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Financial delusions and the persistence of capital
Finance and Society 2023, 9(1): 76-79 © The Author(s) 10.2218/finsoc.8099
Fabio Vighi Cardiff University, UK
The dominant view among critics of today’s debt-based and increasingly volatile economy is that, at some point in the seventies or eighties, capitalism took the wrong turn, falling victim to greed and corruption. This view, a familiar narrative in a world that loves to personalise guilt, is flawed. It assumes that our finance-driven system is the fraudulent version of a fundamentally rational mode of production. As I have argued in a recent book, capitalist society is no longer able to reproduce itself through the value extracted from labour (Vighi, 2022). Increasingly and overtly, capitalism is driven by leveraged, speculative returns on financial assets. While it is delusional to believe that value can be produced through securitisation ad infinitum, to imagine that we should look to a putative ‘real economy’ to ignite a new growth cycle only means we are willing to be fooled twice. The financial demon is nothing but an expression of the inner demons of capitalism as such. The current slow-motion collapse of globalised capitalism is, at its core, a terminal crisis of the exploitation of labour. Today, at the dawn of the Fourth Industrial Revolution, the destruction of the substance of value (productive wage-labour) is not only irreversible, but also supplemented by new forms of authoritarianism aimed at controlling the unemployed masses. Neoliberal capitalism is gradually morphing into a fully digitised, neo-feudal type of capitalist seigniorage where a small financial aristocracy rules over the immiserated plebs. More labour continues to be eliminated than reabsorbed, driving yet more capital into the financial sector. This in turn feeds growing volatility in the global debt market, the pulsating heart of the financial perpetual-motion machine. Whenever the bond market experiences a sell-off, the central bank steps in to buy the unloved debt. Fresh liquidity may restore confidence but the beneficial effect is increasingly short-lived, as more cash is needed to prevent the credit-doped asset bubbles from bursting. After decades of expansive monetary policies feeding the system’s liquidity addiction, inflation is now structural. Any interest rate hike or Quantitative Tightening of monetary policy is hostage to the opposite necessity: the need to continue monetising public and private debt (as demonstrated by the recent collapse of Silicon Valley Bank). Either money is devalued as a general equivalent (inflation) or currency debasement takes the form of a market crash and/or violent recession (deflation). Unlike in the past, however, today both options come with the added bonus of system breakdown, which Corresponding author: Fabio Vighi, School of Modern Languages, Cardiff University, 2.05, 66A Park Place, Cathays, Cardiff, CF10 3AS, UK. Email: vighif@cardiff.ac.uk. https://doi.org/10.2218/finsoc.8099