The Condition of Postmodernity 13 - autonomous learning

..194 Political-economic capitalist transformationordinary efflorescence and transformation in financial markets (seefigures 2.12, 2.13, and 2.14). There have been phases of capitalisthistory - from 1890 to 1929, for example - when 'finance capital'(however defined) seemed to occupy a position of paramount importancewithin capitalism, only to lose that position in the speculativecrashes that followed. In the present phase, however, it is notso much the concentration of power in financial institutioI;lS thatmatters, as the explosion in new financial instruments and markets,coupled with the rise of highly sophisticated systems of financial coordinationon a global scale. It is through this financial system thatmuch of the geographical and temporal flexibility of capital accumulationhas been achieved. The nation state, though seriously weakenedas an autonomous power, nevertheless retains important powers oflabour disciplining as well as of intervention in financial flows andmarkets, while becoming itself much more vulnerable to fiscal crisisand the discipline of international money. I am therefore tempted tosee the flexibility achieved in production, labour markets, and consumptionmore as an outcome of the search for financial solutions tothe crisis-tendencies of capitalism, rather than the other way round.This would imply that the financial system has achieved a degree ofautonomy from real production unprecedented in capitalism's history,carrying capitalism into an era of equally unprecedented financialdangers.The emphasis on financial and monetary solutions derives, ofcourse, from the inflationary rather than deflationary nature of theway the crisis was manifest from the mid-1960s on. What is surprisingis the way in which indebtedness and fictitious capital formationhave accelerated since then, at the same time as massivedefaults and devaluations have been absorbed, not without trauma tobe sure, within the financial apparatus of overall regulation (seefigures 2.12 and 2.13). In the United States, for example, the bankingsystem went into the red, for the first time since 1934, in the firsthalf of 1987 with scarcely a murmur of panic. The pace of bankfailures has likewise picked up dramatically since 1980 (figure 2.14).And we need only take the secondary market value of third worlddebt, and multiply it by the obligations outstanding, to get a roughestimate of the volume of devaluation current within the financialsystem (see figure 2.16 and table 2.9). Compared to all of this, theextraordinary fluctuations manifest in stock and currency marketsappear more as epiphemonena rather than as fundamental structuralproblems.It is tempting, of course, to see this all as some prelude to afinancial crash that would make 1929 look like a footnote in history.807060504030Brazil20 Peru. ... . . . . . . ...",--_/ .. ,...,Mexico • "_ . . - . . ..." -'" " .,10 ..% 0J A S a NFlexible accumulationD ' J. .1987 1988F,y '. - " -.. .M A M J J. .• • • ArgentinaFigure 2.16 The changing secondary market value of the debt obligations ofselected countries(Source: The Economist)While it would be foolish to rule that out as a very real possibility,particularly in the light of the heavy losses in world stock markets inOctober 1987 (see table 2.10), circumstances do indeed appear radicallydifferent this time around. Consumer, corporate, and governmentaldebts are much more tightly tied in with each other (figure2.13), permitting the simultaneous regulation of both consumptionand production magnitudes through speculative and fictitious financing.It is also much easier to deploy strategies of temporal and geographicaldisplacement together with sectoral change under the hegemonicumbrella of burgeoning financial markets. Innovation within thefinancial systems appears to have been a necessary prerequisite toovercoming the general rigidities as well as the distinctive temporal,AS195