Lecture
As is well known, in the second section of Volume I of Capital, K. Marx, in fixing the general formula of capital (M—C—M′: money that brings in additional money), formulates its contradiction by identifying the famous antinomy: additional money, according to this formula known to every entrepreneur, arises in circulation, yet it is equally true that it cannot arise out of circulation if only an exchange of equivalents takes place within it.
It is likewise well known that Marx resolves this antinomy by turning to an investigation of the process of production, where, according to the theory of the author of Capital, surplus value is actually created. Yet here is a paradox: the appearance of late capitalism once again returns us to this very antinomy — fictitious capital, existing outside the sphere of production, appears to regain the miraculous ability to create profit exclusively within the sphere of circulation... This appearance is not accidental. Moreover, like most of the inverted forms characteristic of capitalism, it is objective. All the more important, then, to work out what real content is concealed behind this latest somersault, this "transformation" of capital.
Since this problem itself has become especially urgent since the 2008 crisis, let us begin with a question directly tied to practice: can fluctuations in the financial market destroy the real economy? And if so, why? To answer this question we must understand why an economy cannot permanently operate on debt, counting on future profits and income — after all, in reality people do work, produce goods and services, and these goods are consumed (both personally and productively). Under capitalism, however, this is not enough: a commodity can enter consumption only by being sold on the market, only by being exchanged for money. If for some reason exchange for money proves impossible, at least in some cases, then at first this is merely a private problem for the unlucky few. But if the scale of these failures reaches a certain critical point, triggering a chain reaction of defaults, then the whole system of the regular exchange of commodities for money collapses. And a second cause, important specifically for capitalism — if goods are nevertheless sold but yield insufficient (below-average) profit, or none at all, then their production will be curtailed. It is well known that contemporary monetary (effective) demand rests mainly not on real money but on debt obligations and claims to future profits (that is, on credit and fictitious capital). Yet resting on these two legs (crutches?), demand provides an extremely unstable foundation for supply. Debt can grow without particular problems for quite a long time — but only for as long as there is a reasonable expectation of repaying it, or for as long as interest income is able to significantly outweigh the principal even without any hope of the principal itself being repaid. Matters are more complicated with claims to future profits expressed in the financial instruments of fictitious capital. The market treats them as liquid resources (quasi-money) not only for as long as (1) there is an expectation of these very future profits, but also for as long as (2) there is an expectation that the market valuation of fictitious capital will keep rising.
A rising market valuation creates the possibility of profitable operations with fictitious capital regardless of whether the real capital that fictitious capital reflects actually yields real profit or not. However, this growth also has its limits and is not entirely independent of real capital. The deepest cause of the negative impact of financial-market instability on the real economy is the divergence of the movement of money capital from the movement of actual (productive) capital — expressed in the suppression of the "legitimate," "natural" functions of money capital (that is, those stemming from its genesis as a means serving the movement of productive capital, its being-for-another) and the growth of its "self-sufficient" functions (being-for-itself), based on the exploitation of speculative effects.1 (Here money capital is understood to include all its derivative and inverted forms — loan capital, fictitious capital, and virtual capital.) Why has it come about, with the development of capitalism, that not only extended credit but the debt obligations themselves (loan agreements, promissory notes, etc.) have become capable of expanding demand? Why has fictitious capital, in turn, become a basis for credit expansion (that is, come to be accepted as collateral for loans)? These are questions of fundamental importance for characterizing the relationship between actual capital and virtual capital. Debt obligations and claims to future income can generate real demand provided that they are able to function as "value signs" — that is, as substitutes for real money in its function as a medium of circulation. In essence, they create a private mass of quasi-money not controlled by the state. Their peculiarity, however, is that they create demand for goods in general not directly (ordinarily no one pays for goods with shares or futures contracts) but only through (1) the expansion of credit and (2) the extraction of profit from the financial market. It is precisely these sources that have allowed large capital to secure profitable outlets for itself, and it is precisely these that make the "being-for-itself" of financial capital socially in demand. Moreover, as a result, non-financial corporations too have increasingly been drawn into operations aimed at extracting profit directly from the financial market.
Before 1997, non-financial corporations in the United States incurred losses on financial operations — and this was natural, since they acted as borrowers of financial resources vis-à-vis the credit system, and the efficiency of their stock-market operations was low precisely because these were forced operations undertaken to attract missing capital. After that date, however, such operations became profitable — moreover, in certain periods the share of profit from financial operations among non-financial corporations exceeded 50%. But that is not all. With respect to the credit system, after 2003 non-financial corporations were for a time transformed from net debtors into net creditors: the interest they received from their own lending operations exceeded the interest they paid on the loans they had taken out. In this way, through credit and fictitious capital (as was already demonstrated back in Marx's Capital), real capital acquires the capacity for supplementary expansion, pushing back the narrow limits imposed on it by the conditions for realizing value and surplus value on the basis of real monetary demand and ordinary buying and selling alone. But this capacity is acquired at the price of increased market instability. Debts and fictitious capital are able to serve the movement of real capital only insofar as the supplementary demand they create corresponds to the capacity of real capital for expansion, a capacity otherwise constrained by the narrow bounds of monetary demand. This supplementary demand allows capital to increase real production of goods and services, drawing in all available resources and using every possible improvement. But this growth has an internal limit — capital must find profitable use. As soon as this limit reveals itself, it turns out that some part of capital cannot be employed at the normal average profit, and demand that previously seemed real turns out to be illusory (virtual). More precisely, since production was in fact functioning, it is not so much absolutely illusory as insufficient for the profitable employment of capital. Not excessive, as one might think looking at swollen "financial bubbles," but precisely insufficient (on the nature of this "insufficiency," fraught with a crisis-"heart attack," more shortly). So the central problem is the presence, within real capital itself, of an internal limit obstructing its profitable employment. Up to a certain point, this internal limit to capital's expansion remains hidden and does not manifest itself on the market. Up to what point?
The answer is, in principle, known: for as long as it does not become apparent that obligations — primarily in the real sector, although on the surface this may look like a sudden fall in securities prices — that were made counting on future profits cannot be met, or their actual fulfillment can no longer be postponed. It should be borne in mind that the stock market is driven predominantly by borrowed money. Playing for a rise draws in additional credit. A hitch causes the credit to be unrepayable — panic sets in: the dumping of assets to settle debts leads to a further deterioration of conditions, higher lending rates due to increased risk, demands for increased collateral on repo deals, or demands for early repayment (margin calls), and so on. Here we encounter the operation of two regularities of the capitalist mode of production in general and of late capitalism in particular. The first: the presence of a contradiction between capital's general drive toward boundless expansion (which is served by the inflation of virtual financial bubbles, creating the illusion of a possibility of boundless demand expansion) and the drive to secure private interests and avoid the risk of losing profits. Private capital cannot indefinitely content itself with the mere illusion of demand and the illusion of payment — it is prepared to take risks by exploiting these very illusions, but ultimately it wants to convert its goods and services into real money, to genuinely realize the value and surplus value it has created.
The second: the cyclical character of the reproduction of capital, which is itself precisely what forces capitalists into the chain reaction of the compulsory necessity of securing their private interests under conditions of an inevitable downturn in business conditions. As a result, in defending their private interests and striving for the actual realization of the value and surplus value produced, for the fulfillment of obligations in real money, capitalists discover the illusory nature of the swollen demand they themselves created with the help of virtual capital. But this illusory nature is revealed, of course, not during the phase of revival and upswing but during the downturn (when the efficiency of employing real capital falls). The question then arises: why, then, has capitalism in the developed countries managed to develop almost continuously, with only minor hitches, without serious crises for at least four cycles? This is the most difficult question in this whole story. The very mechanism of financial expansion through the swelling of the market for fictitious capital was created (half-unconsciously, of course) partly in order to cushion the downturn phase, when it arrived, with instruments of virtual demand expansion. It remains an open question why this trick succeeded not once, not twice, not even three times, but rather quite systematically. It seems this was because a whole series of other factors were superimposed on the growth of financial bubbles. First, state regulation of the market — both anti-cyclical (stimulating demand during a downturn, cooling the economy during an upswing) and structural (active industrial policy) — smoothing out the cyclical character of capital renewal. Second, the formation of the so-called welfare state (the "affluent society"), which secured an expansion of demand through redistributive mechanisms. If millions of people have some monetary savings but are just a bit short of what's needed for a refrigerator, a car, an apartment, and so on, and the state tops up that bit for them, then this creates real, additional, multi-million-strong demand for entire industries, far exceeding the actual budget transfers made. Transfers convert part of deferred demand, held as private income savings, into real demand. Third, the collapse of the colonial system and the transition to neocolonialism opened the way for globalization processes. Moving production to countries of the "Third World" secured a reduction in the costs of the real sector, cheapened the elements of the value of labor power, and so on, temporarily smoothing out the phenomena of capital overaccumulation. Fourth, the rise of financialization coincided with the upward phase of another Kondratiev cycle. All these processes were politically stimulated by the factor of competition with the world socialist system, and then the collapse of that system opened new markets to the world capitalist economy. Now all these factors have exhausted their effectiveness. They have not disappeared (at least, not entirely), but there are no longer significant prospects for increasing the efficiency of capital through these factors. Regulation remains, some social compromise or another remains, globalization deepens nonlinearly but continues to deepen, the long wave of technological renewal will not reverse — but the "cream" has already been skimmed off these factors. Moreover, the computer, information, telecommunications, and similar revolution, for all its significance (it was, in particular, one of the factors in the victory over world socialism in the competition between systems), has still not led to a qualitative technological renewal of capitalism. Technologically, capitalism remains industrial. Moreover, the possibilities for a substantial increase in efficiency through computerization have already been essentially exhausted — and not today, but at the turn of the 2000s. The above allows us, it seems, to settle the question of what virtual profit extracted from the financial market actually is. It is the fee that money capitalists (agents of the financial market) charge for granting capital the supposed possibility of boundless expansion and of earning income from the sale of goods and services that satisfy illusory demand. In fact, illusory demand is itself created by capital in the financial sector precisely in order to appropriate virtual profit. The illusory character of both is determined by the fact that financial expansion extends far beyond the bounds of the conditions for the balanced reproduction of capital. This entire process is multiplied by the production of simulacrum-commodities satisfying simulated needs.
Virtual profit extracted from the financial market is the fee that money capitalists (agents of the financial market) charge for granting capital the supposed possibility of boundless expansion and of earning income from the sale of goods and services that satisfy illusory demand.
Thus, on a new turn of the spiral and in a new quality, in sublated form (having passed, more than once, through the spiral of the "negation of the negation") the law of value is reproduced — a law under which the price of individual commodities on the market is now determined not so much by the relation of supply (sellers) and demand (buyers), oscillating around the values of commodities, as by the competitive conditions of the various, diverse global networks. As a result, price becomes an extremely mediated expression of value — and not in (gold) money, but in a complex aggregate in which, behind the appearance of the old monetary form (the dollar, the ruble), lies concealed the indeterminate state of global financial networks. In place of the single, integral universal equivalent (money as a commodity that is objectively always needed by everyone, being a product of universal socially necessary labor) comes a spontaneous world market of virtual money, subject to unknown conditions (and, on the other hand, dependent in each of its concrete links on subjective forces — this or that financial corporation). Directly, as we have already noted, it may be correlated with the world's financial markets, filled as they are with gigantic "bubbles." In place of gold as the universal regulator and stabilizer (both anchor and safety valve at once) of the market comes virtual money-capital — an unstable, spontaneous super-network, privatized by an indeterminate circle of corporations yet fully controlled by no one. This spontaneity of the financial market (the core of the vital activity of the modern market) stands in essential contradiction with a deeply ordered, interdependent (more precisely, highly socialized) production on a world scale. The latter, in its technological foundation, has for a long time now functioned not so much spontaneously (restoring proportionality through constant disproportions and overproduction crises) as on the basis of a constantly maintained proportionality, which, relatively rarely but with extraordinary force, explodes in worldwide systemic crises (crises that touch the very foundations of capital's power). These systemic crises, from the Great Depression onward, have arisen and will continue to arise as a result of the expansion (overaccumulation) of virtual financial capital crossing a certain boundary. Qualitatively, this boundary may be defined (this remains, so far, no more than a hypothesis) as such an overaccumulation of virtual capital (a substitute for money) as prevents it from performing functions analogous to those of money in the contemporary market. The precondition for this is an excessive (this measure, too, remains to be determined) divorce of such capital from (1) real production and (2) the regulatory influence of society, in particular state regulation of monetary circulation (it is no accident that monetarists so fear this rupture and strive so hard to prevent it). Bearing in mind that total marketization deepens humanity's global problems as well, and that the only means of relative stabilization and regulation of this system is virtual money itself — bearing all this in mind, it is not hard to conclude that the global financial and economic crisis that began in 2008 was a lawful consequence of the causes named above
1. Moreover, the fact that the root causes of this crisis have not been eliminated (above all, the persistence of the problem of capital overaccumulation in general, and of virtual fictitious capital in particular) makes a repetition of similar phenomena highly likely, unless substantial corrections are made, at the very least at the institutional level and within the framework of economic policy. Here, in our view, Baudrillard's figurative parallel is quite apt — his comparison of the global threat of financial crisis with the global threat of a thermonuclear explosion. In this author's view, both large financial capital and weapons of mass destruction are "hyper-realized"; they hang, as it were, in orbit above our heads, capable at any moment of bringing about catastrophe. And although this catastrophe itself remains for now only probabilistic, the threat of financial collapse, like the threat of nuclear war, is a real global factor of life today
2. Moreover, it may be considered — and this view is increasingly being developed by both theorists and practicing financiers — that the crises of the late 1990s in Southeast Asia, Russia, and Latin America were, in a sense, of virtual capital. The world economic crisis turned out to be a "real" stroke, the treatment of which has proceeded in a highly contradictory manner, although the patient (capitalism) is still "more or less alive." As we noted earlier, the truly more difficult question from a political-economy standpoint is not why the global financial and economic crisis happened, but why it was postponed for so long. The authors identified the causes of this well before the crisis as well. They lie in the fact that the contemporary economy also contains a whole series of powerful countertendencies. Let us begin with the fact that the processes described above are so far only unfolding and have not acquired absolute force. The gold basis of money persists in part (though to an ever-diminishing degree). Even more important is the fact that the largest states still control the movement of a significant part of monetary aggregates within countries and on the world market, in the interests not only of corporate elites but also of overall stability, and the privatization of state functions has not gone excessively far (the qualitative-quantitative boundary — the measure — here is defined by the state's retained capacity to ensure the regulability of monetary circulation). The power of private TNCs is not yet sufficient to compete on equal terms with the largest "First World" states, and international financial structures remain, for now, subordinated more to the latter than to the former. But the balance is extremely precarious (as indicated by the first tremors — local financial crises, and, still more, by the world "shock" of 2008), and the expansion of the total market, combined with monetarist tendencies toward dismantling social-democratic control and market regulation, may finally let the genie of financial crisis out of the (already thinning) "bottle" of control over the world financial market. Ipse fecit.1
1 Done with one's own hand (Lat.)
The genesis of the total "network market" and of virtual money, under the conditions of the neoliberal stage of the undermining of capitalism's own foundations (the stage in which we find ourselves today), gives rise to the next — one of the most important and most decisive — steps in undermining these foundations, foundations that are concealed, let us repeat, behind the appearance of a restoration of the "classical" features of capitalism. This step (a highly half-hearted and inconsistent one) is the undermining of the very form of capital as a relation of production, of the general formula of its circulation. For connoisseurs of Capital it is no secret that this general formula of capital is (M—C—M+ΔM): money that brings in money with an increment. The contradiction of this formula is formulated by K. Marx as an antinomy (ΔM both does and does not arise in circulation), and, as noted above, has as its historical prototype the antediluvian forms of capital (merchant and usurer's capital, operating outside direct material production). K. Marx's theory shows that the contradiction of the general formula of capital is resolved by the fact that the commodity labor power, in material production, creates not only the equivalent of the value of its own labor power but also surplus value. Today the severing of this connection occurs, as it were (this is an objective appearance), through a "return" to the extraction of ΔM outside of material production, within the sphere of circulation, where transactions (to use this fashionable term of the new institutionalism), dealings in commodities (C) and money (M), appear (again, an objective appearance) to generate additional money (ΔM; in the language of economics — profit) all by themselves. But the present stage is not simply a return to the speculations of merchant and usurer's capital from the era of capitalism's genesis. It is something more. Superimposing itself on the growth of socialization on a world scale (highly efficient and cheap transport and telecommunications systems, and the like) and, above all, on the genesis of information technologies, of the "network market," and of virtual money, capital, in the process of its self-negation, gives rise to a new space and time of its own domination — the sphere of transactions. This is, above all, the space and time of the vital activity of global virtual fictitious financial capital. This space and time may be correlated with the form of the financial market.
It is precisely here today that the main (in terms of role) and gigantic (in terms of scale, exceeding the budgets of many states) capitals of the modern world are concentrated. This fictitious capital is, by its very nature, cut off from material production, and owes its life only in the final analysis (after an extremely complex system of mediations) to (1) the capital accumulated over the centuries of its dominance and (2) material production as such, where wage workers create surplus value. It is significant that the latter is now produced by a world class of wage workers more numerous than ever before, concentrated predominantly in the countries of the "Third World," in material production and other branches where value is created. Here, incidentally, lies the key to explaining one of the central contradictions of globalization — between world capital and world labor, a contradiction that also takes on a geo-economic character. Such fictitious capital utilizes the prior growth of labor productivity, which led to a sharp reduction of material production and the genesis of information technologies in the developed countries. As a result, it occupies and subordinates to itself the most modern sphere of activity and communication — information systems, which have created an adequate basis for the life and expansion of corporate fictitious capital. Thus arises a special world of this virtual capital, with its own special space, time, laws, and values of life. It is precisely this capital — corporate virtual capital — that is now the principal socio-economic force of the total hegemony of capital in general.
The virtual form of this capital, as noted above, has a significant effect on its content. First, virtual capital becomes fundamentally more mobile in time and space than capital in any other form. And speed of turnover, as was shown already in Volume II of Capital, is of fundamental importance for capital. The virtual mode of existence of capital qualitatively increases this speed, allowing it to move to any point in space at practically instantaneous speed and with minimal "transport" (transaction) costs: it is enough to compare virtual capital-money with capital in the form of gold or securities to understand what this means. In this way, virtual capital acquires a carrier, a material embodiment, that is itself worldwide and eternal: information becomes obsolete only in the moral, not the physical, sense. As such, secondly, virtual capital-money turns out to be linked to a specific subject (a natural or private person), to a specific position in social space-time, only in the form of ownership, and it can change owners as quickly and as often as one likes (which, in fact, is constantly happening in the financial markets).
If we add to this the previously noted fundamental complexity (that is, a complexity such that mapping all the connections in the system is already impossible) and the blurredness of the contemporary system of property rights, it becomes clear that virtual capital is capital that has not only broken away from production but is also not located, in any stable way, in the private ownership of any specific natural or legal persons. The latter means (we return once again to the conclusion drawn above) that virtual capital is not the object of any stable regulation or control on the part of any person. Third, the contradiction between the properties of information and the properties of capital leads to the fact that private ownership of virtual capital, its alienation and appropriation, become phenomena dependent above all on formal, and likewise virtual, "rules" governing its movement. All material-productive and personal ties (including those between the owner of capital and workers, as well as the ties of owners to physical objects — factories, land, buildings, and the like) gradually disappear and are replaced by processes taking place in computer networks. Moreover, virtual capital as a whole becomes entirely dependent on the quality of the institutions that ensure the maintenance and development of the capitalist form (for example, private ownership of information, guarantees of trade secrecy, and the like) of the information network as a whole (the latter, let us recall, is unified in time and space). Hence humanity may, if not today then in the near future, find itself dependent on hackers who not only threaten to launch missiles with nuclear warheads but are also capable of introducing a virus into financial computer systems and thereby triggering a world financial crisis. Moreover, a situation is gradually taking shape in which whoever controls the world's information networks also becomes the master of the single material carrier of all virtual capital, the material carrier of "all the money in the world" (though not of money as such, for money is not some material carrier, even gold; it is well known that on a desert island gold is not money). Thus the virtual character of capital, capital-money's acquisition of a new carrier, also entails substantial changes in the socio-economic content of capital. This carrier, in principle, allows any capital to become worldwide, eternal, and maximally mobile. Capital possessing such a carrier is linked to a specific owner only formally, and these links are constantly changing, which is one of its attributive characteristics; it is dependent, in all its links, on humanity's unified information system, and is at once maximally powerful and maximally vulnerable. Existing primarily in virtual form (in computer networks), it nevertheless really absorbs all the highest achievements of civilization (from the best specialists to the best offices) and increasingly strengthens its dominance, draining the lifeblood of material production (now increasingly concentrated in the "Second" and "Third" worlds), of nature (indirectly absorbing a gigantic volume of resources), and of Man (appropriating not only most of the surplus value created throughout the world, but also the achievements of human culture, the creative potential of humanity).1
1 Moreover, today we see many attempts to introduce a "single" criterion for evaluating works of art — they must sell, and their monetary valuation is treated as the court of last instance. Space and fundamental scientific research have run into the same thing — there are constant attempts to assess them by payback and profit. Yet this very assessment is itself highly expensive, and so falls into the hands of influential financial institutions. In this way a situation arises in which humanity's highest achievements depend on the mercy of the masters of virtual money, since those without such significant sums do not take part in the decision-making.
Summing up, and partly repeating what has been said above, we may conclude that virtual capital-money of the late twentieth and early twenty-first centuries, unlike the fictitious capital of the nineteenth century:
• is a global virtual network (this is significant — see what was said above about the new qualities of capital created by the new "carrier"), rather than an atomized aggregate of monetary units regulated by the nation-state, or an aggregate of separate financial corporations; this network is unified in all its links (virtual capital moves instantaneously through its "capillaries," reacting to changes in any of the network's "nerve centers"); by definition (by virtue of its globality and unity) it functions spontaneously, and is therefore only partially controllable by national and supranational state structures;
• is privatized (being a world super-network) by a limited circle of private persons, yet is not controlled by them: virtual capital is owned by a virtual (probabilistically indeterminate), anarchically unorganized, internally contradictory circle of masters of the contemporary corporate-network market;
• performs the role of neo-money — a universal "regulator" and universal equivalent (a measure of value, a means of carrying out transactions, a store of value, and so on) of the corporate-network market; the role of a kind of "network of networks," which makes the entire system of prices (of goods, capitals, labor power, and so on), transactions, savings, and the like dependent on the state of this super-network (as it once was dependent on gold: recall the "price revolution" — the worldwide upheaval of the 15th–16th centuries resulting from the appearance of a large quantity of cheaper gold);
• possesses, by virtue of the properties listed above, the quality of virtual self-expansion (the accumulation of virtual, probabilistic value, expressed nevertheless in "ordinary" money — dollars, euros, and so on, since these too are becoming virtual), only indirectly connected with the production (and accumulation) of surplus value; the boundary of this virtual accumulation, as well as the threat of its collapse, was defined above as a hypothesis.
The sphere most adequate to such capital becomes that of "secondary" and "tertiary" relations of production.1 These are the spheres of finance, trade, and other transactions, where the activity, the relations concerning that activity, and the functioning of the material factors of that activity — all these components are entirely engendered (not merely subordinated, but engendered!) by the capitalist form. (Let us note in passing: they are not needed by production as such, they are needed by capitalist production. In a different social system, entirely different relations might become the form for the exchange of activity.) Moreover — in most cases they are engendered by the form of virtual fictitious capital. Each of the components named is not a material product but a socio-economic form as such. This is especially characteristic of finance — the key sphere of the hegemony of contemporary corporate capital. Indeed, the entire process of the functioning of finance is based on the fact that the resources of this activity are themselves a socio-economic form — capital, securities; the activity itself consists in the transformation, the alteration, of this social form (operations with securities, with currency, are the classic example of such activity). Relations of production arise here in connection with an activity whose object and result is the bourgeois socio-economic form itself; the result appropriated is likewise tied to the functioning of this form exclusively, and not to direct material goods or cultural values. This world of manifold doubled, tripled, multiplied inverted forms substantially strengthens the hegemony of corporate capital, for in this sphere the displacement of capital by other social relations is impossible. Only the displacement of this sphere as a whole is possible, which requires a qualitative change in the entire system of social relations and the replacement of the sphere of transactions of the total market with a new system of social relations.
Thus, basing ourselves on an analysis of the contradictions of late capitalism, we arrive at a conclusion already drawn in the authors' previous works on the basis of a study of the world of alienation as a whole: it is characteristic of global society at the turn of the century that the most modern information products — those that define the face of today's and tomorrow's economy — are produced, consumed, and distributed mainly in the "inverted [useless] sector." The latter, let us recall, is the sector of the reproduction of the inverted forms of human vital activity — that is, the sphere in which some inverted socio-economic forms are used to produce, replicate, etc., other, equally inverted forms, to the extent (NB! this is a very important qualification, to which we shall return) that this sphere is not the controlling subsystem of the economy. Analysis of the "decline" of the "realm of necessity" allowed us to show the boundaries of this sector — it is the sphere in which neither material nor cultural goods (goods that foster the development of the personality) are created as the principal product of its activity.1 Analysis of the "decline" of capital allows for a more precise characterization of it. From a socio-economic point of view, the inverted sector is the sphere of the creation, consumption, and transformation (transactions) of the products of global virtual capital. The historico-genetic structure of this capital also provides the key to the structure of the inverted sector. First, this system of activities is superimposed on free (classical) market competition as a result of the control and regulation of the market by the largest monopolistic associations and state bodies, to the extent that this activity is directed at the expansion of corporate hegemony (this applies, incidentally, to states as well, viewed as super-corporations) rather than at the performance of managerial, social, and other productive functions (from the standpoint of society as a whole).
Indeed, it should not be forgotten that this activity, as a rule, simultaneously also serves the cause of economic progress, "correcting" market failures. Thus, for example, the state-bureaucratic apparatus, to the extent that it works for its own expansion and privileges, is part of the inverted sector; to the extent that it regulates the structure of the economy and so on, it is part of society's collective worker. Second, the inverted sector grows as a result of the development of the relations of the total corporate-network market (the "market of webs") — namely, the activity of "spiders" (TNC centers) in spinning (ensuring the functioning and expansion of) their webs, in all the diversity of activity aimed at subordinating clients (from consumers and subcontractors to lobbyists within the state apparatus and controlled mass media).
A significant part of managerial and marketing activity (advertising especially) is a classic example of such "web-spinning" and an important component of the inverted sector. Third, a component of the inverted sector becomes the entire set of relations connected with the self-reproduction of fictitious capital, beginning with the stock-exchange speculation of the nineteenth century, through the financial capital of the early and mid-twentieth century (not by chance called parasitic), to the virtual capital of the late twentieth and early twenty-first centuries. It is precisely the latter that, owing to all the circumstances described above, becomes a system of "bubbles" of virtual financial capital — bubbles that are empty by their very nature (no material or cultural goods are created within them) but that, as already noted, absorb enormous and highly valuable resources and are as explosive as a weapon of mass destruction. Finally, the inverted sector also extends beyond the economy proper, encompassing, in particular, spheres such as the military-industrial complex and the science, education, and information/control functions connected with it; mass culture, in which cultural values are in fact absent, and others. On the whole, the inverted sector may be defined as the parasitic component of "secondary" relations of production (as distinct from the "controlling subsystem" of the economy). Figuratively speaking, it may be compared to a kind of giant vacuum cleaner, sucking up society's most valuable intellectual, financial, and other resources and locking them away in a dusty bag, where the human creator turns into a "man in a case." The inverted sector may also be compared to a cancerous tumor on the body of aging capitalism. But the subtlety here lies in the fact that these metastases cannot be removed without destroying the organism — the inverted sector cannot be destroyed without destroying late capitalism itself. Moreover, the aging system itself constantly produces them anew, on an ever-larger scale... The maximal task, therefore, is to qualitatively transform the very relations of domination of market and capital that give rise to this fictitious superstructure. At minimum, it is possible and necessary to localize, reduce, and place under democratic control the expansion of this "tumor," this sector. Let us now turn to the problem of exploitation (Part 3) and the social structure characteristic of contemporary capitalism (Part 4), concluding the analysis with an examination of the problems of contemporary capitalist globalization.
VIRTUAL PROFIT EXTRACTED FROM THE FINANCIAL MARKET — this is the fee that money capitalists (agents of the financial market) charge for granting capital the supposed possibility of boundless expansion and of earning income from the sale of goods and services that satisfy illusory demand.
A.4.1. Why does a "debt economy" develop on the basis of fictitious capital?
A.4.2. How does the divorce of fictitious capital from its actual foundation (virtualization) make it possible to overcome the demand constraints on the reproduction of capital?
A.4.3. What is the connection between the debt economy and the overaccumulation of capital?
A.4.4. In what way does the growth of the mass of fictitious capital, as it detaches from its actual foundation, increase economic risks?
A.4.5. Why does the growth of virtual financial capital mean the growth of the inverted sector of the economy?
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