imc indymedia

Los Angeles Indymedia : Activist News

white themeblack themered themetheme help
About Us Contact Us Calendar Publish RSS
latest news
best of news




A-Infos Radio

Indymedia On Air

Dope-X-Resistance-LA List


IMC Network:

Original Cities africa: ambazonia canarias estrecho / madiaq kenya nigeria south africa canada: hamilton london, ontario maritimes montreal ontario ottawa quebec thunder bay vancouver victoria windsor winnipeg east asia: burma jakarta japan korea manila qc europe: abruzzo alacant andorra antwerpen armenia athens austria barcelona belarus belgium belgrade bristol brussels bulgaria calabria croatia cyprus emilia-romagna estrecho / madiaq euskal herria galiza germany grenoble hungary ireland istanbul italy la plana liege liguria lille linksunten lombardia london madrid malta marseille nantes napoli netherlands nice northern england norway oost-vlaanderen paris/Île-de-france patras piemonte poland portugal roma romania russia saint-petersburg scotland sverige switzerland thessaloniki torun toscana toulouse ukraine united kingdom valencia latin america: argentina bolivia chiapas chile chile sur cmi brasil colombia ecuador mexico peru puerto rico qollasuyu rosario santiago tijuana uruguay valparaiso venezuela venezuela oceania: adelaide aotearoa brisbane burma darwin jakarta manila melbourne perth qc sydney south asia: india mumbai united states: arizona arkansas asheville atlanta austin baltimore big muddy binghamton boston buffalo charlottesville chicago cleveland colorado columbus dc hawaii houston hudson mohawk kansas city la madison maine miami michigan milwaukee minneapolis/st. paul new hampshire new jersey new mexico new orleans north carolina north texas nyc oklahoma philadelphia pittsburgh portland richmond rochester rogue valley saint louis san diego san francisco san francisco bay area santa barbara santa cruz, ca sarasota seattle tampa bay tennessee urbana-champaign vermont western mass worcester west asia: armenia beirut israel palestine process: fbi/legal updates mailing lists process & imc docs tech volunteer projects: print radio satellite tv video regions: oceania united states topics: biotech

Surviving Cities africa: canada: quebec east asia: japan europe: athens barcelona belgium bristol brussels cyprus germany grenoble ireland istanbul lille linksunten nantes netherlands norway portugal united kingdom latin america: argentina cmi brasil rosario oceania: aotearoa united states: austin big muddy binghamton boston chicago columbus la michigan nyc portland rochester saint louis san diego san francisco bay area santa cruz, ca tennessee urbana-champaign worcester west asia: palestine process: fbi/legal updates process & imc docs projects: radio satellite tv
printable version - js reader version - view hidden posts - tags and related articles

The Crisis Explained

by Tomasz Konicz Wednesday, Jan. 25, 2012 at 7:42 AM

So much crisis was never analyzed with a crisis-conditioned satisfaction guarantee! Instead of seeking culprits, we must seek the systemic causes of the indebtedness dynamic. These gigantic debt mountains were necessary to keep capitalism functioning. Fewer and fewer workers can producer more and more goods in an ever-shorter time.


What you need to know about the crisis but never dared ask. Different FAQ on the permanent capitalist crisis

By Tomasz Konicz

[This article published 12/23/2011 on the German-English cyber journal Telepolis is translated from the German on the Internet,]

Have you made yourself at home in the permanent crisis? Do you have an overview on all the huge debt mountains collapsing over us? A very special service is now offered for all who want to see through the crisis thicket. Do you want to become a crisis expert in a few minutes with the great FAQ on the crisis? The causes of the crisis will be named and the most frequent crisis myths unmasked. As the main attraction, links to texts offering more information and background on the complex themes can be found at the end of each answer. So much crisis was never analyzed with a crisis-conditioned satisfaction guarantee!


Instead of seeking "culprits." We must seek the systemic causes of the indebtedness dynamic. In the past decades, these gigantic debt mountains arose because they were necessary to keep capitalism functioning. Without contracting debts, the system would break apart in itself. Increasingly private and/or state indebtedness is a system prerequisite without which capitalism cannot reproduce any more.

We need only call to mind that borrowing really represents a turn to the future where financial resources are made available here and now that must be gained later from borrowing and paid back. These credits are expended for investments, building activity or consumption. As a result, debt overload creates an additional credit-financed demand that has a stimulating effect on the economy.

In the final analysis, it does not matter whether the state, the private economy or consumers become indebted. This credit-generated demand stimulates the economy and leads to further economic growth. Whether the American state orders new cruise missiles, builds new vacation homes in Spain for speculative purposes or consumer credits are awarded in Eastern Europe, all these actions generate demand, create jobs and animate the corresponding industrial branches. A so-called deficit economy arises if the indebtedness dynamic is strong enough. This economic upswing is based on the accumulation of debts or deficits.

These deficit economies acted as the crucial motor of the world economy in the epoch before the outbreak of the world economic crisis in 2008. This was a long term process that started with the realization of neoliberalism and the rise of the financial sector in the 1980s and gradually intensified. This indebtedness dynamic that went along with the expansion of the financial markets was supported by gigantic speculative bubbles in the financial sector that stimulated the economy up to their collapse. The real estate bubbles that burst between 2007 and 2008 with their enlivening effe3cts on industry should be named here since they occurred with the real building activity.

Not all countries became indebted equally. By a great distance the US was the strongest deficit economy - together with its huge debt mountains - followed by Southern Europe, Eastern Europe, Ireland and Great Britain. These countries and regions showed rising balance of payments- and/or trade deficits while experiencing a continuing de-industrialization.

A series of countries with enormous trade surpluses and significant industrial sectors engaged in a sharp predatory competition. China, Germany, Japan and South Korea can be named here. These countries could profit by means of their trade surpluses from the indebtedness processes in the US and Southern Europe without having to become encumbered themselves. The vast global European "imbalances" in their trade balance sheets can be explained by this development.

Capitalism as a world system cannot function anymore without these deficit economies and their imbalances. As soon as the private or state credit-generated demand collapses, a self-intensifying downward spiral starts in which over-production leads to mass dismissals, demand falls again and more waves of dismissals result.

More information:

"The End of the `Golden Age' of Capitalism and the Rise of Neoliberalism" [1]

"Explosive Expansion of Financial Markets in the Clinton Era" [2]

"From Real Estate Speculation to Collapse of the Global Deficit Economy" [3]


Its increasing operational efficiency in the last years drives capitalism in an indebtedness pressure. The system is too productive to maintain its reproduction within its productive conditions without deficits.

Summarizing according to Marx, the productive forces break the chains of productive conditions. Thus this capitalist system crisis is actually a crisis of capital. The businessman invests his money as capital in machines, labor power and raw materials to produce new goods in factories that are profitably sold on the market. The expanded capital is reinvested in this boundless exploitation process of capital to produce even more goods. This process of the accumulation or exploitation of capital cannot function any longer without contracting debts.

To make this diagnosis completely understandable, the famous contradictions inherent in the capitalist production mode must be briefly explained. Besides the well-known contradiction between capital and labor, another fundamental incongruity marks the system resulting in a permanent structural change.

Even though paid labor is the substance of capital, capital strives to banish paid labor as much as possible through rationalization (out of the production process). A kind of race with the machines occurs. Market competition forces entrepreneurs in all industrial branches to continuously rationalize their production with technical-scientific innovations. Employment in long-established economic branches continuously falls.

The same technical progress that leads to job cuts in established industrial branches also encourages the rise of new industrial branches. In the history of capitalism, there was always a structural change in which old industries disappeared and new industries were added. Fields for investment and paid labor are opened up. Therefore the history of capitalism is marked by a succession of key sectors of the economy that act as accumulation-, business cycle- and employment centers: the textile industry, heavy industry, chemicals, electronic industry and auto manufacturing.

However this structural change does not function any more with the rise of the third industrial revolution of micro-electronics and information technology. While the IT industry creates jobs, its technologies and products are applied across the economy and far more jobs disappear than are created in the course of globalization measures. A process of the melting away of paid labor is carried out within goods production. Fewer and fewer workers can produce more and more goods in an ever-shorter time.

As a result, the advanced capitalist countries fell into the crisis of the work society with increasing unemployment, general precariousness and/or stagnating wage levels. At the same time, spending for infrastructure and production investments increases with the technical level of production. This again strains mass demand and/or business profits. The necessary aggregate social investments to maintain the accumulation of capital always continue growing. The relation between profitable capital exploitation and the necessary expenditures for that exploitation shifts in favor of the latter.

Thus the true causes of the crisis are contrary to the populist slogans according to which the populations of threshold countries, Europe or the US lived "above their means." The exact opposite occurs. Capitalism has reached such a high production level that it could only lead a kind of zombie life for a long while by contracting debts - up to the great crash.

More information:

"The Crisis Myth: Greece" [6]

"Robots instead of Workers" [7]

"The Race with Machines" [8]

"A Corpse Governs Society" [9]

"Perhaps We Are All Inmates in an Insane Asylum" [10]

"On Debts and Jobs" [11]


Since the financial crash preceded the economic collapse, the impression arises that the financial markets cast the real economy into the abyss. However the financial markets by awarding credits kept the real economy going by producing credit-financed mass demand. The financial markets made possible the deficit economies since credit is generally the most important "asset" of financial management.

The collapse of the real estate bubble in 2008 and the "credit crunch" led to the collapse of demand and the economic crisis of 2009. The growth of the financial markets for decades was itself a result of the above-described crisis of the work society resulting from continuous rationalization. Capital streams where the highest profits are expected. Criticizing bankers for excessive greed is absurd since "greed" - as the highest possible capital expansion - is the nature of capital.

This is also true for goods production as well as for the financial branch. When the utilization of capital in the goods-producing economy comes to a standstill and increasing predatory competition lowers profits, investment-eager capital now streams into the financial markets. In general, financial excesses result from a crisis in goods-production.

The rapidly expanding financial markets seem to play the role of the key sector of the economy since the structural change in the real economy did not function any more. The financial explosion from the 1980s and 1990s was unstable and not lasting for the long run even though many jobs were created in the financial sector. This explosive growth of financial management was built on sand. Capitalist wealth expressed in the abundance of goods must be deconstructed in the framework of capitalist exploitation. The financial markets can contribute to this process by granting businesses credits that are used to modernize, for productive investments and/or expand quantities of production.

On account of the systemic over-production crisis in the real economy, the expansion of the financial markets actually ran in another direction - in pure speculation that always leads ultimately to bubbles. For two decades, we witnessed a kind of financial bubble capitalism characterized by the rise of ever-greater speculative bubbles that in their initial phase functioned as stable economic motors and upon bursting leave behind ever-greater devastations.

In a protracted process, the dependence of the whole system on the indebtedness dynamic increased successively: beginning with the Asian crisis at the end of the 1990s, the high tech bubble of 2000, the real estate speculation that burst in 2008 to the liquidity bubble that is presently bursting. In the past, the disastrous consequences of this collapsing speculative dynamic could only be delayed through new bubbles - through a blind "flight" into more speculative excesses.

We must make clear that the current state debt crisis can be referred back in large part to the bursting of the speculative bubbles in the real estate sector. Before the eruption of the crisis in 2008, Spain and Ireland had lower state indebtedness than Germany. State indebtedness exploded in many countries through "relief measures" in the billions for the staggering financial markets and "socialization" of the crisis losses. It seems paradoxical but the states have actually stabilized the financial markets through further indebtedness on the financial markets. But the European state debt crisis will not automatically become a financial market crisis since state bankruptcies would immediately drive the banks into bankruptcy that bought up government bonds.

Thus both poles of capital socialization - the state and capital - are chained together in a chain symbiosis. It is important to remember that state and private debts had the same aggregate social effect as stimulation of the economy. Therefore the debt mountains now piled up also represent an aggregate social burden. The debt crisis is a crisis of the whole system and is not only a crisis of the states or the banks.

In summary, an expanded financial sector can be interpreted as an undisputed crisis phenomenon - but not as the cause of the crisis. The advance of productive forces driven tempestuously by capitalism undermines the foundations of the capitalist production mode. The crisis has its causer in the contradictions of the goods-producing industry, not in the financial sector. The excessive proliferation of the financial markets keeps the real economy suffering under latent over-production alive through debt-generated demand.

More information:

"From Real Estate Speculation to Collapse of the Global Deficit Economy" [12]

"The Miracle on Wall Street" [13]

"Hurrah, the (Pseudo-) Upswing is Here!" [14]


Politics with its instruments cannot solve the present crisis. But it can delay the serious economic collapse that is threatening.

Crisis policy finds itself in a philosophical paradox, in an insoluble self-contradiction in which it can only choose between two different paths into crisis. On one hand, politics can drive the state indebtedness higher and higher to prevent economic collapse. This approach which mostly goes along with an expansive monetary policy leads at the end to inflation or state bankruptcy - since ultimately the printing press must be turned on to maintain the indebtedness dynamic. On the other hand, governments could try to reduce their huge debt mountains through draconian cuts. However this would cause an immediate economic breakdown that would lead to considerable impoverishment in the impacted societies.

Most governments decided first for contracting debts. After the outbreak of the crisis, the states maintained the indebtedness dynamic on the financial markets from 2008 on through credit-financed economic programs. The deficit economy formerly organized by the financial markets in which accumulation of debts stimulated the economy was nationalized after the crisis eruption - until the states hit the limits of their financial burden. With the increasing crisis intensity, the arguing over crisis policy escalated. The German government can now obligate the European Union to strict austerity programs while the US persists on continuing indebtedness and taking out loans.

The conflicts over the concrete organization of capitalist crisis policy become more ferocious because both fractions in this dispute fear the disastrous consequences of the policy of the other side. Several countries can no longer refinance their budget deficits on the financial markets because of excessive state indebtedness and must flee under the "Euro bailout umbrella." Discontinuance of the debt-financed economic programs leads to an economic slack period, stagnation and recession.

In their diagnosis, both sides are actually right in the financial policy conflict around the organization of future crisis policy. More state indebtedness will inevitably lead to state bankruptcy or hyper-inflation; ending state indebtedness will lead to recession. But both sides are also on the wrong way when they assume that their "therapies" and policy concepts could solve the fundamental crisis of the world economy that was only extended after 2008 through escalating state indebtedness.

The irrational reflexes tending to the chauvinistic that spread in politics and the mass media and among those who raise capitalist ideologies to the extreme result from the impossibility of mastering this system crisis with the instruments of crisis policy.

More information:

"Politics in the Crisis Trap" [15]

"Crisis and Mania" [16]


The huge debt mountains of the US and Europe grew in similarly gigantic dimensions. On both sides of the Atlantic, the causes of indebtedness can be referred back to the unsuccessful structural change and the crisis of the work society. Confronted with the crisis traps, policy in the US takes another course than in the Euro zone.

The difference between the US and the EU lies in the readiness of the US to maintain the indebtedness dynamic of the US state by buying up government bonds - and accepting excessive inflation in the medium term. Since the US Federal Reserve bought up US government bonds on a large scale, the interest-burden of the US was kept low and a catastrophic economic collapse prevented since the state indebtedness dynamic - and the credit-financed state demand - can be maintained.

In the EU, Germany prevailed with the demand for immediate budget revitalization while the European Central Bank's buying up of government bonds was vigorously rejected by Berlin. Without the European Central Bank's buying up government bonds, the interest burden of the Southern European debt states will soon be intolerable. A breakdown of the Euro zone will be very likely. Without continuing indebtedness, the Euro zone will sink into a gr4ave recession that is already announced with falling industrial production across Europe.

More information:

"Greece as Crisis Myth" [17]

"Will Europe Break Down in the Crisis?" [18]

"A Comparison of the Transatlantic Debt Towers" [19]

"The Worldwide Economic Crisis as a Debt Crisis" [20]


In the short-term, the system will certainly sink in a serious economic crisis as soon as the indebtedness dynamic breaks down that still keeps capitalism going. The looming global depression could reach the intensity and drama of the worldwide economic crisis of the 1930s with grave social and political dislocations and upheavals. The economic collapse in Southern Europe will not be superseded by a later upswing. Instead a permanent economic descent occurs in the periphery of the EU that will drive back the affected countries in their civilization development. It is like the "third world" spreading from North Africa and the Mediterranean to Southern Europe. A process of the "melting away" of the island of prosperity of the "first world" is now underway on a global scale.

The coming global depression is only the latest stage of a long-term world-historic al process in which the capitalist world system hits the internal limit of its development capacity and collapses in its escalating contradictions. The system enters a phase of chaotic upheaval while the direction and ending of this process cannot be predicted. The American sociologist Immanuel Wallerstein described this period of systemic upheaval as follows:

"We live in a phase of transition from our existing world system and capitalist economy to another system or other systems. We do not know whether this will be a change for the better or for the worse. We will first know this when we arrive there. This could take another 50 years. We know the period of transition will be very hard for everyone living in it... It will be a time of conflicts and considerable unrest and a time in which the factor of free will is raised to the maximum. This is not paradoxical. Every individual and collective act will have a greater effect in building the future than in normal times during the survival of an historical system."

Immanuel Wallerstein, Utopistik, Vienna 2002, p.43

In a certain sense, the conflicts and dislocations that are escalating globally can be understood as part of this struggle over the formation of the future world system even if this is mostly not clear to the actors in these struggles. The enormous intensification of the upheavals and conflicts result from the fact that the present system becomes insufferable to more and more people since it strikes its limits of development.

More and more people fall out of the process of capital accumulation. They become "superfluous" - while the pressure on wage-earners grows. The lack of perspectives of youth in the Arabian region was an important driving force of the upheavals in this area. Germany can be described as a burnout-republic while double-digit rates of unemployment are reached in Southern Europe.

These contradictions will intensify with the increasing intensity of the crisis. The outcome of this chaotic transformation process is completely unclear, as Wallerstein says, since he starts from the infinitely complex and interwoven actions of the dependent actors. The coming world system can be much worse (more hierarchical and more dictatorial) than the present system - or better (more egalitarian and more democratic). The society emerging from this transformation will certainly not be a capitalist society since it is the capital relation itself that strikes its internal limits and is the deeper cause of the current crisis.

In the end, this crisis could also be seen as a chance to build a better, more democratic and more egalitarian social system. In abstracting from the concrete forms of capitalist socialization, the crisis assumes an absolutely absurd character. Society suffocates in its surplus.

Capitalism in the end loses its endless "race with the machines." Since too many goods can be produced with fewer and fewer workers, more and more population sectors and world regions sink in marginalization and impoverishment. Still the technical and material prerequisites for building a society that satisfies the basic needs of all people worldwide exists.

More information:

Immanuel Wallerstein on the End of Capitalism [21]

"In 30 years there will be no capitalism any more" [22]

"Reducing the Over-Capacities" [23]

"Second wave of global economic crisis in the next years" [24]







link to




















homepage: homepage:

address: address:

contribute to this article

Report this post as:

Local News

More Pix: "Families Belong Together," Pasadena J02 12:16PM

"Families Belong Together" March, Pasadena J02 12:08PM

Short Report on the Families Belong Together Protest in Los Angeles J30 4:26PM

Summer 2018 National Immigrant Solidarity Network News Alert! J10 11:58PM

Watch the Debate: Excluded Candidates for Governor of California M30 10:20PM

Change Links June 2018 posted M28 12:41AM

The Montrose Peace Vigil at 12 Years M22 1:01PM

Unity Archive Project M21 2:42AM

Dianne Feinstein's Promotion of War, Secret Animal Abuse, Military Profiteering, Censorshi M17 3:22PM

CA Senate Bill 1303 would require an independent coroner rather than being part of police M10 2:08PM

Three years after OC snitch scandal, no charges filed against sheriffs deputies M10 1:57PM

California police agencies violate Brown Act (open meetings) M02 1:31PM

Insane Company Wants To Send Nuke Plant Waste To New Mexico A29 4:47PM

Change Links May 2018 A27 1:40AM

Worker-Owned Car Wash on Vermont Closed A26 10:37PM


lausd whistle blower A10 11:58PM

Website Upgrade A10 3:02AM

Help KCET and UCLA identify 60s-70s Chicano images A04 1:02PM

UCLA Luskin: Casting Youth Justice in a Different Light A02 11:58AM

Change Links April 2018 A01 11:27AM

Nuclear Shutdown News March 2018 M31 6:57PM

Join The Protest Rally in Glendale on April 10, 2018! M29 7:00PM

Spring 2018 National Immigrant Solidarity Network News Alert! M19 2:02PM

Anti-Eviction Mapping Project Shows Shocking Eviction Trends in L.A. M16 5:40PM

Steve Mnuchin video at UCLA released M15 12:34AM

Actress and Philanthropist Tanna Frederick Hosts Project Save Our Surf Beach Clean Ups M06 12:10PM

After Being Told He's 'Full of Sh*t' at School Event, Mnuchin Demands UCLA Suppress Video M02 11:44AM

More Local News...

Other/Breaking News

3 Essential Videos J19 3:53AM

The System Question as a Survival Question J18 8:54PM

“Animaniacs in Concert!” Starring Voice Legend Rob Paulsen J18 2:41PM

Nation's Largest Voting Machine Co., ESS, Admits Lying Re Having Installed Remote Control J18 11:55AM

Du pain et des jeux J18 9:53AM

Fbi joins with Facebook to remove this report J18 7:08AM

Paraphysique de martyrologie J17 8:00AM

Asian Countries:Cambodia, Vietnam, N. Korea do not permit unlawful immigration J16 8:06PM

Children Incorporated Earns 4-Star Rating on Charity Navigator J16 11:24AM

Democratic Socialists of America J14 4:57PM

Leonard Peltier Non Violent Native American Political Prisoner since 1970's J14 4:18PM

Paraphysique miscellanées de l'aggiornamento J14 12:54AM

Actress and Philanthropist Tanna Frederick Hosts Project Save Our Surf Beach Cleanup J13 4:14PM

FBI Investigated LA County Sheriff Baca,Why Not Hank Skinner's Persecution? J13 3:52PM

Updated Partial List Of Famous Vegetarians, Vegans, & Fruitarians J13 2:59PM

The Shortwave Report 07136/18 Listen Globally! J12 4:36PM

Social Policy as Social Infrastructure J12 3:38AM

Vol I: 84 Varieties Of GOP Election Fraud J12 1:50AM

Texas Can Call it An Execution,But It is A State Sponsored Murder of Hank Skinner.. J11 6:48PM

June 2018 Honduras coup update J11 3:35PM

Maria Estrada doubles down on racist support J11 1:40PM

New York Women in Film & Television Announces 2018 NYWIFT Ha Phuong Scholarship Recipients J11 10:14AM

Trapps de la domination, trapps de l'aliénation J11 1:31AM

Please Work For The Defeat Of Brett Kavanaugh And Why J09 8:54PM

Change Links 2018 July posted J09 1:27PM

Transinhumanisme ( transe inhumanisme ) J09 12:44PM

Google, World's Biggest Censor, Was Founded By The CIA J09 10:25AM

For a World Free of Nuclear Risks J09 8:29AM

More Breaking News...
© 2000-2018 Los Angeles Independent Media Center. Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by the Los Angeles Independent Media Center. Running sf-active v0.9.4 Disclaimer | Privacy