Contribution de Christian Marazzi pour la séance du 9 mars 2011

« Violent Capitalism »*

From the bankruptcy of Lehman Brothers in the fall of 2008 to the G20 Summit in Toronto in June 2010, the crisis of financial capitalism has deepened and become even more complicated. In two years we’ve gone from state bail outs of banks, insurance companies, financial institutions and entire industrial sectors to the so-called “crisis of sovereign debt.” The latter is the result of states taking responsibility for salvaging banks, the massive defiscalization of capital and of the high incomes of the last 15 years, the reduction of fiscal revenue typical of recessions, the increase in costs tied to social welfare and in the interest on debt paid to Treasury bond holders.

In the same period, we’ve seen a process of economic and political concentration and reinforcement of the banks bailed-out by the state who have exploited low interest rates to increase profits by directly and almost exclusively investing in the stock market and in state bonds. This has allowed banks to pay back the aid received in the heat of the crisis, thus freeing them from any political interference and putting them back into a position of dictating the conditions for recovery. Three years from the subprime bust, the political power of banking institutions has grown to such a point as to mitigate and slowdown the application of the most urgent legislative reforms in the sector, in particular the separation of commercial and investment banks (following in the footsteps of the Glass-Steagall Act of 1933) found in the “Dodd- Frank US Financial Regulation” voted on in June 2010, with the result that the financial-banking system will continue to be “too interconnected to let it fail” for a long time to come.

The banks, both public and private, highly exposed to debt—and still holding toxic bonds inherited from the speculative wave of subprime mortgages—in countries like Greece, Portugal, Spain, Ireland and Italy, are at the origin of the financial aid of the EU and the IMF to neighboring countries and the severe austerity measures imposed on their governments. The aid provided to indebted states are actually measures to bail out major European banks, in particular German and French ones. It is “recapitalization” masked in a phase in which, just like during the American subprime crisis, banks no longer trust one another because of the opaqueness of their accounts, the interbank market is practically blocked and the threat of selling off public bonds— hounded by the devaluation of the Euro—is provoking the fall of those same bonds, increasing interest rates. These in turn further burden the cost of debt and the deficit of the most indebted countries. The result of the stress tests made public on 23 July 2010, according to which only 7 European banks out of the 91 banks tested wouldn’t be able to face a hypothetical financial shock, didn’t substantially change the big picture, leaving banks exposed to the stress tests of the market for now. The net result of this “financial Keynesism” in which central banks monetize the growing demand of the financial-banking sector at the expense of investments aid at growth and employment, is the continuing crisis.

In the US, ever since the Federal Reserve concluded its program of acquiring bonds tied to real estate credit in March 2010, we’ve witnessed the shutting down of the securities market, thus limiting banks’ possibility to package the credit paid in bonds to sell on the market. This, in turn, pushes American banks to restrict the criteria for credit concession even more. In Europe, the fact that the Central Bank has become the main source of financing for the banking system, is forcing banks to restrict their credit policies. It follows that, even if interest rates defined by central banks are close to zero and monetary policy is expan- sive, credit in the economy is still rationed. We are prisoners of a “liquidity trap” where the low cost of money doesn’t kick start consumption and investments, all the more so when everyone keeps waiting for an improbable return of inflation and the relative increases in interest rates—a situation that Japan already experienced in the 1990s. Together, tight credit and austerity measures are determining a deflationary spiral that, as Paul Krugman maintains, can lead to a depression similar to those following the Panic of 1873 and the crisis in 1929–1931.

This picture is even more complicated when we look at it geopolitically. The clash between the US, Europe and emerging countries, was evident at the Toronto G20 Summit. The Obama administration asked countries with strong commercial progress (Germany, China and Japan) to adopt expansive measures to sustain economic revival and substitute for American efforts, but Europe decided to maintain restrictive fiscal policies in order to face the crisis of trust over the sustainability of the public debt of its member states. The conclusion was a de facto null.

The US has exhausted the margins of “Keynesian” financial maneuvering. Its deficit is getting higher and higher and the Fed finds itself obliged to keep printing money in order to avoid a second recession. This is triggering a dangerous carry trade, with investors who go into dollar debt at a low cost and invest in bonds with higher returns. The only support to American and European recovery from the 2008–2009 recession consisted in America’s expansive monetary and fiscal policies, but even these have proven to be ineffective on a short to midterm basis, as the persistence of high unemployment and the reemergence of the real estate market crisis after state aid stopped both demonstrate.

In Europe, the depreciation of the euro isn’t able to counterbalance the depressive effects of the austerity measures taken by most EU countries, favoring only economically strong countries like Germany, whose exportations are mostly directed outside the eurozone. The policies of European governments converge on the adoption of “competitive disinflation” with draconian reductions in public employment, social welfare costs and salaries, but diverge from a strategic point of view. The political divergences between Germany and France are real and concern the definition of the size of the European block, fiscal harmonization policies, the relationship with the Central European Bank and the measures adopted towards countries that don’t respect budget discipline. It is a power struggle between a France that has lost its position on the international market and a Germany that wants to dominate Europe with austere economic policy.

The crisis of sovereign debt has revealed what the creation of the eurozone was able to hide over the last few years: the fracture between industrially strong countries like Germany and its hinterland, geared towards exportation, and neighboring countries of the eurozone, Romania, Poland, the Baltic states and Hungary, whose economic growth depends on the reinvestment of commercial surplus in both public and private sectors by central countries.

This European circuit is similar to the one established between the US and China over these last few years, in which countries with commercial surplus invest their savings in T-bills issued to cover the debt of deficit countries rather than investing them domestically in wage increases and social welfare. As noted, the American subprime crisis matured inside this particular economic and financial cycle, thanks to the securitization of real estate mortgages, the latter facilitated by low interest rates on American T-bills resulting from the influx of Chinese capital. The European circuit has worked more or less in the same way, except that in Europe there is only one currency while in the US-China circuit there are two. This is no small difference because the internal structural imbalances of the eurozone don’t leave room to form differentiated governance, like the choice to stimulate internal demand with infrastructure investments (as happened in China after the 2008 crisis) or with measures taken on the exchange rate of money (dollar depreciation or higher flexibility of yuan exchange rates).

Countries in surplus in the eurozone can’t allow for an excessively depreciated euro because the circuit rests on the acquisition of neighboring countries’ sovereign debt bonds by the same banks of central countries who, with a weak euro, would risk insolvency. On the other hand, as we saw after the subprime crisis, the circuit is only able to reproduce itself, at least in the mid-term, if the country in commercial deficit, even if it is highly unbalanced in the financial sector, actuates a kick-start policy increasing the public deficit, and certainly not decreasing it as Europe is doing. Even though it has been estimated that a depreciation of the euro would bring assets of $300 billion to the commercial balance in a short time, it isn’t clear who could absorb an asset of this size. Certainly not the US, where consumers are still struggling with unburdening their families of debt, and neither can China, which can’t quickly transform itself from an exporting to an importing country.

We are probably witnessing a historical process of the de-europeanization of Europe that can end in the explosion of the euro. According to some analysts, it shouldn’t be excluded that, even by the end of 2010, Germany decides to leave the euro to continue with its export-oriented political economy, this time rein- vesting its surplus more in Asia or Brazil than in neighboring European countries. It is a more likely scenario than a two-speed Europe with a single currency differentiated into a euro 1 (strong) and a euro 2 (weak). At stake is the survival of the European banking system and the power relationships internal to Europe and between Europe and the US. The relationship between the US and China, at least under the profile of currency exchange, is already quite precarious because there is also a weak euro in the middle of it, which forces China to devaluate the yuan to the dollar in order not to lose their market position in exportation.

Originally, the euro was conceived and created to protect Europe from the dollar and from American monetary policy. European economic and social unification wasn’t possible because the Constitution was strongly centered around the unification of capital markets. It didn’t adopt wages and fiscal measures between member states that would have consolidated welfare policies suitable to new processes of production and redistribution of wealth. Such coordination may have been possible with the introduction of a “european monetary snake” inside which each member state could have managed its own currency according to its own possibilities and needs. The euro, de facto a nationless currency, instead has worked as a vehicle for the financialization of the economy and public expenditure. It didn’t reduce commercial imbalances in the eurozone, rather worsened them.

Faced with the risk of the deflation of global demand and a slowdown in internal growth, the Chinese government seems willing to increase wages and better living conditions, a strategic-political measure meant to increase its international power, not through improbable revaluations of the yuan, but through the gradual construction of a social state in a period when its European counterparts are doing everything they can to dismantle it. Since the introduction of the new labor law of January 2008, Chinese workers’ wages have in fact increased over 17% and the frequency of strikes against Japanese and American multinational corporations are also on the rise. This is a process that will modify the composition of investment that has been strongly leaning, until today, toward infrastructural investments at the expense of the internal demand for consumer goods. But it is also a first sign that the US-China relation- ship regarding wage regulation may change, if it is true that, over the last few years, the low cost of Chinese labor and the low-cost of goods sold in American supermarkets has increased the buying power of the American worker by $1000.00 a year. It has been calculated that a 20% increase in Chinese consumption would allow a $25 billion increase in goods exported from the US, creating 200,000 US jobs. We are still far from full employment, but it is interesting to see that the global economy can be rebalanced by a new cycle of worker struggles in China.

As Silvio Andriani lucidly synthesized, “What kind of development could help us overcome the crisis? Both the hypothesis that there can be a rally of investments pulled by a revival in private consumption financed with family debt—since no one is proposing a wave of increases in redistribution—and that this increase in consumption can be pulled by the US would require reimplementing the old development model, and it is its unsustainability that brought this crisis about to start with. Even supposing that this scenario were possible, we would be laying the ground for the next crisis, which would be worse than the current one. More likely, such a hypothesis is unrealistic and the risk of a “third depression” and the reinforcement of protectionist reactions will become quite real.”

It is a veritable riddle and it wouldn’t be sufficient to provide an answer invoking a quantitative increase in public demand financed through debt to counterbalance the fall in private demand caused by the first crisis. In this case, it is quite probable that the structural imbalances between countries in surplus and countries in deficit accumulated on a global scale over the past years would only get worse. This raises once more a series of questions developed in this book.

The first question concerns the interpretation of the financialization process, its progressive development beginning at the end of the ’70s and its relationship to the real economy. The thesis that we have put forward is that financialization is the other side of the post-Fordist capitalism coin; it is its “adequate and perverse” form. However, it doesn’t make financial capitalism less detestable. Maintaining that financialization is consubstantial to the new processes of capital accumulation means going beyond the 19th century idea that there exists a good real economy and a bad financial economy—two conflicting worlds where finance works “against” the real economy, ripping capital from its productive use, the creation of employment and wages. Certainly, the way the logic of finance works and the succession of speculative bubbles which increases private and public debt impacts the real economy, provoking closer and closer recessions. The problem is that, with financial capitalism, on a global scale, it is extremely difficult to overcome the crisis by definancializing the economy, i.e., reestablishing a more balanced relationship between the real and financial economy, for example by increasing investments in the industrial sector or, as in the 1930s in the US, investing in the construction of the social state.

By now, finance permeates from the beginning to the end the circulation of capital. Every productive act and every act of consumption is directly or indirectly tied to finance. Debt-credit relationships define the production and exchange of goods according to a speculative logic, transforming, that is, the use value of goods (theoretically all produced or to-be-produced goods) in veritable potential financial assets that generate surplus value. The demand, and the indebtedness it implies, for a financialized use value, as happened with housing during the subprime bubble, induces further increases in demand precisely in virtue of the increase of the price of that good. This fully contradicts the law of supply and demand typical of neoclassical theory where an increase in price reduces demand. After the ascendant phase of the economic cycle, when the inflated prices of financialized goods begin to diminish for lack of new buyers, the contradiction between debt levels (fixed in nominal terms) and prices of financial assets (which can both increase and decrease) violently explode. This triggers a selloff of financial assets in order to be able to cover the debt contracted, a selloff that in turn causes a further reduction in prices and therefore more selling (this spiral is called a debt deflation trap).

The debt crises that have characterized businesses, consumers and states for nearly 30 years are based on carry trade, i.e., borrowing at a low cost to invest in higher rendering bonds. As such, the debt crisis is, as was theorized years ago by the American economist Hyman Minsky, inherent and cyclical to financial capitalism. In the ascending phase of the cycle, in times of prosperity, businesses, consumers and states are encouraged to assume more and more risks, i.e. go into debt. Initially, such speculation is profitable and encourages more and more new subjects to go into debt in virtue of the increase in the price of financial assets. This inclusive process works as long as the capacity to repay the debt is guaranteed by new entries, but ends in flipping over into its opposite, into crisis, when the difficulty of repaying debt first begins to show, triggering a selloff of assets and an increase in interest rates.

In global financial capitalism, the margin of flexibility in interest rates used by monetary authorities is very limited. This is due to investment fluxes in state bonds, in particular in American T-bills, which lengthen the expansive phase of the debt spiral despite the increases in interest rates decided on by central banks in order to contain speculative bubbles. Today, more than interest rates, which are in fact, close to zero, it is the interbank market (the bulk market that banks use for their account activities) that is responsible for rationing credit to the real economy. In order to save the banking-financial system from collapse with injections of liquidity, public intervention, be it national or supranational, reveals two things: on one hand, the necessity to plug up with added demand (to prevent a crisis of overproduction) the surplus value produced in the expansive phase of the cycle through debt, on the other, to determine a process of exclusion from access to goods produced in the ascending phase through layoffs and the worsening of living conditions. It is during this phase that we see a selloff of excess produced goods coupled with industrial and bank capital concentrations.

Overcoming the subprime crisis caused the shift of debt from private to public sectors, but the public debt, increasing vertiginously more than anything else, is the result of the socialization of financial capital made with the taxpayer money and the creation of liquidity by monetary authorities. A kind of communism of capital where the state, i.e. the collectivity, caters to the needs of “financial soviets,” i.e. banks, insurance companies, investment funds and hedge funds, imposing a market dictatorship over society. The “communism of capital” is the result of a historical process beginning with the recourse to retirement funds to finance the public debt of New York in the mid-seventies and, following this, the trans- formation of new productive processes that have changed the base of the creation of wealth and the very nature of labor.

The analysis of financialization raises a series of questions that are subject to debate. First, if it is certain that in the last 30 years profit rates have constantly increased despite frequent financial crises, it is also true that, on average, the rate of accumulation on a global scale has increased, but at decidedly lower rates in respect to profit. “Data demonstrates,” Daniel Albarracin writes, “an important accumulation in Asian and emerging countries, which mostly compensate for the regression seen in the US, Japan and Europe.” The divergence between these two rates is surely at the origin of the coexistence of prosperity and relative growing poverty, but cannot be immediately interpreted from a historical point of view.

In our opinion, the divergence in accumulation rates between developed countries, Asian countries and new emerging countries should be analyzed on the basis of the global form of contemporary capitalism, keeping in mind the strategic role of trans- national companies that directly benefit from the high growth rates of emerging countries, repatriating the surplus value realized there to invest it in financial markets, as well as keeping in mind the appearance of new political tools for coordination, intervention and supranational control, like the G20, the IMF, the World Bank, the WTO and the central banks of the main regional poles of development. The globalization of capital has internalized peripheral economies, forming the Empire theorized by Negri and Hardt— an empire in which the same logic of exploitation rules, even if articulated in different forms, and where the appropriation of wealth by a transnational capitalist oligarchy dominates. Today, the relationships between North and South, center and periphery are inside accumulation processes, every “outside” is already “inside” the process of capitalist growth.

Reasoning in terms of empire rather that imperialism (i.e., the relationship between “inside” and “outside,” center and periphery, development and underdevelopment) doesn’t mean underestimating the internal contradictions of global capitalism. There is no doubt that between the US, Europe, Asian countries and emerging countries there are differentiated strategies regarding investment choices, monetary policy, growth stimulating measures, the role of exports and modalities of financing public debt, as we’ve shown in our analysis of the real tensions at play in capitalism in this period. These contradictions are, however, inscribed inside a “cooperative competition” that has the unifying objective of extending the processes of workforce exploitation and the redistribution of wealth according to appropriative logic. This does not exclude the possibility of a crisis in international relations, the beginning of a dangerous process of de-globalization based on protectionist policies and local wars to reestablish a hierarchical order of global control. The crisis we’re in can have entirely contradictory and dramatic effects precisely because of its long duration and the sum of tensions that are emerging from it.

The other crucial question open to the analysis of contemporary capitalism is the interpretation of financialization beyond preconceived ideological schemes inherited from the past. There is no doubt that the separation of the rate of profit and the rate of accumulation is the consequence of policies centered around increasing stock value and transferring surplus value (dividends and interest) to investors, above all large institutional investors. This was made possible thanks to souring labor conditions, direct and indirect wage compression, precarizing labor and externalization processes of whole segments of production. That is, if the cost of labor is minimized and employment is reduced, profits increase and a part of them are invested in financial markets to guarantee financial rents. The mobility of capital, its orientation towards emerging countries with high rates of profit and company delocalization are all processes that have contributed to increasing profits, without, however, triggering a new wave of general prosperity, rather an extreme polarization of incomes. We are witnessing a spiral of growth sustained by global rates of accumulation. Even industrial technological innovations, which have been considerable over the last few decades, have been applied more to compress the cost of labor and intensify the workday than to trigger cumulative growth, as was the case in the Fordist period.

According to our analysis, beginning in the ’80s, the expansion of finance was the other face of extending the process of extracting and appropriating value over the entire society. Financialization and the cyclic crises that characterize it should in fact be interpreted in the light of the biopolitics of labor, i.e., the post-Fordist productive strategies in which one’s entire life is put to work, when knowledges and cognitive competences of the workforce (the general intellect that Marx spoke about in his Grundrisse) assume the role played by machines in the Fordist period, incarnated in living productive bodies of cooperation, in which language, affects, emotions and relational and communication capacities all contributed to the creation of value.

In these processes externalizing the production of value, the consumer is often co-producer of goods and services, and it is in this light that financialization should be studied: as an effect of the bifurcation between the rate of profit and the rate of accumulation. The scissor process between profit increases and stagnation of investments in constant and variable capital, or rather in capital goods and wages, can be explained in terms of the transformation of the very nature of labor. In this gap, the extraction of surplus value, of unpaid labor, is done by capturing devices outside of the direct productive processes by using an organizational business model that draws from the productive, creative and innovative qualities of the workforce developed in extra-professional environments. The production of financial rent, with the reinvestment of profits and workers’ savings (retirement funds) in the stock market rather than the creation of wage employment with investments in capital goods, has contributed to generate the increase of an effective demand necessary for the monetary realization of profits, which is to say, for the sale of goods and services holding surplus value.

On the other hand, the stagnation of real wages was in turn “compensated for” with private debt. In short, a “becoming-rent” of profits (and, in part, of wages too) came to be, a process symmetric to the production of value directly inside the sphere of the exchange of goods and services.

In our opinion, the increase in profits over the last 30 years is therefore due to a production of surplus value with accumulation, albeit a totally new type of accumulation because it is external to traditional productive processes. This new constant capital, unlike the (physical) machine system of Fordism, is constituted by a whole of organizational disciplinary systems (as well as information technologies) that suck surplus labor by following citizen-workers through every moment in their lives, resulting in a lengthened and densified workday (the time of living labor). These crowdsourcing strategies, leaching vital resources from the multitudes, represent the new organic composition of capital, the relationship between constant capital dispersed throughout society and variable capital as the whole of sociality, emotions, desires, relational capacities and a lot of “free labor” (unpaid labor), a quality that is despatialized as well, dispersed in the sphere of the consumption and reproduction of the forms of life, of individual and collective imaginary.

So, the American economist Robert Schiller is right when he says that in the current phase of massive unemployment, evermore a long-term unemployment, the stimulus packages shouldn’t have an increase in the GDP as primary objective but rather the creation of jobs directly in sectors of high intensity labor, like education, healthcare and social services, urban infrastructure maintenance, youth employment programs, domestic aid, cultural and artistic projects and scientific research. The idea is to monetize activities that don’t need particular investments in capital goods to be legitimated, activities that for the most part are already done at no cost or activities whose positive externalities, in particular in the environment, aren’t immediately translated into GDP growth in the classic and obtuse cost-benefit analysis. According to Schiller, hiring one million unemployed workers in these sectors would cost $30 billion per year, or 4% of the entire American economic stimulus package, and 0.2% of the national debt.

The relationship between the apparently diver- gent rate of profit and rate of accumulation of the last years makes Marx’s intuition, contained in his Manuscripts of 1844, quite contemporary: “The increasing value of the world of things continues in direct proportion to the devaluation of the world of men. Labor doesn’t only produce commodities; it produces itself and the worker as a commodity—and does so in the proportion in which it produces commodities generally.” The depreciation of men and women is greater the more the production of value is not recognized in its whole breadth, but is instead conditioned by the laws of the market (and the GDP), i.e., by criteria for measuring value tied to the relationship between the costs, direct and indirect, of wage labor and profits. Overcoming long-term unemployment must assume the evermore anthropogenic nature of the new system of accumulation; it must therefore privilege forms of labor remuneration directly tied to the reproduction of life itself. No longer the production of goods through goods, but the production of man through men.

There is something Luxemburghish about financial capitalism that, between one bubble and the next, colonizes more and more common goods. Rosa Luxemburg wrote her study on capital accumulation, where she maintained that capitalism cannot survive without “non-capitalist” economies: it is able to progress, following its own principles, as long as there are “virgin lands” open to expansion and exploitation; but as soon as it conquers them to exploit them, it takes their pre-capitalist virginity away from them and exhausts the sources of its own nourishment.

The imperialistic accumulation cycle was characterized by a precise relationship between center and periphery, development and underdevelopment. The center exported to the pre-capitalist countries of the periphery the surplus it couldn’t sell internally for lack of a demand. In order to allow poor countries to import capitalist goods, the creation of external demand was based on a “debt trap,” a device in virtue of which the banks of the North created the demand necessary for selling surplus through the indebted- ness of importing countries. This mechanism forced peripheral countries, on one hand, to destroy the natural local economy in favor of imported capitalist goods and, on the other, to export as much of their primary materials as possible at prices determined by capitalist markets in order to be able to honor the debt. The destructuration of common goods, the local natural resources strategic for the capitalist development of countries in the North, had to come about without the restructuration of the local economy, i.e., without the possibility for poorer countries to escape poverty and their dependency on rich Northern countries, lest they suffer the same problem of selling surplus on a bigger scale. The dependency between rich and poor countries was sealed by the relationship of debt-credit.

This scheme of imperialistic relations historically went into crisis when peripheral countries matured forms of political autonomy capable of imposing autochthonous development strategies against the dependency on the predatory development of Northern countries. This is the historical result of the struggles for national liberation, struggles that transformed underdeveloped countries into new emerging countries.

Today, the same historical logic of dependent relationships between the center and the periphery is found inside the capitalist empire. The central difference, between imperialism and empire, is that today “pre-capitalist” common goods are made, so to speak, by human primary materials, the vital capacity of producing wealth autonomously. The hidden face of financialization, of the recurrent production of “debt traps,” as happened with the subprime bubble, is constituted by the production and exportation—silent, but real—of what we call the common. The common is the entire knowledge, understandings, information, images, affects and social relations that are strategically subject to the production of goods. In respect to natural primary materials, which are limited, these new common cognitive and immaterial goods that capital appropriates are theoretically unlimited, hence their privatization (for example with copyrights and patents, or with the simple privatization of entire sections of public service networks) brings about the artificial creation of scarcity through private property.

Contemporary financial crises are moments of the redefinition of capitalist control over common goods, they produce poverty as “common poverty,” moments of deconstruction-without-reconstruction of social economies based on horizontal cooperative relationships. In the crisis, the process of inclusion of common goods is overturned into a process of exclusion, which means that the access to common goods is downwardly redefined, transforming debt relations into control over forms of life, into austerity and poverty. This is the moment when wage constriction is violently manifested, exactly like the 16th century enclosures where access to land as a common good was repressed with the privatization of the land and the putting wages to the proletariat.

Today more than ever, the “pre-capitalist” nature of common goods recalls the concept of collective property against private property. “The common,” writes Ugo Mattei, “has an ‘ecosystem’ as a model, i.e., a community of individuals or social groups interconnected through a network; in general it refutes the idea of hierarchy (as well as the idea of competition produced by the same logic) in favor of a collaborative and participative model that never confers power to one part of the same whole, putting the interest of the latter at the center of attention.”

Through recurring crises, the capitalist financialization of the last few decades has upset the legal-political distinction between private property and the state. The crisis of sovereign debt, in this sense, marks the entrance of financial markets in the management of public debt, extending financial logic to the public sphere, with its rules, its privatizing discipline and the concentration of its power. This process was preceded by the privatization of public works, but with the financialization of sovereign debt it has definitively torn the ideological veil from the “counterposition” between state and market.

“The sovereign government on national territory,” writes Negri, “hasn’t worked for decades: to reestablish an effectiveness it uses a procedure of governance. But this, too, is insufficient—the same local government needs something that goes beyond a territorial state, something that substitutes the exclusive sovereignty that the nation-state otherwise possessed.” The pas- sage from government as the state modality of the regulation of growth to governance as the exercise of technocratic control—partial, punctual and local—is exactly what we have been witnessing in the international crisis of sovereign debt. It isn’t by chance that the financial crisis is, de facto, a banking crisis, an insolvency crisis in which regional banks, from the German Landesbanken to the Spanish Cajas to nation-states and American cities, find themselves on the brink of bankruptcy, struggling to reduce their debts. It’s like experiencing again the crisis of New York City in the ’70s, but this time on a global scale. At that time, it was the retirement funds of public employees that saved New York from bankruptcy, inaugurating the era of the “communism of capital” and the processes of financialization that followed. Today, international financial markets are the ones that, with the “simple” differential of bond revenues, technically determine if a citizen of Greece, Illinois or Michigan has the right to retirement funds or if he or she has to resort to public assistance to survive.

This is the terrain in which austere governance and government of the common are confronting each other. The forms and objectives of the struggle “inside and against” crisis capitalism are at the same time local and global. The objectives of this struggle are clear: imposing, collectively and from the ground up, new rules to govern the market and the financial system, a social mobilization for starting anew investment policies in public services, education and welfare, the creation of public employment for the conversion of energy, a refusal to defiscalize high incomes, assert the right to wages, employment and social income and the construction of autonomous, self-determined spaces. However, the first step in constructing new alternative paradigms, new forms of common government, is totally subjective. There are no predefined recipes, there is only the challenging awareness that any future depends on us.

*This text will appear as the postface of the upcoming volume The Violence of Financial Capitalism, published by Semiotext(e), 2011. Translated from Italian by Jason Francis Mc Gimsey.