JWM

I think that’s absolutely right. One way to look at it is that capitalists have a collective action problem. When conditions are good they want to sell everything they can produce. So they’re perfectly happy, individually, to pay somewhat higher wages or make other concessions, like a shorter workweek, to get the labor they need.

But for the capitalist class as a whole, they’re undermining their collective bargaining position as they all compete with each other over scarce labor. And so it’s the job of the central bank — or whoever the authorities are, but today it’s generally the central bank — to act in the collective interest of capitalists, to get them to stop undermining each other in their competition for workers by creating a condition of artificial capital scarcity, by reducing demand. In a way, you could say this is not so different from the collective action problem of climate change, except that this is one that capital and its political institutions take very seriously.

Another way of looking at it is that we have this class of people, capital owners, who notionally have a useful role in coordinating production. The problem is, the thing they are supposed to be providing — capital, in its various incarnations — isn’t necessarily scarce in today’s world. The more that the growth in production depends on science and technology, on large-scale coordination, on various social institutions — things that don’t fit the mold of private property — the less useful money-prices and markets are in coordinating it. The kind of means of production that you can buy with money are no longer the main limiting factor. And liquidity, the thing that financial markets are supposed to provide, is not scarce in any objective sense.

This is the situation of capital abundance that Keynes thought would be reached in a generation or two from when he was writing in the 1930s, which would lead to the euthanasia of the rentier. And he was right! The problem is, the rentier doesn’t want to be euthanized. Capital is not going to say, “okay, our work here is done, goodbye.” So to maintain the social position of money-owners, you have to create an artificial shortage of money, and that’s another way of looking at the job of the central bank.

The problem that you’re pointing to is, the system is not very robust to shortages of money. It’s not very robust to the kind of scarcity that has to be created to maintain the social position of capital. So if you are trying to manage it, you have to strike a delicate balance. If you focus too much on maintaining the bargaining position of capitalists, you interrupt the reproduction of the productive system, and you create situations where people aren’t able to meet their financial commitments. But on the other hand, if you’re too loose, as you said, you create a situation where capital is abundant and the bargaining power moves to workers, or perhaps to owners of land, or intellectual property, or other stuff that can’t be reproduced with money. It’s always a tightrope they have to walk.

The IG Metall contract is a good example of the danger on that side, from the point of view of the authorities. More broadly, there’s a strong argument that the low unemployment and sustained growth of the postwar period laid the foundation, not just for a stronger labor movement but for the whole range of social movements in that period. These developments are extremely complex and depend on the specific circumstances and conditions.

But it seems likely that the postwar period of sustained very strong growth — which of course was motivated by the need to compete with the Soviet Union and show the superiority of “our” system — made it possible not just to have an upsurge of workers’ movements, but the new social movements around gender, the environment, and so on. When you weaken the boss’s authority in the workplace that is going to undermine other hierarchies as well.

So while we wouldn’t want to be too mechanical about it, there are good historical reasons for thinking that movements to transform the system may actually be in a stronger position when the system is seemingly working well.