Paper presented at the Critical Legal Conference, Warwick School of Law, 2017 Capital and Catastrophe: Laws and economic laws in the context of crisis When I started thinking about contributing with a paper to this year’s CLC, my immediate reaction was to start thinking about the word ‘catastrophe’. Catastrophe, in Greek, is most commonly used to refer to natural disasters (floods, fires, earthquakes, etc.). This does not mean it is exclusively used in this meaning. It may also denote a man-made, deliberate destruction. However, I was puzzled as to whether catastrophe is an accurate term to describe socio-economic processes, which are neither natural, nor man-made. Then I remembered that the word catastrophe is used in the Greek language to refer to the ‘destruction of capital’ taking place as a result of a capitalist crisis. So the question arose: is the destruction of capital a natural outcome or the result of man-made decisions? What is the nature of the laws which govern the process that leads to this destruction/catastrophe? The next step in my syllogism was to start thinking about the relation between different processes: natural, socio-economic and juridico-political. In fact, I started thinking about these processes in terms of the corresponding laws which describe, explain and govern their motion. So, this is how I want to begin this paper, by setting out a taxonomy of laws. We might say that there are three kinds of laws: natural laws, socio-economic laws and juridicopolitical laws. This taxonomy is not absolute, and it certainly does not exclude the interaction of the processes described by these laws. Natural laws are laws that describe natural phenomena and processes, such as the law of gravity, or Einstein’s laws of general relativity. These laws are not man-made; they cannot be altered at will; they are not determined by social and historical conditions. On the contrary, juridico-political laws (such as the Acts of the British Parliament) are certainly, man-made, and are arguably altered at will. However, this last characteristic is definitely qualified, since juridico-political laws are not arbitrary, but correspond, shape and are being shaped by socioeconomic processes. So that in order to understand the former, one has to examine them in their unity with the latter. Which brings us to the final set of laws: the socio-economic ones. In particular, I want to refer to the laws of motion of the economy, and of capitalist economy for that matter. The laws of motion of the economy govern the origins, rise, development, decline and disappearance of a given social form of economic organisation. Economic laws are, therefore, social laws, in the sense that they operate in the developing field of contradictory social relations, shaping and being shaped by class struggle (the economic tendencies in capitalism [1] provoke the reaction of social forces). Economic laws are also historical laws in the sense that they are not eternal; they rather give rise to contradictions and antagonisms (e.g. socialisation of production process) which may lead to their supersession. So, the laws of motion of the capitalist economy describe and explain the unfolding of the inner contradictions of the capitalist mode of production. Central among these laws, according to Marxist analysis, is the law of value, which states: the relative exchange-values of products are proportional to the average amounts of human labour-time which are currently socially necessary to produce them. Of course, there are factors counter-acting the law (such as the non-existence of regular trade; structural and unequal exchange; taxation and subsidies; disparities in currency exchange rates). Nevertheless, the law of value captures the essence of capitalist economic exchange, which aims not to trade goods and services of equivalent value, but to make money from the trade. In order to extract value out of the consumption of a commodity, the money-owner must find in the sphere of circulation a commodity whose use-value possesses the peculiar property of being a source of value. This commodity is labour-power. The law of value is, thus, intrinsically linked with another law of capitalism: the law of capital accumulation. Under the general law of capital accumulation, capital is defined as value in search of additional value. So that capital accumulation is the main motive of capitalist production. Capital is organising a process of self-valorisation, constantly searching for increasing of its own value through the exploitation of labour-power. This entails a manic pursuit of profits, increasing of sales and cutting of costs. It also entails capitalist competition for higher labourexploitation rate and higher productivity in order to increase surplus value-profit and volume of products per time-unit. Other tendencies arising in the context of the functioning of the law of capital accumulation are: the growth in the organic composition of capital; the growing concentration and centralisation of capital; proletarianisation (transformation of the majority of economically active people into sellers of labour-power); the declining rate of profit; recurrent recessions, and the inevitable class struggle. We could then argue that the laws of motion of capitalist economy all flow in the final analysis from the law of value, and show this mode’s of production intrinsic relation to exploitation, in growth cycles as well as in crisis cycles. Under capitalism, economic growth appears in the form of accumulation of capital. The basic drive of the capitalist mode of production, i.e. the drive to accumulate capital, is essentially explained by competition, the phenomenon of ‘various capitals’, which is the driving fire of growth. Competition is combined with the trend to replace labour by machinery as driving force for capital accumulation and the accompanying tendency of intensifying the exploitation of the labourpower. As a result, economic growth is not neutral with respect to living and dead labour, because the way in which capital accumulation proceeds contains a powerful dynamic to reduce the value of labour-power. The worker is a ‘cost element’ from the capitalist point of view, and this cost must be constantly measured in money terms, in order to be reduced to the utmost. [2] Production for profit presupposes exact and minute calculations of labour-time expenditure down to fraction of seconds, with the purpose of reducing costs. Reducing the cost of labour, i.e. intensifying the exploitation of workers, is a constant demand in capitalism, both in periods of growth and in periods of crisis. Let us see how this demand assumes its juridico-political form in the context of the Greek crisis legislation. In this context, catastrophe of capital takes the form of depreciation of labour (among other forms which fall outside the scope of this paper; such as recapitalisation of banks; psi; restructuring the Greek debt held by private investors). Interestingly enough, the ‘handbook’ for dealing with the crisis, by ‘enhancing competitiveness, growth and employment’ through flexibility is the EU Commission’s White Paper of 1993 on Growth, Competitiveness, and Employment. This White Paper identified ‘lack of flexibility in labour-regulation’ -more particularly in terms of the organization of working time, pay and mobility- as the root cause of ‘what are relatively high labour costs, which have risen at a much greater rate in the Community than among our principal trading partners’ (p.123). The main reason behind the White Paper is the assessment of the loss of competitive angle of European monopoly groups. In order for EU Member states and the EU as a whole to be able to restore its international competitiveness against low-wage countries, wages have to be reduced and the level of exploitation has to increase. This will be done through policies focusing on ‘removing obstacles which make it more difficult or costly to employ part-time workers or workers on a fixed-duration contract’; on ‘reducing working hours in a period of recession’; on ‘gearing levels of pay to company performance and productivity’. It is interesting to see how, flexibility, reduction of costs, competitiveness and growth are all linked together in this exposition of bourgeois economics. What is equally interesting is the fact that the ‘handbook’ for dealing with the crises was drafted in close cooperation with a major transnational group of industrialists, the European Roundtable of Industrialists (ERT). The ERT, founded in 1983, is a forum bringing together around 50 CEOs and Chairmen of major multinational companies of European parentage covering a wide range of industrial and technological sectors, with combined revenues exceeding €2,250 billion, and around 6.8 million employees in the EU. Now, in the autumn of 1993 the ERT prepared its report ‘Beating the Crisis’. In December of the same year, the Commission’s ‘White Paper on Growth, Competitiveness and Employment’ was released. The two reports were prepared in close cooperation between the ERT and the Commission and ‘are strikingly uniform in their calls for deregulation, flexible labour markets and transport infrastructure investments’. It is no wonder, then, that the White Paper reflects the long-standing requests of big capital (not only German, but also Greek) for austerity and deregulation of labour relations. This point enhances the argument that there is a symbiotic relation between big capital and EU institutions. It also explains the EU wide application of the principle of flexibility in the aftermath of the crisis. According to the 2016 labour reforms in France, the means to restore the competitiveness of the French economy is the reduction of labour costs through measures [3] which re-organise the working-hours and collective bargaining. With regards to Italy, the main ratio behind the Jobs Act of 2015 was the re-boosting of the economy through the elimination of labour market ‘rigidities’ -namely, strong trade unions, generous social benefits, high minimum wages, powerful insiders, or firing restrictions - which were identified the main causes behind persistent unemployment and loss of competitiveness. Of course this tendency is also evident in the UK, where -to give just one example- 2,5% of the labour-power in Britain is employed under zero-hour contracts, the most flexible form of employment. It should not be forgotten, however, that the term ‘mini-job’ was coined in Germany, to denote a form of marginal employment that is generally characterized as parttime with a low wage (i.e. less than 450euros). According to the figures of the German Employment Agency, 7.3 million Germans, or one in every five employees, held ‘mini-jobs’ in September 2010 -an increase of 1.6 million since 2003. In Greece, the goal of reducing labour-costs, through the intensified exploitation of a wider labour-force, was promoted with the introduction of the principle of flexibility in the Second Memorandum. The Second Memorandum radically altered the landscape of Greek labour law. Apart from an immediate realignment of the minimum wage level (determined by the national collective agreement) by 22% (32% for young employees), it provided for the elimination of unilateral recourse to arbitration; a maximum duration of three years for all collective contracts; revision of the ‘after effects’ of collective contracts (which means that if a new collective agreement cannot be reached within 3 months from the expiration of a collective contract, remuneration will revert back to basic wage). On the basis of the above points, I argue that rather than seeing the developments in Greece as imposition of neo-colonial rule over the Greek people, or as an antagonism between the bad-North and the good-South, we should face the reality that these measures, which intensify labour-exploitation, reflect long-standing demands of the Greek capitalists too. So that a much more complex analysis is needed. In fact a Marxist analysis is necessary, which takes into account the uneven development of EU economies; the capitalist competition between capital fractions within the EU and between the EU and international competitors; the intra-EU contradictions and the division between ‘technological leaders’ and ‘technological laggards’; the restrictions imposed by the Economic and Monetary Union; the role of technological innovation in the creation of capitalist crises; the need for absolute surplus value extraction and intensified exploitation as the only way out of the crisis. As I am mindful of the time I have left, I will not delve into the analysis of the public law accommodating the labour measures discussed above and will proceed with the conclusion. To conclude, let us return to the taxonomy of laws and the question: what is to be done? What can one do with the laws of motion of the capitalist economy? Are they eternal and necessary or can they be altered? Well, to answer this question one may begin by considering what one does with the laws of natural processes and phenomena. We cannot change and abolish the laws of physics, but we may discover these laws, get to know them, study them, reckon with them in his activities and utilise them in the interests of society. To give a simple example: with the lapse of time and the development of human knowledge, when man had [4] learned to build dams and hydro-electric stations, it became possible to protect society from the catastrophe of floods which had formerly seemed to be inavertible. The same must be said of the laws of political economy. They reflect objective processes of economic development which cannot be altered at will. But these laws are historical laws, shaped and being shaped by class struggle, and giving rise to contradictions that may lead to their supersession. We cannot destroy these laws or create new ones at will. But we may discover these laws, get to know them and, relying upon them, utilise them in the interests of society, impart a different direction to the destructive action of some of the laws, restrict their sphere of action, and allow fuller scope to other laws that are forcing their way to the forefront. It would be quite absurd to expect the decline and disappearance of capitalist economic laws, and the abolition of exploitation of man by man, to take place by political decree, let alone by laws enacted in the bourgeois parliament. To expect radical socio-economic change to arise out of institutions designed to contribute to the reproduction of capitalist relations of power, property and production is futile. The passing of the law that would shift the focus of the economy from the pursuit of profit, “competitiveness”, and “growth” to the satisfaction of social needs, would not only be non-sensical. It would be an error from the standpoint of the institution itself. By analogy, it would amount to the attempt to divide by zero. In mathematical equations there are qualifications designed to avoid this devastating, systemthreatening option. Similarly, in representative democracies, constitutional concepts and institutions function to prevent options which would threaten their own existence and, by extension, the reproduction of the regime of power, property and productive relations. So that the ultimate catastrophe for the popular movement itself is its entrapment and the exhaustion of its class struggle in parliamentary paths. [5]