[Translated from Radio Lora, Munich, January 11, 25; May 10; June 6, 2010]
1. If it is so clear that each crisis goes at the expense of the wage workers – what’s all the bellyaching for?
The free market economy has gone through many a crisis, and each time there’s complete bedlam. This time, the responsible politicians and critical journalists are maintaining they even “looked into the abyss.” By “abyss” they mean that for a moment it looked as if even the Holiest of Holies of this economic order, money, might have gone down the tubes. And what are we supposed to learn from that? It is absolutely crucial that normality has to return again – nothing but away from the abyss! The normal market-economic business life – for which money is the central point and which led to the crisis – must completely get off the ground again! Seen that way, there is one certain profiteer of crises: capitalism – it should function as usual. Everyone who was afflicted by the usual course of business before the crisis and felt some discontent because they could notoriously never make ends meet or had to reckon with the next lay-off should forget all that in the face of the much greater damage from the crisis and long for the times “before.”
Of course: “These things must never ever happen again.” Like in every crisis, guilty persons are being found, and this time around there is agreement on “banksters” with their “greed.” This is handy, because then the state in all its power can become active with all sorts of conditions and laws, restricting bonuses and salaries and enacting tougher regulations in matters of “risks” – and one thing has at any rate been achieved: good faith can be strengthened in the actually beneficial and economically so indispensable effects of the business of banking, if only because the “black sheep” have gotten a bloody nose. Other culprits will be found for the next crisis. The “climate catastrophe” is perhaps a frontrunner…
There’s one rule for coping with the crisis: there’s a lot of energy being spent on propaganda and regulations in order to comprehend the crisis as the exception to the rule – the other way around, the rule is given the best testimonial. If this is so, we invest some energy in showing what can be learned from the exception to the rule – provided one refrains for a moment from the one and only desire to wish the crisis disaster away.
To begin with the main point: the bulk of the people have only one opportunity to earn a living in a market economy. They need an employer in order to offer themselves, i.e. their labor power – they have nothing else – for a remuneration. In a crisis, significantly more people than usual get to experience – and all others get to experience it first-hand, too – how insecure such a livelihood is. But a crisis is nothing special in this respect, such an existence is always insecure. Nobody gets paid because he needs money, but only because an employer considers such expenses profitable – for the profit of the company. Public companies do not calculate any differently. Nothing goes without profit and everything depends on it. That is why there is kind of a natural law in capitalism: wages have to be low, and there’s an increasing work-load demanded. All jobs are dependent on this decree – and this is why there’s no guarantee for their profitability. Every entrepreneur works on making his workplace more profitable than those of his competitors. That is why he demands that every job, day in and day out, stand the test of profitability – which is why jobs constantly don’t fit into the scheme of things. Capitalistic logic demands that money that can no longer be used in a profitable way needs to be spared – and with it the human being whose income depends on that money.
In a way, everybody knows that the economy is run this way and reckons with that. What regularly happens, however, is something peculiar. Whenever, as is now the case, layoffs are piling up and firms stop hiring, when wage concessions and overtime no longer help and when a hard-earned living is destroyed, then nonetheless everybody is amazed and in fear, and there’s a lot of public grumbling. Then it is obvious: people on the one hand continuously try to adapt to “reality” – which, as is said, is “the way it is” – of course for no other reason than to make the best of it. On the other hand, the same people don’t really believe, or at least don’t really take seriously, what everybody actually notices and knows: they can only work for a living as long as their employers’ calculations work out. People cling to this “as long as” as if there were really this “one boat” in which the company and the workforce were rowing together. As long as they have a job, they simply do not want to admit that a job is paid for no other reason because and in order that a firm makes money by utilizing labor. They do not want to admit that the only opportunity that the majority has, namely to earn their living by wage labor, is not an end but once and for all merely a means – for the employer’s purposes.
Now that the moans and groans have started all over again about “lost jobs” and the “many difficult fates behind them,” they are useful for one thing alone: to uphold the lie with which “realistic” people who try to make the best of everything struggle through life: somehow and in the end, the purpose of the market economy just has to be, at least in part, the livelihoods of those who depend on wages, and somehow they should be able to earn the wages on which they depend. And yet the lesson is unambiguous: if a large portion of the wage-dependent population is plunged into deprivation, while the remainder can no longer be certain of their future income, this is not a crisis. A crisis is when profit-making no longer functions. Then livelihoods get sacrificed across the board, because in the market economy their right to exist derives solely from the benefit that a company can extract from the use of their labor. In a crisis, none of this gets glossed over, but at the same time, nobody really wants to accept the clarification.
This is least of all the case for the unions. They know instinctively that there’s only one remedy: profit-making has to function again. As representatives of the wage-dependent population, they have one and only one offer as to how the profitable exploitation of the working population can be gotten off the ground again and how mass-lay-offs can be restricted: more concession on wages, more unpaid working time, more sacrifices in spare time. And nobody realizes, least of all the unions themselves, that their offer only testifies to what nobody wants to admit: employers’ business interests, in the crisis more than ever, are irreconcilably opposed to what workers need and require for a secure livelihood. The special lie of the unions is, however, that their offer could nonetheless reconcile these antagonistic interests – wholly at the cost of wage-dependent people. And even that doesn’t get the unions anywhere. A crisis thwarts every last hope for reconciliation between the necessity of making a living and the laws of appropriate market behavior. Of course, firms demand that their workers make concessions in terms of wages and working hours as soon as they run into difficulties, they happily accept such offers. But not even in normal times does that go toward “creating jobs,” rather than lowering costs and making workers superfluous. And once profit-making falters across the board, earnings and earnings opportunities get slashed – voluntary impoverishment – encouraged by the unions – won’t “rescue” anything.
2. Everything in this society depends on the accumulation of money in the financial sector
The financial crisis has still not yet been overcome, and for quite some time it has been eating away at global money-making in all business sectors. The public deals with the reasons and consequences according to the maxim that what we have here is a special case, even a totally unnecessary accident in capitalism. As the main culprit of the current crisis, it has picked out the “bankster” who – out of sheer greed – has been ruining his own bank and the economy with it. The impending collapse of the entire money economy allegedly lies in the excesses of speculators in harvesting profits for their employers. The question arises: what then really is the normal job of all these financial agents at their banks, stock exchanges, real estate funds, and so on and so forth – don’t they all work to make their clients richer? And isn’t the rule everywhere: the more so, the better? As long as there’s no crisis, the bankers are after all honorable and highly paid persons, but now they have suddenly fallen into disrepute as if they were a criminal organization. Once credit trading and speculating in whatever you can think of are carried out responsibly, they are said to be very respectable and decent business activities. And this same business is all the same capable of messing up the entire world of this in principle marvellously functioning capitalism only because of an excess of “greed” by those who do it? Before finding these accusations all too plausible, it might be better to take a look at the solid business principles of these “masters of money.” What if the reason for the financial crisis and its harmful consequences lies more in the much-praised norm of a capitalistic money-accumulation than in a criminality of “banksters”?
Everybody takes it for granted that money “works.” An asset grows not only for the big money owners who constantly invest their money in new and various ways. Even the poorest holder of a savings account is delighted about 2% interest and finds it quite normal that his money becomes more, simply by itself. Really a fantastic thing, that money: the only thing you shouldn’t do with it is keep it under your pillow or spend it on food and furniture; instead, it must find its way to the financial market. For becoming rich, there is nothing needed but money, but of course as much of it as possible.
In pre-crisis times, the financial market kept its promise to increase money in a wonderful way. Many successfully made money, the yields were galore. They all bet on growth, invested their money in various ways, and anybody who has a say money-wise was engaged. This is the way in which they initiated an upward spiral in which each of them trusted in his success because all the others were successful too. As long as that functions, the public judgement is positive and considers speculating to be so important that even financially entirely inexperienced television viewers are always kept informed about growth rates or losses on the stock exchanges. It’s only normal that even decent regional banks then also speculate, and as long as the upward spiral is functioning, the banks and similar institutes create always new “financial products” that they keep on selling among each other in their so-called “retail trade.”
In 2008, the trade with these sorts of speculative papers all of a sudden came to a stop. There was talk of dodgy security businesses, not only here and there but across the board on the global financial market. It turned out that many of the fabulous securities that banks, insurance companies, investment-funds and so on and so forth had been selling in piles among each other were suddenly no longer money capital; and this simply because from one day to the next they did not sell any more, so they were no longer tradable. The losses in value then not only affected the papers that were on offer at the moment. Even huge amounts in already purchased papers, lying around in deposits and safes are entirely or in parts devalued. Hence a downward spiral gets going that puts a minus to the growth rates of pre-crisis-times.
In hindsight, as in every crisis, there are a few know-it-alls who want to have foreseen it: there’s rumors of “gigantic mis-speculations,” of a “bubble,” of unreliable, all-too-risky businesses. There was even talk of the accusation that it had been the practice to participate in a snowball-system which would never ever have been able to result in an accumulation. Such reproaches miss the point and completely play down what a money economy really is.
First point: the accusation of over-speculation. This reproach takes it entirely for granted that on the financial market each and every business is speculative anyway. Only: what does that really mean? Money changes hands for a security, a share certificate, or a loan against the promise of a future repayment with interest. The financial world immediately credits itself with the envisaged return, long before it has occurred, on their accounts as capital, as a growth of their assets. And they do, as if nothing could go wrong, and treat their returns plus interest as a fact, as something that can be taken for granted – something that proves to be well-founded because and as long as the upward spiral is taking its turn. The money owner who buys a security is pleased. He is rid of his money but is nonetheless able to project his assets accordingly, the expected increase included. So if everywhere the success of a speculation is immediately anticipated – which speculation is then reasonable and which one excessive? As long as the upward spiral runs, they all have done the correct thing. None of the know-it-all journalists would have been able to tell in advance where the “over” will start.
Second point: “too risky” in what way? Every financial agent knows the general risk entailed in speculation: his business partner may for whatever reason not be able to repay the loaned sum plus interest. In this case, it is no help that he is legally obliged to repay. But that must in no case be an argument against financial businesses. The world of finance has found the means and ways to deal with the insecurity of their businesses by fixing their prices. Even risky papers are allowed and expected to enter the market, they only have to offer high yields. They just transform the insecurity of their business into a mere question of price. All the banks, hedge-funds, and so on and so forth always want to have some of these high-yield papers in their portfolio, the higher the yield, the better. Which risk is too high will just turn out afterwards.
Third point: How is a “bubble” really discerned? In no other way than that it has already burst! The know-it-alls should better not pretend that there were entirely solid and undeniable businesses in the financial sector that could be neatly separated from those without foundation and prospects of success. When business is running well, it doesn’t do so because it is solid, in other words because it is based on secure earnings. The financial activists offer each other businesses on all levels of risk and regard a high yield to be a good reward for a high risk. There is only one thing that is really necessary for a business to come about: they have to trust their business partner to make the promised payments. And obviously this trust works as long as the bulk of business activities is running well and the upward spiral is going. Vice versa.
It is precisely this trust in their fabulous money accumulation that the operating authorities have withdrawn from each other at the beginning of the big financial crisis. With that, huge parts of the running businesses and the papers issued on them were just as “toxic” as planned new ones – and that immediately on a worldwide scale and in all sectors. The assets of the big money houses that mainly consisted in such papers whose value was based on mutual trust disappeared with the upcoming mistrust into thin air. The course of the crisis reveals that everything on as much as the whole globe depends upon whether and how the money accumulation in the financial market works. That gets to the heart of the "logic" of the market economy. A booming economy, profitable business, and worldwide economic success – that all depends on banks and agents of finance making use of it all as the basis of their own moneymaking. If and as long as they do that, the power of money to increase itself is the motor for a gigantic system of global enrichment without any inherent limits. But if they don't, then look out, for then it turns out that as soon as the power of money to increase itself doesn't work for speculators, then money simply disappears. Therefore, money only exists for the purpose of becoming more money, and it only exists within this process.
The revival of this madness, without greed and with a really great deal of responsibility – is that something to hope for?
3. If banks “save” on loans
In the market economy, credit is not meant for the production of useful goods. It is just the other way round:
Production is a means for the transformation of debts into capital – or it doesn’t take place (anymore)
About two years ago, the former German finance minister Peer Steinbrück said “we were all staring into the abyss.” What made him shudder was the idea that the entire money of the society could disappear into a “black hole.” This wasn’t unrealistic, as the bankruptcy of Lehman Brothers sent one financial institution after another into a tailspin; in Germany, Hypo Real Estate's losses were especially high. The states filled up the so-called “black hole” with vast sums of money, as they feared for the continued existence of money assets and the total circulation of money .They feared a worst case scenario as can be caused by the banks.
The banks, as is known, don’t keep the money of their depositors in order to pay it out to them when they are asked for it. Instead, they carry out most of their business with their customers via “noncash payments,” thus they give credit entries on an account or debit it directly. Such entries stand for money property confided to the bank which the bank uses for other purposes than simply carrying out payment transactions.
The bank uses this money for its investment banking in credit and capital. The money itself has long been en route on its capitalist mission – as working capital of the financial world for its particular businesses. For all the money that passes through the hands of the credit industry – thus for almost any existing money – it is valid that, according to the standards of this business, it only exists as money as long as there are business deals going on between financial institutions that base themselves on their mutual trust. John Doe may think he has invested his hard earned money safely and his savings will be rewarded with interest: in the crisis, he can learn that his money long ago became a derivative of a successful economy with debts. It is simply not there anymore when the doubts of the financial institutions regarding the success of their capital investments get out of hand. Money is its own source. This is what the entire business of the banks is founded on. If businesses fail, money is gone – even the small amounts that wage-dependent mankind has earned and now needs for its livelihood.
The whitewashed announcements by politicians or in public opinion at the beginning of the crisis were completely inappropriate: it was merely about “upheavals” in the financial sector whereas the “real economy” was said to be healthy, meaning: profitable. This way the upcoming crisis should be played down. However, the “healthy real economy” quickly announced that profitability is built on sand if the “supply with loans” is not ensured. The supply with credit was jeopardized because all of a sudden the banks mistrusted the revenue promises circulating between them. In this way, an overwhelming mass of securities suddenly had no value anymore or were in danger of being devalued. In the newspapers, one could read that the “trade between the banks” wouldn’t function anymore, and that means: as they did not finance each other anymore or stopped giving credits, everything that they had credited as their capital and which they had promised to let grow was shaky.
All of a sudden, every bank doubted the capital of the others. It wasn’t that the bankers suddenly had revealed that their customers in the “real economy” weren’t solid anymore or wouldn’t be able to service their current loans. Rather, it was that the banks were no longer in a position to lend as usual because of their damaged capital power. Thus, they also lost the growth of their capital – springing from these loans – which they had already calculated with.
In the process, the optimism of the politicians and the public quickly went down the tubes as the “real economy” announced: “This affects our vital lifeline!” As a matter of fact, the companies of the “real economy” don’t only have to ride out a mere liquidity squeeze, but they are all permanently under the constraint of the fundamental principle of the market economy: their capital has to grow continually and therefore one thing is indispensably needed – more capital. Already in the daily turnover of their capital, companies follow this maxim. When they bring their commodities to the market, they do not wait until the returns have come back to them so that they buy the elements of the production process anew. It is rather that they pragmatically anticipate the sales returns of their commodities by granting each other loans, by which means they right away continue with their production. Thereby, banks are essential as they accept payment promises between companies and change them into capital which can be used immediately when they set up an agreed overdraft for the current business or when they pre-finance an export business, etc. Although the term “speculation” is always only used in reference to the finance industry, “real economy” businesses speculate, namely with their prospective yields which they always treat as if they’d already been realized. This way they get the trick done of enlarging their business without having yet realized their yields and in this way they achieve their prospective yields. Another way to get more capital for companies is to use their profits for expanding their advance. But even this is not sufficient for them, as they want to survive competition with their own “money making machine.” Thus they have to watch out as to how to attract funds that do not necessarily stem from their own business. Companies constantly want to, and have to, take on debts as they need this continual inflow of credit which they use in order to increase their capital advance. This means that the inflow of credit isn’t needed in order to cope with difficulties, but for making their money making machines more and more powerful. In the end, mergers are made by shifting especially huge masses of credit. Whether these debts can ever be paid back or whether it isn’t too risky to constantly raise new credits is never asked while capitalism is prospering. For better or for worse, it counts on more and more surplus springing from more and more growing capital. The fact that this process comes to a halt now and then and leads to a crisis only proves the necessity for capital to grow. And this also isn’t corrected by the crisis.
Therefore, “supply with credit” is indispensably needed in order to meet the pressures of growth and its constraints, and this “supply” is in the hands of the banks. Big companies can issue their own bonds as well, but for this process they need the capital market, which again is dependent on the domain of the banks and its functioning. If in the crisis the beautiful “service” called “supplying credit” is cancelled by banks, one could notice that it is mere credit, i.e. debts, that keep businesses running. Obviously, debts are the one and only indispensable means of production, not only for the financial industry but for the entire free-market industry. If borrowed money does not flow anymore, material means of production, factories and machines go to wrack and ruin. As well as the human factors of production that know how to deal with equipment and computers and assembly lines in the correct way – they might be around abundantly, but are not used anymore for the utilization of borrowed money, thus they are condemned to idleness and pauperized.
Hence it is a fairy tale of the market economy that capitalism is a useful mechanism for the “best possible supply of goods for the society.” In other words, the market economy doesn’t aim at providing many useful products by which means mankind ekes out a living. What counts is rather the accumulation of advanced capital through debts. Therefore, the credits of the finance economy are not an aid for production and consumption. Instead, the “law” of finance capital and its security trading also counts for the “real economy” and that is the interest they both have – which has become petrified as an inherent necessity: Debts become capital, or nothing happens at all. This always makes clear that work is carried out to have credits work as capital, meaning to practice the power of the invested money and its right to its increase and the fixing of this process as well as its gradually increasing reproduction. The material life process of society is an instrument of the command of money over work and takes place only for the purpose, and to the extent, that the command of money grows thereby.
Politicians, entrepreneurs’ associations and the public do not want to admit such finance capitalist calculations, but insist their “true” nature is to supply productive trade with sufficient credit. This is because they peremptorily assume that capitalistic businesses should kindly be successful. The going bust of one or the other business because of mismanagement is put up with; however, as soon as banks start hesitating as to when to give out loans, so that assembly lines all over the place are threatened with coming to a stand still, this is looked at with varying moral standards. The “real economy” is pitied as the victim of the finance business and is regarded as the “good” part of the capitalistic economic hustle. Deliberately, such protagonists and public commentators fail to see that the “real economy” follows the same principle of capital accumulation and is therefore dependent on the course of business and the calculations of the finance business.
Before the crisis began, at a time when all the businesses of productive and financial capital went very well, nobody would have imagined distinguishing between good and bad capitalists. An official duty of the credit sector is only demanded at a point when it becomes obvious that the economy is existentially and vitally dependent on being supplied with loans; and when the collapse of the financial economy in unison with the ruin of the “real economy” jeopardizes the life of the society in every respect and, consequently, the power of the state as well.
4. The sovereign powers save the credit industry and thereby their entire economic system – so this system is based on force
It was a bit strange, recently: the financial industry was mired in the crisis, some major banks were virtually broke, and some of them actually went bankrupt. The worldwide market economy as a whole was threatened with insolvency – and then the powerful governments, the executive boards of various credit institutions, and the central banks’ representatives met. They passed a common resolution – followed by an official promise and a single stroke of the pen. That was sufficient and there it was: money in abundance. This secured the banking sector’s solvency and the business world’s liquidity, and it rescued the public’s deposits and savings accounts. The world economy could – haltingly, but nonetheless – go on. So this authority’s command was sufficient, the authority that is usually given bad marks by experts, accused of incompetence, and urgently advised to stay out of the economy because only the experts know what is appropriate. But now, exactly this same authority was in fact able to replace the lost speculative trust in the future of money-making and to save the crumbling capitalistic wealth from its complete destruction by exactly the same economic actors who had previously created it and made fortunes from its increase.
What absurdity, one might think. Loads of money is messed up – if not money itself – then loads of money is poured in, and everything is fixed! But this paradox didn’t interest the public nor was the question raised how that actually works. Instead, an offended sense of justice came up. All of a sudden, the country was teeming with advocates of the “average Joe”. They asked in a complaining tone of voice – and of course they only asked without demanding anything – why the government doesn’t show at least a bit of this generosity for other important tasks. The pressure to economize has applied in all other fields for years: in education and social welfare and for future generations…. The slogan of “moral hazard” came up, meaning the bankers’ systematic irresponsibility when they take irresponsible risks, in full confidence that the government will bail them out. Others already imagined the next economic upswing, in which the currently created billions would inevitably fuel inflation – certainly without mentioning that for this to happen, companies would first have to increase their prices. The responsible politicians defended themselves with the catchword “systemic”: the survival of the financial institutes, for which they had provided such enormous guarantees and financial means, is “relevant to the system.” This did in no way disqualify the system, which is so expensive to maintain, but does justify the effort. Ironically, the representatives of the highest power are more right about the market-economic system than they would ever admit. “Relevant to the system” after all says what it necessarily and systemically is all about in the system of the market economy: about the celebrated “growth,” i.e., the increase of capital of all sorts – for which all the other spheres of society have to be useful.
This was the moment when the crisis convinced politicians that the credit system had to be restored. The “self-regulating powers of the market” and entrepreneurial expertise – both otherwise highly estimated – were obviously not in a position to do that – instead it was up to the political power alone. For, when politicians pass a gigantic rescue operation for the financial sector, then it is not merely the result of the goodwill of a handful of experts and democratic leaders. The decisions only come into effect because the state’s complete machinery of power backs them up: heads of state, government offices, the Central Banks. The state becomes active in order to give the banks a helping hand as soon as they start to ruin themselves. Indeed the whole world then has to obey, even the super-rich elite, who otherwise refuse to tolerate any state interference into their private business of money-making. And that is revealing – namely regarding the real foundation of the entire system of free enterprise: If this freedom can only be rescued by a sovereign act of force, but if it then actually can be rescued, then it is also based on force. This exceptional act by the highest authorities shows how and on which foundation the market-economic normality actually works. This system needs a perfectly functioning machinery of force that not only dictates to society how to maintain itself, but also ordains the “stuff,” through which everything functions: money, which was just recently lost instead of increased by its professional large-scale consumers. Money: in which the private power of the owner is embodied, i.e., which excludes through the barrier of money any access to a needed object – which is why first of all the private property owner’s need for money definitely has to be satisfied. This is the essence of market economic freedom, and this freedom needs to be authorized by the state. That much can be learned from the re-empowerment of the financial industry, which was just at the edge of declaring bankruptcy: by restoring its solvency, the state rescues the financial power of this industry and with it money itself. But that also means: wealth itself, calculated and realized in money, is nothing but a relation of force. Business is nothing but the execution of the power of disposal and command that state power bestows by virtue of its authority on property and its material form, the legal tender. This should give everyone who learned in civics class that money is simply a useful thing, needed to help exchange goods, something to think about.
“Relevant to the system” taken seriously does not only mean that the authorities care more about the financial sector than other sectors and other valid social needs. It also and more importantly means that governments teach a practical lesson with their emergency measures that they themselves don’t really grasp, but that leaves nothing to be desired in terms of clarity:
- From the outset, a market economy is a relation of force.
- This relation of force is based on and guaranteed by the state’s monopoly on power.
- By the rule of law, the state confers on property the command over all areas of life – or in other words: only if the requirement is met that property is increased, can this society, literally, exist.
- Property, and its demand to be increased, is consummated in money and its increase.
- And that power is conversely consummated in the financial industry. The business world is dependent on it functioning and is thus commanded by it.
5. State power replaces money with a money-substitute — but what are the consequences?
As was shown in the last section, money is a relation of power. It is involved in everything you do. People don’t get anything they need unless they buy it. Everybody takes that for granted, but it is only this way because the state has ordained it. The protection of property is a top priority in the state’s legal system: You can only get hold of a commodity if you pay its owner money. The meaning and objective of this procedure is not to enable the seller to buy something nice with the money he has earned. If he were to spend it on consumption, it would be gone, no longer available for the true economic objective of the exchange between a commodity and money: to continuously increase money. This can be seen in what capitalistic companies do every day and in particular in the unadulterated affairs of gentlemen in the financial business, whose yields set the standard for the whole business world. That is the purpose for which production takes place; for that purpose, loans are granted and increasingly risky “financial products” are created – and that is exactly what the state wants. It imposes this purpose on society and obliges everyone – from the CEO of the bank to welfare recipients – to adhere to this guiding principle. The former is the successful protagonist of this money accumulation, the latter are the inevitable victims.
The principle of increasing money applies so strictly that the state power itself respects it while ruling over its territory and its subjects. Of course, the state neither works nor runs a profit-oriented production process, but it pays like a regular customer for all the goods and services it needs for itself and for attending to its society. It thus adheres to the rules it enforces on its society, i.e. the rules of private property and its capitalistic accumulation. In a crisis, the state even uses its power – i.e., umpteen billions in newly incurred debt – to rescue money and credit from self-destruction, but then lets the business world decide how to make use of the state’s guarantees. The state explicitly leaves it to those it rescues to follow their own calculations – i.e., exactly those calculations which were valid before their disastrous collapse and with which they had driven themselves into the mess. Or an instant, the state is directly employing its authority as the condition and means for business – but only in order to empower the financial sector and the rest of the business world to operate again according to their calculations and their techniques of business. This explicitly includes using their speculation and their command over the business world to newly create capital out of the debts guaranteed by the state. It is their business whether they regard the loans provided by the state as a suitable base, as start-up funds with which to regain lost confidence. This is even true if banks get nationalized, rather that is a last emergency measure to ensure their survival, thus re-launching their business with debts in accordance with the rules of property.
How serious the state is in re-empowering the financial industry is demonstrated by the fact that the state, the ultimate power, condemns itself to powerlessness in terms of generating financial business. That the state does everything in its power to restore the power of the financial industry to engineer an upward spiral of debts also means that the state makes itself dependent on the financial industry functioning like it did before. After all, all the nation's economic activities, above all the validity and quality of the nation’s money itself, depend on it – and that is something the state authority just does not have under control. The financial industry might conclude that the money spent on its rescue is good for nothing more than dressing up the banks’ balances, and that the state’s rescue efforts will only add to the heap of debts and payment promises already accumulated within the financial sector, leaving the fragile status of the debts regime unchanged. The consequence – as demonstrated by the crisis of the Euro – is that doubts are being cast on the quality of government bonds in one country after another. The public has learned at least this much: Blaming the Greeks for their debts and bragging about their own country’s solidity may make them feel good and satisfy their desire for justice, but it does not change the fact that what the speculators are attacking is their own currency.
The increasing devaluation of Greek – then Irish, Portuguese, Spanish, etc. – government bonds affects the quality of the euro and thereby all European countries. This is why they all have agreed on a 750 billion euro rescue program. But now the same circle is starting again; or rather, it is continuing on just as usual: Once again, it is up to the banks to judge – and they have again been licensed to do so – whether they can use this rescue package to increase their money. There are some who look upon the inflated government debt with suspicion – which came about for their own sake! – and demand that politicians “consolidate” their debts. Others accuse the Spanish state – which is striving for this same ‘consolidation’ and is implementing “cuts” – of stalling growth. However, the contradictions in these demands are no reason for the states to neglect finance’s judgment, instead it means the state has to make an even stronger effort and do everything right so that finance can get on its feet again and perform its indispensable services.
Of course, politicians, who are always concerned with and intent on displaying strong leadership, do not openly proclaim the dependence that the state itself continuously reinforces because of the “systemic” indispensability of the financial industry. Instead, the leading figures of the big global economic nations bicker with each other over how everything could be done correctly, if only their regulatory power were correctly implemented. There are some who make the absurd claim that states’ bank rescues are basically a step towards socialism and aggressively deny responsibility for alleviating the hardship into which the crisis has plunged a vast portion of the capitalistic rank and file. Even though they thereby admit their inability to fight poverty, it is no reason for them to give up.
The next moment politicians present the only true remedy for success, which is to do everything in their power to revive “economic growth” – by supporting the same economy that created all the misery and multiplied it in the crisis. There are others who prefer posturing, making powerful gestures such as pestering the highly paid agents of the capitalistic economy with government demands. But all this does not change the fact that the state’s rescue package won’t achieve the urgently desired restructuring of the financial industry.
This is because the state’s intervention does not eradicate the following decisive difference: On the one hand, there is real capitalistic wealth, whose purpose is to continuously grow by means of an all-encompassing business with debts. On the other hand, there are the state’s umpteen billions, which are in and of themselves not yet capital, but ultimately only a guarantee for the continued existence of monetary assets. So the guarantee for the accumulation of these assets is anything but certain; it is rather a substitute that does more to conceal the present lack of increase than to compensate for it. And a state can only hope that this accumulation – for which only the material has been conserved – will come into operation by itself again. The state wants a return to the status quo, i.e., it wants the financial industry to continue to function as the motor of its economy – precisely by freely speculating and trusting in the success of its own speculation. What was true yesterday should be true again today and tomorrow: Definitive societal wealth is only what the financial industry earns by speculating on uncertain future increases in money. Real societal wealth consists in the legal claims that bankers possess on each other and the entire economy in which they invest. For it is only in this way that money’s power of self-accumulation takes effect as it should. That’s why state power is able to guarantee the command of money, but cannot replace its productive use. Of course, the state makes money available, but has delegated its use as self-increasing power to the economy. There is one “systemic” risk the state also has to take into account: Ultimately, it is the commanding power of money that is possibly at stake if “business” doesn’t deliver.