Business as Usual – On the ongoing madness of the capitalist mode of production by Thomas Meyer, 7/12/2023

Business as Usual – On the ongoing madness of the capitalist mode of production

by Thomas Meyer

[This article posted on 7/12/2023 is translated from the German on the Internet, https://www.exit-online.org/business-as-usual-vom-fortlaufenden-wahnsinn-der-kapitalistischen-produktionsweise/.]

It is gratifying when the real madness of capitalism is actually acknowledged in general analysis, especially with regard to the crisis since 2007/2008, and when criticism of it is formulated on that basis. Paul Mattick Jr.1 attempts to do this in his book, written in 2011 and translated into German in 2012,Business as Usual – The Economic Crisis and the Failure of Capitalism”2.

In this book, Mattick outlines the history of economic crises and argues for a concrete historical examination of capitalism. As a rule, however, crises are neither really explained nor understood, as people are unable to relate them to the internal history and logic of exploitation of capitalism. This is often because capitalism is perceived as natural anyway, and consequently, no consideration is given to viewing it historically.

### Capitalism as an imposition and crisis

The situation is well known: the bursting of the real estate bubble in 2007/2008 marked the beginning of the so-called financial crisis. Most commentators agreed in their actual incomprehension of capitalism. The mainstream of economics, mostly of neoclassical provenance, was rightly accused of being unable to formulate reasonably reliable forecasts or offer plausible explanations for the current economic situation. Critics of neoliberalism, deregulation, etc., on the other hand, were similarly blind to history, such as Keynesian Paul Krugman, who did not “address the reasons why Keynesian theory fell into disrepute in the 1970s” (25).

According to Mattick, a fundamental problem lies “in the prevailing approach to contemporary economic issues. Part of the problem is the terms used to understand the social system in which we live” (30).

To understand the current crisis, Mattick argues, one must examine the history of capitalism and its historical dynamics. In particular, we should take note of the nature of crises in capitalism, as opposed to, for example, famines in pre-modern societies: “But as the increasingly money-driven economy led to the industrial revolution and capitalism spread to such a large area that it became the dominant social system, a new phenomenon emerged: crises of the social system as a whole. Of course, various disruptive factors such as war, plague, and crop failures had already affected social production before. However, the establishment of capitalism brought something new: despite good harvests and mountains of food, famines occurred […]. Such collapses no longer had natural or political causes, but were due to specific economic factors: There was not enough money to buy the necessary goods, and profits were too low to make investment in production worthwhile” (35, emphasis in original).

Insofar as these facts were acknowledged at all, bourgeois economists have always sought the causes of crises in extra-economic or extra-social factors, such as William Stanley Jevons, “who since 1875 had stubbornly sought to prove a correlation between economic booms and busts and the sunspot cycle […].“ Marx, on the other hand, took a completely different view: ”Marx argued that the nature of capitalism produced a tendency toward crisis, which manifested itself in recurring depressions and would ultimately lead to the downfall of the system. However, his approach differed so fundamentally from conventional economic theories that other theorists who dealt with the subject—including the majority of those who called themselves Marxists—had difficulty even understanding his ideas, let alone finding them useful” (38f.).

Nevertheless, some bourgeois economists succeeded in recognizing the obvious, such as Wesley Mitchell (1874-1948) in his 1927 book on the business cycle, in which he wrote: “It is not what a company produces, but what it earns from it that is its business purpose. […] In a monetary economy, business is determined by current and expected profits” (43).

Mattick notes that it is quite astonishing that this insight has eluded most economists to this day.

However, Mitchell cannot provide a theoretical explanation for fluctuating profitability. Nor does he ask himself what money actually is: “These are questions that even a historically oriented economist like Mitchell did not think to ask, because the existence of money seemed completely self-evident to him […]. To ask them of a citizen of a capitalist society is like asking a resident of ancient Egypt why the water level of the Nile, and thus the growth and decline of agricultural yields, is determined by Osiris. Answering them requires sufficient intellectual distance from social conventions […] in order to understand money and thus also profit as historically peculiar social institutions that have certain consequences for our way of life” (48f.).

Work, i.e., humans reduced to a labor force, bourgeois gender relations, i.e., the double idiocy of kitchen and career, and a way of thinking that, especially in its practice, can only recognize the whole world as a substrate for the realization of value, would also have to be added.

Furthermore, it is forgotten that most people “[…] in large parts of the world, even in the very recent past, were rarely or never dependent on money […], that money does occur in many types of societies, but only in capitalism does it play such a central role in production and distribution […]. In such a system, money has a different social meaning than in earlier societies. […] In capitalism, this distribution takes place by determining which products can be sold in what quantities – and not through a social decision-making process about what should be produced” (50f.)4.

Mattick states that crises are related to the dynamics of exploitation in capitalism: On the one hand, the aim is to achieve maximum “profitability” – because making money is the driving force behind capitalist production – and on the other hand, in order to prevail in competition, costs must be reduced, for example by increasing labor productivity: by reducing the proportion of labor used relative to the quantities it produces. This generally results in the cost of the means of production rising relative to wages, so that individual goods become cheaper. This manifests itself in saturated markets, declining investment in the means of production, etc., and rising unemployment (59f.). The misery appears to be a lack of demand. This is precisely where Keynesianism comes in. The idea was that the state would generate demand through credit (e.g., through large-scale infrastructure projects5) in order to reignite the dynamics of utilization, thereby overcoming the depression and ultimately paying off the debt through increased tax revenues. Keynes’ model seemed to be successful, the depression was overcome (not least by the Second World War, 86f.), and parts of humanity were then blessed with an economic miracle (the “golden age” as Mattick calls it). Nevertheless, Keynesian methods were continued after the actual depression. The economic miracle was therefore hardly self-sustaining: “In reality, crisis management turned into a permanent public-private ‘mixed economic system’; far from being repaid, government debt rose in all capitalist developed countries from the mid-1970s onwards, both in absolute terms and in relation to GDP […] When Reagan left office, government debt had tripled from $900 billion to $2.8 trillion […]. In 1930, the US government’s debt stood at $16 billion; today it is $12.5 trillion and growing” (69, 91-93).6

Mattick also describes the genesis of finance-driven capitalism: “The decline in productive investment meant that more and more money became available for other purposes. […] This ‘massive shift toward speculative use of liquidity […] was expressed in a strong push for legal deregulation.’ Deregulation was thus a reaction to speculative pressure: it facilitated risky transactions, but was not the cause of increasing speculation. It is equally silly to explain the increase in credit-financed corporate acquisitions and other forms of speculation as a consequence of greed, as is often done today: not only does this leave unexplained why greed has suddenly increased in recent decades, it also obscures the basic motive behind capitalist investment decisions” (75 f.).

Mattick further emphasizes that the financial crisis of 2007/2008 must not be viewed in isolation from the crisis since the 1970s and its cause in the logic of exploitation; nor should the smaller crises since the 1980s. Rather, the current situation is “an expression of the depression that dramatically announced itself in the mid-1970s but has been kept in check for over thirty years by government economic policy—partly by shifting it to poorer regions of the world, but above all by historically unprecedented levels of debt incurred by states, companies, and private individuals in the richer part of the world” (82).

But what is the fundamental difference between the current crisis and the depression of 1929, apart from the boundless increase in government debt?

Unfortunately, Mattick hardly elaborates on this crucial point. He does mention that government spending “counteracted the previous decline in profit rates, but did not overcome it, [so] it is not surprising that companies used the available funds less to build new factories to produce more goods and more to try to squeeze more profit out of existing production: They invested in labor- and energy-saving technologies and reduced labor costs by relocating factories from high-wage to low-wage countries […] The results of this include a lasting increase in unemployment in Western Europe and the Rust Belt in the US” (73).

The qualitative novelty, the crisis of the working society, the microelectronic revolution, and its still untapped potential for rationalization are not really clearly elaborated. Referring to Marx, Mattick does, however, note that the exploitation dynamics of capitalism must ultimately lead to its downfall (see above), but he does not refer explicitly to the “machine fragment” from the Grundrisse, but only to the tendency of the rate of profit to fall.

Another inaccuracy regarding the question of why Keynesian methods cannot work is his statement that “state-financed production does not generate profit. […] The government does not have its own money, but pays with tax revenues or borrowed money, which ultimately also has to be repaid from tax revenues. […] Government spending cannot therefore solve the problem of depression […]. The government can postpone the problem by providing financial and other companies with the money they need to maintain their operations. It can alleviate the hardship caused by it, at least temporarily, by employing or supporting the unemployed, and it can build infrastructure that will benefit future profitable production. […] The fundamental problem in a period of depression can only be solved by the depression itself […]. Depression can […] increase profit rates by reducing the cost of capital goods and labor, increasing productivity through technological innovation, and concentrating capital ownership in larger, more efficient units” (100f.).

The counterargument to this is that Keynesian methods are effective, precisely when they lead to production on an expanded scale; when government concentration and mobilization measures lead to a greater absorption of living labor, when the reduction in the price of goods leads to an expansion of markets, when this consequently leads to an expansion of total capital, to an increase in the total value of society, whether mediated by war or not. This leads to higher tax revenues, so that those loans, which represented an anticipation of future earnings, can then be serviced after all. It is well known that this worked to a certain extent due to the massive expansion of Fordist industries. Why are Keynesian measures definitely no longer effective today, even though they worked at other times?

As already indicated, these methods no longer worked in the 1970s because the subsequent microelectronic revolution did not lead to a renewed absorption of living labor, and therefore finance-driven capitalism and neoliberal ideology represented the historical form through which capitalism, although completely blind to history and increasingly resistant to facts, dealt with this contradiction.

According to Mattick, the idea that the depression could be solved by a market shakeout (which was averted by loans of unprecedented magnitude) is definitely wrong for the present. Further concentration of capital, further rationalization measures, etc., would only increase the difficulty for people to function as exploitable labor containers; as would the mass of superfluous people “who gathered in huge slums by the hundreds of millions” (81f.). Mattick’s somewhat imprecise definition of the crisis makes him seem a little ahistorical, even though he is well aware of the extent of the misery, citing Mike Davis’ Planet of Slums. Fortunately, he does not succumb to a false optimism that ignores reality, as is often the case with the bourgeois lumpen intelligentsia.

Furthermore, Mattick writes, unlike many others, that China and India cannot be seen as beacons of hope for a restored capitalism, because “China’s growth remains […] closely linked to that of the developed countries […]. India, where the majority of the population still consists of poor rural workers, is even further from being an independent economic power. In fact, the foreign trade of both the Indian and Chinese economies continues to consist largely of the re-export of final or intermediate products and services produced by multinational companies based in Europe or the United States” (110).

### What can be done?

What can be done in the face of millions of people living in misery, environmental destruction, and even man-made climate change? What practical conclusions does Mattick draw?

According to Mattick, the traditional left, insofar as it is not already marginalized, can hardly be expected to transcend the horizons of capital. For the traditional left (social democracy and real socialism) has definitely had its day historically, since “the traditional labor movement was not a harbinger of the overthrow of capitalism, but rather an aspect of its development, insofar as it fulfilled the task of normalizing a new mode of social relations through organizations capable of negotiation and compromise” (122f.).

However, the demise of the traditional left is no reason to apathetically accept capitalist madness: for it is precisely in times of crisis that the difference between material and monetary wealth, as Karl Marx attempted to outline, can become apparent to many, which could motivate people to take action. Mattick also outlines this idea: money may be devalued, factories may be closed, but material wealth is still within reach, so to speak: “While they are currently still waiting for the promised return of prosperity, the millions of new homeless people, like many of their predecessors in the 1930s, may at some point look at foreclosed vacant houses, unsaleable consumer goods, and government food depots and recognize them as the things they need to live. However, simply seizing housing, food, and other goods breaks with the rules of an economic system based on the exchange of goods for money, and thus already points to a completely different kind of society” (133).

The independent appropriation of the means of production may be a first step toward getting rid of capitalism and thus finding a different form of society, even if humanity will still have to struggle with the catastrophic legacy (environmental destruction, etc.) of capitalism for a long time to come: “Whatever you call it, it will have to begin by abolishing the separation between those who control production and those who carry it out, and replacing a social mechanism based on monetary market exchange (including the exchange of labor power) with some kind of social decision-making” (137).

However, Mattick must be contradicted here when he writes that the means of production are under the control of certain subjects. It is true that no use other than a capitalist one is intended for means of production and real estate, etc., and that this will therefore be defended by all means of force if people presume to wrest them from the capitalist exploitation movement, as Mattick himself suggests: “Just as in totalitarian states, direct organs of power of the population in democratic states pose a threat to those in power, however limited their goals may be.8 Threats to the economic order will undoubtedly provoke repression that will exceed the level of violence already used by the military and police in recent years against demonstrators in Athens, striking civil servants in South Africa, students in London and other cities […]” (135).

Nevertheless, this essentially traditional Marxist formulation suggests that certain subjects actually have control over production and its contents. The functional logic of the dynamics of exploitation cannot be traced back to the volition of subjects, but this does not mean that no one can be held responsible for anything, because the imperatives of capitalism must be mediated through the subjects so that they can (or rather must) act in accordance with these imperatives. However, this does not mean that people are the subjects of the capitalist enterprise as a whole. This is where a subject- and ideology-critical level of criticism would come in, which is missing in Mattick (apart from an ideology critique of economics and various views of history).

But mere appropriation would be far from enough: for it is the productive (or rather destructive) legacies of capitalism, and in particular the business management form of their implementation, that are to be criticized and therefore cannot be viewed as positive per se. It would be a waste of effort to appropriate the capitalist “productive forces” only to then simply continue them on one’s own initiative (as can be observed in occupied factories9). If the mode of production is to be transformed, then the same applies to the content of production, which of course includes the abolition or reduction of certain types of production, such as the automotive industry.

Incidentally, this idea is not so new as a basic concept. The anarchist Erich Mühsam, for example, wrote in 1932: “The childish notion that the revolution will have already accomplished the transition to socialism by the workers occupying the factories and simply continuing to run them under their own management is as nonsensical as it is dangerous. […] Under capitalist conditions, businesses of all kinds are structured and organized exclusively to maximize profits for entrepreneurs. There is no consideration for people’s desires, no consideration for the requirements of justice, reason, or the lives and health of workers and consumers. […] An economy that leaves millions of people without work, literally starving, while at the same time burning important foodstuffs, dumping them into the sea, leaving them to rot in barns or using them as fertilizer, cannot simply be taken over and continued. It must be fundamentally transformed.”10

In times of “failed states,” appropriation occurs anyway, albeit in the sense of a plunder economy. However, appropriation, however understandable it may be in the given situation, can also mean that those who appropriate see themselves as an ethnic gang, a racist human breeding club, or a religious terrorist sect, etc., and consequently exclude other people from their means of production (or what remains of them), thereby continuing the competition by other means; in other words, appropriation as a bloody mode of redistribution in a “molecular civil war” (Enzensberger). As described, Mattick’s critique of capitalism is almost exclusively economic; the subjective moment is left out. He does mention that in crisis situations, people are quite capable of spontaneous solidarity, which gives us a little hope, but he does not further address the fact that they can prove equally capable of racism, sexism, anti-Semitism, and anti-Gypsyism, not only in their minds, but also as realized acts, as celebrated and applauded pogroms. At this point, at the latest, omitting the level of ideology and subject criticism from a critique of capitalism would come back to haunt us. Unfortunately, Mattick largely leaves it at the practical conclusions quoted above, without giving further thought to the matter. An answer to Lenin’s question may be more urgent today than ever, but it should not be demanded by shortening or even abandoning theoretical reflection.

Paul Mattick: Business as Usual – Crisis and Failure of Capitalism, Hamburg, Edition Nautilus 2012.

1. Paul Mattick Jr., born in 1944, the son of Paul Mattick (1904-1981), teaches philosophy at Adelphi University in New York.^See also the interview about the book that Paul Mattick gave to The Brooklyn Rail magazine in 2011. A German translation of the interview can be found at kosmoprolet.org. ^On the incomprehension of capitalism in neoclassical economic theory, see Claus Peter Ortlieb: “Market Fairy Tales – A Critique of Neoclassical Academic Economics and Its Use of Mathematical Models,” in EXIT! – Crisis and Critique of Commodity Society No. 1 (2001), 166-183. Online:https://exit-online.org/pdf/exit_komplett/exit1.pdf. Conventional economic theory usually considers itself “ideology-free” because it uses mathematics, which, given its obvious and historically powerful success in the natural sciences, is supposed to guarantee objectivity. However, this is more a case of methodological misuse of mathematics, cf. Herbert Auinger: Mißbrauchte Mathematik – Zur Verwendung mathematischer Methoden in den Sozialwissenschaften (Misused Mathematics – On the Use of Mathematical Methods in the Social Sciences), Frankfurt 1995. For further reading, see also: Knut Hüller: Kapital als Fiktion – Wie endloser Verteilungskampf die Profitrate senkt und ,Finanzkrisen? erzeugt, Hamburg 2015.^See, for example: Robert Kurz: Geld ohne Wert – Grundrisse zu einer Transformation der Kritik der politischen Ökonomie, Berlin 2012 and Hartmut Apel: Verwandtschaft Gott und Geld – zur Organisation archaischer, ägyptischer und antiker Gesellschaft, Frankfurt 1982.^See Wolfgang Schivelbusch: Distant Kinship: Fascism, National Socialism, New Deal. 1933-1939, Munich/Vienna 2005.^Currently (March 2016), US national debt stands at between $19 trillion and $20 trillion, depending on the source. However, according to various economists, the national debt is actually much higher: for example, if you include the steadily rising costs of social security, see http://deutsche-wirtschafts-nachrichten.de/2013/08/09/studie-deckt-auf-usa-haben-verdeckte-schulden-von-70-billionen-dollar/. ^More precisely, half of the population works in agriculture, 800 million Indians are considered poor, a third of the population is chronically undernourished, and 92% of the working population works in the informal sector without any insurance. Information from Dominik Müller: India – The largest democracy in the world?, Berlin/Hamburg 2014. Girls are more severely affected by malnutrition: it is quite common for boys in poor families to receive more than girls; girls are often not allowed to eat their fill, and if they try, they are beaten, and if there is not enough food, they are left to starve (!). cf. Georg Blume/Christoph Hein: India’s suppressed truth – polemic against an inhumane system, Hamburg 2014.^Even self-organized meals for the homeless are being combated by the state, cf. the material on nationalhomeless.org. ^When factories were occupied in Argentina, there was also discussion there about practical constraints and the expansion of night shifts, cf. “Occupied Factories in Argentina – Movement Against Capital or Self-Administration of Capitalist Misery?” in Wildcat No. 70 (2004). An occupation canalso mean a continuation of competition by other means!^

2. Erich Mühsam: Befreiung der Gesellschaft vom Staat (Liberation of Society from the State), Berlin 1975, 75. ^