Thinking the Unthinkable on the Shutdown
There is a recurrent theme in this shutdown. Let’s see if you are perceptive enough to pick up on it (courtesy Zero Hedge blog):
#6 Richard Bove, VP of research at Rafferty Capital Markets: “If they seriously default on the debt, what we’re really talking about is a depression”#7 Chinese vice finance minister Zhu Guangyao: “The U.S. is clearly aware of China’s concerns about the financial stalemate [in Washington] and China’s request for the US to ensure the safety of Chinese investments.”
#8 The U.S. Treasury Department: “A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse”
#9 Goldman Sachs: “We estimate that the fiscal pull-back would amount to 9pc of GDP. If this were allowed to occur, it could lead to a rapid downturn in economic activity if not reversed quickly”
#10 Simon Johnson, former chief economist for the IMF: “It would be insane to default, but it’s no longer a zero-percent probability”
#11 Warren Buffett about the potential of a debt default: “It should be like nuclear bombs, basically too horrible to use”
#12 Bloomberg: “Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.”
If the shutdown is not ended soon and the debt ceiling raised, all hell is going to break loose. These seem to be shared assumptions of both Democrats and GOP, hence public debate (propaganda) takes place within their parameters. The crisis as a mere political event begins with the assumption that any reduction in the debt must end in default, which is predicted to unleash such calamitous events as to be unthinkable.
And that is the point: We are not supposed to think about the likely outcome of a default or, if we do, must accept that it will “plunge” the world economy into a “depression”. Why a depression would be bad is never actually explained, yet we must never challenge that it would by a bad thing. We had a depression once in the 1930s, we are told and once is enough. What happened in this depression? Factories went silent and millions were out of work, poverty and starvation spread. We are scarred by this event forever, and just don’t want another one — ever.
This is the argument that is put forward to argue against default, which must, if it should ever occur result in a replay of the 1930s catastrophe. This argument is powerful and completely ends the discussion — it is like calling someone a racist or a pedophile. No one in their right mind wants to be associated with anything that everyone says must result in a depression. One need only establish — via the pronouncements of the highly respected College of Policy Makers, Money Managers and Economists — that “default must lead to a Depression” to seal off any further consideration of even the slightest slowdown in the growth of public debt.
The argument is so powerful that even the fiercest critics of the state on the Left and Right will not question it. Every account of the crisis I have read, no matter from what source, has accepted this assumption as a core premise of their argument. Even the Tea Party, who are the most vociferous opponents of deficits completely accept the premise default must lead to a depression — they only differ from all other sides in this political circus in that they assert default is not necessarily the outcome of ending deficits.
However, if you begin with the idea ending deficits must leads to a default on US debt and to a depression, you have not ended the discussion: you still have to explain why a depression is such a bad thing. A depression is defined by bourgeois simpletons as a severe reduction in employment and output. What is so catastrophic about the reduction in the level of employment and output? This question might seem absurd, but bear with me.
Do either a reduction in the level of employment or the level of output of themselves threaten society? Of course not. If we were to dismantle the bloated defense and national security sector of the economy, the fall in employment and output would be pretty severe. There would be both a fall in the level of employment and a fall in the level of output as measured by fascist state statistics in the form of GDP — it would fall by at least 10-15%. But ask yourself, what basis is there to continue spending on armaments and spies just because abolishing the Defense Department, the CIA and NSA must lead to a depression of GDP?
This is not a bad thing; it is just the sort of depression we want; we absolutely want a collapse of GDP in this sector.If this is what is meant by a depression, I say bring it on.
But you cannot even have this discussion because the word “depression” immediately causes people to lose their fucking minds. With all the angst over the possibility of another depression, no one ever stops to ask, What exactly is being depressed here? Employment n the Defense industry, of course. Similarly, it is absolutely true that a default on US debts will cause the complete collapse of the financial sector and a depression. But so what — that is the entire reason not to pay the fucking debt! You don’t pay the debt because you WANT the financial sector to collapse.
But we cannot get to this result in our own agitation because the moment Washington cries “DEPRESSION” the Left loses their lunch. Do you really think the result of an outright default on its debts by Greece would have been worse than what the working class suffered these five years?
To put this as directly as possible: We don’t want the economy to grow robustly — we want it to collapse; we don’t want an expansion — we want a depression. There is nothing about a depression that poses an threat to the working class whatsoever. A depression means profits fall, and to the extent wage slavery is dependent on profits it too must fall. But who in their right mind wants wage slavery to increase? Only the capitalist. The working class can protect itself from any depression by its own means — provided only that it will.
Moreover, what is a depression?
It is simply the forcible reduction of hours of labor imposed on the capitalist by the law of value. How the hell can the forcible reduction of hours of labor be bad for wage slaves? Every step the capitalists take to avoid a depression is a step they are taking to avoid reducing hours of labor and nothing else. You need to understand this, because when they say they are trying to avoid a depression, they are only saying they want to keep you working; they are only saying they are trying to keep you sitting in that cubicle, or standing at that cash register or attached to that machine as long as they possibly can.
And why is this? Because the longer you work, the more surplus value you produce. This is the whole meaning of avoiding a “depression” for the capitalists and the state.
The question this raises is the relation between raising the debt limit and avoiding a depression, i.e., a forcible reduction in hours of labor. Not one labor theorist has taken the time to explain the connection between the two. Since the bourgeois simpletons spend so much time warning us any reduction in state debt must end in depression, it is obvious there must be a connection and they recognize the connection between debt and hours of labor, although, apparently, the imbeciles of the Marxist academy do not.
When the fascist state borrows the excess capital of the capitalist and uses it to build aircraft carriers, this huge expenditure of labor does not create a single minute of surplus value. It simply destroys the excess capital and allows the capitalist to avoid reducing employment. The capital is employed unproductively, i.e., consumed in its entirety, both use value and value. Since the problem of every depression is the overproduction of capital, this addresses the immediate problem of overproduction. The overproduction of capital itself is not ended, but the social product produced by this overproduction, (overproduced commodities) is destroyed.
The means by which the mode of production disposes of its excess surplus is, therefore, staggeringly wasteful. A depression brings this wasteful expenditure to a halt momentarily or permanently in a very severe devaluation of the excess capital. The social laborers discharged from employment in this crisis represents a mass of labor time that is no longer necessary for society. It is not the workers themselves who are superfluous, but their labor time is no longer socially necessary.
However, since this labor time is not socially necessary, it does not produce surplus value — the capitalist, since he is only interest in labor time that produces surplus value, discharges them. Thus the reduction of hours of socially necessary labor is borne completely by one section of the working class, while the employed section remains overworked to the point of exhaustion.
This is the way capital solves the problem, but it is not the least bit necessary. Which is to say, the depression must happen in any case, but it does not have to lead to massive unemployment and starvation. To conflate the necessity for a reduction of hours of labor (depression) with massive persistent unemployment is capital’s solution to overproduction. And it is your solution insofar as you adopt the viewpoint of the capitalist on this question.
Marxists “pundits” who argue a default on the debt will end in unemployment for workers are simply regurgitating capitalist propaganda. These folks, like Doug Henwood, are merely echo chambers of the capitalist ideologues within the workers movement. The capitalists need you to believe that any reduction of fascist state deficits must lead to a depression. This is why everyone — even the most retrograde GOPers — are being trotted out by the Democrats right now to reinforce this message. This message has to be hammered into your consciousness that any attempt to reduce the size of the state will have unthinkable consequences. Even the most consistent and resolute communists have absorbed this fallacious argument and never question it.
The only real consequence of reducing the size of the state is to make necessary a proportional reduction in general hours of labor. This is all a depression is: the necessity imposed on capital to further reduce hours of labor.