Marx explained that capital was invariably over-extended in a boom and that in the crisis that followed a part of that capital was devalued, enabling the rest to return to profitability and to the process of accumulation and expansion. However, we are now to some extent in uncharted territory: a phase of monopoly-finance capital that is in many ways unprecedented.
Actually, I believe this is not a totally “uncharted territory” if we recall all the milestones in the history of capitalism; since the catastrophic possibilities, or at least, the unchangeable nature of the “engine” that the system has developed over centuries was more or less defined almost one hundred years ago by important thinkers. In the circumstances of the late eighteenth century, Marx could only imagine the rapid transformation of capital into something totally different at the next stage: A new form which is completely independent from the industrial production but having the ability to affect and even dominate it. Rudolf Hilferding clearly recognized the characteristics and tendency of this new structural change in the early twentieth century and named it simply the finance-capital – banking capital in money form, which was actually being transformed into industrial capital. A few years later, Lenin stated that “the supremacy of finance-capital over all other forms of capital meant the predominance of the rentier and of the financial oligarchy.”
That was a very important phase in the history of capitalism which triggered the circumstances that eventually brought the world economy to the collapse point – at least two times so far.
The finance-capital has two very important characteristics: First, it is independent from all nation-states (if we can still mention the existence of nation-states, of course) and local bourgeoisies – it’s absolutely multinational and globally liquid. Second, its nature is clearly money-oriented and it therefore strongly encourages creating and managing virtual values which we call “exchangeable shares” in today’s stockmarket terminology. Finance-capital tends to dominate the entire economy, using all the popular apparatuses that help it to create and manipulate unreal, fictitious values that have the ability to set control on industrial production. The inevitable consequence of it, is the collapse of the over-inflated financialization system.
So Foster rightfully points out this situation in his article:
Our experience of the last half-century has shown that capitalism at its core was able to avoid stagnation only by vast military expenditures and, when that proved insufficient, by an enormous inflation of asset values and speculation, i.e. “financialization.”
This is the crucial point here: Enormous inflation of asset values and speculation. But it’s finance-capital’s core nature and since it’s “globalized” now, the worst part comes: Just like the finance-capital itself, the catastrophic consequences are transferable to the whole world too! “The entire world economy is now affected,” says Foster:
“Already one economy in the European sphere itself — Iceland — has experienced a meltdown, requiring rescue from outside, and some have called Iceland the ‘canary in the coalmine.’ Over this last neoliberal epoch, the United States and its European allies have forced upon the entire globe a model of the free flow of capital across borders. The result today is the free flow of catastrophe.”
I couldn’t agree more.