Can Mumbai's housing bubble ever burst?


These two questions tend to block each other out: It's hard to tell what to do without having an idea of ​​who is supposed to do it. Conversely, it is just as difficult to find out who could do something without knowing what it is. There are great ideas about what we should do. But then you look around and ask yourself: "Who the hell is going to do this?" And when you ask what the real people are likely to do or would like to see done, you are quickly frightened.

On the one hand, it is about breaking this block and bringing it into a more dialectical movement: we have to familiarize more people with the idea that something has to be done by making it clear what needs to be done. At the same time, as more people are involved, the question of what to do will need to be recast.


I do not see ourselves in a revolutionary situation - I would be very grateful if we were, but we are not. We are faced with the question of how different social groups can be involved in political activities and struggles in order to come closer to the question of "who the hell is doing it". Traditionally, the question of the actor was answered with the proletariat. Lately this has been supplemented or replaced by the precariat. I am not sure what the precariat is, any more than I have ever been able to say for sure what the proletariat was. In my opinion, all of this should be rethought. I am not happy with our traditional definition of class for a number of reasons. In my opinion, the problem lies in the tendency to define class only through the processes in production, through the production of surplus value, the working class. The typical image of the worker is the factory worker.

I have been dealing with urbanization processes for a long time. I ask who produces the city and who produces urbanization. With Henry Lefebvre and his conceptual shift from the urban to the production of space, we can go a little further. The question of who produces the space draws attention to all the people who build canals and roads, lay train tracks, etc. When asked who the working class is, these people are quickly lost sight of.

Instead of a narrow definition of class focused on factory workers, we should choose a broader approach. Many of those who produced the cities, created the urban and the space, were never regularly employed. Often they were wandering migrant workers. With this perspective on the production of urbanization, the precariat has existed for a very long time. And it has often played a significant role in history, also politically. In the Paris Commune, stonemasons and their political organizations had an important position, but they were organized differently from the factory workers. In 19th century London, the majority of working people belonged to the precariat and their working conditions were very different from, for example, the factories in Manchester. It is important to note that the concept of the class always also includes exclusions and the Marxian concept also seems to me to be rather unsatisfactory here. It's not clear why class has always been thought of from a production standpoint. The reproduction of the classes takes place in the neighborhood, home, city and many other places. The maintenance and reproduction of class relationships is therefore an urban phenomenon. The point is to analyze the relationship of individuals between their position in production and reproduction, because the point of view in reproduction is equally decisive from the aspect of the reproduction of class relations. If you look at how cities function and thus reproduce class distinction, marginalization and exclusion, you can see their crucial importance for the way society is organized. The processes in the living space are also of enormous importance for the generation and distribution of added value.

What is a ›class event‹? In January 2008, Wall Street paid out $ 32 billion in bonuses, just two percent less than the year before. So Wall Street executives got $ 32 billion for leading the world financial system to collapse. I think that's a very good return, nobody would pay me that amount for total failure.

At the same time, approximately two million households in the United States have lost their homes to foreclosure. There are striking correlations: In Baltimore, for example, the effects on the African-American population were particularly serious. Women and one-person households from the Afro-American community are particularly disproportionately affected. The marginalized part of the African American population is experiencing the greatest loss of wealth to date.

On the one hand, $ 32 billion is accumulating; on the other, over two million people are losing their homes. If we ponder the connection between these two events, it could be said that one part of the population is stolen from something that is accumulated from another part. For me this is a classic case of "accumulation through expropriation". Their general dynamics include massive losses in the endangered sections of the population. These losses stand in striking proportion to the accumulation of wealth at the other end of the class hierarchy. It becomes clear that class action also has an impact beyond production. That is why I speak of a 'class event' and this other dynamic of exploitation must be included in the understanding of class relations. This is addressed in a few lines in the Communist Manifesto: The exploitation in production is described and then, with another glance, it is found that completely different people are still waiting to exploit the worker, such as the landlord, etc.

From the point of view of reproduction, attention is drawn to the relationship between traders (commercial capital), landowners and other social classes. They deprive the workers of their wealth through exploitative practices in their living space. It seems to me that one of our difficulties is to bring these two forms of exploitation together and see them as a unit. As long as we do not understand this unity, as well as the differences between the two forms, we will not get a clear idea of ​​who can initiate alternatives and what needs to be done for them. So it concerns the question of "who". The way in which the precariat is talked about sometimes seems like an attempt to develop sympathy for the 'lumpenproletariat', of which Marx often spoke derogatory.

But in order to develop our politics further, we have to redefine our understanding of class - and on this basis class struggle - in a new and broader way. Class struggles in and around the city are just as important as class struggles in and around the factory. Even if the struggles take place in different places and follow different dynamics, there is a need to bring them together. I am increasingly amazed at how difficult it seems for the left to take note of this unity within the differences.


Now to the question of what to do. The crisis is already generating certain answers. First of all, a real analysis of the causes of the crisis and its development is required. Capitalism never overcomes its tendency to crisis, it only postpones it. One crisis is followed by another over time. In many ways, the roots go back to the crisis of 1970 and the crisis management that resulted from it. The way out of the crisis of the 1970s lay in two elements, which are only briefly examined here. On the one hand, the problem of wage labor has been solved by smashing the power of the organized labor movement, making employment structures more flexible, etc. This has been achieved with a policy that is best described as wage depressing. The economy has been characterized by stagnating, in some cases falling, real wages since the 1970s. This has been achieved partly through globalization and partly through repressive forms that have pushed new segments of the population into precarious and part-time work. In the 1970s, the labor movement was a central problem for capital in maintaining class society. By the mid-1980s, the problem was largely resolved; At the beginning of the twenty-first century there can be no talk of excessive working class power. The current crisis cannot be traced back to the fact that the profits of capital are being diminished by the overwhelming power of the labor movement. The second problem was excessive monopoly in the late 1960s. On the other hand, the attempt was turned to open the world to competition and to organize the economy more through competition. This has been achieved in part through globalization, financialization, and the reorganization of capital accumulation. This created a situation of accelerated and intensified competition. As a result, profit rates will decline in the mid-1980s.

The low wages and profit rates herald the next crisis. In the 1980s it becomes difficult for the capitalist class to invest their money profitably. When the rate of return to production is low, other options need to be found. From the 1980s onwards, there was large-scale investment in returns on investment rather than in production. Fixed assets can take several forms: shares, stocks, futures trading, and various financial instruments. Investments can be made in the art market or the real estate market. The interesting thing about the investment market is that, in contrast to the normal commodity market, it works like a pyramid game: the more people invest, the more property prices rise, for example. The more real estate prices rise, the more attractive it appears to be to invest in residential property. The higher the shares rise, the more attractive it appears to be to invest the money in these shares. The capitalist class has therefore generally invested its newly found wealth not in the productive area but in the investment market. This gave rise to a series of investment bubbles from the 1980s onwards, the new economy bubble of the 1990s, the stock market bubble in changing forms, a series of real estate market bubbles. The current crisis is not the first to develop around real estate. Rather, there were major slumps in the US and UK real estate markets in 1987, '88 and '89. In 1982 the Swedish banks went bankrupt because of their excessive property speculation, in 1990 the Japanese boom ended with a collapse of the property and stock market; since then, land prices in Japan have been falling. In the past 30 years, increasing numbers of small financial crises and the bursting of investment bubbles have been observed - what is new, however, is the global dimension.

The working people can only be brought into this world by addressing the fact that their wages are not rising by encouraging a large part of the population to go into debt in order to create effective demand in the market. The gap between what could be bought with wages and what the workers actually bought was bridged by the increasing indebtedness of the population. Household indebtedness in the United Kingdom and the United States has roughly tripled over the past 30 years. This particular constellation has caught up with us now - not as an excessive working class power, but more like the 1930s: an underconsumption problem and a lack of effective market demand. The capitalists find themselves in an economy of low wages and low profits. They produce too many goods in relation to the actual demand situation in the market. That is the core of the current crisis.


What are the ways out? The classic answer of the 1930s, of course, was Keynesianism. And we are actually in a Keynesian moment whether we like it or not. The neoliberal practice has clearly differed from its own teachings in a number of points. This applies, for example, to the dogma of a balanced state budget. In fact, the entire neoliberal era was marked by Keynesian episodes. The first was the national debt, which Ronald Reagan used to finance the immense expansion of the defense budget - a form of wartime Keynesianism. Under the last Bush administration there was a combination of wartime Keynesianism and national debt: a kind of reversed class Keynesianism, which was realized in tax policy in favor of the upper classes. This concerns the core of neoliberalism: consolidation and expansion of power of the capitalist class. Everything else is tactics and rhetoric that serve that goal.

A key element in expanding capitalist class rule worked through financialization. Since 1982, the US has strictly adhered to the notion that in the event of a conflict between the welfare of financial institutions and that of the people, the welfare of the first should be given priority. This has also been enshrined in the policies of the International Monetary Fund and has been pursued since the IMF rescue package for Mexico in 1982. So our Keynesian moment is a continuation of neoliberal practices that are in stark contrast to the self-assurances of neoliberalism. The bail-out that has been established in the US and UK is a continuation of these practices: the financial institutions and financiers are bailed out. Who is paying?

The population. Who cares? Now. So far, people have not found a framework in which the injuries suffered can be interpreted. We have to create a way of articulation here that makes it clear what needs to be changed. If we are living in a Keynesian moment, is there a left version of Keynesianism?

Marxist and Keynesian thinking are often in conflict - "that is Keynesian" is often used as a synonym for "wrong". We have to consider how we can use the Keynesian moment and derive political gain from it. And with a view to what goal? Keynes’s view was that restoring effective demand depended on the working class in the marketplace, not politically, being strengthened. That meant full employment, which in turn was to be achieved by reducing working hours. There is a lot of discussion about Keynesianism in the media right now, but nobody is talking about it. But if we emphasize this aspect of Keynes, we could say: We are redirecting a large part of government spending in such a way that the banks and financial institutions are not secured, but are using it to raise the minimum wage, the rights of the workers through legal reductions of the working day and the weekly working hours. If we were to advance Keynesianism in all of these areas, we could lay the groundwork for a different policy. To do this, we have to deal with what seems to be causing the greatest difficulties at the moment: Margret Thatcher said that she does not just want to change the economy, but rather the soul of people. And she was damn successful at that. Most of us think neoliberally. This is shown most clearly in the foreclosures: When asked who was responsible for their situation, what went wrong, who was to blame, many responded in the surveys: “That was my mistake”, “I had an accident «,» I've lost my job, got sick «. In the interviews that have been viewed so far (and that is only a part, these statements may have to be put into perspective) there is no indication that people think of foreclosures as a systemic problem that would also have to be dealt with systematically, i.e. through a reform of capitalism . That explains why the two, now maybe three or four million people affected by foreclosure are not forming a political movement. They just disappeared. There have recently been attempts to organize that are proving difficult. But when these people - other than they see it - are victims of a class event, a start must be made to change the course of history. Politically, we come back here to the question of "who". Could the four million people who have lost their homes form a political force for system change? It could be, but they don't. But we must begin to interpret the problem publicly from this point. The beginnings can already be observed: small movements for the occupation of abandoned houses and the right of return of the displaced families, which has been expropriated.But as long as these small movements do not grow, we will not have a "who" - nor will we be able to name what to do with that.


If we take the situation as a Keynesian moment, it becomes clear that it should be used in such a way that the majority of the people begin to benefit from it, instead of centralizing the power of the capitalist class as has been the case up to now. Five years ago, New York's top hedge fund managers received $ 250 million in compensation in just one year - each and every one of them. Last year, four hedge fund managers received over $ 3 billion each. So if you think the capitalist class is in trouble, think again. It is not losing its power, it is more centralized than ever. In fact, the remaining banks and financial institutions are more powerful than before; we are experiencing an increase in power in this economic segment. In the Communist Manifesto, Marx and Engels spoke out in favor of concentrating credit funds in the hands of the state. However, they had assumed that this would lead to a dictatorship of the proletariat.

Indeed, with the whole economy we are moving towards a dictatorship of the world central banks. Within the state apparatus there is a "state-finance nexus," as I would like to call it, so that it is not really possible to differentiate between the state and the financial sector. Marx identified this connection as early as the 16th and 17th centuries, when rulers and banking princes were inextricably linked over national debt. I was intrigued how that day in September 2008, eight men walked into a room and returned a few hours later with three pages written, practically demanding of the government and the people of the United States, "Give us $ 700 billion or the economy will collapse. ”It was a kind of coup d'état, a financial coup against the government and people of the United States. There was a lot of controversy, Congress was a little indignant, and we had some tense negotiations. Basically, however, the Congress did nothing more than replace the three with about 58 pages. The 700 billion were transferred. A new class constellation is emerging that has enormous power. It is difficult to imagine how this power could be countered. Interestingly, on that day in September, the President and Vice-President of the United States disappeared, and almost all government politicians disappeared from the stage and went into hiding. It was the Treasury Secretary and the Federal Reserve chairman who took over and said, "We govern, this is what to do." This is a dictatorship of the state finance nexus, a dictatorship of the Treasury Department and the central bank. We are in the unfortunate position that the same agencies are regulating this incredible Keynesian moment the way they are - and they have considerable backing in the US.

Mark Twain said at the end of the 19th century that Congress was always the best money could buy. And there is actually what I call the Wall Street Party that controls the political machine in Washington. This Wall Street party can be found in both the Democratic and Republican parties. A right wing of the Republicans opposes them, as does a left wing of the Democrats. But the Wall Street Party rules. In this respect, we have a situation in which the important bankers, the Treasury and the Wall Street Party are entrusted with the restoration and continuation of capitalist class rule, and they hold all the trumps in their hands.

The approaches to mobilization, on the other hand, are populist and not class-related. Here, too, the question arises, what are we doing? Are we turning away because the movement is not anchored enough in the class, or are we trying to support the growing popular anger about bank preference and steer it in a more class-related direction? In my opinion, we are not in a revolutionary situation worldwide - with a few exceptions perhaps in Latin America, and who knows what is going on in China - so what must be done? In which direction are we pushing Keynesianism, that opportunistic, class Keynesianism that prevails right now? Does Keynesianism have to be rejected altogether, or cannot we just ask which Keynesianism will it be? And in whose favor is it being pushed? Can we - as Keynes himself succeeded - in arguing that this is the only way to save capitalism? It wouldn't be the first time the left has saved capitalism. We may not like it, but it turns out that not doing this bailout has horrific costs.

The capitalist class may have been hit, Warren Buffet lost a third of his fortune, but he still has $ 30 billion. The ones who really suffer are the people on the fringes. As in Haiti: From there we receive news that malnutrition is increasing, that people are starving because remittances from the USA are falling. For example, if a housemaid in New York City previously sent $ 100 a month, that $ 100 makes a life-and-death difference. Now only $ 25 a month is being transferred because the person in New York has lost their job - in this case almost all women. Against this background, there is nothing good to see in "letting the system collapse". Because the rich have built their ark and they can all too easily float on the tidal wave. Those who are already marginalized would drown. It is not true that people in the informal economy, in Mumbai, Haiti or wherever, have nothing to lose. You are vulnerable. We need to develop a policy that recognizes this state of affairs.

The question of "what to do?" Does not seem to me to be by far as profound as I would like it to be in my revolutionary, more theoretical moments. If we ask about the potential actors, it is noticeable that they have so far lacked a vision of how Keynesianism could be driven in a more socialist direction and linked with a class perspective. That would be a different direction than the previous one, which is being pushed by the Wall Street Party, the world central banks and the global capitalist class. The capitalist class is prepared to collapse the system in order to maintain its power. We have to respond to this collectively. We should not pretend that there is a proletarian vanguard or particular social group that will lead us out of this mess. We first have to develop the answers by building coalitions and alliances, in the workplace, in the living space. Alliances that span the many differences and that are able to understand the possible unity within these differences. In my opinion, we should all work towards this. If we fail to do that, that Keynesian moment will be used for other class interests.

Translated from the English by Jan Latza