French Government Falls As Social-Democracy Falters Amid New Global Debt Crisis - Part 5 of 9

The real reason that conservative social-democracy has sought to raise retirement ages, to reduce holidays, to cut welfare spending and so on, is not because workers are living longer, need more health care and so on, because the rise in labour productivity of actual use-values, more than covers that. It is that the parasitic ruling-class, which has no useful function, has drawn more and more for itself out of social production. What is more, the fact that the bourgeois measure of productivity has slowed significantly since the global financial crisis of 2008 is, also, no coincidence.

After 2008, a growing proportion of GDP went to cover revenues to the ruling-class and its state not for actual consumption, but simply to finance the purchase of existing financial assets, as they sought to remedy the damage done to their paper wealth as the asset price bubble burst. Compare that with the period after WWII, when a progressive social-democracy built welfare states, and pumped huge amounts into real capital investment in plant and equipment in nationalised industries, into state infrastructure, which itself raised productivity, and during which time, even the parasitic ruling-class looked to increased real capital investment as the basis of their revenues from expanding masses of profits, funding their payments of dividends and interest. What is more, they did that despite national debt forming a much larger percentage of GDP than it does today.

In contrast, as testament to the fact that the system has become thoroughly decadent and based on gambling and speculation, today, we have huge dams built in Ethiopia, producing vast amounts of hydro-electric power, which is then used not to produce goods and services for the Ethiopian people, but to power huge computer banks used for Bitcoin mining! The current cost of mining those Bitcoins is $20,000 each, but the Bitcoin is itself a pure speculative asset, even more so than were Tulip bulbs during the mania. At least tulips are real commodities. But Bitcoin has no use-value other than purely for the purpose of speculation. You can't eat it, wear it, or produce anything else from it. It is a pure waste of labour-time, and only sustainable as long as speculators gamble that its market price will be higher tomorrow than it is today.

If you borrow to finance real capital accumulation, as happened after WWII, the increased mass of capital and profits provides the basis of paying back the debt, as well as raising productivity and profitability. If you borrow to finance consumption, or to finance simply the inflating of already inflated asset prices it spells inevitable catastrophe.

What changed in the 1980's, was that, in order to resolve the crisis of overproduction of capital relative to the labour supply, a technological revolution was introduced, in which machines using the latest microchip technology replaced huge quantities of labour. Productivity, real productivity, i.e. physical output per labour hour, rose massively, meaning that the unit value of output fell significantly. That fall in unit values of commodities meant that there was a huge fall in the value of constant capital, and moral depreciation of the vast quantities of existing fixed capital. So, the rate of profit rose massively, and a further huge release of capital was created. In addition, not only did wages fall, as the former relative shortage of labour turned into widespread mass unemployment, but the value of labour-power itself was reduced. The rate of surplus value, and, thereby, rate of profit was raised.

In these conditions as in all previous long-wave cycles, total output rose more slowly than net output, because with rising unemployment and falling wages, aggregate demand grows more slowly. Profits rose, but with the new technologies, and release of capital, a smaller proportion of those profits were needed to fund capital accumulation. Interest rates, thereby, fell, and that started a secular rise in asset prices. The ruling-class, a global class, now with no social function, and which rested upon its ownership of fictitious capital, increasingly saw its wealth and power deriving from those fictitious assets, as though they had some magical power to provide them with wealth and revenues independent from the need to accumulate additional real industrial capital, and, thereby, the production of growing masses of profits.

That impression was further enhanced by the growing deindustrialisation of the developed western economies, and the growing industrialisation of economies in Asia, and Latin America, and more latterly Africa. A global ruling-class of owners of fictitious-capital has no particular objective reason to favour capital in one part of the world as against another, particularly in conditions of US hegemony, and para state global institutions whose role is to establish an international rules based order, seeking to provide a level playing field for capital everywhere. The ruling-class can as easily own shares or bonds of companies or governments in Asia, as it can those in Europe or North America, and the new communications technologies enabled them to buy and sell these paper assets at the press of a computer key, creating a further problem for nation states and governments, as I will discuss later.

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