George Bush delivered a speech tonight in which he told the people of America what was going on in the economic world in words both he and they could understand. He unpacked the term ‘credit crunch’, telling a room full of carpenters that it meant that people could no longer borrow the money to buy their desks. It would have sounded patronising if anyone else had delivered it but from him, it just sounded like a man happy to articulate something coherently.
The world is in the middle of what Marx described as a catastrophic collapse of credit - an event (like the Wall Street Crash of 1929) when a tidal wave of bankruptcies sweeps across the world, paralysing production and ultimately leading to massive unemployment. How did it come about? The recent decade or more of boom not only inflated the value of shares on global stockmarkets but also allowed banks to accumulate a vast quantity of ‘fictitious capital’.
But what is fictitious capital? In short, it is the future surplus value of something. It is capital that is yet to be realised. A company might raise actual capital by issuing stocks, shares and bonds and then use that capital to generate surplus value. The owner of the share certificate or bond therefore has a marketable claim to a share of the future surplus value production. However, because the value of this claim does not function as capital, merely a claim on future surplus, the capital-value of this certificate is illusory - it is ‘fictitious’.
With the part-nationalisation of the banking sector in some countries and the tax-payer bailout in others, the general public are effectively becoming gamblers. Governments are betting on the future surplus value of the ailing banking sector using the people’s money. Talk about negative EV wagers? How ironic this is for the gambling community of the USA who have been blocked and hampered from making deposits onto online gambling sites by recent ‘nanny state’ legislation. It is almost as ironic as President Bush supporting a leftist Communist solution to America’s woes now that his beloved Market Capitalism has (as Marx predicted) proved itself untenable.
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