[rad-green] No, the coronavirus is not responsible for the fall of stock prices

This is a multi-part message in MIME format...

------------=_1584146209-7785-118318
Content-Type: multipart/alternative; boundary="000000000000ab7dbe05a0c5c6f7"

--000000000000ab7dbe05a0c5c6f7
Content-Type: text/plain; charset="UTF-8"
Content-Transfer-Encoding: quoted-printable

*https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-o=
f-stock-prices
<https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-o=
f-stock-prices>*

*Committee for the Abolition of the Illegitimate Debt                5
March 2020*

No, the coronavirus is not responsible for the fall of stock prices

*by Eric Toussaint*

(CC - pixabay)

We are witnessing a big crisis in the stock markets of the Wall Street,
Europe, Japan and Shanghai, and many blame the coronavirus for it. In the
last week of February 2020, the worst week since October 2008, the Dow
Jones fell 12.4%, the S&P 500 fell 11.5% and the Nasdaq Composite fell
10.5%. The scenario is similar in Europe and Asia for the corresponding
period. On the London Stock Exchange, the FTSE-100 fell by 11.32%, in Paris
the CAC 40 fell by 12%, in Frankfurt the DAX lost 12.44%, on the Tokyo
Stock Exchange the Nikkei fell by 9.6%, the Chinese stock exchanges
(Shanghai, Shenzhen and Hong Kong) also fell. On Monday, March 2, following
(promises of) massive interventions by central banks to support the stock
markets, most of the indices went up again except in London. On Tuesday,
March 3, the panicked U.S. central bank, the Fed, lowered its key rate by
0.50%, which is a considerable drop. The Fed=E2=80=99s new key rate is now =
in a
range of 1 to 1.25%. It should be noted that the inflation rate in the
United States between February 2019 and January 2020 reached 2.5%, which
means that the Fed=E2=80=99s real interest rate is negative. The mainstream=
 press
writes that this measure is intended to support the U.S. economy threatened
by the COVID-19 epidemic. The leading American media put out large
headlines =E2=80=9CThe Fed just hit the coronavirus panic button=E2=80=9D (
https://edition.cnn.com/2020/03/03/investing/federal-reserve-interest-rate-=
cut-coronavirus-emergency/index.html
).
However, the poor health of the American economy dates back well before the
first cases of coronavirus in China and its effects on the world economy
(see
https://www.cadtm.org/The-Credit-Crunch-is-Back-and-the-Federal-Reserve-Pan=
ics-on-an-Ocean-of-Debt).
In short, the Fed and the mainstream press are not telling the truth when
they state that the measure is designed to deal with the coronavirus. In
spite of the Fed=E2=80=99s decision, on Tuesday March 3, the S&P 500 fell a=
gain by
2.81% and the Dow Jones fell by 2.9% (
https://edition.cnn.com/2020/03/03/investing/dow-stock-market-today/index.h=
tml
).
On March 3 and 4, several Asian stock exchanges also experienced a decline.
Nevertheless, on March 4 there has been a stock market rally in New York to
celebrate the return of Joe Biden to the presidential race in the United
States during the Democratic primaries on March 3, as this is a relief for
them in front of Bernie Sanders. Joe Biden is clearly the candidate of the
Democratic establishment and the billionaires who support that party. Also
note that Donald Trump has in a tweet last week linked his fate to that of
the Wall Street stock market. On February 26, he called on his colleagues
from the richest 1% asking them not to sell their shares and to support the
stock market. He further stated that if he is re-elected as the president
of the United States in October 2020, the stock market will rise
enormously, while if he loses, there will be a stock market crash on a
scale never seen before (according to the Financial Times, Trump announced
that the market will =E2=80=9Cjump thousands and thousands of points if I w=
in,=E2=80=9D ...
=E2=80=9Cand if I don=E2=80=99t, you=E2=80=99re going to see a crash like y=
ou=E2=80=99ve never seen before
.... I really mean it.=E2=80=9D
https://www.ft.com/content/399783e2-57e9-11ea-a528-dd0f971febbc ).
Precisely what will happen in the stock markets in the coming days and
weeks is unpredictable, but it is very important to analyse the real causes
of the current financial crisis.

The mainstream media, in an oversimplification, claimed that this worldwide
stock market collapse was caused by the coronavirus and this explanation is
widely echoed on social networks. However, it is not the coronavirus and
its expansion that is the cause of the crisis, the epidemic has only
triggered it. All the ingredients for a new financial crisis have been
present for several years, at least since 2017-2018 (see
https://www.cadtm.org/Dancing-on-the-Volcano dating back to November 2017;
https://www.cadtm.org/Sooner-or-later-there-will-be-a dating from April
2018). When the air is replete with inflammable materials, any given spark
can cause a financial explosion, at any time. It was hard to predict where
the spark was going to come from. The spark sets the fire but it is not the
root cause of the crisis. We are yet to know whether the sharp stock market
crash of late February 2020 will =E2=80=9Cescalate=E2=80=9D into a huge fin=
ancial crisis
but there is a real possibility. The fact that the stock market crash
coincides with the effects of the coronavirus epidemic on the productive
economy is no accident, but to say that the coronavirus is the cause of the
crisis is untrue. It is important to see where the crisis really comes from
and not be fooled by explanations that put up a smokescreen over the real
causes.

The mainstream media, in an oversimplification, claimed that this worldwide
stock market collapse was caused by the coronavirus [...] However, the
epidemic has only triggered it. All the ingredients for a new financial
crisis have been present at least since 2017-2018

Big businesses, the rulers and the media at its service have every interest
<https://www.cadtm.org/Interest> in blaming the virus for a major financial
and then economic crisis. This allows them to wash their hands off it
(excuse the expression).

The drop in stock prices was predicted long before the coronavirus appeared.

The rise of share <https://www.cadtm.org/Share> prices and the price of
debt securities (also known as bonds) have far outpaced the growth of
output over the last ten years, with an acceleration in the last two or
three years. The wealth of the richest 1% has also grown strongly as it is
largely based on the growth of financial assets.

It must be stressed that the stock prices fall due to a willing choice (I
am not talking about a conspiracy): a part of the very rich (the 1%, the
big business) decides to start offloading the shares it has acquired not
forgetting the fact that every financial party has an end. And, rather than
suffer in the process, it prefers to take the lead. These large
shareholders prefer to be the first to sell in order to get the best
possible rates before the share price falls very sharply. End of February
2020, large investment companies, large banks, large industrial companies
and billionaires have ordered *traders to* sell off *a part of* the shares
or private debt securities (i.e. bonds) they hold in order to pocket the
15% or 20% appreciations of the recent years. They decided the time to do
it: they call it booking =E2=80=9Ctheir profits=E2=80=9D. They are least bo=
thered if it
generates a herd behaviour of others trying to sell. The important thing
for them is to sell before others do. This can cause a domino effect and
escalate into a global crisis. They know that and they feel that they will
get away with it in the end without too much trouble, as a large number of
them did in 2007-2009. In the United States, for example, the two main
investment and asset <https://www.cadtm.org/Asset>  management funds
BlackRock and Vanguard have done very well, as have Goldman Sachs, Bank of
America, Citigroup and Google, Apple, Amazon, Facebook, etc.

Another important point to note is that the 1% sells shares of private
companies, causing the share prices of the latter to fall and the stock
markets to plummet. At the same time, however, they buy public debt
securities that are considered safe. This is particularly the case in the
United States, where the price of US treasury securities has risen in
response to very strong demand. Please note that an increase in the price
of treasury securities that are sold on the secondary market
<https://www.cadtm.org/Secondary-market> results in a decrease in the yield
<https://www.cadtm.org/Yield> of these securities. The wealthy who buy
these treasury securities are willing to accept a low return because what
they are currently looking for is security when corporate stock prices are
falling. Consequently, it must be stressed that once again it is the
securities issued by the states that are considered to be the safest, by
the richest. Let=E2=80=99s keep this in mind and be prepared to say it publ=
icly,
because we can expect the familiar refrain of the public debt crisis and
the markets=E2=80=99 fears about government securities to return soon.

Big business (the 1%) has reduced its investment share in production and
increased it in the financial sphere

Nevertheless, let=E2=80=99s revisit what has been happening repeatedly for =
a little
over thirty years, that is, since the neoliberal offensive and the massive
deregulation of the financial markets have taken deep roots: [1
<https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-o=
f-stock-prices#nb2-1>
] big business (the 1%) has reduced its investment share in production and
increased it in the financial sphere (this includes the case of the iconic
=E2=80=9Cindustrial=E2=80=9D firm such as Apple). It did that in the 1980s =
and it produced
the bond market <https://www.cadtm.org/Bond-market> crisis of 1987. It
repeated it in the late 1990s and it produced the dot-com and Enron crisis
in 2001. It repeated it again between 2004 and 2007 and created the
subprime crisis, structured products and a series of high-profile
bankruptcies, including that of Lehman Brothers in 2008. This time around,
big business mainly speculated long [2
<https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-o=
f-stock-prices#nb2-2>
] on the price of shares on the stock market and on the price of debt
securities on the bond <https://www.cadtm.org/Bond> market (i.e. the market
where shares of private companies and debt securities issued by governments
and other public authorities are sold). Among the factors that have led to
the extravagant rise in the prices of financial assets (stock market
equities and private and public debt securities), are the negative actions
of the major central banks since the financial and economic crisis of
2007-2009. I have analysed this in
https://www.cadtm.org/The-Economic-Crisis-and-the-Central-Banks

This phenomenon does not therefore begins only the day after the 2008-2009
crisis; it is a recurring phenomenon in the context of the financialisation
of the capitalist economy. And before that, the capitalist system had also
undergone important phases of financialisation both in the 19th century and
in the 1920s, which led to the great stock market crisis of 1929 and the
prolonged period of recession of the 1930s. Then the phenomenon of
financialisation and deregulation was partly muzzled for 40 years following
the Great Depression of the 1930s, the WWII and by the ensuing
radicalisation of the class struggle. Until the end of the 1970s there were
no major banking or stock market crises. The banking and stock market
crises re-emerged when governments gave big business the freedom to do
whatever it wanted in the financial sector.

The banking and stock market crises re-emerged when governments gave big
business the freedom to do whatever it wanted in the financial sector

Let us look back at the last few years. Big business, which considers that
the rate of return it derives from production is not sufficient, develops
financial activities not directly related to production. This does not mean
that it abandons production, but that it is proportionally developing its
investments in the financial sphere more than its investments in the
productive sphere. This is also known as financialisation or financialised
globalisation. Capital =E2=80=9Cmakes profit <https://www.cadtm.org/Profit>=
=E2=80=9D from
fictitious capital through largely speculative activities. This development
of the financial sphere increases the massive indebtedness of large
corporations, including firms such as Apple (I have written a series of
articles on this subject
https://www.cadtm.org/The-mountain-of-corporate-debt-will-be-the-seed-of-th=
e-next-financial-crisis
).

Fictitious capital is a form of capital, it develops exclusively in the
financial sphere without any real link to production (see box: What is
fictitious capital?). It is fictitious in the sense that it is not directly
based on material production and the *direct* exploitation of human labour
and nature. I am talking about direct exploitation because, of course,
fictitious capital speculates on human labour and on nature, which
generally degrades the living conditions of workers and Nature itself.
*What is fictitious capital?*

*=E2=80=9CFictitious capital is a form of capital (public debt securities, =
shares,
debts) that circulates while the income from production to which it gives
entitlement is merely promises, the outcome of which is by definition
uncertain=E2=80=9D*. Interview with C=C3=A9dric Durand conducted by Florian=
 Gulli, =E2=80=9CLe
capital fictif, C=C3=A9dric Durand=E2=80=9D, *La Revue du projet*:
http://projet.pcf.fr/70923

According to Michel Husson, *=E2=80=9CMarx=E2=80=99s theoretical framework =
allows him to
analyse =E2=80=98fictitious capital=E2=80=99, which can be defined as the s=
et of financial
assets whose value is based on the capitalisation of a flow of future
income:* =E2=80=9CThe formation of a fictitious capital is called capitalis=
ation.=E2=80=9D=E2=80=9D
[Karl Marx, *Capital*, Vol III]. *If a share provides an annual income of
=C2=A3100 and the interest rate is 5%, its capitalised value will be =C2=A3=
2000. [3
<https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-o=
f-stock-prices#nb2-3>]
But
this capital is fictitious, insofar as* =E2=80=9Cthere remains absolutely n=
o trace
of any relationship whatsoever with the real process of capital
development=E2=80=9D [Karl Marx, *Capital*, Vol III]. Michel Husson, =E2=80=
=9CMarx et la
finance : une approche actuelle=E2=80=9D, *=C3=80 l=E2=80=99Encontre*, Dece=
mber 2011,
https://alencontre.org/economie/marx-et-la-finance-une-approche-actuelle.ht=
ml

Fictitious capital is a form of capital, it develops exclusively in the
financial sphere without any real link to production. It is fictitious in
the sense that it is not directly based on material production and the
direct exploitation of human labour and nature

For Jean-Marie Harribey: *=E2=80=9CBubbles burst when the gap between reali=
sed
value and promised value becomes too great and some speculators understand
that promises of profitable liquidation cannot be honoured for all, in
other words, when financial gains can never be realised for lack of
sufficient capital gains in production=E2=80=9D*. Jean-Marie Harribey, =E2=
=80=9CLa
baudruche du capital fictif, lecture du Capital fictif de C=C3=A9dric Duran=
d=E2=80=9D, *Les
Possibles*, N=C2=B0 6 - Printemps 2015 :
https://france.attac.org/nos-publications/les-possibles/numero-6-printemps-=
2015/debats/article/la-baudruche-du-capital-fictif

See also Fran=C3=A7ois Chesnais, =E2=80=9CFictitious Capital, Dictatorship =
of
Shareholders and Creditors: Current Challenges,=E2=80=9D *Les Possibles*, N=
o. 6 -
Spring 2015:
https://france.attac.org/nos-publications/les-possibles/numero-6-printemps-=
2015/debats/article/capital-fictif-dictature-des

I agree with C=C3=A9dric Durand when he says: *=E2=80=9COne of the major po=
litical
consequences of this analysis is that the social and political left must
become aware of the class content of the notion of financial stability.
Preserving financial stability means making the claims of fictitious
capital come true. To free our savings from the grip of fictitious capital,
we need to engage in financial de-accumulation. In concrete terms, this
refers of course to the issue of cancelling public debt and the private
debt of ordinary households, but also to the decrease in shareholder
returns, which automatically translates into a decrease in market
capitalisation. Make no mistake, such objectives are very ambitious: they
inevitably involve socialising the financial system and breaking with the
free movement of capital. But they allow us to grasp precisely some of the
conditions necessary to turn the page on neo-liberalism.=E2=80=9C* C=C3=A9d=
ric
Durand,=E2=80=9DSur le capital fictif, R=C3=A9ponse =C3=A0 Jean-Marie Harri=
bey", *Les
Possibles*, N=C2=B0 6 - Printemps 2015 :
https://france.attac.org/nos-publications/les-possibles/numero-6-printemps-=
2015/debats/article/sur-le-capital-fictif

Fictitious capital wishes to capture part of the wealth produced in
production (Marxists say part of the surplus value produced by workers in
the sphere of production) without getting its hands dirty, that is, without
going through the process of being invested directly in production (in the
form of buying machines, raw materials, paying for human labour power in
the form of wages, etc.). The fictitious capital is a share whose owner
expects it to pay a dividend. He will buy a Renault share if it promises a
good dividend, but he can also sell it to buy a General Electric or Glaxo
Smith Kline or Nestl=C3=A9 or Google share if it promises a better dividend.
Fictitious capital is also a debt bond issued by a company or a public debt
security. It is also a derivative, a structured product
<https://www.cadtm.org/Structured-product>... Fictitious capital can give
the illusion that it generates profits on its own while having detached
itself from production. Traders, brokers or managers of large companies are
convinced that they =E2=80=9Cproduce=E2=80=9D. However, at some point, a br=
utal crisis
erupts and a mass of fictitious capital goes up in smoke (falling stock
prices, falling bond market prices, falling property prices...).

Traders, brokers or managers of large companies are convinced that they
=E2=80=9Cproduce=E2=80=9D. However, at some point, a brutal crisis erupts a=
nd a mass of
fictitious capital goes up in smoke

Big business repeatedly wants us to believe or make us believe that it is
capable of turning lead into gold in the financial sphere, but periodically
reality brings it to order and the crisis breaks out.

When the crisis erupts, a distinction must be made between the spark on one
hand (today, the coronavirus pandemic may be the spark) and the root causes
on the other.

Over the past two years, there has been a very significant slowdown in
productive sectors. In several major economies such as Germany, Japan (last
quarter 2019), France (last quarter 2019) and Italy, industrial production
has declined or slowed down sharply (China and the United States). Some
industrial sectors that had recovered after the 2007-2009 crisis, such as
the automobile industry, entered into a very strong crisis during the years
2018-2019 with a very significant drop in sales and production. Production
in Germany, the world=E2=80=99s largest car manufacturer, fell by 14% betwe=
en
October 2018 and October 2019. [4
<https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-o=
f-stock-prices#nb2-4>
] Automobile production in the United States and China also fell in 2019,
as it did in India. Automobile production will fall sharply in France in
2020. The output of another flagship of the German economy, the machinery
and equipment producing sector, fell by 4.4% in October 2019 alone. This is
also the case for the production of machine tools and other industrial
equipment. International trade has stagnated. Over a longer period of time,
the rate of profit has declined or stagnated in material production, and
productivity gains have also declined.

In 2018-2019, these various phenomena of economic crisis in production
manifested themselves very clearly, but as the financial sphere continued
to operate at full capacity, the big media and governments did everything
possible to affirm that the situation was positive overall and that those
who announced the next major financial crisis, in addition to the marked
slowdown in production, were only bringers of bad luck.

The perspective of social class is also very important: for big business,
as long as the wheel of fortune in the financial sphere continues to turn,
the players stay on track and are happy with the situation. The same is
true for all governments because they are currently linked to big business,
both in the old industrialised economies such as North America, Western
Europe or Japan, and in China, Russia or other large so-called emerging
economies.

Despite the fact that real output stopped growing significantly in 2019 or
began to stagnate or decline, the financial sphere continued to expand

Despite the fact that real output stopped growing significantly in 2019 or
began to stagnate or decline, the financial sphere continued to expand:
stock prices continued to rise, even reaching record highs, the price of
private and public debt securities continued to rise, real estate prices
began to rise again in a series of economies, etc.

In 2019, production slowed down (China and India), stagnated (much of
Europe) or started to decline in the second half of the year (Germany,
Italy, Japan, France), notably because global demand shrinkage: most
governments and employers were active to lower wages and pensions, which
reduced consumption because the increasing debts incurred by families were
not enough to offset the drop in income. Similarly, governments pursued a
policy of austerity leading to cuts in public spending and public
investment. The combination of the fall of purchasing power of the majority
of the population and the fall in public spending leads to a reduction of
aggregate demand and therefore part of the production does not find
sufficient outlets, resulting in a fall of [5
<https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-o=
f-stock-prices#nb2-5>
] economic activity.

It=E2=80=99s important to clarify where we stand: I=E2=80=99m talking about=
 a production
crisis not because I=E2=80=99m in love with production growth. Rather, I am=
 for
organising (planning) a de-growth in order to respond, in particular, to
the current ecological crisis. So, personally, I am not saddened by the
fall or stagnation of production at world level, but the opposite. It=E2=80=
=99s all
very well if fewer cars are produced and their sales drop. On the other
hand for the capitalist system, it is not the same: the capitalist system
needs to constantly develop production and conquer new markets. When it
does not succeed or when it starts to get stuck, it responds to the
situation by developing the world of financial speculation and issuing more
and more fictitious capital not directly related to the productive sphere.
It seems to work for years, and then at some point speculative bubbles
burst. At several moments in the history of capitalism, the logic of
permanent expansion of the capitalist system and of production has been
expressed through trade wars (and this is again the case today, especially
between the United States and its main partners) or through real wars, and
this outcome is not entirely excluded today.

De-growth must be started immediately and urgently planned to combat the
ecological crisis. We must produce less and better

From the point of view of the exploited and despoiled social classes that
make up the overwhelming majority of the population (hence the image of the
99% as opposed to the 1%), it is clear that the conclusion is that a
radical break must be made with the logic of capital accumulation, whether
productive or financial, or financialised productive, whatever the name.
De-growth must be started immediately and urgently planned to combat the
ecological crisis. We must produce less and better. The manufacture of
certain products vital to the well-being of the population must increase
(construction and renovation of decent housing, public transport, health
centres and hospitals, drinking water supply and sewage treatment, schools,
etc.) but many other productions must radically decline (personal cars) or
disappear (arms manufacturing). Greenhouse gas emissions must be
drastically and abruptly reduced. A whole range of industries and
agricultural activities need to be converted. A large part, and in some
cases all, of the public debt must be cancelled. Banks, insurance
companies, the energy sector and other strategic sectors must be
expropriated without compensation and transferred to the public service.
Central banks must be given other tasks and structures. Other measures
include the implementation of a comprehensive tax reform with high taxation
of capital, an overall reduction in working time with compensatory hiring
and maintenance of wage levels, free public health services, education,
public transport, effective measures to ensure gender equality. Wealth must
be distributed respecting the social justice and prioritising human rights
and respecting fragile ecological balances.

The large mass of the population that sees its real income decrease or
stagnate (i.e. its real purchasing power) compensates for this decrease or
stagnation by resorting to debt to maintain its level of consumption,
including on vital issues (how to buy foodstuffs, how to ensure schooling
of children, how to reach the workplace if you have to buy a car since
there is no public transport, how to pay for health care, etc.). Radical
solutions to the growing indebtedness of a majority of the world=E2=80=99s
population around the world must be found and debt cancellation must be
used. A large part of private household debts (including student debts,
abusive mortgage <https://www.cadtm.org/Moral-hazard> debts, abusive
consumer debts, debts related to abusive microcredit, etc.) must therefore
be cancelled. It is necessary to increase the income of the majority of the
population and to greatly improve the quality of public services in health,
education and public transport, free of charge for the population.

We must lead the fight against the multidimensional crisis of the
capitalist system and resolutely embark on the path of an
ecologist-feminist-socialist exit. This is an absolute and immediate
necessity

We are facing a multidimensional crisis of the world capitalist
system: *economic
crisis, trade crisis, ecological crisis, crisis of several international
institutions, part of the system of capitalist domination of the planet* (
WTO <https://www.cadtm.org/WTO-World-Trade-Organisation>, NATO
<https://www.cadtm.org/NATO-North-Atlantic-Treaty>, G7, crisis in the Fed
<https://www.cadtm.org/FED-Federal-Reserve> - the central bank
<https://www.cadtm.org/Central-Bank> of the United States -, crisis in
the European
Central Bank <https://www.cadtm.org/ECB-European-Central-Bank>), *political
crisis in important countries* (especially in the United States between the
two big parties of big business). In the opinion of many people in many
countries, the rejection of the capitalist system is higher than it has
ever been in the last five decades, since the beginning of the neo-liberal
offensive under Pinochet (1973), Thatcher (1979) and Reagan (1980) see:
https://www.cadtm.org/International-situation-and-Radical-Alternatives

The abolition of illegitimate debts, this form of fictitious capital, must
be part of a much broader programme of additional measures. Eco-socialism
must be put at the heart of the solutions and not left aside. We must lead
the fight against the multidimensional crisis of the capitalist system and
resolutely embark on the path of an ecologist-feminist-socialist exit. This
is an absolute and immediate necessity.


*Translated by Sushovan Dhar*

Footnotes

[1
<https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-o=
f-stock-prices#nh2-1>
] See Eric Toussaint, *Bankocracy <https://www.cadtm.org/Bankocracy>*,
2015, Chapter 3 =E2=80=9CThirty years of financial deregulation=E2=80=9D.

[2
<https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-o=
f-stock-prices#nh2-2>
] In finance, a long position in a financial instrument means the holder of
the position owns a positive amount of the instrument. The holder of the
position has the expectation that the financial instrument will increase in
value.

[3
<https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-o=
f-stock-prices#nh2-3>
] =E2=80=9CFor example, if the annual income is =C2=A3100 and the rate of i=
nterest 5%,
then the =C2=A3100 would represent the annual interest on =C2=A32,000, and =
the =C2=A32,000
is regarded as the capital-value of the legal title of ownership on the
=C2=A3100 annually. For the person who buys this title of ownership, the an=
nual
income of =C2=A3100 represents indeed the interest on his capital invested =
at
5%. All connection with the actual expansion process of capital is thus
completely lost, and the conception of capital as something with automatic
self-expansion properties is thereby strengthened.=E2=80=9D Karl Marx, *Cap=
ital*,
Vol III. Chapter 29 (Component Parts of Bank Capital)

[4
<https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-o=
f-stock-prices#nh2-4>
] The German car industry, directly employs 830,000 people and supports a
further 2m jobs in the wider economy (Source: *Financial Times*, =E2=80=9CG=
erman
industry hit by biggest downturn since 2009=E2=80=9D, 6-7 December 2019).

[5
<https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-o=
f-stock-prices#nh2-5>
] Regarding the explanation of the crises, among Marxist economists, two
great =E2=80=98schools=E2=80=99 have arisen. One claims that the crises are=
 caused by the
under-consumption of the masses (that is, over-production of consumer
goods), the other that they are caused by over-accumulation (meaning the
insufficiency of profit to continue expansion in the production of producer
goods). This debate is but a variant of the old debate between those who
explained the crises by =E2=80=98insufficient aggregate demand=E2=80=99, an=
d those who
explained them by =E2=80=98disproportionality=E2=80=99. Ernest Mandel, *The=
ories of Crisis:
An Explanation of the 1974-82 Cycle*, in M. Gottdiener & Nicos
Komninos ed. *Capitalist
Development and Crisis Theory: Accumulation, Regulation and Spatial
Restructuring*, New York, 1989, p 30. Following Ernest Mandel, I consider
that the explanation of the current crisis must take into account several
factors that cannot be reduced to a crisis produced by the overproduction
of consumer goods (and therefore insufficient demand) or by the
over-accumulation of capital (and therefore insufficient profit).
Eric Toussaint  <https://www.cadtm.org/Eric-Toussaint?lang=3Den>

is a historian and political scientist who completed his Ph.D. at the
universities of Paris VIII and Li=C3=A8ge, is the spokesperson of the CADTM
International, and sits on the Scientific Council of ATTAC France.
He is the author of *Debt System* (Haymarket books, Chicago, 2019),
*Bankocracy* <https://www.cadtm.org/Bankocracy> (2015); *The Life and
Crimes of an Exemplary Man*
<https://www.cadtm.org/The-Life-and-Crimes-of-an-Exemplary-Man> (2014); *Gl=
ance
in the Rear View Mirror. Neoliberal Ideology From its Origins to the
Present*, Haymarket books, Chicago, 2012 (see here
<https://www.cadtm.org/Glance-in-the-Rear-View-Mirror>), etc.
See his bibliography: https://en.wikipedia.org/wiki/%C3%89ric_Toussaint
He co-authored *World debt figures 2015* with Pierre Gottiniaux, Daniel
Munevar and Antonio Sanabria (2015); and with Damien Millet *Debt, the IMF,
and the World Bank: Sixty Questions, Sixty Answers*
<https://www.cadtm.org/Debt-the-IMF-and-the-World-Bank>, Monthly Review
Books, New York, 2010. He was the scientific coordinator of the Greek Truth
Commission on Public Debt
<https://www.cadtm.org/4-April-2015-a-landmark-in-the> from April 2015 to
November 2015.

--=20

---=20
You received this message because you are subscribed to the Google Groups "=
Sid-l" group.
To unsubscribe from this group and stop receiving emails from it, send an e=
mail to [email protected].
To view this discussion on the web visit https://groups.google.com/d/msgid/=
sid-l/CACKppczw-fBFOtNzye32kO39WK4HcmjAo4pOa4n85QG459xbtw%40mail.gmail.com.

--000000000000ab7dbe05a0c5c6f7
Content-Type: text/html; charset="UTF-8"
Content-Transfer-Encoding: quoted-printable

<div dir=3D"ltr"><div class=3D"gmail_default" style=3D"font-size:small"><fo=
nt color=3D"#000000"><b><a href=3D"https://www.cadtm.org/No-the-coronavirus=
-is-not-responsible-for-the-fall-of-stock-prices" target=3D"_blank">https:/=
/www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-of-stock-=
prices</a><br></b></font></div><div class=3D"gmail_default" style=3D"font-s=
ize:small"><b><br></b></div><div class=3D"gmail_default"><b><font size=3D"4=
">Committee for the Abolition of the Illegitimate Debt=C2=A0 =C2=A0 =C2=A0 =
=C2=A0 =C2=A0 =C2=A0 =C2=A0 =C2=A0 5 March 2020</font></b></div><div class=
=3D"gmail_default"><b><font size=3D"4"><br></font></b></div><div class=3D"g=
mail_default"><div style=3D"box-sizing:content-box;margin:0px;padding:0px;v=
ertical-align:bottom;overflow:hidden;font-family:arial,sans-serif"><h2 styl=
e=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0px;vertical-align:=
bottom;line-height:1.2em"><font color=3D"#000000" size=3D"6">No, the corona=
virus is not responsible for the fall of stock prices</font></h2><p style=
=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom"><f=
ont color=3D"#000000" size=3D"4"></font></p><p style=3D"box-sizing:content-=
box;margin:0px;padding:0px;vertical-align:bottom"><small style=3D"box-sizin=
g:content-box;margin:0px;padding:0px;vertical-align:bottom"><font color=3D"=
#000000" size=3D"4"><b>by=C2=A0<span style=3D"box-sizing:content-box;margin=
:0px;padding:0px;vertical-align:bottom">Eric Toussaint</span></b></font></s=
mall></p><font color=3D"#000000" style=3D"font-size:15.2px"><br style=3D"bo=
x-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom;clear:bot=
h;border:none;height:0px;line-height:1px;font-size:1px"></font><div style=
=3D"font-size:0.9em;box-sizing:content-box;margin:15px 0px;padding:0px;vert=
ical-align:bottom"><img alt=3D"" src=3D"https://www.cadtm.org/local/cache-v=
ignettes/L640xH396/arton18166-9b4ce.png?1583322909" width=3D"472" height=3D=
"292" style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align=
:bottom;border:0px;float:left;outline:none"><p style=3D"box-sizing:content-=
box;margin:0px;padding:0px;vertical-align:bottom;clear:both"><font color=3D=
"#000000">(CC - pixabay)</font></p></div></div><div style=3D"font-size:15.2=
px;box-sizing:content-box;margin:10px 0px 15px;padding:0px 0px 0px 10px;ver=
tical-align:bottom;border-left:1px solid rgb(238,0,0);clear:both;overflow:h=
idden;font-family:arial,sans-serif"><p style=3D"box-sizing:content-box;marg=
in:0px 0px 10px;padding:0px;vertical-align:bottom"><font color=3D"#000000">=
We are witnessing a big crisis in the stock markets of the Wall Street, Eur=
ope, Japan and Shanghai, and many blame the coronavirus for it. In the last=
 week of February 2020, the worst week since October 2008, the Dow Jones fe=
ll 12.4%, the S&amp;P 500 fell 11.5% and the Nasdaq Composite fell 10.5%. T=
he scenario is similar in Europe and Asia for the corresponding period. On =
the London Stock Exchange, the FTSE-100 fell by 11.32%, in Paris the CAC 40=
 fell by 12%, in Frankfurt the DAX lost 12.44%, on the Tokyo Stock Exchange=
 the Nikkei fell by 9.6%, the Chinese stock exchanges (Shanghai, Shenzhen a=
nd Hong Kong) also fell. On Monday, March 2, following (promises of) massiv=
e interventions by central banks to support the stock markets, most of the =
indices went up again except in London. On Tuesday, March 3, the panicked U=
.S. central bank, the Fed, lowered its key rate by 0.50%, which is a consid=
erable drop. The Fed=E2=80=99s new key rate is now in a range of 1 to 1.25%=
. It should be noted that the inflation rate in the United States between F=
ebruary 2019 and January 2020 reached 2.5%, which means that the Fed=E2=80=
=99s real interest rate is negative. The mainstream press writes that this =
measure is intended to support the U.S. economy threatened by the COVID-19 =
epidemic. The leading American media put out large headlines =E2=80=9CThe F=
ed just hit the coronavirus panic button=E2=80=9D (<a href=3D"https://editi=
on.cnn.com/2020/03/03/investing/federal-reserve-interest-rate-cut-coronavir=
us-emergency/index.html" rel=3D"nofollow external" style=3D"box-sizing:cont=
ent-box;margin:0px;padding:0px;vertical-align:bottom;text-decoration-line:n=
one;outline:none" target=3D"_blank">https://edition.cnn.com/2020/03/03/inve=
sting/federal-reserve-interest-rate-cut-coronavirus-emergency/index.html</a=
>=C2=A0). However, the poor health of the American economy dates back well =
before the first cases of coronavirus in China and its effects on the world=
 economy (see=C2=A0<a href=3D"https://www.cadtm.org/The-Credit-Crunch-is-Ba=
ck-and-the-Federal-Reserve-Panics-on-an-Ocean-of-Debt" rel=3D"nofollow" sty=
le=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom;t=
ext-decoration-line:none;outline:none" target=3D"_blank">https://www.cadtm.=
org/The-Credit-Crunch-is-Back-and-the-Federal-Reserve-Panics-on-an-Ocean-of=
-Debt</a>). In short, the Fed and the mainstream press are not telling the =
truth when they state that the measure is designed to deal with the coronav=
irus. In spite of the Fed=E2=80=99s decision, on Tuesday March 3, the S&amp=
;P 500 fell again by 2.81% and the Dow Jones fell by 2.9% (<a href=3D"https=
://edition.cnn.com/2020/03/03/investing/dow-stock-market-today/index.html" =
rel=3D"nofollow external" style=3D"box-sizing:content-box;margin:0px;paddin=
g:0px;vertical-align:bottom;text-decoration-line:none;outline:none" target=
=3D"_blank">https://edition.cnn.com/2020/03/03/investing/dow-stock-market-t=
oday/index.html</a>=C2=A0). On March 3 and 4, several Asian stock exchanges=
 also experienced a decline. Nevertheless, on March 4 there has been a stoc=
k market rally in New York to celebrate the return of Joe Biden to the pres=
idential race in the United States during the Democratic primaries on March=
 3, as this is a relief for them in front of Bernie Sanders. Joe Biden is c=
learly the candidate of the Democratic establishment and the billionaires w=
ho support that party. Also note that Donald Trump has in a tweet last week=
 linked his fate to that of the Wall Street stock market. On February 26, h=
e called on his colleagues from the richest 1% asking them not to sell thei=
r shares and to support the stock market. He further stated that if he is r=
e-elected as the president of the United States in October 2020, the stock =
market will rise enormously, while if he loses, there will be a stock marke=
t crash on a scale never seen before (according to the Financial Times, Tru=
mp announced that the market will =E2=80=9Cjump thousands and thousands of =
points if I win,=E2=80=9D ... =E2=80=9Cand if I don=E2=80=99t, you=E2=80=99=
re going to see a crash like you=E2=80=99ve never seen before ....=E2=80=89=
I really mean it.=E2=80=9D=C2=A0<a href=3D"https://www.ft.com/content/39978=
3e2-57e9-11ea-a528-dd0f971febbc" rel=3D"nofollow external" style=3D"box-siz=
ing:content-box;margin:0px;padding:0px;vertical-align:bottom;text-decoratio=
n-line:none;outline:none" target=3D"_blank">https://www.ft.com/content/3997=
83e2-57e9-11ea-a528-dd0f971febbc</a>=C2=A0). Precisely what will happen in =
the stock markets in the coming days and weeks is unpredictable, but it is =
very important to analyse the real causes of the current financial crisis.<=
/font></p></div><div style=3D"font-size:15.2px;box-sizing:content-box;margi=
n:0px;padding:0px;vertical-align:bottom;overflow:hidden;font-family:arial,s=
ans-serif"><p style=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0=
px;vertical-align:bottom"><font color=3D"#000000">The mainstream media, in =
an oversimplification, claimed that this worldwide stock market collapse wa=
s caused by the coronavirus and this explanation is widely echoed on social=
 networks. However, it is not the coronavirus and its expansion that is the=
 cause of the crisis, the epidemic has only triggered it. All the ingredien=
ts for a new financial crisis have been present for several years, at least=
 since 2017-2018 (see=C2=A0<a href=3D"https://www.cadtm.org/Dancing-on-the-=
Volcano" style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-al=
ign:bottom;text-decoration-line:none;outline:none" target=3D"_blank">https:=
//www.cadtm.org/Dancing-on-the-Volcano</a>=C2=A0dating back to November 201=
7;=C2=A0<a href=3D"https://www.cadtm.org/Sooner-or-later-there-will-be-a" s=
tyle=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom=
;text-decoration-line:none;outline:none" target=3D"_blank">https://www.cadt=
m.org/Sooner-or-later-there-will-be-a</a>=C2=A0dating from April 2018). Whe=
n the air is replete with inflammable materials, any given spark can cause =
a financial explosion, at any time. It was hard to predict where the spark =
was going to come from. The spark sets the fire but it is not the root caus=
e of the crisis. We are yet to know whether the sharp stock market crash of=
 late February 2020 will =E2=80=9Cescalate=E2=80=9D into a huge financial c=
risis but there is a real possibility. The fact that the stock market crash=
 coincides with the effects of the coronavirus epidemic on the productive e=
conomy is no accident, but to say that the coronavirus is the cause of the =
crisis is untrue. It is important to see where the crisis really comes from=
 and not be fooled by explanations that put up a smokescreen over the real =
causes.</font></p><p style=3D"box-sizing:content-box;margin:0px 0px 10px;pa=
dding:0px;vertical-align:bottom"><q style=3D"box-sizing:content-box;margin:=
0px 0px 10px 15px;padding:0px;vertical-align:bottom;float:right;text-align:=
right;font-family:Georgia,Times,serif;font-size:1.6em;line-height:1.1em;wid=
th:200px;border:none;quotes:&quot;\00201c&quot; &quot;\00201d&quot; &quot;\=
002018&quot; &quot;\002019&quot;"><font color=3D"#000000">The mainstream me=
dia, in an oversimplification, claimed that this worldwide stock market col=
lapse was caused by the coronavirus [...] However, the epidemic has only tr=
iggered it. All the ingredients for a new financial crisis have been presen=
t at least since 2017-2018</font></q></p><p style=3D"box-sizing:content-box=
;margin:0px 0px 10px;padding:0px;vertical-align:bottom"><font color=3D"#000=
000">Big businesses, the rulers and the media at its service have every=C2=
=A0<a href=3D"https://www.cadtm.org/Interest" name=3D"m_-185591316954724673=
5_m_-485269423820198001_mot1186_0" style=3D"box-sizing:content-box;margin:0=
px;padding:0px;vertical-align:bottom;text-decoration-line:none;outline:none=
" target=3D"_blank"><span style=3D"box-sizing:content-box;margin:0px;paddin=
g:0px;vertical-align:bottom;border-bottom:1px dotted gray;font-size:inherit=
;font-style:italic">interest</span></a>=C2=A0in blaming the virus for a maj=
or financial and then economic crisis. This allows them to wash their hands=
 off it (excuse the expression).</font></p><p style=3D"box-sizing:content-b=
ox;margin:0px 0px 10px;padding:0px;vertical-align:bottom"><font color=3D"#0=
00000">The drop in stock prices was predicted long before the coronavirus a=
ppeared.</font></p><p style=3D"box-sizing:content-box;margin:0px 0px 10px;p=
adding:0px;vertical-align:bottom"><font color=3D"#000000">The rise of=C2=A0=
<a href=3D"https://www.cadtm.org/Share" name=3D"m_-1855913169547246735_m_-4=
85269423820198001_mot1220_1" style=3D"box-sizing:content-box;margin:0px;pad=
ding:0px;vertical-align:bottom;text-decoration-line:none;outline:none" targ=
et=3D"_blank"><span style=3D"box-sizing:content-box;margin:0px;padding:0px;=
vertical-align:bottom;border-bottom:1px dotted gray;font-size:inherit;font-=
style:italic">share</span></a>=C2=A0prices and the price of debt securities=
 (also known as bonds) have far outpaced the growth of output over the last=
 ten years, with an acceleration in the last two or three years. The wealth=
 of the richest 1% has also grown strongly as it is largely based on the gr=
owth of financial assets.</font></p><p style=3D"box-sizing:content-box;marg=
in:0px 0px 10px;padding:0px;vertical-align:bottom"><font color=3D"#000000">=
It must be stressed that the stock prices fall due to a willing choice (I a=
m not talking about a conspiracy): a part of the very rich (the 1%, the big=
 business) decides to start offloading the shares it has acquired not forge=
tting the fact that every financial party has an end. And, rather than suff=
er in the process, it prefers to take the lead. These large shareholders pr=
efer to be the first to sell in order to get the best possible rates before=
 the share price falls very sharply. End of February 2020, large investment=
 companies, large banks, large industrial companies and billionaires have o=
rdered=C2=A0<i style=3D"box-sizing:content-box;margin:0px;padding:0px;verti=
cal-align:bottom">traders to</i>=C2=A0sell off=C2=A0<strong style=3D"box-si=
zing:content-box;margin:0px;padding:0px;vertical-align:bottom">a part of</s=
trong>=C2=A0the shares or private debt securities (i.e. bonds) they hold in=
 order to pocket the 15% or 20% appreciations of the recent years. They dec=
ided the time to do it: they call it booking =E2=80=9Ctheir profits=E2=80=
=9D. They are least bothered if it generates a herd behaviour of others try=
ing to sell. The important thing for them is to sell before others do. This=
 can cause a domino effect and escalate into a global crisis. They know tha=
t and they feel that they will get away with it in the end without too much=
 trouble, as a large number of them did in 2007-2009. In the United States,=
 for example, the two main investment and=C2=A0<a href=3D"https://www.cadtm=
.org/Asset" name=3D"m_-1855913169547246735_m_-485269423820198001_mot1142_2"=
 style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bott=
om;text-decoration-line:none;outline:none" target=3D"_blank"><span style=3D=
"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom;border=
-bottom:1px dotted gray;font-size:inherit;font-style:italic">asset</span></=
a>=C2=A0 management funds BlackRock and Vanguard have done very well, as ha=
ve Goldman Sachs, Bank of America, Citigroup and Google, Apple, Amazon, Fac=
ebook, etc.</font></p><p style=3D"box-sizing:content-box;margin:0px 0px 10p=
x;padding:0px;vertical-align:bottom"><font color=3D"#000000">Another import=
ant point to note is that the 1% sells shares of private companies, causing=
 the share prices of the latter to fall and the stock markets to plummet. A=
t the same time, however, they buy public debt securities that are consider=
ed safe. This is particularly the case in the United States, where the pric=
e of US treasury securities has risen in response to very strong demand. Pl=
ease note that an increase in the price of treasury securities that are sol=
d on the=C2=A0<a href=3D"https://www.cadtm.org/Secondary-market" name=3D"m_=
-1855913169547246735_m_-485269423820198001_mot1219_3" style=3D"box-sizing:c=
ontent-box;margin:0px;padding:0px;vertical-align:bottom;text-decoration-lin=
e:none;outline:none" target=3D"_blank"><span style=3D"box-sizing:content-bo=
x;margin:0px;padding:0px;vertical-align:bottom;border-bottom:1px dotted gra=
y;font-size:inherit;font-style:italic">secondary market</span></a>=C2=A0res=
ults in a decrease in the=C2=A0<a href=3D"https://www.cadtm.org/Yield" name=
=3D"m_-1855913169547246735_m_-485269423820198001_mot1233_4" style=3D"box-si=
zing:content-box;margin:0px;padding:0px;vertical-align:bottom;text-decorati=
on-line:none;outline:none" target=3D"_blank"><span style=3D"box-sizing:cont=
ent-box;margin:0px;padding:0px;vertical-align:bottom;border-bottom:1px dott=
ed gray;font-size:inherit;font-style:italic">yield</span></a>=C2=A0of these=
 securities. The wealthy who buy these treasury securities are willing to a=
ccept a low return because what they are currently looking for is security =
when corporate stock prices are falling. Consequently, it must be stressed =
that once again it is the securities issued by the states that are consider=
ed to be the safest, by the richest. Let=E2=80=99s keep this in mind and be=
 prepared to say it publicly, because we can expect the familiar refrain of=
 the public debt crisis and the markets=E2=80=99 fears about government sec=
urities to return soon.</font></p><p style=3D"box-sizing:content-box;margin=
:0px 0px 10px;padding:0px;vertical-align:bottom"><q style=3D"box-sizing:con=
tent-box;margin:0px 0px 10px 15px;padding:0px;vertical-align:bottom;float:r=
ight;text-align:right;font-family:Georgia,Times,serif;font-size:1.6em;line-=
height:1.1em;width:200px;border:none;quotes:&quot;\00201c&quot; &quot;\0020=
1d&quot; &quot;\002018&quot; &quot;\002019&quot;"><font color=3D"#000000">B=
ig business (the 1%) has reduced its investment share in production and inc=
reased it in the financial sphere</font></q></p><p style=3D"box-sizing:cont=
ent-box;margin:0px 0px 10px;padding:0px;vertical-align:bottom"><font color=
=3D"#000000">Nevertheless, let=E2=80=99s revisit what has been happening re=
peatedly for a little over thirty years, that is, since the neoliberal offe=
nsive and the massive deregulation of the financial markets have taken deep=
 roots:<span style=3D"box-sizing:content-box;margin:0px;padding:0px;vertica=
l-align:bottom">=C2=A0[<a href=3D"https://www.cadtm.org/No-the-coronavirus-=
is-not-responsible-for-the-fall-of-stock-prices#nb2-1" rel=3D"appendix" tit=
le=3D"See Eric Toussaint, Bankocracy, 2015, Chapter 3 =E2=80=9CThirty years=
 of financial=C2=A0(...)" id=3D"m_-1855913169547246735m_-485269423820198001=
gmail-nh2-1" style=3D"box-sizing:content-box;margin:0px;padding:0px;vertica=
l-align:bottom;text-decoration-line:none;outline:none" target=3D"_blank">1<=
/a>]</span>=C2=A0big business (the 1%) has reduced its investment share in =
production and increased it in the financial sphere (this includes the case=
 of the iconic =E2=80=9Cindustrial=E2=80=9D firm such as Apple). It did tha=
t in the 1980s and it produced the=C2=A0<a href=3D"https://www.cadtm.org/Bo=
nd-market" name=3D"m_-1855913169547246735_m_-485269423820198001_mot1146_5" =
style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:botto=
m;text-decoration-line:none;outline:none" target=3D"_blank"><span style=3D"=
box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom;border-=
bottom:1px dotted gray;font-size:inherit;font-style:italic">bond market</sp=
an></a>=C2=A0crisis of 1987. It repeated it in the late 1990s and it produc=
ed the dot-com and Enron crisis in 2001. It repeated it again between 2004 =
and 2007 and created the subprime crisis, structured products and a series =
of high-profile bankruptcies, including that of Lehman Brothers in 2008. Th=
is time around, big business mainly speculated long<span style=3D"box-sizin=
g:content-box;margin:0px;padding:0px;vertical-align:bottom">=C2=A0[<a href=
=3D"https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fal=
l-of-stock-prices#nb2-2" rel=3D"appendix" title=3D"In finance, a long posit=
ion in a financial instrument means the holder of=C2=A0(...)" id=3D"m_-1855=
913169547246735m_-485269423820198001gmail-nh2-2" style=3D"box-sizing:conten=
t-box;margin:0px;padding:0px;vertical-align:bottom;text-decoration-line:non=
e;outline:none" target=3D"_blank">2</a>]</span>=C2=A0on the price of shares=
 on the stock market and on the price of debt securities on the=C2=A0<a hre=
f=3D"https://www.cadtm.org/Bond" name=3D"m_-1855913169547246735_m_-48526942=
3820198001_mot1147_6" style=3D"box-sizing:content-box;margin:0px;padding:0p=
x;vertical-align:bottom;text-decoration-line:none;outline:none" target=3D"_=
blank"><span style=3D"box-sizing:content-box;margin:0px;padding:0px;vertica=
l-align:bottom;border-bottom:1px dotted gray;font-size:inherit;font-style:i=
talic">bond</span></a>=C2=A0market (i.e. the market where shares of private=
 companies and debt securities issued by governments and other public autho=
rities are sold). Among the factors that have led to the extravagant rise i=
n the prices of financial assets (stock market equities and private and pub=
lic debt securities), are the negative actions of the major central banks s=
ince the financial and economic crisis of 2007-2009. I have analysed this i=
n=C2=A0<a href=3D"https://www.cadtm.org/The-Economic-Crisis-and-the-Central=
-Banks" style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-ali=
gn:bottom;text-decoration-line:none;outline:none" target=3D"_blank">https:/=
/www.cadtm.org/The-Economic-Crisis-and-the-Central-Banks</a></font></p><p s=
tyle=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0px;vertical-ali=
gn:bottom"><font color=3D"#000000">This phenomenon does not therefore begin=
s only the day after the 2008-2009 crisis; it is a recurring phenomenon in =
the context of the financialisation of the capitalist economy. And before t=
hat, the capitalist system had also undergone important phases of financial=
isation both in the 19<span style=3D"box-sizing:content-box;margin:0px;padd=
ing:0px;vertical-align:baseline;font-size:11.4px;font-variant:inherit;line-=
height:0">th</span>=C2=A0century and in the 1920s, which led to the great s=
tock market crisis of 1929 and the prolonged period of recession of the 193=
0s. Then the phenomenon of financialisation and deregulation was partly muz=
zled for 40 years following the Great Depression of the 1930s, the WWII and=
 by the ensuing radicalisation of the class struggle. Until the end of the =
1970s there were no major banking or stock market crises. The banking and s=
tock market crises re-emerged when governments gave big business the freedo=
m to do whatever it wanted in the financial sector.</font></p><p style=3D"b=
ox-sizing:content-box;margin:0px 0px 10px;padding:0px;vertical-align:bottom=
"><q style=3D"box-sizing:content-box;margin:0px 0px 10px 15px;padding:0px;v=
ertical-align:bottom;float:right;text-align:right;font-family:Georgia,Times=
,serif;font-size:1.6em;line-height:1.1em;width:200px;border:none;quotes:&qu=
ot;\00201c&quot; &quot;\00201d&quot; &quot;\002018&quot; &quot;\002019&quot=
;"><font color=3D"#000000">The banking and stock market crises re-emerged w=
hen governments gave big business the freedom to do whatever it wanted in t=
he financial sector</font></q></p><p style=3D"box-sizing:content-box;margin=
:0px 0px 10px;padding:0px;vertical-align:bottom"><font color=3D"#000000">Le=
t us look back at the last few years. Big business, which considers that th=
e rate of return it derives from production is not sufficient, develops fin=
ancial activities not directly related to production. This does not mean th=
at it abandons production, but that it is proportionally developing its inv=
estments in the financial sphere more than its investments in the productiv=
e sphere. This is also known as financialisation or financialised globalisa=
tion. Capital =E2=80=9Cmakes=C2=A0<a href=3D"https://www.cadtm.org/Profit" =
name=3D"m_-1855913169547246735_m_-485269423820198001_mot1213_7" style=3D"bo=
x-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom;text-deco=
ration-line:none;outline:none" target=3D"_blank"><span style=3D"box-sizing:=
content-box;margin:0px;padding:0px;vertical-align:bottom;border-bottom:1px =
dotted gray;font-size:inherit;font-style:italic">profit</span></a>=E2=80=9D=
 from fictitious capital through largely speculative activities. This devel=
opment of the financial sphere increases the massive indebtedness of large =
corporations, including firms such as Apple (I have written a series of art=
icles on this subject=C2=A0<a href=3D"https://www.cadtm.org/The-mountain-of=
-corporate-debt-will-be-the-seed-of-the-next-financial-crisis" rel=3D"nofol=
low" style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:=
bottom;text-decoration-line:none;outline:none" target=3D"_blank">https://ww=
w.cadtm.org/The-mountain-of-corporate-debt-will-be-the-seed-of-the-next-fin=
ancial-crisis</a>).</font></p><p style=3D"box-sizing:content-box;margin:0px=
 0px 10px;padding:0px;vertical-align:bottom"><font color=3D"#000000">Fictit=
ious capital is a form of capital, it develops exclusively in the financial=
 sphere without any real link to production (see box: What is fictitious ca=
pital?). It is fictitious in the sense that it is not directly based on mat=
erial production and the=C2=A0<strong style=3D"box-sizing:content-box;margi=
n:0px;padding:0px;vertical-align:bottom">direct</strong>=C2=A0exploitation =
of human labour and nature. I am talking about direct exploitation because,=
 of course, fictitious capital speculates on human labour and on nature, wh=
ich generally degrades the living conditions of workers and Nature itself.<=
/font></p><table style=3D"box-sizing:content-box;margin:30px 0px;padding:2p=
x;vertical-align:bottom;max-width:99%;border-collapse:collapse;border-spaci=
ng:0px;line-height:normal;border:none;width:629.333px"><tbody style=3D"box-=
sizing:content-box;margin:0px;padding:0px;vertical-align:bottom"><tr style=
=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom;bac=
kground:none 0px 0px repeat scroll rgb(241,233,222)"><td style=3D"box-sizin=
g:content-box;padding:10px;vertical-align:top;border:none"><font color=3D"#=
000000"><strong style=3D"box-sizing:content-box;margin:0px 0px 10px;padding=
:0px;vertical-align:bottom">What is fictitious capital?</strong><br style=
=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom"><b=
r style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bot=
tom"><i style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-ali=
gn:bottom">=E2=80=9CFictitious capital is a form of capital (public debt se=
curities, shares, debts) that circulates while the income from production t=
o which it gives entitlement is merely promises, the outcome of which is by=
 definition uncertain=E2=80=9D</i>. Interview with C=C3=A9dric Durand condu=
cted by Florian Gulli, =E2=80=9CLe capital fictif, C=C3=A9dric Durand=E2=80=
=9D,=C2=A0<i style=3D"box-sizing:content-box;margin:0px;padding:0px;vertica=
l-align:bottom">La Revue du projet</i>:=C2=A0<a href=3D"http://projet.pcf.f=
r/70923" rel=3D"nofollow external" style=3D"box-sizing:content-box;margin:0=
px;padding:0px;vertical-align:bottom;text-decoration-line:none;outline:none=
" target=3D"_blank">http://projet.pcf.fr/70923</a><br style=3D"box-sizing:c=
ontent-box;margin:0px;padding:0px;vertical-align:bottom"><br style=3D"box-s=
izing:content-box;margin:0px;padding:0px;vertical-align:bottom">According t=
o Michel Husson,=C2=A0<i style=3D"box-sizing:content-box;margin:0px;padding=
:0px;vertical-align:bottom">=E2=80=9CMarx=E2=80=99s theoretical framework a=
llows him to analyse =E2=80=98fictitious capital=E2=80=99, which can be def=
ined as the set of financial assets whose value is based on the capitalisat=
ion of a flow of future income:</i>=C2=A0=E2=80=9CThe formation of a fictit=
ious capital is called capitalisation.=E2=80=9D=E2=80=9D [Karl Marx,=C2=A0<=
i style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bot=
tom">Capital</i>, Vol III].=C2=A0<i style=3D"box-sizing:content-box;margin:=
0px;padding:0px;vertical-align:bottom">If a share provides an annual income=
 of =C2=A3100 and the interest rate is 5%, its capitalised value will be =
=C2=A32000.<span style=3D"box-sizing:content-box;margin:0px;padding:0px;ver=
tical-align:bottom">=C2=A0[<a href=3D"https://www.cadtm.org/No-the-coronavi=
rus-is-not-responsible-for-the-fall-of-stock-prices#nb2-3" rel=3D"appendix"=
 title=3D"=E2=80=9CFor example, if the annual income is =C2=A3100 and the r=
ate of interest 5%, then=C2=A0(...)" id=3D"m_-1855913169547246735m_-4852694=
23820198001gmail-nh2-3" style=3D"box-sizing:content-box;margin:0px;padding:=
0px;vertical-align:bottom;text-decoration-line:none;outline:none" target=3D=
"_blank">3</a>]</span>=C2=A0But this capital is fictitious, insofar as</i>=
=C2=A0=E2=80=9Cthere remains absolutely no trace of any relationship whatso=
ever with the real process of capital development=E2=80=9D [Karl Marx,=C2=
=A0<i style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align=
:bottom">Capital</i>, Vol III]. Michel Husson, =E2=80=9CMarx et la finance =
: une approche actuelle=E2=80=9D,=C2=A0<i style=3D"box-sizing:content-box;m=
argin:0px;padding:0px;vertical-align:bottom">=C3=80 l=E2=80=99Encontre</i>,=
 December 2011,=C2=A0<a href=3D"https://alencontre.org/economie/marx-et-la-=
finance-une-approche-actuelle.html" rel=3D"nofollow external" style=3D"box-=
sizing:content-box;margin:0px;padding:0px;vertical-align:bottom;text-decora=
tion-line:none;outline:none" target=3D"_blank">https://alencontre.org/econo=
mie/marx-et-la-finance-une-approche-actuelle.html</a><br style=3D"box-sizin=
g:content-box;margin:0px;padding:0px;vertical-align:bottom"><br style=3D"bo=
x-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom"></font><=
q style=3D"box-sizing:content-box;margin:0px 0px 10px 15px;padding:0px;vert=
ical-align:bottom;float:right;text-align:right;font-family:Georgia,Times,se=
rif;font-size:1.6em;line-height:1.1em;width:200px;border:none;quotes:&quot;=
\00201c&quot; &quot;\00201d&quot; &quot;\002018&quot; &quot;\002019&quot;">=
<font color=3D"#000000">Fictitious capital is a form of capital, it develop=
s exclusively in the financial sphere without any real link to production. =
It is fictitious in the sense that it is not directly based on material pro=
duction and the direct exploitation of human labour and nature</font></q><f=
ont color=3D"#000000"><br style=3D"box-sizing:content-box;margin:0px;paddin=
g:0px;vertical-align:bottom"><br style=3D"box-sizing:content-box;margin:0px=
;padding:0px;vertical-align:bottom">For Jean-Marie Harribey:=C2=A0<i style=
=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom">=
=E2=80=9CBubbles burst when the gap between realised value and promised val=
ue becomes too great and some speculators understand that promises of profi=
table liquidation cannot be honoured for all, in other words, when financia=
l gains can never be realised for lack of sufficient capital gains in produ=
ction=E2=80=9D</i>. Jean-Marie Harribey, =E2=80=9CLa baudruche du capital f=
ictif, lecture du Capital fictif de C=C3=A9dric Durand=E2=80=9D,=C2=A0<i st=
yle=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom"=
>Les Possibles</i>, N=C2=B0 6 - Printemps 2015 :=C2=A0<a href=3D"https://fr=
ance.attac.org/nos-publications/les-possibles/numero-6-printemps-2015/debat=
s/article/la-baudruche-du-capital-fictif" rel=3D"nofollow external" style=
=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom;tex=
t-decoration-line:none;outline:none" target=3D"_blank">https://france.attac=
.org/nos-publications/les-possibles/numero-6-printemps-2015/debats/article/=
la-baudruche-du-capital-fictif</a><br style=3D"box-sizing:content-box;margi=
n:0px;padding:0px;vertical-align:bottom"><br style=3D"box-sizing:content-bo=
x;margin:0px;padding:0px;vertical-align:bottom">See also Fran=C3=A7ois Ches=
nais, =E2=80=9CFictitious Capital, Dictatorship of Shareholders and Credito=
rs: Current Challenges,=E2=80=9D=C2=A0<i style=3D"box-sizing:content-box;ma=
rgin:0px;padding:0px;vertical-align:bottom">Les Possibles</i>, No. 6 - Spri=
ng 2015:=C2=A0<a href=3D"https://france.attac.org/nos-publications/les-poss=
ibles/numero-6-printemps-2015/debats/article/capital-fictif-dictature-des" =
rel=3D"nofollow external" style=3D"box-sizing:content-box;margin:0px;paddin=
g:0px;vertical-align:bottom;text-decoration-line:none;outline:none" target=
=3D"_blank">https://france.attac.org/nos-publications/les-possibles/numero-=
6-printemps-2015/debats/article/capital-fictif-dictature-des</a><br style=
=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom"><b=
r style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bot=
tom">I agree with C=C3=A9dric Durand when he says:=C2=A0<i style=3D"box-siz=
ing:content-box;margin:0px;padding:0px;vertical-align:bottom">=E2=80=9COne =
of the major political consequences of this analysis is that the social and=
 political left must become aware of the class content of the notion of fin=
ancial stability. Preserving financial stability means making the claims of=
 fictitious capital come true. To free our savings from the grip of fictiti=
ous capital, we need to engage in financial de-accumulation. In concrete te=
rms, this refers of course to the issue of cancelling public debt and the p=
rivate debt of ordinary households, but also to the decrease in shareholder=
 returns, which automatically translates into a decrease in market capitali=
sation. Make no mistake, such objectives are very ambitious: they inevitabl=
y involve socialising the financial system and breaking with the free movem=
ent of capital. But they allow us to grasp precisely some of the conditions=
 necessary to turn the page on neo-liberalism.=E2=80=9C</i>=C2=A0C=C3=A9dri=
c Durand,=E2=80=9DSur le capital fictif, R=C3=A9ponse =C3=A0 Jean-Marie Har=
ribey&quot;,=C2=A0<i style=3D"box-sizing:content-box;margin:0px;padding:0px=
;vertical-align:bottom">Les Possibles</i>, N=C2=B0 6 - Printemps 2015 :=C2=
=A0<a href=3D"https://france.attac.org/nos-publications/les-possibles/numer=
o-6-printemps-2015/debats/article/sur-le-capital-fictif" rel=3D"nofollow ex=
ternal" style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-ali=
gn:bottom;text-decoration-line:none;outline:none" target=3D"_blank">https:/=
/france.attac.org/nos-publications/les-possibles/numero-6-printemps-2015/de=
bats/article/sur-le-capital-fictif</a></font></td></tr></tbody></table><p s=
tyle=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0px;vertical-ali=
gn:bottom"><font color=3D"#000000">Fictitious capital wishes to capture par=
t of the wealth produced in production (Marxists say part of the surplus va=
lue produced by workers in the sphere of production) without getting its ha=
nds dirty, that is, without going through the process of being invested dir=
ectly in production (in the form of buying machines, raw materials, paying =
for human labour power in the form of wages, etc.). The fictitious capital =
is a share whose owner expects it to pay a dividend. He will buy a Renault =
share if it promises a good dividend, but he can also sell it to buy a Gene=
ral Electric or Glaxo Smith Kline or Nestl=C3=A9 or Google share if it prom=
ises a better dividend. Fictitious capital is also a debt bond issued by a =
company or a public debt security. It is also a derivative, a=C2=A0<a href=
=3D"https://www.cadtm.org/Structured-product" name=3D"m_-185591316954724673=
5_m_-485269423820198001_mot1226_8" style=3D"box-sizing:content-box;margin:0=
px;padding:0px;vertical-align:bottom;text-decoration-line:none;outline:none=
" target=3D"_blank"><span style=3D"box-sizing:content-box;margin:0px;paddin=
g:0px;vertical-align:bottom;border-bottom:1px dotted gray;font-size:inherit=
;font-style:italic">structured product</span></a>... Fictitious capital can=
 give the illusion that it generates profits on its own while having detach=
ed itself from production. Traders, brokers or managers of large companies =
are convinced that they =E2=80=9Cproduce=E2=80=9D. However, at some point, =
a brutal crisis erupts and a mass of fictitious capital goes up in smoke (f=
alling stock prices, falling bond market prices, falling property prices...=
).</font></p><p style=3D"box-sizing:content-box;margin:0px 0px 10px;padding=
:0px;vertical-align:bottom"><q style=3D"box-sizing:content-box;margin:0px 0=
px 10px 15px;padding:0px;vertical-align:bottom;float:right;text-align:right=
;font-family:Georgia,Times,serif;font-size:1.6em;line-height:1.1em;width:20=
0px;border:none;quotes:&quot;\00201c&quot; &quot;\00201d&quot; &quot;\00201=
8&quot; &quot;\002019&quot;"><font color=3D"#000000">Traders, brokers or ma=
nagers of large companies are convinced that they =E2=80=9Cproduce=E2=80=9D=
. However, at some point, a brutal crisis erupts and a mass of fictitious c=
apital goes up in smoke</font></q></p><p style=3D"box-sizing:content-box;ma=
rgin:0px 0px 10px;padding:0px;vertical-align:bottom"><font color=3D"#000000=
">Big business repeatedly wants us to believe or make us believe that it is=
 capable of turning lead into gold in the financial sphere, but periodicall=
y reality brings it to order and the crisis breaks out.</font></p><p style=
=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0px;vertical-align:b=
ottom"><font color=3D"#000000">When the crisis erupts, a distinction must b=
e made between the spark on one hand (today, the coronavirus pandemic may b=
e the spark) and the root causes on the other.</font></p><p style=3D"box-si=
zing:content-box;margin:0px 0px 10px;padding:0px;vertical-align:bottom"><fo=
nt color=3D"#000000">Over the past two years, there has been a very signifi=
cant slowdown in productive sectors. In several major economies such as Ger=
many, Japan (last quarter 2019), France (last quarter 2019) and Italy, indu=
strial production has declined or slowed down sharply (China and the United=
 States). Some industrial sectors that had recovered after the 2007-2009 cr=
isis, such as the automobile industry, entered into a very strong crisis du=
ring the years 2018-2019 with a very significant drop in sales and producti=
on. Production in Germany, the world=E2=80=99s largest car manufacturer, fe=
ll by 14% between October 2018 and October 2019.<span style=3D"box-sizing:c=
ontent-box;margin:0px;padding:0px;vertical-align:bottom">=C2=A0[<a href=3D"=
https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-of=
-stock-prices#nb2-4" rel=3D"appendix" title=3D"The German car industry, dir=
ectly employs 830,000 people and supports a=C2=A0(...)" id=3D"m_-1855913169=
547246735m_-485269423820198001gmail-nh2-4" style=3D"box-sizing:content-box;=
margin:0px;padding:0px;vertical-align:bottom;text-decoration-line:none;outl=
ine:none" target=3D"_blank">4</a>]</span>=C2=A0Automobile production in the=
 United States and China also fell in 2019, as it did in India. Automobile =
production will fall sharply in France in 2020. The output of another flags=
hip of the German economy, the machinery and equipment producing sector, fe=
ll by 4.4% in October 2019 alone. This is also the case for the production =
of machine tools and other industrial equipment. International trade has st=
agnated. Over a longer period of time, the rate of profit has declined or s=
tagnated in material production, and productivity gains have also declined.=
</font></p><p style=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0=
px;vertical-align:bottom"><font color=3D"#000000">In 2018-2019, these vario=
us phenomena of economic crisis in production manifested themselves very cl=
early, but as the financial sphere continued to operate at full capacity, t=
he big media and governments did everything possible to affirm that the sit=
uation was positive overall and that those who announced the next major fin=
ancial crisis, in addition to the marked slowdown in production, were only =
bringers of bad luck.</font></p><p style=3D"box-sizing:content-box;margin:0=
px 0px 10px;padding:0px;vertical-align:bottom"><font color=3D"#000000">The =
perspective of social class is also very important: for big business, as lo=
ng as the wheel of fortune in the financial sphere continues to turn, the p=
layers stay on track and are happy with the situation. The same is true for=
 all governments because they are currently linked to big business, both in=
 the old industrialised economies such as North America, Western Europe or =
Japan, and in China, Russia or other large so-called emerging economies.</f=
ont></p><p style=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0px;=
vertical-align:bottom"><q style=3D"box-sizing:content-box;margin:0px 0px 10=
px 15px;padding:0px;vertical-align:bottom;float:right;text-align:right;font=
-family:Georgia,Times,serif;font-size:1.6em;line-height:1.1em;width:200px;b=
order:none;quotes:&quot;\00201c&quot; &quot;\00201d&quot; &quot;\002018&quo=
t; &quot;\002019&quot;"><font color=3D"#000000">Despite the fact that real =
output stopped growing significantly in 2019 or began to stagnate or declin=
e, the financial sphere continued to expand</font></q></p><p style=3D"box-s=
izing:content-box;margin:0px 0px 10px;padding:0px;vertical-align:bottom"><f=
ont color=3D"#000000">Despite the fact that real output stopped growing sig=
nificantly in 2019 or began to stagnate or decline, the financial sphere co=
ntinued to expand: stock prices continued to rise, even reaching record hig=
hs, the price of private and public debt securities continued to rise, real=
 estate prices began to rise again in a series of economies, etc.</font></p=
><p style=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0px;vertica=
l-align:bottom"><font color=3D"#000000">In 2019, production slowed down (Ch=
ina and India), stagnated (much of Europe) or started to decline in the sec=
ond half of the year (Germany, Italy, Japan, France), notably because globa=
l demand shrinkage: most governments and employers were active to lower wag=
es and pensions, which reduced consumption because the increasing debts inc=
urred by families were not enough to offset the drop in income. Similarly, =
governments pursued a policy of austerity leading to cuts in public spendin=
g and public investment. The combination of the fall of purchasing power of=
 the majority of the population and the fall in public spending leads to a =
reduction of aggregate demand and therefore part of the production does not=
 find sufficient outlets, resulting in a fall of<span style=3D"box-sizing:c=
ontent-box;margin:0px;padding:0px;vertical-align:bottom">=C2=A0[<a href=3D"=
https://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-of=
-stock-prices#nb2-5" rel=3D"appendix" title=3D"Regarding the explanation of=
 the crises, among Marxist economists, two=C2=A0(...)" id=3D"m_-18559131695=
47246735m_-485269423820198001gmail-nh2-5" style=3D"box-sizing:content-box;m=
argin:0px;padding:0px;vertical-align:bottom;text-decoration-line:none;outli=
ne:none" target=3D"_blank">5</a>]</span>=C2=A0economic activity.</font></p>=
<p style=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0px;vertical=
-align:bottom"><font color=3D"#000000">It=E2=80=99s important to clarify wh=
ere we stand: I=E2=80=99m talking about a production crisis not because I=
=E2=80=99m in love with production growth. Rather, I am for organising (pla=
nning) a de-growth in order to respond, in particular, to the current ecolo=
gical crisis. So, personally, I am not saddened by the fall or stagnation o=
f production at world level, but the opposite. It=E2=80=99s all very well i=
f fewer cars are produced and their sales drop. On the other hand for the c=
apitalist system, it is not the same: the capitalist system needs to consta=
ntly develop production and conquer new markets. When it does not succeed o=
r when it starts to get stuck, it responds to the situation by developing t=
he world of financial speculation and issuing more and more fictitious capi=
tal not directly related to the productive sphere. It seems to work for yea=
rs, and then at some point speculative bubbles burst. At several moments in=
 the history of capitalism, the logic of permanent expansion of the capital=
ist system and of production has been expressed through trade wars (and thi=
s is again the case today, especially between the United States and its mai=
n partners) or through real wars, and this outcome is not entirely excluded=
 today.</font></p><p style=3D"box-sizing:content-box;margin:0px 0px 10px;pa=
dding:0px;vertical-align:bottom"><q style=3D"box-sizing:content-box;margin:=
0px 0px 10px 15px;padding:0px;vertical-align:bottom;float:right;text-align:=
right;font-family:Georgia,Times,serif;font-size:1.6em;line-height:1.1em;wid=
th:200px;border:none;quotes:&quot;\00201c&quot; &quot;\00201d&quot; &quot;\=
002018&quot; &quot;\002019&quot;"><font color=3D"#000000">De-growth must be=
 started immediately and urgently planned to combat the ecological crisis. =
We must produce less and better</font></q></p><p style=3D"box-sizing:conten=
t-box;margin:0px 0px 10px;padding:0px;vertical-align:bottom"><font color=3D=
"#000000">From the point of view of the exploited and despoiled social clas=
ses that make up the overwhelming majority of the population (hence the ima=
ge of the 99% as opposed to the 1%), it is clear that the conclusion is tha=
t a radical break must be made with the logic of capital accumulation, whet=
her productive or financial, or financialised productive, whatever the name=
. De-growth must be started immediately and urgently planned to combat the =
ecological crisis. We must produce less and better. The manufacture of cert=
ain products vital to the well-being of the population must increase (const=
ruction and renovation of decent housing, public transport, health centres =
and hospitals, drinking water supply and sewage treatment, schools, etc.) b=
ut many other productions must radically decline (personal cars) or disappe=
ar (arms manufacturing). Greenhouse gas emissions must be drastically and a=
bruptly reduced. A whole range of industries and agricultural activities ne=
ed to be converted. A large part, and in some cases all, of the public debt=
 must be cancelled. Banks, insurance companies, the energy sector and other=
 strategic sectors must be expropriated without compensation and transferre=
d to the public service. Central banks must be given other tasks and struct=
ures. Other measures include the implementation of a comprehensive tax refo=
rm with high taxation of capital, an overall reduction in working time with=
 compensatory hiring and maintenance of wage levels, free public health ser=
vices, education, public transport, effective measures to ensure gender equ=
ality. Wealth must be distributed respecting the social justice and priorit=
ising human rights and respecting fragile ecological balances.</font></p><p=
 style=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0px;vertical-a=
lign:bottom"><font color=3D"#000000">The large mass of the population that =
sees its real income decrease or stagnate (i.e. its real purchasing power) =
compensates for this decrease or stagnation by resorting to debt to maintai=
n its level of consumption, including on vital issues (how to buy foodstuff=
s, how to ensure schooling of children, how to reach the workplace if you h=
ave to buy a car since there is no public transport, how to pay for health =
care, etc.). Radical solutions to the growing indebtedness of a majority of=
 the world=E2=80=99s population around the world must be found and debt can=
cellation must be used. A large part of private household debts (including =
student debts, abusive=C2=A0<a href=3D"https://www.cadtm.org/Moral-hazard" =
name=3D"m_-1855913169547246735_m_-485269423820198001_mot1121_9" style=3D"bo=
x-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom;text-deco=
ration-line:none;outline:none" target=3D"_blank"><span style=3D"box-sizing:=
content-box;margin:0px;padding:0px;vertical-align:bottom;border-bottom:1px =
dotted gray;font-size:inherit;font-style:italic">mortgage</span></a>=C2=A0d=
ebts, abusive consumer debts, debts related to abusive microcredit, etc.) m=
ust therefore be cancelled. It is necessary to increase the income of the m=
ajority of the population and to greatly improve the quality of public serv=
ices in health, education and public transport, free of charge for the popu=
lation.</font></p><p style=3D"box-sizing:content-box;margin:0px 0px 10px;pa=
dding:0px;vertical-align:bottom"><q style=3D"box-sizing:content-box;margin:=
0px 0px 10px 15px;padding:0px;vertical-align:bottom;float:right;text-align:=
right;font-family:Georgia,Times,serif;font-size:1.6em;line-height:1.1em;wid=
th:200px;border:none;quotes:&quot;\00201c&quot; &quot;\00201d&quot; &quot;\=
002018&quot; &quot;\002019&quot;"><font color=3D"#000000">We must lead the =
fight against the multidimensional crisis of the capitalist system and reso=
lutely embark on the path of an ecologist-feminist-socialist exit. This is =
an absolute and immediate necessity</font></q></p><p style=3D"box-sizing:co=
ntent-box;margin:0px 0px 10px;padding:0px;vertical-align:bottom"><font colo=
r=3D"#000000">We are facing a multidimensional crisis of the world capitali=
st system:=C2=A0<strong style=3D"box-sizing:content-box;margin:0px;padding:=
0px;vertical-align:bottom">economic crisis, trade crisis, ecological crisis=
, crisis of several international institutions, part of the system of capit=
alist domination of the planet</strong>=C2=A0(<a href=3D"https://www.cadtm.=
org/WTO-World-Trade-Organisation" name=3D"m_-1855913169547246735_m_-4852694=
23820198001_mot1140_10" style=3D"box-sizing:content-box;margin:0px;padding:=
0px;vertical-align:bottom;text-decoration-line:none;outline:none" target=3D=
"_blank"><span style=3D"box-sizing:content-box;margin:0px;padding:0px;verti=
cal-align:bottom;border-bottom:1px dotted gray;font-size:inherit;font-style=
:italic">WTO</span></a>,=C2=A0<a href=3D"https://www.cadtm.org/NATO-North-A=
tlantic-Treaty" name=3D"m_-1855913169547246735_m_-485269423820198001_mot112=
4_11" style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align=
:bottom;text-decoration-line:none;outline:none" target=3D"_blank"><span sty=
le=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom;b=
order-bottom:1px dotted gray;font-size:inherit;font-style:italic">NATO</spa=
n></a>, G7, crisis in the=C2=A0<a href=3D"https://www.cadtm.org/FED-Federal=
-Reserve" name=3D"m_-1855913169547246735_m_-485269423820198001_mot1167_12" =
style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:botto=
m;text-decoration-line:none;outline:none" target=3D"_blank"><span style=3D"=
box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom;border-=
bottom:1px dotted gray;font-size:inherit;font-style:italic">Fed</span></a>=
=C2=A0- the=C2=A0<a href=3D"https://www.cadtm.org/Central-Bank" name=3D"m_-=
1855913169547246735_m_-485269423820198001_mot1100_13" style=3D"box-sizing:c=
ontent-box;margin:0px;padding:0px;vertical-align:bottom;text-decoration-lin=
e:none;outline:none" target=3D"_blank"><span style=3D"box-sizing:content-bo=
x;margin:0px;padding:0px;vertical-align:bottom;border-bottom:1px dotted gra=
y;font-size:inherit;font-style:italic">central bank</span></a>=C2=A0of the =
United States=C2=A0-, crisis in the=C2=A0<a href=3D"https://www.cadtm.org/E=
CB-European-Central-Bank" name=3D"m_-1855913169547246735_m_-485269423820198=
001_mot1166_14" style=3D"box-sizing:content-box;margin:0px;padding:0px;vert=
ical-align:bottom;text-decoration-line:none;outline:none" target=3D"_blank"=
><span style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-alig=
n:bottom;border-bottom:1px dotted gray;font-size:inherit;font-style:italic"=
>European Central Bank</span></a>),=C2=A0<strong style=3D"box-sizing:conten=
t-box;margin:0px;padding:0px;vertical-align:bottom">political crisis in imp=
ortant countries</strong>=C2=A0(especially in the United States between the=
 two big parties of big business). In the opinion of many people in many co=
untries, the rejection of the capitalist system is higher than it has ever =
been in the last five decades, since the beginning of the neo-liberal offen=
sive under Pinochet (1973), Thatcher (1979) and Reagan (1980) see:=C2=A0<a =
href=3D"https://www.cadtm.org/International-situation-and-Radical-Alternati=
ves" style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:=
bottom;text-decoration-line:none;outline:none" target=3D"_blank">https://ww=
w.cadtm.org/International-situation-and-Radical-Alternatives</a></font></p>=
<p style=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0px;vertical=
-align:bottom"><font color=3D"#000000">The abolition of illegitimate debts,=
 this form of fictitious capital, must be part of a much broader programme =
of additional measures. Eco-socialism must be put at the heart of the solut=
ions and not left aside. We must lead the fight against the multidimensiona=
l crisis of the capitalist system and resolutely embark on the path of an e=
cologist-feminist-socialist exit. This is an absolute and immediate necessi=
ty.</font></p><p style=3D"box-sizing:content-box;margin:0px 0px 10px;paddin=
g:0px;vertical-align:bottom"><i style=3D"box-sizing:content-box;margin:0px;=
padding:0px;vertical-align:bottom"><font color=3D"#000000"><br style=3D"box=
-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom">Translate=
d by Sushovan Dhar</font></i></p></div><font color=3D"#000000" style=3D"fon=
t-size:small"><br style=3D"box-sizing:content-box;margin:0px;padding:0px;ve=
rtical-align:bottom;clear:both;border:none;height:0px;line-height:1px;font-=
size:1px;font-family:arial,sans-serif"></font><div style=3D"box-sizing:cont=
ent-box;margin:30px 0px 0px;padding:5px 0px 0px;vertical-align:bottom;borde=
r:none;font-family:arial,sans-serif"><h5 style=3D"box-sizing:content-box;ma=
rgin:0px;padding:0px 0px 5px;vertical-align:bottom;border-bottom:1px solid =
rgb(68,68,68);font-weight:normal"><font color=3D"#000000" size=3D"2">Footno=
tes</font></h5><div id=3D"m_-1855913169547246735m_-485269423820198001gmail-=
nb2-1" style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-alig=
n:bottom"><p style=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0p=
x;vertical-align:bottom"><font color=3D"#000000"><span style=3D"box-sizing:=
content-box;margin:0px;padding:0px;vertical-align:bottom">[<a href=3D"https=
://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-of-stoc=
k-prices#nh2-1" title=3D"Footnotes 2-1" rev=3D"appendix" style=3D"box-sizin=
g:content-box;margin:0px;padding:0px;vertical-align:bottom;text-decoration-=
line:none;outline:none" target=3D"_blank">1</a>]=C2=A0</span>See Eric Touss=
aint,=C2=A0<i style=3D"box-sizing:content-box;margin:0px;padding:0px;vertic=
al-align:bottom"><a href=3D"https://www.cadtm.org/Bankocracy" style=3D"box-=
sizing:content-box;margin:0px;padding:0px;vertical-align:bottom;text-decora=
tion-line:none;outline:none" target=3D"_blank">Bankocracy</a></i>, 2015, Ch=
apter 3 =E2=80=9CThirty years of financial deregulation=E2=80=9D.</font></p=
></div><div id=3D"m_-1855913169547246735m_-485269423820198001gmail-nb2-2" s=
tyle=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom=
"><p style=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0px;vertic=
al-align:bottom"><font color=3D"#000000"><span style=3D"box-sizing:content-=
box;margin:0px;padding:0px;vertical-align:bottom">[<a href=3D"https://www.c=
adtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-of-stock-prices=
#nh2-2" title=3D"Footnotes 2-2" rev=3D"appendix" style=3D"box-sizing:conten=
t-box;margin:0px;padding:0px;vertical-align:bottom;text-decoration-line:non=
e;outline:none" target=3D"_blank">2</a>]=C2=A0</span>In finance, a long pos=
ition in a financial instrument means the holder of the position owns a pos=
itive amount of the instrument. The holder of the position has the expectat=
ion that the financial instrument will increase in value.</font></p></div><=
div id=3D"m_-1855913169547246735m_-485269423820198001gmail-nb2-3" style=3D"=
box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom"><p sty=
le=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0px;vertical-align=
:bottom"><font color=3D"#000000"><span style=3D"box-sizing:content-box;marg=
in:0px;padding:0px;vertical-align:bottom">[<a href=3D"https://www.cadtm.org=
/No-the-coronavirus-is-not-responsible-for-the-fall-of-stock-prices#nh2-3" =
title=3D"Footnotes 2-3" rev=3D"appendix" style=3D"box-sizing:content-box;ma=
rgin:0px;padding:0px;vertical-align:bottom;text-decoration-line:none;outlin=
e:none" target=3D"_blank">3</a>]=C2=A0</span>=E2=80=9CFor example, if the a=
nnual income is =C2=A3100 and the rate of interest 5%, then the =C2=A3100 w=
ould represent the annual interest on =C2=A32,000, and the =C2=A32,000 is r=
egarded as the capital-value of the legal title of ownership on the =C2=A31=
00 annually. For the person who buys this title of ownership, the annual in=
come of =C2=A3100 represents indeed the interest on his capital invested at=
 5%. All connection with the actual expansion process of capital is thus co=
mpletely lost, and the conception of capital as something with automatic se=
lf-expansion properties is thereby strengthened.=E2=80=9D Karl Marx,=C2=A0<=
i style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bot=
tom">Capital</i>, Vol III. Chapter 29 (Component Parts of Bank Capital)</fo=
nt></p></div><div id=3D"m_-1855913169547246735m_-485269423820198001gmail-nb=
2-4" style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:=
bottom"><p style=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0px;=
vertical-align:bottom"><font color=3D"#000000"><span style=3D"box-sizing:co=
ntent-box;margin:0px;padding:0px;vertical-align:bottom">[<a href=3D"https:/=
/www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-of-stock-=
prices#nh2-4" title=3D"Footnotes 2-4" rev=3D"appendix" style=3D"box-sizing:=
content-box;margin:0px;padding:0px;vertical-align:bottom;text-decoration-li=
ne:none;outline:none" target=3D"_blank">4</a>]=C2=A0</span>The German car i=
ndustry, directly employs 830,000 people and supports a further 2m jobs in =
the wider economy (Source:=C2=A0<i style=3D"box-sizing:content-box;margin:0=
px;padding:0px;vertical-align:bottom">Financial Times</i>, =E2=80=9CGerman =
industry hit by biggest downturn since 2009=E2=80=9D, 6-7 December 2019).</=
font></p></div><div id=3D"m_-1855913169547246735m_-485269423820198001gmail-=
nb2-5" style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-alig=
n:bottom"><p style=3D"box-sizing:content-box;margin:0px 0px 10px;padding:0p=
x;vertical-align:bottom"><font color=3D"#000000"><span style=3D"box-sizing:=
content-box;margin:0px;padding:0px;vertical-align:bottom">[<a href=3D"https=
://www.cadtm.org/No-the-coronavirus-is-not-responsible-for-the-fall-of-stoc=
k-prices#nh2-5" title=3D"Footnotes 2-5" rev=3D"appendix" style=3D"box-sizin=
g:content-box;margin:0px;padding:0px;vertical-align:bottom;text-decoration-=
line:none;outline:none" target=3D"_blank">5</a>]=C2=A0</span>Regarding the =
explanation of the crises, among Marxist economists, two great =E2=80=98sch=
ools=E2=80=99 have arisen. One claims that the crises are caused by the und=
er-consumption of the masses (that is, over-production of consumer goods), =
the other that they are caused by over-accumulation (meaning the insufficie=
ncy of profit to continue expansion in the production of producer goods). T=
his debate is but a variant of the old debate between those who explained t=
he crises by =E2=80=98insufficient aggregate demand=E2=80=99, and those who=
 explained them by =E2=80=98disproportionality=E2=80=99. Ernest Mandel,=C2=
=A0<i style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align=
:bottom">Theories of Crisis: An Explanation of the 1974-82 Cycle</i>, in M.=
 Gottdiener &amp; Nicos Komninos ed.=C2=A0<i style=3D"box-sizing:content-bo=
x;margin:0px;padding:0px;vertical-align:bottom">Capitalist Development and =
Crisis Theory: Accumulation, Regulation and Spatial Restructuring</i>, New =
York, 1989, p 30. Following Ernest Mandel, I consider that the explanation =
of the current crisis must take into account several factors that cannot be=
 reduced to a crisis produced by the overproduction of consumer goods (and =
therefore insufficient demand) or by the over-accumulation of capital (and =
therefore insufficient profit).</font></p></div></div><div style=3D"box-siz=
ing:content-box;margin:0px;padding:20px 0px;vertical-align:bottom;line-heig=
ht:15px;overflow:hidden;font-family:arial,sans-serif"><font color=3D"#00000=
0"><a href=3D"https://www.cadtm.org/Eric-Toussaint?lang=3Den" style=3D"box-=
sizing:content-box;margin:0px;padding:0px;vertical-align:bottom;text-decora=
tion-line:none;outline:none" target=3D"_blank"><span id=3D"m_-1855913169547=
246735m_-485269423820198001gmail-nom" style=3D"box-sizing:content-box;margi=
n:0px;padding:0px;vertical-align:bottom;font-weight:bold">Eric Toussaint=C2=
=A0</span></a><p style=3D"box-sizing:content-box;margin:0px 0px 10px;paddin=
g:0px;vertical-align:bottom;display:inline">is a historian and political sc=
ientist who completed his Ph.D. at the universities of Paris VIII and Li=C3=
=A8ge, is the spokesperson of the CADTM International, and sits on the Scie=
ntific Council of ATTAC France.<br style=3D"box-sizing:content-box;margin:0=
px;padding:0px;vertical-align:bottom">He is the author of=C2=A0<i style=3D"=
box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom">Debt S=
ystem</i>=C2=A0(Haymarket books, Chicago, 2019),=C2=A0<a href=3D"https://ww=
w.cadtm.org/Bankocracy" style=3D"box-sizing:content-box;margin:0px;padding:=
0px;vertical-align:bottom;text-decoration-line:none;outline:none" target=3D=
"_blank"><i style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical=
-align:bottom">Bankocracy</i></a>=C2=A0(2015);=C2=A0<a href=3D"https://www.=
cadtm.org/The-Life-and-Crimes-of-an-Exemplary-Man" style=3D"box-sizing:cont=
ent-box;margin:0px;padding:0px;vertical-align:bottom;text-decoration-line:n=
one;outline:none" target=3D"_blank"><i style=3D"box-sizing:content-box;marg=
in:0px;padding:0px;vertical-align:bottom">The Life and Crimes of an Exempla=
ry Man</i></a>=C2=A0(2014);=C2=A0<i style=3D"box-sizing:content-box;margin:=
0px;padding:0px;vertical-align:bottom">Glance in the Rear View Mirror. Neol=
iberal Ideology From its Origins to the Present</i>, Haymarket books, Chica=
go, 2012 (<a href=3D"https://www.cadtm.org/Glance-in-the-Rear-View-Mirror" =
style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:botto=
m;text-decoration-line:none;outline:none" target=3D"_blank">see here</a>), =
etc.<br style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-ali=
gn:bottom">See his bibliography:=C2=A0<a href=3D"https://en.wikipedia.org/w=
iki/%C3%89ric_Toussaint" rel=3D"external" style=3D"box-sizing:content-box;m=
argin:0px;padding:0px;vertical-align:bottom;text-decoration-line:none;outli=
ne:none" target=3D"_blank">https://en.wikipedia.org/wiki/%C3%89ric_Toussain=
t</a><br style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-al=
ign:bottom">He co-authored=C2=A0<i style=3D"box-sizing:content-box;margin:0=
px;padding:0px;vertical-align:bottom">World debt figures 2015</i>=C2=A0with=
 Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Da=
mien Millet=C2=A0<a href=3D"https://www.cadtm.org/Debt-the-IMF-and-the-Worl=
d-Bank" style=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-ali=
gn:bottom;text-decoration-line:none;outline:none" target=3D"_blank"><i styl=
e=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom">D=
ebt, the IMF, and the World Bank: Sixty Questions, Sixty Answers</i></a>, M=
onthly Review Books, New York, 2010. He was the scientific coordinator of t=
he=C2=A0<a href=3D"https://www.cadtm.org/4-April-2015-a-landmark-in-the" st=
yle=3D"box-sizing:content-box;margin:0px;padding:0px;vertical-align:bottom;=
text-decoration-line:none;outline:none" target=3D"_blank">Greek Truth Commi=
ssion on Public Debt</a>=C2=A0from April 2015 to November 2015.</p></font><=
/div></div></div>

<p></p>

-- <br />
<br />
--- <br />
You received this message because you are subscribed to the Google Groups &=
quot;Sid-l&quot; group.<br />
To unsubscribe from this group and stop receiving emails from it, send an e=
mail to <a href=3D"mailto:[email protected]">sid-l+unsubsc=
[email protected]</a>.<br />
To view this discussion on the web visit <a href=3D"https://groups.google.c=
om/d/msgid/sid-l/CACKppczw-fBFOtNzye32kO39WK4HcmjAo4pOa4n85QG459xbtw%40mail=
.gmail.com?utm_medium=3Demail&utm_source=3Dfooter">https://groups.google.co=
m/d/msgid/sid-l/CACKppczw-fBFOtNzye32kO39WK4HcmjAo4pOa4n85QG459xbtw%40mail.=
gmail.com</a>.<br />

--000000000000ab7dbe05a0c5c6f7--

------------=_1584146209-7785-118318
Content-Type: text/plain; charset="UTF-8"
Content-Disposition: inline
Content-Transfer-Encoding: 8bit

---
To unsubscribe: <mailto:[email protected]>
List help: <https://riseup.net/lists>

------------=_1584146209-7785-118318--