The management and manipulation of crises is, according to David Harvey, one of the most important features of the so-called accumulation by dispossession, that is, the continuation and proliferation of accumulation practises that were grasped by Marx as ‘primitive’ or ‘original’. Debt crises, especially in the peripheral countries of the capitalist world-system, have been quite common since the 1980s (having even become endemic in the Latin American countries) and have as a rule been managed and controlled according to the recipes of the representatives of creditors, international financial institutions such as the IMF, and the governments of the core capitalist countries. The ‘fine art’ of dealing with the crises of the countries that have fallen into the debt trap has thus become an efficient instrument of the agents of capital in ‘rationalising’ subordinate peripheral economies as well as redistributing assets from the poor countries to the rich ones. The processes of what neoliberal economists call ‘confiscatory deflation’, which usually follow a crisis, are, for Harvey, nothing but practices of accumulation by dispossession.
The countries of the southern and eastern peripheries of the EU and the eurozone, such as Hungary, Romania, Greece and Portugal, have been the first to experience a severe debt crisis in the EU. They have been the first victims of harsh austerity measures and ‘structural adjustment’ policies imposed by the troika (IMF, ECB and the EC). This panel discussion will address the following question: Should the current ‘fiscal sustainability policies’ for managing and controlling the debt crisis in the peripheries of the EU and the eurozone – that is, policies that include draining public funds by means of high interest rates on sovereign bonds, programmes of privatisation of assets that have so far been public, etc. – be seen as practices of primitive accumulation, that is, of accumulation by dispossession?
Marko Kržan – From the Crisis of Public Finance to the Crisis of the Public Sector and the Welfare State
Like many peripheral EU member states, Slovenia is facing a serious crisis of public finance. The fact that its main problem is liquidity (a large government deficit and high yields on long-term government bonds), rather than solvency (the public debt and its servicing are low, the balance of payments surplus is increasing), is of little comfort.
As is well known, Marx treated the public debt and the international credit system as powerful sources of primitive accumulation that redistribute newly created value to the wealthiest domestic and foreign households. But there are two additional mechanisms of primitive accumulation that directly correspond to the measures taken by many neoliberal governments, supposedly in order to remedy the crisis.
These two processes will be described and analysed as the (intentional) transformation of the crisis of public finance into a crisis of the public sector and a crisis of the welfare state. The first affects the public sector employment, wages and spending, with immediate consequences for the aggregate demand and impediment of growth. The second implies the reduction of the scope and quality of the services of the welfare state. This will inevitable increase social inequalities. Furthermore, it will have specific effects on the class structure as well. With public institutions severely weakened, health, educational and other social services will be provided by (often state subsidised) private institutions. This will bring about a shift of class power from the modern bourgeoisie (clerks and [semi-]professionals of the welfare state) to traditional petty bourgeoisie (professionals), with a large part of former modern petty bourgeoisie transformed into a much more ‘flexible’ working class. Soon, centralisation of small proto-capitals will take place, both on the supply side and on the side of demand (private health and social insurances, pension funds). With the demise of the local bourgeoisie in case of mass privatisations of government enterprises, this will bring about a much more peripheral regime of accumulation.
Jan Toporowski – Interest-bearing Capital and the Accumulation of Capital
Marx put forward his analysis of interest-bearing capital before the development of markets in long-term debt. This facilitated the centralisation of capital. Along with the development of ‘pure credit’ money, this changed the way in capitalist enterprises finance themselves, and expanded the possibilities capital accumulation through credit operations rather than just through primitive accumulation. These two developments transformed the dynamics of capitalism from a system in which the amount of their own savings determined the scale of capital accumulation, with capitalists’ savings being augmented by largely short-term borrowing. The dependence on short-term borrowing gave rise to the typical industrial crisis of the nineteenth century, set off by an inability to roll over short-term borrowing. Long-term debt markets gave rise to Hilferding’s finance capital, stabilising the finances of monopoly capital, at the expense of capitalist firms in the competitive sector. Among Marxists, the resulting weakening of capital accumulation was widely seen as a problem of underconsumption, most notably in the earlier work of Paul Sweezy (The Theory of Capitalist Development). This interpretation of realisation problems in capitalism was challenged by Luxemburg, Kalecki and Kowalik, who saw the real problem of twentieth-century capitalism as being one of under-investment rather than underconsumption. This has clear relevance for twenty-first century capitalism, in which the scale of middle-class consumption precludes the possibilities of underconsumption.
Jan Toporowski studied Economics at Birkbeck College, London and at the University of Birmingham. He worked in fund management for the Church Commissioners for England, as an international economist for Standard Chartered Bank and the Economist Intelligence Unit and, most recently, as a Visiting Research Fellow at the Bank of Finland. In 2003 he joined SOAS with a Leverhulme Fellowship to write an intellectual biography of Kalecki, an endeavour that continues to be frustrated by his duties as Head of the Department of Economics since 2009.
Mislav Žitko – Left-Keynesianism: Friend or Foe?
The implementation of austerity measures and conservative economic policies with an unyielding focus on fiscal balance has created a space for the restoration of the Keynesian theory. Indeed, as the macroeconomic mismanagement in Europe reached extreme levels the rhetoric of fiscal stimulus and public investment became a legitimate instrument of struggle even in some Marxian circles. However, doubts about the nature of the Keynesian counter-cyclical policies remained as strong as ever. The question of whether the Post-Keynesian theory represents the proper description of the capitalist accumulation is usually complemented by the even more pressing issue concerning the incorporation of the Keynesian measures into a comprehensive anti-capitalist strategy. In my paper, I will try to highlight possible components of the Left-Keynesian programme beyond the simple measures of fiscal stimulus. Furthermore, I will tackle the question of the interplay between the fiscal policy and the social environment by looking at the political framing of the fiscal capacity of governments in the peripheral countries. My aim is to explore the relationship between the Marxian and Keynesian solutions to the present crisis through the insights offered by the Regulation school and the Varieties of capitalism literature.