Socialised and Fictitious Capital
What is different with this fifth wave is specifically this role of fictitious capital. Its only with the introduction of limited liability in 1855 that shareholding becomes significant. But, when the third wave begins in 1890, it is not a dominating issue. The reserves of money-capital can be mobilised for real capital accumulation. By the time the fourth wave begins, in 1949, shareholding is well established, and fictitious capital is the dominant form of wealth of the ruling class. But, inflated asset prices depend on low interest rates, and in 1949, huge public debts, run up as a consequence of the war, soaked up excess money-capital putting a floor under interest rates.
The physical destruction of capital and infrastructure placed huge costs on capital for reconstruction – without which post-war growth would have been even more robust – and thereby soaked up more of the excess money-capital. So, there was less scope for an asset price bubble, less basis for the owners of fictitious capital to focus on capital gains as opposed to yields, and so every incentive to direct available money-capital into new high profit industries. The opposite of those conditions existed in 1999, and it is that which explains not just 2008, but more importantly the response of the state and central banks to 2008, and their efforts to keep asset prices inflated. The Dow Jones did not recover its pre-1929 level until the 1950's. Between 1950 and 1980, the percentage rise in the Dow Jones was only half that of US GDP. By contrast, between 1980 and 2000, the Dow Jones rose by seven times the percentage rise in US GDP.
For the reason I set out earlier, nor do I see any reason why these conditions promote wars or revolutions. By contrast, there are plenty of reasons why the crisis phase would do so.
Paul says,
“Throughout the whole cycle, the tendency to replace labour with machines operates.” (p 73)
But, as Marx points out, that is not the case. For long periods, the process is one in which existing technology is simply accumulated extensively. Each machine added does not replace labour, but creates another job for another machine operator, and, in the process, increases the amount of surplus value. Its precisely for that reason that, during these periods, productivity starts to slow down, wages begin to rise, so as to eat into surplus value. Its that which leads to the profits squeeze that creates the conditions for the crisis phase.
It's not, as Paul says, technology here that means that displaced workers, in old industries, can be found jobs in new industries. It is that the new technologies, introduced to deal with the labour shortage, high wages and profits squeeze, are the basis for displacing workers, creating a relative surplus population, reducing wages and raising the rate of surplus value. Its one of the tools that capital uses against labour, and which causes the intensity of the struggles during such periods – Paris Commune, 1917 Revolution, 1972-4 Miners' Strikes. If the workers fail to create a new form of society during this period, then, contrary to Paul's thesis, they eventually suffer defeat in every instance.
It is not, as Paul theorises, some successful act of resistance by workers that causes capital to withdraw from the productive sphere into the financial sphere, forcing the capitalist state to intervene to introduce some new regime of capital. As Marx describes, in relation to The Factory Acts, for example, even in the 1840's as a new expansionary wave was underway, it was not successful workers resistance that forced the state to intervene. Repeated pieces of legislation were flouted, ignored or got round by the capitalists. In the end, as Marx says, it was the requirement of capital itself to have a level playing field, especially in conditions where the initial excess supplies of labour-power were starting to get used up, that forced them to accept, collectively, the requirement for state regulation.
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