Fictitious Capital and Today’s Global Crisis
The worldwide credit crunch we are seeing today is just the culmination of a process underway since the late 1950’s, (the proverbial “from a scratch to the danger of gangrene”), whereby an ever-increasing mass of nomad dollars, corresponding to no real wealth in the world economy, are tossed around like a hot potato by central banks always counting on the “bigger fool” to be holding them when they finally deflate. The central banks of Asia (China, Japan, South Korea and Taiwan) currently hold over $2 trillion of these nomad dollars, and China alone is expected to have $2 trillion sometime in 2008. The Middle East oil exporters, above all the Saudis and the Gulf states, hold a comparable amount.
We can call these dollars, which represent uncollectible debts arising first or all from five decades of chronic American balance-of-payments deficits, “fictitious capital”, a concept which, when unpacked, leads straight to the heart of fifty years of capitalist history and to the illumination of own our precarious present.
Far from being a remote “economic” concept, fictitious capital leads us straight to the central political questions of today, and above all those questions confronting the international left. To see this clearly, these fictitious nomad dollars must be connected to the dynamics of contemporary geopolitics and the closely related class struggle.