The Myths of the Crisis by Tomasz Konicz, 6/9/2017


[This article published on 6/9/2017 is translated from the German on the Internet,]

When life becomes hard, simple explanations sound tempting. The simpler the better because hope can then quickly get back on its feet. Tomasz Konicz explains why all these explanations — financial crisis, greedy bankers and the ecological turn — are all nonsense.


Since the 2007 financial market crisis, culpability is distributed by and in the general public. Scapegoats are sought: greedy bankers, corrupt persons from the South, illegal migrants, incompetent managers or the lazy unemployed. Someone with abnormal behavior, laziness, greed or corruption must have triggered the socio-economic dislocations of the last years. Populist movements in the US and Europe stir up this personification of the causes of crises again and again.

Nevertheless, no one is responsible for the crisis. The market subjects do what the system demands of them ever more efficiently: boundless capital accumulation and reinvestment. The more effectively paid labor can be exploited for this, the greater the pressure to tighten the noose around the neck of all market actors.

This is only seemingly absurd. The central contradiction of capital relations is rationalizing goods production and organizing this ever more efficiently — so its own substance, paid labor, is gotten rid of. All market subjects strive to gain competitive advantages with new technologies and production processes. On the aggregate social plane, this leads to job cuts in the established branches of industry. So this inner contradiction of capital appears outwardly as a crisis of the capitalist work society. Jobs were created in new industrial branches to compensate for the dismantling in old industries. This industrial structural change ran aground in the 1980swith the digital revolution.

Even if no one is “responsible” for the system crisis whose dynamic developed quasi “behind the backs of producers” (Marx), this does not mean no one was to blame in capitalism. All individuals consciously execute the system pressures as “character masks” (Marx) in their respective capitalist roles so the system functions — the marked-mediated oppression, exploitation and ideology production. In the interaction with the crisis dynamic, the exploitation, oppression, and production of lies of the system increase into the absurd.


The crisis process was first located in the financial realm when the real estate bubbles in the US and Western Europe began to burst in 2007. The erroneous view circulated that a financial crisis could drag the so-called goods-producing real economy into the abyss with speculation excesses.

In reality, the situation is reversed. The inflated financial sector keeps the crisis-shaken real economy alive. It does this with the most important commodity produced in the financial sphere: credit. The world system characterized by huge proliferating mountains of debt runs on credit. The financial sector creates the credit-financed demand that makes possible an extremely productive real economy with its mountain of goods. The absurdity of the system crisis comes to light. Industry produces more and more goods with fewer and fewer workers in less and less time and can only write them off because the financial sector produces perversely high debts.

In late capitalism, the indebtedness of private persons and states — despite all political promises of austerity — is increasing much faster than the economic output. At the end of 2014, the global state mountain of debt s was around 286% of the world economic output while it was “only” 269% in 2007 and 246% in 2000.


The present system crisis is a long-term historical process that eats up by degrees from the periphery to the centers of the capitalist world system and is not a short-term event.

The breakthrough of financial-market-driven neoliberalism in the 1980s was a reaction of the system to the crisis of goods production. This was already reflected in the 1970s when the postwar boom, the economic miracle time4, ended. The economic crisis in the 1970s that went along with frequent recessions, inflation and mass unemployment made possible the march of neoliberal ideology from the 1980s

In a simplified way, the crisis occurred because the industrial structural change broke down. The postwar boom faded because no new equivalent accumulation regime arose that exploited the released workers to the same extent as in goods production. Therefore mass unemployment returned from the late 1970s in the core capitalist countries. The financial sector rose and created demand and investment possibilities while the real economy increasingly lost. This rise was accompanied by ever-larger speculation bubbles (dotcom-bubble, real estate bubbles and the current liquidity bubble).

The weakest links in the chain of the world system broke first in the crisis. The crisis had already developed in wide parts of the periphery with the debt crisis of the third world in the 1980s and the socio-economic breakdowns in the 1990s up to the barbaric end product. The periphery characterized by “failed states,” mad suicide sects and brutal dictatorships gives the centers a view of the future, namely the further development of the crisis somewhere between “Mad Max” and “1984.”


A constant struggle around the correct crisis policy has raged in the public sector since the crisis attack of 2007/09 that upended many centers of the world system. Two camps face each other. The neoliberal defenders of strict budget discipline want to surmount the crisis with draconian austerity programs to dismantle the huge global mountains of debt. On the other hand, their Keynesian opponents plead for a more relaxed monetary policy and comprehensive economic programs. Keynesians criticize neoliberals for driving many crisis countries into socio-economic collapse through monetarism and austerity dictates while neoliberals warn credit-financed economic policy only kindles an economic flash in the pan and enlarges the state debt burden.

The problem is that both sides are completely right with their diagnoses at the capitalist sickbed. However, their therapies must logically fail. Economic programs fall flat after a short time while brutal austerity programs lead to disastrous economic downturns. Look at Greece. German finance minister Schauble’s austerity policy literally drove the ravaged Mediterranean country to the brink of economic collapse while indebtedness in relation to the consumptive gross domestic product (GDP) is higher than before the acute eruption of the crisis.

There is no escape from this trap in which capitalist policy finds itself since the crisis cannot be overcome in a system-immanent way. It can only be solved beyond the present form of capital exploitation. Only a system-immanent policy that maintains the (private and state) indebtedness dynamic can prevent economic and social collapse and postpone the agony of late capitalism.


In the eroding euro zone, national state interests eclipse the conflict over crisis policy. With a policy of rigid savings, wage freezes and deflation, Germany successfully saddled the crisis-shaken southern periphery with the burden of the crisis. The German crisis ideology sees the key to overcoming the crisis in its export economy. The euro zone should become internationally competitive according to the German model to return to the prosperity- and growth path with a strong export orientation.

That the trade surpluses of an export-fixated political economy logically correspond to the deficits of import countries is ignored. Globally this is a zero-sum game. Zero euros will always result if all worldwide surpluses and deficits offset each other. Thus trade surpluses represent a debt export. Germany’s export-fixated economic model is based on debts. These debts are exported by means of trade surpluses (nine percent of the GDP) that make completely ridiculous the Germany-wide indignation over the debts of others.


The absurdly unequal distribution of incomes and assets that began with the neoliberal turn makes it seem the present crisis is a pure distribution question. The rich only need to pay more money. Mass demand must be increased to bring capitalism into a prosperity phase again like the postwar boom.

This crisis policy often propagated by leftist Keynesians ignores the inner drive of the capitalist “political economy” emphasizing the highest possible profits as an irrational end-in-itself pursued with rational means and not the satisfaction of needs.

Zillions swirl around in the financial sector, mostly fictional capital generated only by multiplying securities in the financial sphere, not by exploiting paid labor. This was all-too-clear when the real estate bubbles burst in 2007. The financial branch sparked off a boom of new “innovative financial products” like mortgage insurances traded on the expanded financial markets — and now encumbers the balance sheets of the central banks as financial market junk. Tapping this “wealth” would be like a devaluation attack, a wave of inflation.


A crude industrialism oriented backward spreads with increasing crisis intensity that preaches a re-industrialization and either completely denies or trivializes the ecological crisis. The rampant climate crisis and the obvious systemic dislocations in the economy are only two sides of one coin. The economy and ecology are interwoven through the crisis process. Economic rationalization leads to disastrous ecological damage since paid labor constitutes the substance of capital.

In general, the higher the productivity of the global late-capitalist exploitation machine, the greater its resource hunger. Capitalism is primarily a means to the end-in-itself of boundless capital accumulation only possible by the exploitation of paid labor and is not the satisfaction of needs. The greater the competition-mediated productivity increases, the lower the quantity of labor objectified in a commodity and the lower its value. Auto-emissions rise ten percent to avoid mass layoffs with a 10% increased productivity in auto-production. The increased tendencies to planned obsolescence (intentional reduction of the lifespan of products) in goods production have their cause in this absurd crisis dynamic.


In the environment of the eco-movement, the idea circulates that an extensive renewal of capitalism could lead us out of the crisis. Starting from the correct diagnoses that capitalism lacks a new accumulation regime, a massive promotion of ecological industries and the corresponding infrastructure should kindle a new green economic miracle — like auto-manufacturing in the 1950s.

The absurd inner contradiction of capital relations is manifest since the late capitalist economic machine is simply too productive for a necessary radical eco-term. Wind turbines and solar panels cannot be assembled today like cars with hundreds of workers. Therefore the multitude of exploited paid labor — from whose taxes the ecological infrastructure must be financed by the state — is very trifling in the eco-branch while the costs for the infrastructure ecological rebuilding are astronomical. Therefore the entire world speaks about the costs of the eco-turn — and not of its chances.


No, he does not know. The basic assumption of all populist policy that “the people” know their situation and can articulate their interests crashes in the dominance of the mass media and the late capitalist culture industry that long ago won the battle for minds. The population is still caught in forms of capitalist thought engraved in the mass media which in crisis times fuels an extremism of the middle and at best leads to leftist social demands that can hardly be realized in a system immanent way.

The left ultimately remains in the capitalist thought prison. In reaction to the capitalist system crisis, the institutions, mediation planes and forms of socialization of capitalism are maintained come hell or high water. Paid labor, market, and state are in crisis. However, they are strongly affirmed and not put in question by conservative politics.

The left should bring a radical crisis consciousness into the population adequate to the crisis process instead of holding fast to accepted forms of socialization. The first step is communicating the unvarnished truth to people as understandably as possible” to say what is the issue, to explain that the crisis cannot be overcome, that it will be much worse, that they must abandon their accustomed life and that capital in its agony threatens to destroy human civilization. In a word, nothing will remain as it is — whether we want this or not.




I think of myself as a Kierkegaardian and Bonhoefferian. Life consists of super-nova explosions of surprise, wonder, paradox and scandal.

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Marc Batko

Marc Batko

I think of myself as a Kierkegaardian and Bonhoefferian. Life consists of super-nova explosions of surprise, wonder, paradox and scandal.

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