The Invitation to Sacrifice

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By Tomasz Konicz*

The coronavirus is nothing more than a trigger that threatens to collapse an unstable system.

Here we go again – lo and behold, the time for the big “we” has arrived. When late capitalism, tormented by its internal contradictions, starts to be ravaged by a new wave of crisis, the great appeals to citizenship, cohesion and the “spirit of sacrifice” come to the fore. All participants in a deeply divided society are equally called upon to make sacrifices – from the billionaire to the salaryman and even the homeless.

It is the great whole of a false totality in which billions must be consumed to sustain a destructive and irrational system. But this time, the sacrifice to the god Mammon is literally demanding blood. Capitalism is thus unmasked as a secularized religion, as Walter Benjamin had already presented it in 1921 [1].

Blood for the god of death

Why not sacrifice life? If it's for a good cause, that is, for the economy! This is how it is currently argued. Everyone must make sacrifices: that's what Dan Patrick, lieutenant governor of the US state of Texas, demanded of his fellow citizens. After all, the economy must continue to function. Employees must therefore go to work despite the pandemic; the elderly, who die more often on average when they are infected by the coronavirus, should simply be sacrificed so that their grandchildren can continue working - argued the deputy governor. The septuagenarian declared himself ready to give his life for the economy.

Donald Trump argued in the same direction when he said that he does not want to see his country “remain closed”. The US president said that, already at Easter, it would be the time to reopen the United States. In Germany, too, the economy is required not to be ruined by a common pandemic. The newspaper Reuters [2], for example, recently released a sputum from investor Alexander Dibelius (McKinsey, Goldman Sachs), through which he asked that the machine not be stopped: “A flu is better than a stagnant economy”.

It is precisely through cynical phrases like these, under the spotlight of public opinion in times of crisis, that the irrationalism of the capitalist mode of production, a real threat to human civilization, becomes very evident. Capital is a fetishistic end in itself, a movement of unlimited valorization, an end in itself to which one can truly sacrifice everything. 

Such calls from capital for real sacrifice, which include the loss of many lives, show how dire the current situation is. The current crisis is much more serious than the precipitous fall of 2008/2009. In the event of a prolonged pandemic, it is possible that the system could actually collapse due to its intended internal contradictions. And this despite economic policy doing everything “as it should be done”, according to a simple perspective of national capitalist struggle against the crisis. The coronavirus is nothing more than a trigger that threatens to collapse an unstable system.

The economy in free fall

The only question remaining is whether the coming recession will be worse than the slump of 2009. At that time, the world economy plunged into recession after the housing bubble burst in the United States and the European Union. It only rose thanks to a gigantic economic program, with a massive injection of money. Now, however, the main shock comes from a rapid drop in demand, the interruption of production and the breakdown of global supply chains [3]. Well, this could cause an unprecedented historical contraction of the Gross Domestic Product (GDP) in the centers of late capitalism that make up the world capital system.

Maury Obstfeld, who was chief economist of the International Monetary Fund (IMF), recently compared, in terms of consequences, the current economic downturn with that of the Great Depression of the 1930s [4]. The severity of the economic downturn means that forecasts are likely to become obsolete at record pace. The second quarter of 2020 could be the worst US recession since 1947; according to JP Morgan, there is a risk of a 14% growth decline compared to the same period of the previous year. O Bank of America now predicts a 12% drop, while Goldman Sachs[5] still expects a catastrophic 24% drop over the next three months.

But he is the president of Federal Reserve Bank of Saint Louis, James Bullard, who gave the most impressive warning, as he fears a drop in GDP of up to 50% at the end of the second quarter, compared to the first quarter of 2020. This would cause the unemployment rate to rise to 30% and correspond to a 25% drop in economic output. By way of comparison: during the Great Depression of the 1930s, which plunged large segments of the population into extreme poverty, the US GDP fell by 25% in total.

What is decisive here is the time factor: the longer the fight against the pandemic lasts, the more the process of capital appreciation in the commodity-producing industry will be paralyzed to a great extent; thus, the greater the likelihood of a long-term depression. This will make a large layer of workers economically “superfluous”, plunging them into misery and threatening their very conditions of existence. If the virus “does not magically disappear in the coming months”, Professor James Stock told a gathering of journalists, “the crisis could assume the magnitude of the Great Depression of the 1930s”. We can already feel the warning signs of this imminent social catastrophe in California: since March 13, in the space of a week, about a million workers had already registered as unemployed [6].

The manifestly absurd calls, mentioned above, for wage earners to return to work despite the pandemic, for a sacrifice to the god of money to take place, are precisely based on a fetishistic compulsion for the unlimited appreciation of capital. Otherwise, in any case, capitalist society is threatened with collapse; it can only reproduce itself socially as long as the processes of accumulation are successful.

The growing production of an economically superfluous humanity will result from the deepening of the systemic crisis of capital [7]. This process can be largely passed on to wage earners in the periphery [8], through the competition that occurs with the crisis. It will reach the poles of capital accumulation if the fight against the pandemic continues in time. “We” cannot simply seek protection from the pandemic within the structural constraints of capitalism.

In the European Union, the prospects for losses from the crisis have also begun to be calculated. The European Commission initially assumed that the European Union's GDP would fall by 1%. However, in Brussels, parallels are now being made with what happened in 2009. According to these forecasts, the economy of the European Union should shrink in 2020 as much as it contracted after the burst of the real estate bubbles [9], that is, during the last crisis triggered by an endless weakening of the euro: at that time, the contraction of economic output was 4,5% in the euro area and 4,3% in the European Union as a whole.

The tremor that is now affecting the European alliances, which were already in ruins in recent times, runs the risk of giving a new impetus to the centrifugal nationalist forces, in particular in the currency zone. A true highwayman mentality is being established in this European “union”: surgical masks destined for Italy suddenly “disappear” in Germany [10]. Or they were simply intercepted by Poland and the Czech Republic in an act of state banditry [11].

The worst case scenario for West Germany would be a 20% reduction in economic performance [12], which would put more than a million wage earners out of work. The IFO Institute in Munich predicts, at best, a 7,2% decline in GDP in 2020. “The costs must exceed everything we know about the economic crises and natural disasters in recent years in Germany” – warned Clemens Fuest , the head of the IFO institute. Depending on the scenario, the crisis would cost between 255 and 729 billion euros. The head of the Federal Bank, Jens Weidmann, argued in the same way: he considered that the drift towards an “acute recession” appears to be inevitable. The consequences of these economic crises now hitting Europe are being felt strongly by wage earners: Volkswagen has put around 80.000 employees on short-term work [13] due to falling demand and interruptions in delivery chains.

The first forecasts at world level, for example from the IMF, also see the evolution of the economic situation negatively; Economists from this international body also draw parallels with the fall of 2008 [14]. However, the world economy largely depends on China, where, according to early reports, production appears to have restarted. This could mitigate the worldwide meltdown. However, Chinese command capitalism, commanded by a state oligarchy, cannot play the role of engine in the world economic conjuncture because China also has a huge debt [15]. The dependency of the “People's Republic” on export markets is still very strong, despite partial successes in strengthening domestic demand.

Countries shaken by fantasy billions

Given this imminent collapse of economic performance in the countries that form the heart of the world capitalist system, it is little wonder that economic policy relies on trillions of dollars of intervention. Such amounts are now pumped into the system with insane speed, as if there is no tomorrow. It is up to the political elites to prevent the collapse. It remains to be seen whether these efforts can prolong capital's agony by creating new bubbles, as was the case with the real estate bubble that ended up bursting in 2008/2009.

The dimensions of measures to support the functioning of the economic system have no historical precedent – ​​especially in the USA. On March 25, Democrats and Republicans agreed in Congress on a two trillion dollar economic support program. In the United States, the money helicopter that had been ridiculed before, that is, the one that dumps money to citizens in order to stimulate demand, became a reality.

Every US citizen with an annual income of less than $75.000 now receives a cash donation of $1.200, plus an additional $500 for each child. A sum of 100 billion dollars is owed to the private and dysfunctional “health industry”; small entrepreneurs can count on 350 billion; big industry gets 500 billion to stay alive; 150 billion goes to cities and communes, etc.

In the European Union, and in Germany in particular, the austerity measures imposed on the Monetary Union by Schäuble and other staunch supporters of this policy are being lifted, while the European Central Bank has announced a gigantic program of purchases of 750 billion bonds in euros [16], in order to allow indirect financing, through the capital market, of governments in crisis in the euro zone.

Likewise, the European Union has relaxed budgetary rules for eurozone states to promote credit-financed public investment. These have now been made possible through money from the European Central Bank. The brake on the growth of the public debt, imposed by Schäuble, was lifted, both in the European Union and in Germany. Meanwhile, Economy Minister Peter Altmaier said he was ready to think about "unconventional measures", such as "a check in the consumer's pocket". He also announced the nationalization of certain companies to protect them from falling into foreign hands.

The Federal Republic of Germany was able to establish massive economic recovery programs thanks to years of export surpluses achieved by the German policy of "ruin your neighbor", known as "beggar-thy-neighbors” [17]. These programs – even considering economic performance – quite rival [18] the delusions of grandeur in the US economy. To mitigate the economic impact, Berlin is mobilizing 750 billion euros in total, not without contracting new debts amounting to around 156 billion.

Through this additional debt [19], it is intended to finance various social measures, inject capital into an infrastructure that is now in ruins, recover the broken health system, as well as help companies and self-employed workers. Some €600 billion is earmarked for safeguarding German companies and export industries. The aim is to protect them from bankruptcy or hostile takeover through nationalization or government loans.

These billions are not a big deal when compared to the trillions of dollars that central banks must inject into the now weakened financial markets in order to prevent the collapse of the global financial system. The objective is to avoid, above all, the bursting of the liquidity bubble [21], which was fueled by the measures adopted to combat the consequences of the bursting of the real estate bubble in 2008/2009.

 It is precisely these financial bubbles, whose size has grown since the mid-90s (computer bubble, real estate bubble, current liquidity bubble), which generate an accumulation of public and private debts. The current level of global debt stands at 322% of the GDP of the world-economy. It expands now in the hyper-productive world system, as it has become dependent on the demand for credit. Now, however, it is under threat of collapse.

Economic measures stemming from panics cost central banks trillions, but they are necessary to protect the system from a collapse of this gigantic accumulated debt. This concerns both the 750 billion announced by the ECB to buy new bonds and the measures estimated at 1.500 billion dollars by the US Federal Reserve to try to correct the collapse of the American stock market. In the end, it is a creation of fiat money that has been called “quantitative easing”.

It has been carried out in the financial sphere through the purchase of securities and “securities” by central banks, with the aim of keeping the system “liquid” (the increase in the price of securities causes an inflationary effect). O Federal Reserve is now officially no longer subject to any limits: it was announced on March 23 that “aggressive measures” were needed and that “quantitative easing”, i.e. money printing, would be implemented without limits [22].

There is no limit other than the one looming on the horizon: a sharp devaluation of bonds that could spur economic collapse. The problem is that much of this growing mountain of debt can no longer be paid off if the recession continues over time, especially with regard to commercial lending. The shaky house of cards in financial markets, built in late capitalism, would collapse with catastrophic consequences.

Some models have already been made that took into account the debts of companies from eight countries – China, USA, Japan, Great Britain, France, Spain, Italy and Germany. An economic shock only half that of the 2008 global financial crisis would make paying off $19 trillion in debt impossible. This would represent 40% of the total corporate debt in the countries concerned. But the crisis threatens to resemble that of 2009 in many parts of the world.

The economic crisis that “they” are now trying to contain by injecting billions of dollars, euros, etc. threatens to interact with the financial waste of the ever-expanding global financial system. Well, this would lead to its devaluation and the occurrence of an irreversible shock. That is the danger of the current crisis: the bankruptcy of the global debt mountain would trigger a real collapse. The political caste has clearly understood this and that is why the valves of the Federal Reserve and the Central Bank are now open to the maximum.

The archaic demand for sacrifices to appease the markets mentioned above thus concerns an objective capitalist constraint. Trump is right. If the necessary effort against the pandemic is extended over time, there is literally a risk that the centers of the world capitalist system will collapse. The announcement made by Donald Trump that the United States would resume normal operations after Easter, as well as the “economic stimulus package” itself in favor of American financial markets, caused the biggest increase in prices since 1933. O Senhor do Dinheiro – i.e. the Baal of the Phoenicians and Carthaginians - accepts in good kindness the announced human sacrifice. Even if hundreds of thousands of people die miserably, capital must begin to be valued again through wage labor.

Equally obvious is the need for an emancipatory overcoming of this system that is plunging into destruction and barbarism. The high priests of the cult of death now prosper in it, supported by the servants of the money that generates more money. Ultimately, it has become a pure vital necessity to find forms of social reproduction that go beyond this totalitarian socialization. That is the only reasonable demand that can now be formulated in response to the ongoing disaster.

*Tomasz Konicz is a journalist. Author, among other books, of Faschismus im 21. Jahrhundert. Skizzen der drohenden Barbarei. Heise, Medien, 2018.

Post scriptum by Eleutério Prado

Tomasz Konicz is a German-Polish journalist, author of several theoretical and analytical essays that scrutinize the world, in this XNUMXst century, subjected to the suction force of capital, based on the perspective of the critique of value-dissociation. Marx's crisis theory is generally associated with the law of the tendency of the rate of profit to fall presented in the third volume of The capital. The currents of the critique of value and the critique of value-dissociation show, on the contrary, that there is a “first version” of the crisis theory in Marx's texts, which was outlined especially in the floorplans. She attributes the secular crisis of the capitalist economy to the absolute decline of living labor and, consequently, to the fall not only of the average rate of profit, but mainly of the mass of socially produced surplus value. Only this “first version” of the crisis theory makes it possible to coherently understand the absolute internal limit of capital.

“Wealth” in the age of fictitious capital, when the capitalist way of production and life can no longer survive, except through the consumption of a future production of surplus value, which, in the last analysis, will never come to an end. be carried out in the required proportions. Here it appears, now, as a gigantic collection of public and private debts that threatens to collapse. Konicz analyzes the latest push given to this fundamental crisis process: under the effects of the Covid-19 pandemic, much of the global exploration machine is coming to a halt.

Translation: Eleutério Prado

Notes

[1] https://www.heise.de/tp/features/Die-Prophezeiung-3363149.html?seite=all

[2] https://www.handelsblatt.com/finanzen/anlagestrategie/trends/interview-investor-dibelius-shutdown-derwirtschaft-macht-mir-mehr-angst-als-das-virus/25671192.html?ticket=ST -850362-eZ4xIm1hcYVICjh0SCyD-ap5

[3] https://finance.yahoo.com/news/covid-19-supply-chain-shock-100000918.html

[4] https://finance.yahoo.com/news/top-economists-see-echoes-depression-110000038.html

[5] https://finance.yahoo.com/video/goldman-sachs-issues-grim-growth-200114141.html

[6] https://sacramento.cbslocal.com/2020/03/25/gavin-newsom-california-unemployment-coronaviruspandemic/

[7] https://www.heise.de/tp/features/Kapitalismus-kaputt-4684452.html

[8] https://www.heise.de/tp/features/Freihandel-und-Fluechtlinge-3336741.html

[9] https://www.finanzen.net/nachricht/aktien/dickes-minus-droht-eu-rezession-in-2020-koennte-mit-derjahr-2009-vergleichbar-sein-8654765

[10] https://www.dw.com/de/china-hilft-italien-in-der-corona-krise/a-52858981.

[11] https://kurier.at/politik/ausland/corona-lieferung-fuer-italien-polen-und-tschechien-kassieren-maskenund-beatmungsgeraete-ein/400789163

[12] https://www.spiegel.de/wirtschaft/soziales/coronakrise-koennte-deutschland-laut-ifo-hundertemilliarden-

euro-kosten-a-449ac7f9-f0a1-4798-a93d-c68ff2130e43

[13] https://boerse.ard.de/aktien/vw-schickt-80000-beschaeftigte-in-kurzarbeit100.html

[14] https://www.salzburg24.at/news/welt/iwf-chefin-warnt-vor-schlimmerer-rezession-als-2008-85295830.

[15] https://www.reuters.com/article/us-china-economy-debt/chinas-debt-tops-300-of-gdp-now-15-of-globaltotal-iif-idUSKCN1UD0KD

[16] https://www.tagesspiegel.de/wirtschaft/ezb-pumpt-750-milliarden-in-die-maerkte-droht-europa-bald-diehyperinflation/25661774.html

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