of mythology, ascribing reality, power and agency to things that had no life in themselves.” Even the Pope has put in a good word for the old atheist – praising his “great analytical skill”.
The implication of Marx’s renewed popularity is that capitalism is now universally accepted as being fundamentally broken, with the financial system at the heart of the problem. Marx’s description of “the fetishism of commodities” — the translation of goods into tradable assets, disembodied from either the process of creation or their usefulness — seems entirely relevant to the complex process of securitization, in which values seem to be hidden by obscure transactions.
(James does warn against adopting the Communist Manifesto as solution to the financial crisis, however.)
The most relevant part of Capital to the current crisis that I’ve read thus far comes in chapter 3, about money, section 3(b) (here in a somewhat lackluster translation):
The function of money as the means of payment implies a contradiction without a terminus medius. In so far as the payments balance one another, money functions only ideally as money of account, as a measure of value. In so far as actual payments have to be made, money does not serve as a circulating medium, as a mere transient agent in the interchange of products, but as the individual incarnation of social labour, as the independent form of existence of exchange value, as the universal commodity. This contradiction comes to a head in those phases of industrial and commercial crises which are known as monetary crises. Such a crisis occurs only where the ever-lengthening chain of payments, and an artificial system of settling them, has been fully developed. Whenever there is a general and extensive disturbance of this mechanism, no matter what its cause, money becomes suddenly and immediately transformed, from its merely ideal shape of money of account, into hard cash. Profane commodities can no longer replace it. The use-value of commodities becomes value-less, and their value vanishes in the presence of its own independent form. On the eve of crisis, the bourgeois, with the self-sufficiency that springs from intoxicating prosperity, declares money to be a vain imagination. Commodities alone are money. But now the cry is everywhere: money alone is a commodity! As the hart pants after fresh water, so pants his soul after money, the only wealth. In a crisis, the antithesis between commodities and their value-form, money, becomes heightened into an absolute contradiction. Hence, in such events, the form under which money appears is of no importance. The money famine continues, whether payments have to be made in gold or in credit money such as bank notes.
In troubled credit markets, all collateral is suspect.