The real economy – introduction

So, this will be the first post on the site after a break of a few years. At the same time, I will change the language to English. To practice the language and open up a possible discussion to a wider audience. Although Finnish is a beautiful language, unfortunately it does not allow communication to a very large number of people. And I’m not interested in getting stuck in national boundaries. The situation might be different if I had the ambition to pursue a political career here, which I suppose, within certain limits, my previous ambitions could be described as. But now I want to write primarily about social policy and social science, without always having to take a political position. Of course, the very choice of the subject and the window through which it is viewed is in itself always a political act. I wonder if there could ever come a time in the world when the social sciences (which, to the annoyance of economists, I also lump them in with) could be completely neutral. However, it is always possible to look at things scientifically, which distinguishes it from mere political blather.

So, let’s start by laying the groundwork for what I will write about in one way or another. There is a longing in both left-wing and right-wing circles for a return to the real economy. You know, an economy where we do real things. To wipe out all that is pointless and dubious, represented by the players in the financial world. ”If only we could do this, we could have a golden age again!”, many people sigh. And in a way they are right in their longing. Unfortunately, it involves childish hope. Hope that forgets the capitalist nature of our society. And this nature will be the subject of this blog/site.

First of all, it is impossible to separate the financial sector from the production of the real economy. The financial sector is an essential part of all economic activity. Industry and services form a symbiosis with finance.1 As philosopher Slavoj Zizek wrote, those who preach the need for a return from financial speculation to the ”real economy” of producing goods to satisfy real people’s needs, do not take into account the fundamental nature of capitalism. And what that might be? “Self-propelling and self-augmenting financial circulation is its (capitalism’s) only dimension of the Real, in contrast to the reality of production.”2 Under current economic conditions, we have no way of stepping outside this. Yes, reality is where people operate, but the Real is the ”abstract” logic of capital. It determines what happens in social reality.3

As much as someone would like to argue, capitalism is not about the production of goods and services as such. It is about the autonomous movement of value, capital as a social relation. The speculative economy is part of the lifeblood of it. There is no error in the system that needs to be corrected. This is the very nature of the system. Therefore, in our economic and social analysis, we should always take into account the following two points: 1) the social relation itself and 2) what is determined by that relation. The financial sector is therefore not an artificial extension of production. It is ”production” in the sense that it functions as a ghostly logic of production. So, as far as the financial economy is concerned, it penetrates everything nowadays. There is no part in the economic cycle where it does not have an impact.4

So what is capitalism? This question will be answered in more detail in the future, but for now we will just have to make a brief description. It will allow us to detach it from the misleading descriptions attached to it. I think Jussi Vähämäki and Eetu Virén have managed to do a good summary of the nature of capitalism, so I will use it here. First of all, capitalism is not a human system but a mechanical system. It is not defined by human power relations but by inhuman power relations. Nor is capitalism the same thing as a market economy or market. It is not simply a system of resource allocation. It is a system of production and appropriation. What is essential to this system is that capitalism is a money economy of production, where the money owner can use money as capital, subordinating living labour to his service, thus increasing his own monetary wealth.5 

Of course, I am fully aware, for example, as regards the human or inhuman nature of the system, there are several views. However, I would like to emphasise how capitalism differs from previous systems. Here, man does not have a clear master to whom he is a slave, or a nobleman to whom he pays his taxes, while at the same time being tied to the land. We are seemingly free of the other man. Rather, we are ruled by logic, a thing that we accept as such. This could also be called an ideology, which in its highest form seems to fade into the background into the shadows of naturalness. But I will elaborate on the argumentation in the following texts. It is a task that will not be accomplished very quickly or very briefly. On the other hand, I’m in no hurry to do it. I will slowly open up the issue from different angles, depending on what interests me at any given moment. This time, I will present a cornerstone of the story that we will return to again and again: the crisis of Fordism. 

If we look at industrial profits in the 1960s and 1970s, they fell dramatically during that period. Marazzi has identified a few reasons: the saturation of the market for mass consumption goods, the rigidity of fixed capital and production processes, among other reasons.6 Then, in the 1970s, the fall in profits caused a structural crisis. Growth stalled, unemployment and cumulative inflation began to rise.7 In this turmoil, real financialisation began. It was a response to the Fordist crisis of capital relations. It was about a new political organization of capital. Its means were monetarist monetary policy and the deregulation of financial markets.8 It was therefore a question of a certain redefinition of logic in order to maintain a dominant position in the reality of production. A simple request to return to something (“real economy”) would therefore be a request to capital to surrender its supremacy. And if it lost that status, what would guarantee that it would even survive? The commodity economy is not a natural constant.

Slavoj Zizek has used the phrase ”the solipsistic speculative dance of capital”. The purpose of that dance is nothing less than to pursue more profits and not to worry about how its movements affect social reality.9 In order to secure these profits ( in fact, its very existence), capital chooses to use the economic and political means at its disposal. It is not a question of the economy as such (the creation of use values, their exchange, etc.), but of a specific economic logic that needs to be explored. Also, doesn’t the whole history since the 1960s just prove how capital is not a workhorse? Doesn’t history since the 1970s prove how capital liberates itself from the structures of social regulation imposed on it after 1945?10

But now I’m losing the thread and it’s time to stop. However, I have now asked some preliminary questions and painted a background for the topic. After this introduction, we will be able to take small bites out of the subject.

1(Lazzarato 2014, 20.)
2(Zizek 2009, 14.)
3(Zizek 2012, 19-20.)
4(Marazzi 2015, 30.)
5(Virén & Vähämäki 2015, 21-22.)
6(Marazzi 2015, 31.)
7(Duménil & Lévy 2005, 9.)
8(Virén & Vähämäki 2015, 60.)
9(Zizek 2008, 12.)
10(e.g. Streeck 2014, 19)


Duménil Gérard & Lévy Dominique 2005. The Neoliberal (Counter-)Revolution. Teoksessa Neoliberalism: A Critical Reader. Pluto Press. London. Toim. Saad-Filho Alfredo & Johnston Deborah. s. 9-19

Lazzarato Maurizio 2014. Velkaantunut ihminen. Tutkijaliitto. Helsinki.

Marazzi Christian 2015. Finanssikapitalismin väkivalta. Tutkijaliitto. Helsinki.

Streeck Wolfgang 2014. Buying Time – The delaeyd crisis of democratic capitalism. Verso. London/New York.

Viren Eetu & Vähämäki Jussi 2015. Seutu joka ei ole paikka. Tutkijaliitto. Helsinki.

Zizek Slavoj 2008. The Fragile Absolut – or why is the christian legacy worth fighting for? The essential Zizek. Verso. London/New York.

Zizek Slavoj 2009. First as tragedy, then as farce. Verso. London.

Zizek Slavoj 2012. Väkivalta. Otava. Helsinki