Mystifying the Crisis

Despite angering some of its trading partners last week by pledging $600 billion towards another round of quantitative easing, the Obama administration went into the G20 summit in Seoul, Korea with high hopes. They wouldn’t last long. Obama’s agenda met with resistance immediately Thursday morning and was practically dead by the evening. First he failed to reach a free trade agreement with South Korea that was hoped to increase American exports of cars and beef. Later, a long meeting with Chinese President Hu Jintao failed to make any headway on a revaluation of the yuan or a preliminary agreement on an international mechanism to limit global trade and currency imbalances. China’s has firmly rejected any policy changes that would slow down its growth engine, including even non-binding agreements on limits to trade imbalances. “Don’t make others take the medicine for your disease,” Yu Jianhua, a director general of China’s Ministry of Commerce, told reporters.

The sickness referred to is obviously the US’s trade and fiscal position, but the metaphor could easily be extended to the political situation in the Euro-American world more generally. Despite the severity of the crisis, there is no political direction to the measures being taken in the so-called developed world; and there is no political leadership of the sort that a Chavez provides in South America or the state itself in China. Thus it has proven impossible for Euro-American elites to bind together both general and particular interests, at either the regional or national levels. Obama has utterly lost the confidence of American voters, and has been unable even to build a consensus with traditional economic allies like the UK and Germany- both of whom are miffed by the recent US monetary interventions, but neither of who have anything resembling a long-term strategy for sustainable recovery.

The UK, under a new conservative government, has turned to slashing the public budget, but who knows how long they will be able to keep this up, as recent student protests in London have starkly demonstrated the disastrous effects and unpopularity of Cameron’s Tories’ austerity measures. As for Germany, it has weathered the crisis as well as any European nation, but as an export economy it is practically as dependent on the deficit and debt funded spending of importing countries as China is, which is why it also won’t go along with any agreements on trade balance limits. The result has been a bunch of ad hoc measures, generally favoring the rich while adding tremendous levels of stress and uncertainty to the system. Within this geopolitical deadlock, what appear to elites to be short-term interests are pursued, without the metric of a long or even medium-term standard: the only course charted is a directionless drift into the waters of the future.

In attempting to address this strategic confusion in the heartland of the capitalist system, one might as well brush the dust off of Marx’s Capital and recall a famous but cryptic passage from the section “The Fetishism of the Commodity and Its Secret.” Marx:

“The mysterious character of the commodity-form consists therefore simply in the fact that the commodity reflects the social characteristics of men’s own labour as objective characteristics of the products of labour themselves, as the socio-natural properties of these things…. It [the commodity-form] is nothing but the definite social relation between men themselves which assumes here, for them, the fantastic form of a relation between things…. [This] fetishism of the world of commodities arises from the peculiar social character of the labour which produces them.” (Capital, 164-165, emphasis mine.)

For Marx, commodities (not just goods but also services, labor-power, money, international currencies, debts, stocks, bonds, etc.) appear to us not as entities which arise from a particular human mode of production and its entailed social relations between people, but rather as independent and quasi-natural entities with their own mutual inter-relationships, like objects in some kind of mechanical relation to each other. This is partly the result of a misrecognition- we fail to see that we are the ones who stand behind the relations between commodities. At the same time it is really the way that the relations between commodities appear, and therefore part of reality itself- in capitalism commodities do take on an objective and thing-like appearance, even if we are somehow responsible for this appearance in the first place.

In a “globalized” and interconnected capitalist world, this seeming naturalness of the relations between commodities disguises not just the social relations between producers and the owners of the means of production, but also the political relations between nations themselves. And it is indeed the case that Obama and his policy elites would have it that the problems with the global economy are the results of a kind of misalignment of its basic components and arrangements. Thus the global capitalist system, like a misfiring-engine, is merely in need of a tune-up. For them, the problems of the global economy- trade and reserve imbalances, the dismal state of employment growth, the debt and revenue crises that have befallen municipalities and nations alike, the food crises that have stricken the global South- have almost nothing to do with capitalism as such, with the actual stage of capitalism at this moment in our history and its real dynamics and tendencies.

The truth is that the global imbalances and the relative values of international currencies are not the cause of the economic crisis. They are, rather, symptoms of a system in crisis, the result of a mode of production which attempts to drive down the cost of labor to the absolute minimum that society itself can sustain, while at the same time churning out goods that have to be sold on the market in order for a profit to be realized. Cheap and easily exploitable foreign labor is the reason that manufacturing jobs have been hemorrhaging from the US for the last three decades, and it is the reason that they will not be coming back. The manufacturing capacity of China, Germany, and Japan is more than enough to overproduce for a global system that only engages in production in the first place if profits can reasonably be expected. But a world economic system that fails to generate jobs and sufficient wages for people can hardly sustain itself by trying to sell the goods and services it provides to those same people, and this elementary point seems not to have even entered the minds of Obama and co., let alone those of mainstream economists.

Don’t expect this to be lost on the Chinese, whose elites are at least familiar with critical and historical perspectives on the problems of capitalism. What’s more, as a full-fledged nation-state China is able to break with the impotent economic programs of the West, while attempting to guide its economic policies according to what it at least perceives to be its own interest. Granted that it doesn’t have a free hand here- it is certainly constrained by its reliance on US consumer demand and the fact that it holds trillions of foreign reserves that it doesn’t want to see devalued- but it won’t be railroaded into self-defeating policies by a US administration that has more than enough to worry about in both domestic and imperialist spheres. So while we cannot look to China to pull the world out of the doldrums, we probably rely on it to take a less magical view of the underlying causes of the global downturn than elites in the West. Perhaps for this we might be just a little hopeful.

PATRICK MADDEN can be reached at: