The Future Bubble

The Tough Thing About Living Alone, 1986

Capitalism posits a future of endless innovation in products and production processes, but no possible change in the social relations that move them

In science fiction, one of the most common tropes involves a protagonist traveling to the past in order to prevent a dystopian present: Wolverine in X-Men: Days of Future Past trying to prevent a genocide against mutantkind, or Marty McFly in Back to the Future rewriting the history of his own family.

A memorable early-1990s run of Fantastic Four comic books written by Walt Simonson cleverly inverted this trope. He had his heroes travel forward in time, where an impregnable “time bubble” threatened to grow so large as to consume the present. To save the present, the team must alter the future.

This rendering—the unknowable future that eats the present—may resonate more with an anxiety endemic to capitalist societies; as we will see, it is a characteristic nightmare of the capital-accumulating class. Capital always has one foot in the future, and even packages and exchanges “futures” as a financial instrument. A time bubble that erases the future would mean a collapsing asset price bubble in the present. For capitalism’s reality, it turns out, is stranger even than science fiction. Radical challenges to the system can change conditions in the present by, in a manner of speaking, altering the future.

In the 20th century, optimism about the future was strongly identified with progressive liberals and even the radical left. Whether in the form of Lyndon Johnson’s “Great Society” or Communism’s “New Soviet Man,” a brighter and better future was promised to the masses. All that was left for the right was, in William F. Buckley’s famous phrase, to “stand athwart history, yelling Stop!”

Now, however, the terms have shifted, and it is the business propagandists of capitalism who accuse their critics of stopping the future. PayPal billionaire Peter Thiel, for example, warned a tech-industry conference that “we live in a society that is dominated by hatred and dislike of all things scientific and technological,” one that is “dominated by a fear of the future, not hope for the future.” Thus is politics staged as a morality play between, as the libertarian writer Virginia Postrel had it in the title of her 1998 book, The Future and Its Enemies. These figures see themselves, it would seem, as the heroes struggling against the time bubble that is effacing our future.

Yet the vision of the future these would-be champions of tech-driven innovation offer turns out, on closer inspection, to be very cramped and fearful. Many of the companies emerging from Silicon Valley aren’t offering any magical new technologies but merely matching services like Taskrabbit, Airbnb, and Uber. These platforms are little more than mechanisms to more efficiently exploit precarious labor and circumvent local regulations covering work, housing, and transportation.

Any attempt to ameliorate the precarious conditions underpinning these services provokes howls of outrage. For the likes of Thiel, “fear of the future” simply means a willingness to imagine a future under any other terms than those of the ruling class.

Take, for example, the 2014 “Luddite Awards” handed out by the Information Technology and Innovation Foundation, an industry-funded think tank. One group of supposed technology haters are the proponents of net neutrality, the principle that Internet communications should be available at the same prices and speeds to all users. Because this principle invalidates the business models of companies that would like to use their monopoly position to charge variable prices for network access, the net neutrality movement is deemed “anti-innovation.”

Likewise New York State’s effort to regulate the use of Airbnb to run unlicensed hotels, and Virginia and Nevada’s attempt to incorporate Uber drivers into the existing regime of taxi regulation, place those states into the ranks of the Luddites. To be an opponent of the future, it seems, one need not be opposed to technology or innovation as such but merely to any use of it that happens to be profitable in present times.

We can dismiss this as the self-serving rhetoric of the greedy, and indeed it is. But it is not merely reflective of a defect in ruling class ideology. The system itself demands that capitalists, to be successful, must be both obsessed with the future and extremely conservative about it.

This may sound counterintuitive, particularly if one is in the habit of collapsing capitalist and conservative agendas. Conservative politics are often apparently past-oriented, as with Buckley’s proverbial sentry standing athwart history, preserving traditional race and gender hierarchies, traditional religious morality, a pre-New Deal economy, and the like. Even if the strategies of the right are, as Corey Robin argues in The Reactionary Mind, borrowed from the innovations of the left, their objectives are thought to be the restoration of an imagined past.

But a purely capitalist form of conservatism is something different. What it seeks to conserve is not any particular social pecking order but rather the form of capital accumulation itself. And the future is absolutely fundamental to that form. For it turns out that the cycle of accumulation—of Marx’s formula M-C-M’, the mechanism of turning money into more money by circulating it through production and markets—depends on a specific type of future in which the value of what is circulated in the present can be realized.

Shorn of its real-world complexities, the basic logic of capitalism is simple. The capitalist—that is, someone with a lot of money—uses that money to hire workers and means of production. Those workers are then deployed to use the productive facilities to produce something, which is then offered for sale. The idea is to charge more than the cost of the labor, materials, and machinery, returning a profit to the capitalist.

The trouble arises in considering where this profit is to come from. For a single firm, of course, it could come at the expense of competitors. But how, in the economy as a whole, can the total stock of capital increase? The money that is used to buy the product is the same money that is being paid out to the workers to produce it. This, it would seem, is a zero-sum game. The total amount of money available would seem limited to the sum of the value of the means of production and the value of labor power.

The answer turns out to be that profit comes from the future.

This is more mundane than it might sound: Production and exchange unfold in time, and thus the goods turned out today will be bought sometime in the future. But in the context of capitalist production, this gives rise to some odd phenomena indeed.

In The Limits to Capital, David Harvey explains that out of the total amount of money circulating in the economy at any given time, some portion must be “fictitious capital.” This is “money that is thrown into circulation as capital without any material basis in commodities or productive activity” but which can continue to be exchanged against other money while it is “searching for a material basis.”

The definitive form of fictitious capital is credit (which is to say, debt). Capitalists can take out loans to expand their business, with the expectation of paying back that loan, plus interest, once the goods have been produced and sold. Credit is the form that money takes while it searches for its material basis, which it finds only by becoming part of a process that yields future profit. This is fundamentally what fuels capitalism’s drive for endless growth. If, in the future, there are more workers and more production, then all the capital that currently exists can be valorized, including the fictitious part.

But because the cycle of valorization can only be completed in the future, capitalists are necessarily obsessively focused on the nature of that future. This is where capitalism’s extreme future-orientation and extreme conservatism converge. For capitalist production is premised on the notion that the future is already known and has a definite form, where the markets and the demand for commodities exist to realize the surplus and pay off the debts. If the shape of that future were to radically change—if for example, net neutrality regulations undermine a tech startup’s business model—then fictitious capital never finds its material basis and it loses its value. The company goes under; the debt becomes worthless.

Capitalist logic has what linguists call the “futurate” construction, a grammatical structure in which references to the future are expressed in present tense. “This bond is going to yield $500 next year” is the future tense, but “this bond yields $500 next year” is the futurate. Capital refers to what will be as though it is certain, as though it is already what is.

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It is true, as we are all taught, that capitalism requires unpredictability and volatility. Market competition, after all, is supposed to weed out the bad products and inefficient production processes, generating what Joseph Schumpeter called “creative destruction.” Thus does the system, in theory, drive itself to ever greater levels of efficiency and material productivity.

But there is a limit to just how much unpredictability a capitalist economy can tolerate. Economist Frank Knight captured something essential about this limit in a famous 1921 work, Risk, Uncertainty, and Profit. Risk, he said, was “a quantity susceptible of measurement” in the form of probability distributions. That a certain percentage of new businesses will fail in their first year is a matter of risk: We have a good idea of how many will fail; we just don’t know which ones.

Risks can be calculated and hedged, built into the models and algorithms of business. Uncertainty, however, cannot really be quantified. Think of those old magazine articles about the world of the future that are periodically dug up and ridiculed for their wild inaccuracy. The writers had set themselves a hopeless task, because imagining the most important technologies of the world even a few decades into the future is subject to so many unknown and unaccountable factors. Any truly world-changing technological innovation generates fundamental uncertainty.

This is why the same capitalists who revel in risk live in terror of uncertainty. When the future is fundamentally uncertain, vast stocks of capital can suddenly find themselves worthless, as happened during the financial crisis of 2008.

The Silicon Valley entrepreneurs, who are now our leading propagandists for the future, know this all too well. In their industry, the distinctive form of fictitious capital comes from firms providing “venture capital” (and the related “angel investors”). Like all fictitious capital, the money that comes from these investors is still in search of its basis, which it hopes to find in a promising startup. It is expected that many will fail, but that a few will pay off massively by becoming the next Facebook or Google.

In the idealized future of every startup lies an initial public offering of stock. Its purpose is not to raise money for further expansion, or to share the wealth with the ordinary investor, who plays the role of a patsy in this particular operation. Rather, the point is for the founders, venture capitalists, and other early investors to cash out, turning their speculative stakes into capital that can be recirculated elsewhere. Hence the recurrent pattern seen with companies like Facebook, Zynga, and Groupon: a highly publicized IPO and an inflated stock price, followed by insider cash-outs and a collapse in the share price.

The utopian future as a lucrative IPO is hardly inspiring. So we are regaled instead with tales of the magical gadgets and techno-fixes to social problems that we can expect in the future. But the only future the capitalist truly cares to protect is the one in which fictitious capital can continue to find its material basis.

This same dynamic unfolds at the level of states and geopolitics as well. Countries go into debt, and sell that debt into the hands of private investors. They, too, expect to be cashed out in the future, and it is the productivity of the entire national economy that underwrites this form of fictitious capital.

This drama has recently been playing out most spectacularly in the case of Greece, under its new leftist Syriza government. The new finance minister there, Yanis Varoufakis, is all too aware of the peculiar dynamics of capital and its future. A Marxist economist, he has even written in similar terms of the way capitalism places “finance, or debt, at the top of the queue.” And of the way that the capitalist can therefore “put her hand through the timeline, grabbing some value that was not yet produced from the future, bringing it to the present, putting it to good use in the production process so that goods could emerge that would then be sold so as to return to the future the value taken away from it—with interest!”

Varoufakis and Syriza have been engaged in a protracted and acrimonious negotiation with the institutions of the European Union. Greece needs funding to support its shattered economy, while the EU demands the right to restructure the Greek economy to its liking. Hanging over this debate is the future of the Greek banking system and the country’s state debt.

Everyone now seems to agree that this debt will never be repaid in full. But the EU leadership, bond investors, and Greek capitalists alike are all committed to an orderly solution that keeps Greece within the euro and retains many of the claims of foreign and domestic capital. This is a risk that can be managed. Fundamentally uncertain, however, is the scenario where Greece leaves the euro and reintroduces the drachma, imposing capital controls and defaulting on its debt. Even within Syriza, there is an ongoing struggle between the faction that favors this path and the leadership that still finds a break with the euro an unthinkable future.

Syriza is, so far, a long way from staging a break with capitalism. But their high-tension struggles demonstrate the stakes involve in any kind of radical rethinking of economic arrangements. Like those who would impose regulation on Silicon Valley, Syriza is threatening to undermine a future that the capitalist class believes to be already known.

It is said that science-fiction futures are always really about the time in which they are written. The same is true of all radical speculations about the future of capitalism, and all attempts to lay the groundwork for a different future. In a very specific, quantifiable sense, they call into question the value of assets in the present, and therefore the social power of the owners of those assets.