“MUST THE MOLECULES FEAR AS THE ENGINE DIES?” *

NOTES ON THE WALL STREET “MELTDOWN”

Dear Midnight Notes Friends,

The breakdown of the Wall Street financial machine makes the task that we outlined in our June meeting more urgent. In June we planned to rethink Midnight Notes in view of the restructuring of the accumulation process and class relations carried out through the neoliberal turn and Structural Adjustment. We can now define this project more precisely: what do the current crisis and restructuring of the financial system imply for us as we join the rest of the world in the dog house of structural adjustment in the twilight of the American empire?

In response to these questions, it is important, first, that we realize that the so-called Wall Street “meltdown” is certainly the end, but also the completion of the neoliberal program. Let us be clear about it. To think otherwise is to ignore the lesson taught to us by the event that opened the present capitalist era: the 1973 coup again the Chilean working class experiment with socialism, that led to the victory of strong state backed market economy. Karl Polanyi’s theory that the single most important cause of the rise of fascism and Nazism in Europe was the inability to control the financial market after the 1929 crash also resonates here. In other words, we should not read the restructuring taking place as a turn to socialism/Keynesianism, to the extent at least that Keynesianism was an intervention by the state into the economy aimed at increasing the state’s investment in social reproduction, starting with the reproduction of the working class, in exchange for an increase in the social productivity of labor. Despite the adoption of regulatory mechanisms, the operation presently conducted by the US government bears little resemblance to the Keynesian program launched with the New Deal.

Behind the $700 billion bail-out and the many others that will follow--some already in the pipeline-- is a massive transfer of funds from the US working class to capital, inevitably leading to an assault on the last remaining entitlements (like Medicare, Social Security) and a general program of austerity the like of which we have not seen yet in a long time. The fact that there is no organized response to this assault makes us fear the worst. For things would never have reached this point if over the last decade the US workers had responded to the repeated thefts of their money and benefits, through the Enron scandal and the many other “crises” that have followed it. That despite the “instability” of the market, despite its usage as a means to expropriate thousands of small/working class investors, US workers continued to trust their livelihoods and future to it is certainly a key factor in what we are presently witnessing and Washington/Wall Street confidence in launching the new austerity program. It is our argument that in the same way as September 11 served the US government to shed the last remains of “democracy” and move to a model of government where militarization is always around the corner (apparently Representatives were threatened with the proclamation of martial law if they did not pass the bailout bill), so the Wall Street crash will serve to shed the last remaining elements of working class “socialism” in the US political economy, starting with Social Security, Medicare, a thorn in capital’s flesh, but so far demonstrating a great resilience, the last shore for working class struggle in the nation.

2. Lessons from the Debt Crisis.

There is a important parallel here, not sufficiently noted, between the present crash and bail-out and the “debt crisis” of the 1980s, which engulfed most Third World nations (except for China) and was the start of the globalization process. Both have been engineered in the same fashion.

The “debt crisis” was the outcome a financial campaign conducted by Washington and Wall Street, to practically force Third World nations to take cheap development loans --liberally dished out at the lowest interest rates-- at a time when capital was refusing to invest in Europe and North America in the face of the most successful working class attack to its profit-rate since the 1920s, and a new generation of Africans, Asians etc. were organizing to demand a global redistribution of wealth and a program of reparations, that is, in the language of the Bucharest Conference of 1974 : A NEW WORLD ORDER.

Through the lending mechanism, the massive flow of petrodollars that had been amassed in the aftermath of the 1974 embargo (the first attack on US wages, organized through a stiff inflationary wave) was redirected to the coffers of Third World nations, which, attracted by the bait of cheap loans, were soon hooked to the global economy, all dreams of an independent path to development foregone.

In other words, loans at the lowest interest rates were key to the creation of a global debt and the process of primitive accumulation (through structural adjustment) that was imposed on most of the workers of the world.

As we know, within less than a decade, the rise of the interest rates in the US, turned manageable debts into a long-term process of economic and political subordination. Debt became the hook for a massive restructuring of Africa’s, Asia’s Latin America’s political economies, re-establishing a colonial dependency that for three decades has served to promote a massive transfer of funds from the Third to the First World and defeat the organizational efforts of TW nation for an independent road to development.

Under the guise of the “debt crisis,” portrayed as a case of “mismanagement” by backward countries, requiring First World-style financial responsibility, countries across the world were forced to open their books to Washington--via the IMF and World Bank--accept any terms of repayment imposed on them. They were forced to freeze wages, terminate all social spending, open their markets to foreign investors and products, devaluate their currencies and so forth. The consequences of these policies are well known. While Washington and NY built forests of skyscrapers, sucking on the blood of Africans, Asians, Latin Americans, Caribbean people, such levels of impoverishment and expropriation were imposed on the people of the world that millions took the road out of their countries, unable to survive in them, while those remaining witnessed epidemics, elimination of schools, famines, wars, the loss of ancestral lands, waters and forests, brutal wars of privatization, all directly related to the debt.

This is history now, though the politics of SAP have set back for decades the project initiated by the anti-colonial struggle, reformulated and reasserted, as I mentioned, at the Bucharest Conference of 1974, where TW nations emboldened by the defeat of the US in Vietnam, demanded a NEW WORLD ORDER, i.e. the redistribution, return of the wealth that Europe and the US have robbed from the colonial world.

With the debt crisis, international capital obtained three major objectives.

i) It disciplined the working class in Europe and the US, by dismantling its manufacturing structure and refusing for years to engage in any serious investment in these regions [remember “zero growth”?]

ii) It destroyed the attempt of the former colonial world to escape a dependent/subordinate position, as demanded by the new generation of Africans, Asians, etc., who, infused of the spirit of Fanon, were keen on import substitution schemes, were pressing for REPARATIONS, and pushing for some form of socialism (in Angola and Mozambique).

(iii). In addition to defeating revolution in First and Third World, the “debt crisis” built the infrastructure for the new global economy. It forged the mechanisms by which industries and offices could be relocated, companies could run around the globe, the work process could be computerized and streamlined and the working class thereby could be flexibilized and re-divided.

Against this background, we must note some basic similarities between the engineering of the debt crisis and the engineering of the Wall Street crash and must assume these similarities will extend to the social consequences of the crash. The housing bubble was the result of loans made at very low though adjustable credit rates, redirecting the influx of capital coming from abroad (China and other countries) toward the US market.

Is it possible that investment banks, credit rating agencies, the head of the Federal Reserve all FAILED to realize what would be the inevitable result of an “easy credit,” lending policy that reversed decades of regulatory principles and rules? Unless we want to revel in the nonsensical tale of a blinding surge in human greed, the answer must be a negative one. Thus, we must stop using the concept of “failure” to describe the absence of regulations and the reasons for the crash. We must rule out that the architects of the housing/mortgage crisis did not know it would end in a financial disaster and cascade of foreclosures for the home owners, in the same way as banks are partly responsible for the debt of the US working class ($45.000 on average per capita).

Continuing with the parallel, we have to conclude that with this 700 billion dollar “bail-out,” coming straight out of our pockets and hides, the “structural adjustment” that since the 1980s has been imposed on countries across the world, is going to be extended to the US territory and the US working class. This time (after many beginnings and many deferrals) we too are being “adjusted.” I will discuss later what adjustment will mean at this time for us. For the moment we only want to stress that we are witnessing not only a financial meltdown, but also a great robbery, a macro-process of expropriation, an immense transfer of labor, this time siphoning funds to the US banking system not only from the Third World, as in the Debt Crisis of the 1980s, but from our households, through the classic maneuver of increasing the national debt. What we are witnessing is a capitalist coup, an example of capital’s historic readiness to destroy itself in order to regain the initiative and defeat resistance to its discipline.

3. Where does this resistance come from? How is the collapse of the financial systems a response to it?

We cannot understand the Wall Street crisis unless we read it in class term as a means to negotiate a different class deal and response to class struggle and resistance. However, in dealing with these questions, I also want to distinguish this approach and the growing tendency to view every development in capitalist planning as a realization of working class struggle and demands, the Negrian perspective on capital’s response to class movements.

This perspective is dangerous, because besides turning even defeat into a victory, (such as: we wanted globalization, we wanted flexibilization, etc), it ignores the fact that a capitalist response must use working class demands against themselves, use them to drive part of the working class out of the struggle, turn it against or away from the other half, use them in such a way as to spark off forms of development that decompose the class.

Let us look now at the crisis as a disciplinary tools and strategy. There are at least three areas of resistance to the neoliberal accumulation project that the Wall Street collapse has to respond to. I will list them without an attempt to establish an order.

First, the crash and the bail-out must defeat the attempt of the US working class to circumvent class discipline by using financial markets, rather than struggle, sweat and labor, to increase their wages. While strikes and struggles have died out over the last two decades, workers have tried to increase their income in three ways: investing in the stock market, buying on credit, now even for everyday expenses, getting equity money through housing, and defaulting student loans. These tactics have clearly failed and now millions of workers are now to pay twice for them, in terms of their individual losses and in terms of the losses that will be inflicted on the US proletariat as a class through the bailouts. If successful, these bail-outs will in fact be conducive to a new regime of low wages and zero entitlements the like of which we have not seen since the last part of the 19^th century.

The new regime will not be the end of market fundamentalism. It will be a revitalization of market investment through the injection of our social security money, and it will be a revitalization of some parts of American industry now presumably taking advantage of the fact that workers are desperate enough to accept any conditions just to have a job and a roof over their heads. A large part of capital has for a long time been lusting to bring back America to the situation before the New Deal, when employers had the upper hand. The “crisis” is giving them a chance to return to that era.

That this time Social Security is at stake is due to various factors. First, Social Security is the last pot of money available to re-launch the US market, in a context in which workers have no savings and monetary flows from the outside are drying out. It is also the last ‘scandal” on the list of US capitalists who have relentlessly for years now told us it must go. Most important of all, Social Security affects primarily the old, the retired, and it is therefore an easier target than entitlements affecting the whole working class.

So far workers in the US have resisted the privatization of Social Security despite many governmental attempts. But cuts in pensions have already gone a long way in the private sector, where employers have given stocks of their companies to workers, or stopped putting any money in their pension funds. The present crisis will extend that to government backed pensions. And the road to it has been cleared by years of false statements to the effect that Social Security is unsustainable. Though it is a colossal lie, younger generations have, however, accepted it. By cutting Social Security, capital undoubtedly hopes to pit the young against the old, who (as in Africa today) are being pictured as a crew of selfish gerontocrats sucking up the funds the young need to build their future.

The second target of the attack is the global resistance to capital’s appropriation of natural resources beginning with oil and gas extraction. The defeat in Iraq is the peak of it. To this day, despite an immense expenditure in war funding, the US has not been able to put its hands on Iraqi oil. Resistance to international capital control over global energy resources has also come from Venezuela, Bolivia, and Ecuador. Many more countries are also refusing the neoliberal packet, especially in Latin America. These refusals, not peak oil, are the true limits to capital’s energy plans.

There have also been bottlenecks in the exploitation of forests, waters, minerals, and lands which structural adjustment was to remove. A new “rurban” peasant movement has been growing that is fighting independently of unions, parties, ”civil society” and NGOs, using direct action tactics, to re-appropriate the lands and resources of which it has been robbed ---poaching, harvesting timber or produce in commercial plantations, mining diamonds and gold “illegally,” or farming in the very lands from which they have been “legally” excluded. When they move to the cities they squat on urban land and take over land not used, private or public to farm it for their needs. It is a vast re-appropriation movement that is redefining the fundamentals of social reproduction globally. It has put globalizers and adjusters out of government, it has forced the nationalization of local resources, and has redistributed wealth and political power, putting the World Bank and IMF almost out of business in Latin America. It has defeated the attempt to completely liberalize the economies of the TW through the rule of the World Trade organization. Though not sitting at the table, the specter of the rural/urban peasants of the world has guided the refusal of TW representative to comply.

Third, global migration has developed in ways that make it difficult for governments to use it as a regulatory mechanism for the labor market. Far from being an easy device for driving wages down, migration is now an autonomous uncontrollable phenomenon, with a logic of its own that is not reducible to the needs of the labor market. It is important however to stress (against the idealization of the migrant and of Exit, Exodus, Flight as a the highest form of struggle) that the struggle of the migrants is not superior to the struggle of those who remain. In fact, migration can lead to the dissolution of local organizations, it can create new divisions among the locals, separating those benefiting from remittances and those deprived of them, it can boost the cost of living in the area of origin by the influx of new money and hook local economies more strongly to the international monetary system, fostering the expansion of monetary relations. These, of course, are not inevitable results. Actually, migrants have been able to use the wage against the wage, to refuse impoverishment, to create transnational networks, to move from country to country seeking a better deal and nullifying national boundaries and borders.

The attacks on immigrants of recent months, which have seen the most massive factory raids and deportations ever in the US, are response to this autonomy. They are part of the attempt to create a population of rightless workers, to function as a safety valve for the labor market. Only if they have no rights can immigrants function as regulatory mechanism for the labor market (in the same way as mass incarceration and expansion of unpaid labor do). The redefinition of immigrant workers as outlaws and the criminalization of working class--historically a key strategy to devalue labor power--will continue to be a tool of the world order we will see emerging from the crisis. But the crash will intensify the divisions between “natives” and migrants, attack the organizational strength of migrant organizations, unless there is strong opposition to this strategy.

The Politics of the Financial Crisis and Our Response.

Crises are always a threat and an opportunity as they break down business as usual, and reveal something of the inner workings and nastiness of capitalism. This one is not an exception and we can be sure that what will come out of it will be greatly a result of what people do in response to it.

If the Great Depression is an indication, it took more than ten years for capital to organize a different social order. Much can happen in such a period.

The problem for us today is that workers are only organized around electoral politics at best. And many still place more hope in a racist and imperialist stance than in working class solidarity. We certainly don’t have a communist or an anarchist movement organizing rallies of the unemployed, fight against evictions, or organize “penny auctions” of farms as they did during the Great Depression. Nor do we have an anti-capitalist alternative as the Soviet Union was in the eyes of many. We also do not have the kind of solidarity that in the Great Depression led to invention of new commons, like the hobo movement and the creation of “jungle cities.”

Where to start then? This is what we need to work on in the coming months and years. There is no clear path to this kind of mobilization. But we need to start somewhere. On two things we can get people to agree with us: First, we better find alternatives, because, as things stand presently, we are so incestually connected with capitalism that its demise threats our own existence. Second, unless we organize to resist government planning, what lies ahead for us, after a cut of more than a trillion dollars of our “entitlements,” looks much more like some variant of fascism than socialism.

Notes on the "Bailout" Financial Crisis

George Caffentzis

0. These notes on the political-financial crisis were written in the last month while many US financial corporations were, in effect, nationalized in response to the bankruptcy of several major investment and commercial banks. The notes have been prompted by the fact that there has been remarkably little political activity in the streets, union halls, retirement communities of the country demanding a resolution of the crisis in favor of the millions of workers who are now losing wages, houses and pensions.

Certainly not even the most compliant unions and the retirement associations were invited to participate in the negotiations that were carried on concerning the legislation.

Is this lack of attention to workers' interests due to the "shock" tactics that the Bush Administration used to push the "bailout" legislation? Perhaps, but we also think that money and the financial sector of capitalism that deals directly with it have been inherently opaque to working class political analysis and action for more than a century. (The last time there was a self-conscious working class debate on a national level concerning the money form was the 1896 election when the fate of the gold standard hung in the balance.)

The purpose of these notes is to present in outline a way of understanding this crisis as developing out of class struggles taking place in the US and internationally in the last decade. This can be useful, I believe, since if class struggles had the power to create the crisis, then understanding them might guide us to the path that would lead us out of the crisis with more power.

1. Financial crises are difficult to understand from the point of view of class politics, for the standard Marxist model of class struggle to this day is still the factory where the workers' labor power is bought (through the payment of a wage) by capitalist firms and put to work along with machines and other inputs to produce a product that is sold for a profit. The workers are worked harder, longer, more dangerously and/or more productively in order to make a larger profit. They respond to this work regime by a combination of means, from compliance to a thousand and one ways of passive resistance to strikes to factory takeovers, while the capitalists devise strategies to resist this resistance. This struggle can take a myriad of forms (sometimes involving the most refined application of social and psychological sciences and sometimes the most brutal forms of assassination and torture), but the factory model is categorically straight forward: workers resist exploitation and capitalists resist their resistance; with profits and wages most often moving inversely. It is all apparently simple, but it can become complex because in a struggle there are many deceits and tricks each side plays both on each other and on observers (present and future).

When it comes to money and the financial corporations that operate with it (banks, mortgage loan corporations, and other money market firms) this model of class struggle seems not to operate. Why? There are at least three primary reasons.

First, money is quite a different "product" than either physical things like cars or services like massages. It is a bit mysterious. Words that combine the philosophical and necromantic like "magical," "abstract," "fetishistic," and "universal" are often used to describe money and to immediately give the impression that, compared to other commodities, the usual rules do not apply. For example, money is a unique kind of commodity, for it exchanges with all other commodities, a role that no other commodity plays.

Second, while industrial or commercial firms require the production and sale of a non-monetary commodity in order to "make money," financial firms make "money from money." They seem to operate in an abstract realm without a spatial location. This adds to the weirdness of the financial firms that during the history of capitalism have always attracted both fascination and hostility from other capitalists and workers.

Third, they claim a different form of income than other capitalists and workers: Interest. When it comes to making money they make it in the form of interest on loans to capitalists (who pay interest out of their profits) and workers (who pay interest out of their wages). In other words, the money financial firms "make" is created "elsewhere" by workers working for non-financial capitalists. The workers of the financial firms themselves may be exploited--e.g., be forced to work long hours and get paid in worthless stock bonuses--but the income that the firms' owners receive does not derive from these employees' efforts in producing a product. It comes from the profits and wages of those who received loans who are, in most cases, not their employees.

Where does the right to earn interest come from? How is it determined? These kinds of questions haunt our understanding of financial firms, since it appears that in a society where work is the source of value, interest appears to be like "creation out of nothing"!

2. On each of these counts then, financial firms do not fit into the factory model of class struggle. There undoubtedly is a form of struggle that financial firms in their nature are involved in that has an ancient origin: the struggle of debtor versus creditor. For when a firm lends out money to a person or firm, the debtor makes a promise to repay this loan with interest at some time in the future. The failure to do so in ancient times often led to slavery or mutilation, i.e., the famous "pound of flesh" the creditor was allowed to cut from the body of the defaulting debtor. In contemporary capitalism, besides criminal sanctions in the most egregious cases, default on loans leads to bankruptcy for capitalist firms and liens on the property and future income for workers. This kind of struggle (to pay or not to pay the debt) is based upon the threat to violate contracts, not upon the fundamental nature of the wage contract itself as in the case of wage workers which is inherently exploitative.

There is clearly a struggle going on in the US today concerning money and finance, but how best to understand it? Workers versus Capitalists, Debtors versus Creditors, or some new way? What are the political demands that are being voiced in this crisis?

3. To answer these questions we must get back to the basics and how they apply to contemporary capitalism. Before examining the particular elements of the "bailout" legislation, however, let us look to the elements of capitalism that are involved: F, the financial sector; I, the industrial and commercial sector; and W, the working class. We recognize that this might look like dry stuff from the outside, but we have two things to say about our style: (1) however dry, the contents of this analysis concern the fate of millions of people, including our own, and (2) the pace of this analysis has been deliberately made to take one step at a time to slow down the speed of thought concerning this crisis in order to combat the artificial acceleration the Bush Administration and their allies have imbued it.

We must remember that the act of putting a “W” to represent the working class does not magically unify this class. For the working class is profoundly divided by the wage itself. Some workers get higher wages than others and a large part of the working class is unwaged. These unwaged workers in a money economy are often subordinated to the wage-earning fellows. These divisions and hierarchies appear as racism, sexism, and many of the other sources of class weakness. Most important, we need to recognize that the workers involved in this story are not simply those in the territorial US.

Given these elements, we will have to look at the relations and struggles between F-I, the finance sector and industrial and commercial sector; F-W, the finance sector and the working class; and, of course, W-I, the working class and the industrial and commercial sector. Thus there is an intra-class and well as an inter-class struggle, i.e., one between wages and profits and wages and interest, but also one between profits and interest. The entrance of wages into the class equation concerning finance is very important because there has been a profound shift in the 20th century concerning our notion of interest. (That is one reason why, although very important, Marx's work in Capital III is only of limited assistance in this period.) In the 19th century and before, workers were never important direct players in the financial world, since they had almost no property that could be used as collateral to take out loans from financial institutions and they had almost no savings to be used as deposits in banks. In fact, the many mutual aid and credit union organizations that sprang up in the 19th century were due to the fact that banks and other financial institutions considered themselves as having solely capitalists (large and small) as their customers or that workers were too suspicious to hand over their hard earned savings into the hands of financial capital. This is no longer the case. Consequently, when we speak of financial crisis in the 21st century, we must speak of inter-class conflict as well as conflict between factions of capital.

4. What is the source of the financial crisis and the "bailout"? At first, it appears like every other financial crisis in history: the inability of debtors to pay back old loans and the inability of financial firms to make new loans. Instead of money creating money out of nothing, we now have money creating nothing.

There are two reasons why this crisis is a contemporary one: (a) it has its roots in the condition of the US working class and (b) it has its roots in globalization of financial flows.

The inability to pay back has much to do with working class home owners instead of capitalists not being able to sell their production for a profit large enough to pay the interest on their loans (which was the usual crisis scenario in the 19th century). In this case, the workers' wages were not large enough to pay the interest and principal on the loans they took out to purchase their homes. If workers over the last few years were receiving substantial wage increases, then there would not have been a financial crisis in the Fall of 2008. They would have been able to keep up with increasing payments required by the often bizarrely variable rate mortgage loans they negotiated. However, this was not the case. Indeed, there was a bout of real wage stagnation at the very moment when the housing market was booming and housing prices bubbled. So, in an important sense, the inability to sustain a successful wage struggle in the US of the 21st century is at the heart of the present financial crisis.

The second aspect of the crisis is the restriction in the flow of new investment funds into the US financial system. It was through vast flows of capital into the financial sector (especially from China) that led to US financial firms to offer mortgages and extend credit to US capitalists and workers. And here the word "flow" is important, for as long as there is new capital coming into the sector, "bad" loans could be "rolled over," and payments delayed without any serious problem. However, when there are significant constraints in these flows the mechanisms of deferral cannot be used and loans are defaulted on while new loans cannot be transacted.

I hypothesize that China was the major (though not the only) source of restriction of flows into the US for two reasons. The first is the recent reduction of the growth rate of the Chinese economy that indicates that there has been a decline in the average rate of profit in China. The second reason is that the Chinese workers have recently been able to dramatically increase their wages and better their working conditions. This has lead to increased Chinese investment within China itself and the cultivation of the domestic market in government planning. These trends have recently negatively affected the flows of Chinese foreign investment into the financial sector of the US and have been part of the reason why the US government has to make up for the short fall.

Thus we see how the mortgage crisis in the US is the effect of two proletariats: (1) the US proletariat's inability to increase wages (there have been almost no strikes of significance in the US in the last few years) and workers’ reliance on credit and equity to satisfy their subsistence needs (traditionally the attributes of rentiers) and (2) the Chinese proletariat's success, thorough thousands of strikes and protests, in increasing wages and forcing more investment in its social reproduction.

5. Given these causes rooted in class struggle, let us examine the "bailout" legislation as a set of "deals" between different elements of contemporary capitalism (coordinated by the state). By a "deal" we mean something like a tacit agreement that sometimes appears in but often underlies the official legislative formulation of a social contract. We use this language to indicate that the concept of a social contract is too formal and irenic (i.e., peaceful) a structure to capture the often unspoken aspects of these agreements to disagree that are dependent on the state of power relations and grow out of a protracted and open-ended struggle. Antagonists can agree on the rules of the struggle until the rules come up for struggle.

Let us take each of these sectors and examine the deal that is being offered by the state to them in outline:

F (the financial sector): This sector must agree to still-to-be announced government imposed open-ended restrictions on their freedom of action and government regulation of their money capital movements. It also agrees to at least temporary nationalization of certain branches of the industry. In exchange it will get a large-scale "socialization" of debt losses across the board (not just in so-called subprime mortgage loans). Implicitly there is an assumption that this socialization will not be adversarial (i.e., the personnel involved in choosing the debts to be purchased by the government will not be looking out only for the government's interest).

I (industrial and commercial sector): This sector must agree to support the "rescue" of the financial sector in exchange for a government guarantee of a continuous access to credit (the end of the "credit crunch") and an implicit indication that the principle--"too big to crash"--that was used to judge which firms in the financial sector would be "bailed out" would also be applied to this sector.

W (the working class): This class must agree to a dramatic wage decrease either through debt-inspired inflation and exchange rate devaluation or the theft of the Social Security Fund or both in exchange for a return to relatively full employment relatively quickly.

The configuration of the relations between F, I, W in the immediate future is described below:

F-I (the relation between interest and profit and financial and industrial capitalists). This coming period will repose the eternal conflict between the financial sector (and its claim to interest) and the industrial and commercial sector (and their claim to "the profits of enterprise") after a period of hegemony of the financial sector. Economic rhetoric will be filled with snide remarks about pure money magicians and rocket scientists who land their projectiles in teacups and the need for "real" investments (especially in the energy sector).

F-W (the relation between wages and interest or working class and financial capitalists). The coming period will be, on the one side, in the face of a tremendous downward pressure on wages, replete with demands for debt cancellation or Jubilee and, on the other, draconian sanctions for breaking loan agreements, for falling behind the mortgage schedule, and for sending money to cover the credit card statement TOO LATE.

I-W (the relation between wages and profits, and between workers and industrial and commercial capital). The Bush Administration's "ownership" society will begin to look quaint. As a consequence, the efforts by workers to regain their previous levels of income will no longer rely on finding a "financial" exodus (through stock ownership or house purchasing) and will have to confront capital directly around wage struggle, broadly conceived. For by “wage struggle” I mean the struggle to have the power not to have to sell one’s labor power and to have increasing control of the means of production and subsistence. This includes the power to preserve old commons and to create new ones.

All classes and sectors, however, agree that much of the ideology and some of the practice of neoliberalism will be turned into relics. "Government" is now trumping "governance" on all levels of the economy (not, of course, that the state was ever aiming to wither away as some postmodern thinkers were led to believe during the last decade.) Just as developments after September 11 like the invasions of Afghanistan and Iraq showed that the centerless and "flat" world of globalization was more an advertising gimmick than a reality, just as the return of the surveillance state with the "war on terrorism" showed that the internet was no field of open communication, then so too events this September and early October have shown the era of the symbolic, future-centered economy operating at light speed has reached its limits in a meteor shower of falling stock prices, bankrupt investment houses, foreclosed homes and tent cities.

It is also clear that the bailout deal is only as strong as the results it produces. There is no guarantee that either buying up hundreds of billion of dollars of “toxic” loans will be adequate to "restore" confidence in the financial sector, or that the credit flows will resume to the extent that will make an economic upturn possible, or that there will be a return to historically normal levels of employment after a period of "turbulence." Moreover, some parts of the system might eventually reject the deal previously accepted when confronted with demands that were merely implicit in the initial offering. For example, how will workers respond to the demand by the next administration that the Social Security fund be invested in stocks after just seeing the latest of a series of stock market crashes? Will the financial houses balk if they are regulated too stringently? Will the collapse of neoliberalism lead to a more powerful anti-capitalist movement in the US or something resembling what we would call "fascism"? These are the kind of questions that will be central to understand the class politics of capital's "exodus" from neoliberalism that is taking place now.

6. Critics of neoliberal globalization might take a moment to gloat about the destiny of its antagonist...but only a moment, for the consequences of this "bailout" are momentous and need to be considered carefully from the point of view of the state and from the point of view of the proletariat.

The great debate with China that the US government was engaged in for more than a decade concerning the role of the state in capitalism has been won by the Chinese (at least for this round). This is an important strategic outcome of the "bailout" and is often referred to when the international fall-out of the crisis is discussed. The bailout is an ideological blow of major proportions. How can the US government seriously push financial de-regulation at the very moment when it is practicing the exactly opposite policy? It is true that consistency is not to be expected in the world of power. After all, the US government has been preaching the abolition of agricultural subsidies to the governments of Africa at the very moment when it has substantially increased its subsides to its own farmers! But there are limits to political hypocrisy and, moreover, the countries like China that the US is preaching financial de-regulation to are exactly those who have the capacity to resist its embrace.

On the contrary, the Chinese model of strong state control of the financial sector and the exchange rate has proven the winner in this period not only over the Russian transition from Communism to Capitalism but now, apparently, in the US transition from Neoliberalism to a form of Financial Socialism. But this victory also has consequences for the development of a full political economy. What will the re-entrance of the state into the micro-organization of the economy mean for the whole system? Neoliberalism has been a political and a cultural paradigm as well as an economic one. It will require much research to anticipate how these areas of life will be affected by its collapse. How would a Chinese-like economic model bleed into US politics and culture?

Finally, is the US working class ready to lead world society out of this cataclysm of neoliberalism? The electronic assault on the politicians in Washington via the internet and the telephone system that led to the first defeat of the bailout bill gave many around the world some hope, but it was not followed by a more sustained resistance and was defeated in one week. By the wavering political response to the Bush Administration's "blitz," then, the immediate answer must be "No." Talk radio and internet petitions were ultimately weak tokens in this particular struggle. Indeed, by taking "sub-prime" mortgages as the cause of the crisis, the working class demands for reliable housing and income security have been branded to be systematically “toxic” to the credit system (to use the reigning metaphor of our day). The blockage of the credit route out of the long-term stagnation of the wage will have major strategic consequences. Since capital will not allow the US working class to be a class of rentiers (living off the ever increasing value of their stocks and of the equity on their homes), workers must return to the hard terrain of the wage struggle in the widest sense in the coming era, however unpropitious it appears.