Tagged: Crisis

Seize the Crisis! by Samir Amin

The principle of endless accumulation that defines capitalism is synonymous with exponential growth, and the latter, like cancer, leads to death. John Stuart Mill, who recognized this, imagined that a “stationary state of affairs” would put an end to this irrational process. John Maynard Keynes shared this optimism of Reason. But neither was equipped to understand how the necessary overcoming of capitalism could prevail. By contrast, Marx, by giving proper importance to the emerging class struggle, could imagine the reversal of power of the capitalist class, concentrated today in the hands of the ruling oligarchy.

Accumulation, which is synonymous with pauperization, provides the objective framework of the struggles against capitalism. But accumulation expresses itself globally mainly by the growing contrast between the affluence of the societies in the center of the world system that benefit from imperialist “rent,” and the misery of the societies in the dominated peripheries. This center-periphery conflict becomes, therefore, the central axis of the alternative between socialism and barbarism.

Historically, “really existing” capitalism is associated with successive forms of accumulation by dispossession, not only at the beginning (primitive accumulation), but also at each stage of the unfolding of the capitalist system. Since the seventeenth century, Atlantic capitalism has sought to conquer the world, which it has remade on the basis of permanent dispossession of the conquered regions, transforming them into the dominated peripheries of the system.

But this victorious globalization has been unable to impose itself in a durable manner. Just about half a century after its triumph, marked by Britain’s Great Exhibition in 1851 (which already seemed to inaugurate the “end of history”), this model was questioned by the revolution of the Russian semi-periphery and the (victorious) liberation struggles in Asia and Africa. These constituted the defining global historical events of the twentieth century — the first wave of struggles in favor of the emancipation of the workers and the peoples.

Accumulation by dispossession continues in front of our eyes in the late modern capitalism of the contemporary oligopolies. In the centers, monopoly rents — the beneficiaries of which are the oligopolistic plutocracies — are synonymous with the dispossession of the entire productive basis of society. In the peripheries, this pauperizing dispossession manifests itself in the expropriation of the peasantry and the plundering of natural resources of the regions in question. These practices constitute essential pillars for the expansion of the late capitalism of the oligopolies.

In this spirit, I situate the “new agrarian question” at the heart of the challenge of the twenty-first century. The dispossession of the peasantry (in Asia, Africa, and Latin America) is the major contemporary form of the tendency towards pauperization (in the sense that Marx ascribed to this “law”) linked to accumulation. Its implementation cannot be separated from the strategies of imperialist rent-seeking and rent-capturing by the oligopolies, with or without agrofuels. I deduce from this that the main historical results will be a product of these struggles over the future of the peasant societies in the South (almost half of humanity). They will largely determine the capacity of the workers and peoples to progress on the road of constructing an authentic civilization, liberated from the domination of capital — for which I see no name other than socialism.

The plundering of the South’s natural resources, required by the pursuit of the model of wasteful consumption that exclusively benefits the North’s affluent societies, destroys any prospect of development worthy of the name for the peoples in question, and therefore constitutes the other face of pauperization on a worldwide scale. In this spirit, the “energy crisis” is neither the product of the absolute scarcity of certain resources necessary for production (oil, obviously) nor the outcome of the destructive effects of energy-devouring forms of production and consumption that are currently in place. Reference to an “energy crisis” — which is not wrong — fails to go beyond banal and immediate evidence. The real “energy crisis” is the product of the will of oligopolies and a collective imperialism to secure a monopoly of access to the planet’s natural resources, whether these be scarce or not, in such a way as to appropriate the imperialist rent. This is true whether the utilization of these resources remains the same as it is now (wasteful and energy-devouring) — or whether it is subject to “environmentally friendly” measures and new correctives. I deduce from this that the pursuit of the expansionist strategy of the late capitalism of oligopolies will inevitably clash with the growing resistance of the nations of the South.

The current crisis is, therefore, neither a financial crisis nor the sum of multiple systemic crises, but the crisis of the imperialist capitalism of oligopolies, whose exclusive and supreme power risks being questioned once more by the struggles of the entire popular classes and the nations in the dominated peripheries, even if they are apparently “emerging markets.” This crisis is, at the same time, a crisis of U.S. hegemony. Taken together, the following phenomena are inextricably linked to one another: the capitalism of oligopolies; the political power of oligarchies; barbarous globalization; financialization; U.S. hegemony; the militarization of the way globalization operates in the service of oligopolies; the decline of democracy; the plundering of the planet’s resources; and the abandoning of development for the South.

The real question, therefore, is as follows: will these struggles manage to converge in order to pave the way — or ways — on the long road to the transition to world socialism? Or will these struggles remain separate from one another, perhaps even clashing with each other, leaving the initiative to the capital of the oligopolies?

From One Long Crisis to Another

The financial meltdown in September 2008 took most conventional economists and advocates of “sweet spot” globalization entirely by surprise, while disconcerting some of the manufacturers of liberal discourse, triumphant since the “fall of the Berlin wall” — as they are accustomed to say. If, however, this event did not surprise me — I expected it (without of course predicting its date, like Mrs. Soleil*) — it is simply because, for me, this event was to be understood as part of the unfolding of the long crisis of an aging capitalism, begun in the 1970s.

It is good to return to the first long crisis of capitalism, which gave shape to the twentieth century, because the parallel between the stages of the unfolding crises is so striking.

Industrial capitalism, triumphant in the nineteenth century, entered a crisis from 1873 onwards. Profit rates dropped, for the reasons highlighted by Marx. Capital reacted by a double movement of concentration and globalized expansion. The new monopolies confiscated, in addition to their profits, a rent levied on the massive value-added generated by the exploitation of labor power. They reinforced the colonial conquests of the planet. These structural transformations allowed a new surge in profits and led to the “belle époque” — from 1890 to 1914 — the first period of global domination by financialized monopoly capital. The dominant discourses of that time praised colonization (“civilizing mission”) and described globalization as synonymous with peace, earning the support of the workers’ social democracy.

However, the “belle époque,” announced as the “end of history” by the ideologues of this period, ended — as only Lenin had foreseen — in the First World War. And the period that followed and lasted until the aftermath of the Second World War was the period of wars and revolutions. In 1920, after the revolution in Russia (the “weak link” of the system) had been isolated following the defeat of revolutionary hopes in Central Europe, financialized monopoly capital managed, against all odds, to restore the system of the belle époque. This restoration, denounced by Keynes at the time, was the origin of the financial collapse of 1929 and the consequent Great Depression that endured until the start of the Second World War.

The “long twentieth century” — 1873-1990 — is therefore both the century of the deployment of the first systemic and profound crisis of aging capitalism (to the point where Lenin thought that this monopoly capitalism constituted the “highest stage of capitalism”) and that of the first triumphant wave of anti-capitalist revolutions (Russia, China) and the anti-imperialist movements of Asia and Africa.

The second systemic crisis of capitalism began in 1971, almost exactly a century after the commencement of the first, with the abandoning of the gold convertibility of the dollar. Profit rates, investment levels, and growth rates all collapsed (and never again reverted to the levels in the period 1945-75). Capital responded to the challenge, not unlike its response in the previous crisis, by a double movement of concentration and globalization. As such, capital established structures that defined the second “belle époque” (1990-2008) of financialized globalization, allowing oligopolistic groups to levy monopoly rent. The same discourse accompanied this process: the “market” guarantees prosperity, democracy, and peace; it’s the “end of history.” The same eager support occurred, this time by European socialists, for the new liberalism. However, this new “belle époque” was, from the onset, accompanied by war: the war of the North versus the South, begun in 1990. Just as the first financialized globalization had led to 1929, so the second produced 2008. Today we have reached a crucial moment, suggesting the probability of a new wave of wars and revolutions. The more so, since the ruling powers do not envisage anything other than the restoration of the system as it was before the financial meltdown.

The analogy between the unfolding of these long, systemic crises of aging capitalism is striking. There are, nonetheless, differences whose political significance is important.

Behind the Financial Crisis: A Systemic Crisis of the Capitalism of Oligopolies

Contemporary capitalism is, first and foremost, a capitalism of oligopolies in the full sense of the term (in previous capitalism, oligopolies were only partial). What I mean by this is that the oligopolies alone command the production of the economic system in its entirety. They are “financialized” in the sense that they alone have access to capital markets. This financialization grants to the monetary and financial market — their market, in which they compete only with each other — the status of dominant market, which, in turn, structures and commands the labor and commodity exchange markets.

This globalized financialization expresses itself by a transformation of the ruling bourgeois class, which has become a rent-capturing plutocracy. The oligarchs are not only Russian, as is too often presumed, but also, and much more often, U.S., European, and Japanese. The decline of democracy — to the exclusive benefit of the oligopolies — is the inevitable product of this concentration of power.

The new form of capitalist globalization that corresponds to this transformation — in contrast with the one that characterized the first “belle époque” — is also important to specify. I have expressed it in a sentence: the passage from imperialisms (that of the imperialist powers in permanent conflict with each other) to the collective imperialism of the triad (the United States, Europe, and Japan).

The monopolies, which emerged in response to the first crisis of profit rates, constituted themselves on a basis that reinforced the violence of competition between the major imperialist powers of the time, and led to the armed conflict begun in 1914, which continued through the “peace” of Versailles and the Second World War until 1945. That is what Giovanni Arrighi, André Gunder Frank, Immanuel Wallerstein, and I described in the 1970s as the “thirty years war,” a notion that has been taken up by others since.

By contrast, the second wave of oligopolistic concentration, begun in the 1970s, constituted itself on totally other bases, within the framework of a system dominated by the “collective imperialism” of the triad. In this new imperialist globalization, the domination of the centers is no longer exercised by a monopoly of industrial production (as had been the case hitherto) but by other means: control of technologies, financial markets, access to the planet’s natural resources, information and communications, weapons of mass destruction. This system, which I have described as “apartheid on a global scale,” implies a permanent war against the states and the people of the recalcitrant peripheries, a war begun already in the 1990s by the deployment of military control over the world by the United States and its subordinate NATO allies.

According to my analysis, the financialization of this system is inextricably linked to its clearly oligopolistic aspect. What pertains between them is a fundamentally organic relation. This point of view is not prevalent, either in the expansive literature of conventional economists or in the majority of critical writings on the current crisis.

It Is the Entire System that Henceforth Is in Difficulty

The facts are clear: the financial collapse is already producing, not a “recession,” but a profound depression. But beyond this, other dimensions of the crisis of the system have surfaced in public consciousness, even before the financial meltdown. We know the main headings — energy crisis, food crisis, environmental crisis, climate change. Numerous analyses of the aspects of these contemporary challenges are produced on a daily basis, some of which are of the highest quality.

Nonetheless, I remain critical of this mode of treating the systemic crisis of capitalism that excessively isolates the different dimensions of the challenge. I would, therefore, redefine the diverse “crises” as facets of the same challenge — that of the system of contemporary capitalist globalization (whether liberal or not), founded upon the principle that the field of operation of imperialist rent is now global — benefitting the oligopolies of the imperialist triad.

The real battle is fought on this decisive ground between the oligopolies that seek to produce and reproduce the conditions that allow them to appropriate the imperialist rent and their intended victims — the workers of all the countries in the North and the South, the peoples of the dominated peripheries, condemned to give up any perspective of development worthy of the name.

Exiting the Crisis of Capitalism or a Capitalism in Crisis?

This formula was suggested by André Gunder Frank and me in 1974.

The analysis we developed about the new great crisis that we thought had begun led us to the major conclusion that capital would respond to the challenge by a new wave of concentration, followed by massive dislocations. Later developments largely confirmed this. The title of our intervention at a conference organized by Il Manifesto in Rome in 1974 (“Let us not wait for 1984,” referring to the work by George Orwell) invited the radical left at that time to renounce any strategy of coming to the aid of capital by looking for “exits from the crisis,” but rather to seek strategies aimed at an “exit from capitalism in crisis.”

I have pursued this line of analysis with a kind of stubbornness that I do not regret. I have suggested a conceptualization of new forms of domination on the part of the imperialist centers, grounded in new modes of control that replaced the old monopoly over exclusively industrial production. This has been confirmed by the rise of “emerging market” countries. I have described the new globalization now being constructed as an “apartheid at the global level,” requiring the militarized management of the planet, and in this way perpetuating, in new conditions, the polarization that always accompanies the expansion of “really existing capitalism.”

There Is No Alternative to a Socialist Perspective

The contemporary world is governed by oligarchies. The financial oligarchies in the United States, Europe, and Japan dominate not only economic life but also politics and daily life. The Russian oligarchy, which the Russian state tries to control, was created in their image. Statocracy in China and autocracies common throughout the periphery (sometimes hidden behind the appearance of an electoral democracy — of “low intensity”) are inscribed into this worldwide system.

The management of contemporary globalization by these oligarchies/autocracies is in crisis. The oligarchies of the North seek to remain in power once the present crisis is over. They do not feel threatened. By contrast, the fragility of the power held by the autocracies of the South is clearly visible. The model of globalization that is currently in place is therefore vulnerable. Will it be called into question by the revolt in the South, as was the case in the previous century? Probably so, but that could prove tragic. For humanity as a whole will only commit itself fully to the socialist road — the only humane alternative to chaos — once the powers of the oligarchies, their allies, and their servants, have been broken, both in the countries of the South and those in the North. Long live the internationalism of the people in the face of the cosmopolitanism of the oligarchies!

Is the Reinstatement of the Global Oligopoly-Finance Capital Possible?

Capitalism is synonymous with “liberalism” if, by this we mean not the beneficent image that the “liberal” label frequently brings to mind, but the plain and total exercise of the domination of capital, not only over work and the economy, but over all aspects of social life. There can be no “market economy” (a vulgar expression for capitalism) without a “market society.” Capital stubbornly pursues this distinct objective — money; accumulation for its own sake. Marx, and after him other critical thinkers like Keynes, understood this perfectly. But not our conventional economists, including many of those ostensibly on the left.

This model of total and exclusive domination by capital was imposed ruthlessly by the ruling classes throughout the previous long crisis until 1945. Only the triple victory of democracy, socialism, and the national liberation of peoples in innumerable struggles made possible the replacement for a time of this capitalist ideal. From 1945 to 1980, it was supplanted by the conflictual coexistence of three socially regulated models: the welfare state of Western social democracy; the “really existing” socialism in the East; and the popular nationalisms in the South. The demise and collapse of these three models made possible the return of the exclusive domination by capital, this time described as the neoliberal phase of capitalism.

I have linked this new liberalism to a series of new aspects that appear to me to merit the description of “senile capitalism.” My book of this title, published in 2001 (Au-delà du capitalisme senile, Presses Universitaires France), is probably one among the very rare writings at the time that, far from viewing globalized and financialized neoliberalism as the “end of history,” analyzed the system of aging capitalism as unstable and condemned to eventual collapse, precisely by reason of its financialization (its “Achilles Heel,” as I wrote then).

Conventional economists have remained persistently deaf to any questioning of their own dogma — so much so that they were unable to foresee the financial collapse of 2008. Those whom the media have portrayed as “critical” hardly deserve this description. Even Joseph Stiglitz remains convinced that the system as it stands — globalized and financialized liberalism — can be fixed by means of some corrections. Amartya Sen preaches morality without daring to see “really existing” capitalism as it is.

The social disasters caused by the deployment of liberalism — “the permanent utopia of capital,” as I wrote — have inspired quite a bit of nostalgia in relation to the recent or distant past. But such nostalgia cannot respond to the present challenge. It is the product of an impoverished theoretical critique that has gradually blocked understanding of the internal contradictions and the limits of the post-1945 systems; their erosions, diversions, and collapses appeared as unforeseen cataclysms.

Nonetheless — in the void created by this retreat of critical, theoretical thinking — a consciousness about the new dimensions of the systemic crisis of civilization managed to chart a path. I am referring here to the ecological movement. But the Greens, who have purported to distinguish themselves radically from both the Blues (the Conservatives and the Liberals) and the Reds (the Socialists), are locked into an impasse, since they have failed to link the ecological dimension to the challenge of a radical critique of capitalism.

Everything was therefore ready to ensure the triumph — in fact, ephemeral but experienced as final — of the alternative of “liberal democracy.” This reflected a poverty of thought — a veritable non-thinking — disregarding Marx’s decisive argument about bourgeois democracy’s failure to acknowledge that those who decide are not those negatively affected by the decisions. Those who decide and benefit from the freedom reinforced by the control over property are nowadays the plutocrats of capitalism’s oligopolies, and states are their debtors. Perforce the workers and the people in question are little more than their victims. This sort of liberal nonsense might, at some point, have been credible, at least for a short while, as a result of the decline of the three post-1945 systems, East, West, and South. But the prevailing dogmas, in their poverty of theory, could no longer understand the origins of the crisis. Under these conditions, liberal democracy might well have appeared to be “the best of all possible systems.” Yet, its hegemony was threatened by a deepening crisis of its own making.

Today the powers that be — those who did not foresee anything — are busy attempting to restore the same system. Their possible success, as in the case of the conservatives in the 1920s — which Keynes had denounced without much of an echo at the time — will only exacerbate the scope of the contradictions that are the root cause of the 2008 financial collapse.

No less serious is the fact that economists on the “left” have long since embraced the essential tenets of vulgar economics and accepted the erroneous idea that markets are rational. The same economists have focused their efforts on defining the conditions for this market rationality, thereby abandoning Marx, who had discovered the irrationality of markets from the point of view of the workers and the peoples — a perspective deemed “obsolete.” According to this “left-wing” perspective, capitalism is flexible, and adjusts itself to the requirements of progress (technological and even social) if it is properly constrained. These “leftist” economists are not prepared to understand that the crisis that has erupted was inevitable. They are even less prepared to confront the challenges that are faced by the peoples as a result. Like other vulgar economists, they will seek to repair the damage without understanding that it is necessary to pursue another route if we are to overcome the fundamental logic of capitalism. Instead of looking for exits from a capitalism in crisis, they think they can simply exit the crisis.

U.S. Hegemony in Crisis

The recent G20 Summit in London in April 2009 in no way marks the beginning of a “reconstruction of the world.” And it is perhaps no coincidence that it was followed by a summit meeting of NATO, the right hand of contemporary imperialism, and by the reinforcement of NATO’s military involvement in Afghanistan. The permanent war of the North against the South must continue.

We already knew that the governments of the triad — the United States, Europe, and Japan — would pursue the singular goal of restoring the system as it existed before September 2008, and one must not take seriously the interventions at the G20 Summit in London by President Obama and Gordon Brown, on the one hand, and those of Sarkozy and Merkel, on the other. Both were aimed at amusing the spectators. The purported differences, identified by the media but without any genuine substance, respond to the exclusive needs of the leaders in question to make the best of themselves in the face of naïve public opinion.

“Recreate capitalism,” “moralizing financial operations”: such similar grand declarations are made in order to avoid the real questions. That is why restoring the system, which is not impossible, will not solve any problem but will, in fact, exacerbate the gravity of the crisis. The “Stiglitz Commission,” convened by the United Nations, is part of this strategy of tricking the public. Obviously, one could not expect otherwise from the oligarchs who control the real power and their political debtors. The point of view that I have developed, and that puts the emphasis on the inextricable links between the domination of the oligopolies and the necessary financialization of managing the world economy, is confirmed by the results of the G20.

More interesting is the fact that the invited leaders of the “emerging markets” chose to remain silent. A single intelligent sentence was said throughout this day of great spectacle, by the Chinese President Hu Jintao, who observed “in passing,” without insisting and with a (mocking?) smile, that it would be necessary to envisage the creation of a global financial system that is not based on the U.S. dollar. Some commentators immediately linked this — correctly — to Keynes’s proposals in 1945.

This remark is a rude awakening to the fact that the crisis of the capitalist system of oligopolies is inextricably linked to the crisis of U.S. hegemony, which is on the ropes. But who will replace it? Certainly not “Europe,” which does not exist apart from or outside Atlanticism and has no ambition to be independent, as the NATO summit meeting once more confirmed. China? This “threat,” which the media repeat ad nauseam (a new “Yellow Peril”?) in order to justify the Atlantic alignment, has no foundation in reality. The Chinese leadership knows that the country does not have either the means or the will. China’s strategy is confined to promoting a new globalization without hegemony — something which neither the United States nor Europe deems acceptable.

The likelihood of a possible evolution in this direction depends once more on the countries of the South. And it is no coincidence that the United Nations Conference on Trade and Development (UNCTAD) is the only institution within the UN umbrella that has taken initiatives that are fundamentally different from those of the Stiglitz Commission. It is also no coincidence that UNCTAD’s Secretary-General Supachai Panitchpakdi, from Thailand, hitherto considered to be a perfect liberal, has dared propose, in a March 2009 report entitled “The Global Economic Crisis,” realistic ideas that are part of a second wave of a Southern awakening.

For its part, China has begun to build — in a gradual and controlled manner — alternative regional financial systems rid of the U.S. dollar. Similar initiatives complement, on the economic level, the promotion of political alliance within the Shanghai Cooperation Organization (SCO), which is a major obstacle to NATO’s belligerence.

The NATO summit meeting, also convened in April 2009, agreed to Washington’s decision not to start a gradual military disengagement but, on the contrary, to reinforce the scope of its military involvement, always under the misguided pretext of the “war against terror.” President Obama deploys his talents to save Clinton’s and Bush’s program of imposing global military control, which is the only way of prolonging the days of U.S. hegemony, now under threat. Obama scored points and obtained a total, unconditional surrender from Sarkozy’s France, which has now rejoined NATO’s military command — the end of Gaullism — something that was difficult to achieve during Bush’s reign when Washington spoke without intelligence but not without arrogance. Moreover, Obama has acted like Bush by giving lessons, with slight concern for Europe’s independence, about how Turkey should be allowed to enter the Union!

Are New Advances in the Struggles for the Emancipation of the Peoples Possible?

The political management of the worldwide domination by oligopoly capital is necessarily marked by extreme violence. For, in order to maintain their status of affluent societies, the countries of the imperialist triad are henceforth obliged to limit access to the planet’s natural resources to their own exclusive benefit. This new requirement is at the origin of the militarization of globalization that I have elsewhere described as the Empire of Chaos(Monthly Review, 1992), an expression others have since taken up.

In line with Washington’s project of military control over the planet and the waging of “pre-emptive wars” under the pretext of the “war against terror,” NATO has portrayed itself as the representative of the international community and has thereby marginalized the United Nations — the only institution entitled to speak in this name.

Of course, these real goals cannot be openly acknowledged. In order to mask them, the powers in question have chosen to instrumentalize the discourse on democracy and have arrogated to themselves the “right to intervene,” so as to impose “respect for human rights”!

At the same time, the absolute power of the new oligarchic plutocracies has hollowed out the substance of bourgeois democratic practice. In former times, political negotiation between different social parties of the hegemonic bloc was necessary for the reproduction of the power of capital. By contrast, the new political management of the capitalism of oligopolies, established by means of a systematic de-politicization, has given rise to a new political culture of “consensus” (modelled on the example of the United States) that substitutes the consumer and the political spectator for the active citizen, necessary for an authentic democracy. The Liberal Virus (the title of another book of mine published by Monthly Review Press, 2004) abolishes the possibility of alternative choices and replaces it with a consensus centered on respect only for a procedural, electoral democracy.

The demise and collapse of the three above-mentioned social models (i.e., “really existing” socialism in the East, social welfarism in the West, and populist nationalism in the South) is at the origin of this drama. The first page of the wave of struggles for emancipation has now been turned; that of the second wave has not yet been opened. In the twilight that separates them, one can discern “monsters,” as Gramsci writes.

In the North, these developments have caused the loss of a real sense of democratic practice. This regression is masked by the pretensions of the so-called “postmodern” discourse, according to which nations and classes have already left the scene and ceded the political space to the “individual,” now the sole active subject of social transformation.

In the South, other illusions dominate the political realm. The illusion of a capitalist, national, and autonomous development that is part of globalization is powerful among the dominant and middle classes in “emerging markets,” fuelled by the swift successes of the last few decades. Or, in the countries excluded from this process, nostalgic (para-ethnic or para-religious) illusions about the past.

What is worse, these developments have strengthened the general embrace of the “ideology of consumption” and the idea that progress is measured by the quantitative growth of consumption. Marx had already shown that it is the mode of production that determines the mode of consumption and not vice-versa, as is claimed by vulgar economics. What is lost sight of in all this is the perspective of a humanist and superior rationality, the basis for the socialist project. The gigantic potential that the application of science and technology offers the whole of humanity, and that would enable the real flourishing of individuals and societies in the North and the South, is wasted by the requirements of its subordination to the logics of the unlimited pursuit of the accumulation of capital. What’s even worse, the continuous growth of the social productivity of labor is linked to the breathtaking use of mechanisms of pauperization (visible at a global scale as the wholesale attack on peasant societies) — as Marx had already understood.

Embracing the ideological alienation caused by capitalism adversely affects not only the affluent societies of the imperialist centers. The peoples of the peripheries, who are, for the most part, deprived of access to acceptable levels of consumption and blinded by aspirations to consume like the opulent North, are losing consciousness of the fact that the logic of historical capitalism makes the extension of this model to the entire globe impossible.

We can, therefore, understand the reasons why the 2008 financial collapse was the result of a sharpening of the internal contradictions peculiar to the accumulation of capital. Only the intervention of forces that embody a positive alternative can offer a way of imagining an exit from the chaos caused by the sharpening of the internal contradictions of the system. (In this spirit, I have contrasted the “revolutionary way” with the model of overcoming the historically obsolete system through “decadence.”) And, in the current state of affairs, the movements of social protest, despite their visible growth, remain, as a whole, unable to question the social order linked to the capitalism of oligopolies — in the absence of a coherent political project that can match the challenges.

From this point of view, the current situation is markedly different from that which prevailed in the 1930s, when the forces of socialism clashed with fascist parties, producing Nazism, the New Deal, and the Popular Fronts.

The deepening of the crisis will not be avoided, even if reinstatement of the system of domination by oligopoly capital were to be potentially successful, which is not impossible. In this situation, the possible radicalization of the struggles is not an improbable hypothesis, even if the obstacles remain formidable.

In the countries of the triad, such a radicalization would imply that the agenda would be to expropriate the oligopolies — a struggle that seems to be off the table for the foreseeable future. In consequence, the hypothesis that — despite the turmoil caused by the crisis — the stability of the societies of the triad will not be questioned cannot be discarded. There is a serious risk of a “remake” of the wave of struggles of emancipation, as happened in the twentieth century, that is to say, a questioning of the system exclusively by some of its peripheries.

A second stage of “the South’s awakening” (the title of yet another book of mine that offers a reading of the period of Bandung as the first stage of awakening [L’Eveil du Sud (Paris: Le Temps des Cerises, 2007)]) is now on the agenda. In the best possible scenario, the advances produced by these conditions could force imperialism to retreat, to renounce its demented and criminal project of controlling the world militarily. And, if this were the case, then the democratic movement of the countries at the center of the system could make a positive contribution to the success of this strategy of neutralization. Moreover, the decline of the imperialist rent, which benefits the societies in question — itself a result of the reorganization of the international equilibria of production to the advantage of the South (especially China) — could help the awakening of a socialist consciousness. Nevertheless, the societies of the South could remain mired in the same challenges as in the past — a situation that would produce some of the same limits on their progress.

A New Internationalism of the Workers and the Peoples Is Necessary and Possible

Historical capitalism is all things to everyone, except being durable. It is but a short parenthesis in history. The fundamental questioning of capitalism — which our contemporary thinkers, in their overwhelming majority, deem neither possible nor desirable — is nonetheless the inescapable condition for the emancipation of the dominated workers and the peoples (those of the peripheries, i.e., 80 percent of humankind). The two dimensions of the challenges are inextricably linked with one another. There will be no exit from capitalism by way of the sole struggle of the people of the North, or by the sole struggle of the dominated people of the South. There will only be an exit from capitalism if and when these two dimensions combine with one other. It is far from certain that this will occur, in which case capitalism will be overcome by the destruction of civilization (rather than the malaise of civilization, to use Freud’s terminology) and perhaps life on the planet. The scenario of a “remake” of the twentieth century falls short of the requirements of a commitment by humankind to the long route of transition to worldwide socialism. The liberal catastrophe requires a renewal of the radical critique of capitalism. The challenge is the permanent construction/reconstruction of the internationalism of the workers and the peoples in the face of the cosmopolitanism of oligarchic capital.

Constructing this internationalism can only be envisaged by successful, new, revolutionary advances (like those begun in Latin America and Nepal) that offer the perspective of an overcoming of capitalism.

In the countries of the South, the battle of the states and the nations for a negotiated globalization without hegemonies — the contemporary form of de-linking — supported by the organization of the demands of the popular classes, can circumscribe and limit the powers of the oligopolies of the imperialist triad. The democratic forces in the countries of the North must support this battle. The pseudo-democratic discourse (the support for low-intensity democracy) proposed, and accepted, by a majority on the left, and the “humanitarian” interventions conducted in its name — just like the miserable practice of giving “aid” — repels real engagement with this challenge.

In the countries of the North, the oligopolies are already clearly forms of the “commons,” whose management cannot be left to sectional private interests alone (the crisis has highlighted the catastrophic results of such an approach). An authentic left must dare envision genuine nationalization as the first inescapable stage of the socialization of the oligopolies, deepening democratic practice. The current crisis makes it possible to conceive the crystallization of a common front of the social and political forces, bringing together all the victims of the exclusive power of the ruling oligarchies.

The first wave of the struggles for socialism, that of the twentieth century, has shown the limits of European social-democracies, of the communisms of the third international, and of the popular nationalisms of the Bandung era — and the demise and collapse of their popular, social-democratic, socialist ambitions. The second wave, that of the twenty-first century, must draw lessons from this. In particular, one lesson is to associate the socialization of economic management and the deepening of the democratization of society. There will be no socialism without democracy, but equally, no democratic advance outside a socialist perspective.

These strategic goals invite us to think about the construction of “convergences in diversity” (referring here to the formula used by the World Forum of Alternatives), of the forms of organization, and the struggles of the dominated and exploited classes. It is emphatically not my intention to condemn from the outset the convergences of the forms that, in their own way, would retrieve the traditions of social-democracy, communism, and popular nationalism, or would diverge from them.

According to this perspective, it seems to me necessary to conceive of the condition for the renewal of a creative Marxism. Marx has never been so useful and necessary in order to understand and transform the world — today even more so than yesterday. Being Marxist in this spirit is to begin with Marx and not to stop with him — or Lenin or Mao — as conceived and practiced by the historical Marxisms of the previous century. It is to render onto Marx that which is owed him: the intelligence to have begun critical thinking, a critique of capitalist reality, and a critique of its political, ideological, and cultural representations. A creative Marxism must pursue the goal of enriching this critical thinking par excellence. It must not fear to integrate all reflection, in all areas, including those that have wrongly been considered “foreign” by the dogmas of past historical Marxisms.


  1. * French television astrologer, popular in the 1970s.

Retrieved from Monthly Review, 


The Endless Crisis by John Bellamy Foster and Robert W. McChesney

Retrieved from Monthly Review Volume 64, Issue 01 (May) 2012

We have had [in England], ever since 1876, a chronic state of stagnation in all dominant branches of industry. Neither will the full crash come; nor will the period of longed-for prosperity to which we used to be entitled before and after it. A dull depression, a chronic glut of all markets for all trades, that is what we have been living in for nearly ten years. How is this?

—Frederick Engels1

The Great Financial Crisis and the Great Recession began in the United States in 2007 and quickly spread across the globe, marking what appears to be a turning point in world history. Although this was followed within two years by a recovery phase, the world economy five years after the onset of the crisis is still in the doldrums. The United States, Europe, and Japan, remain caught in a condition of slow growth, high unemployment, and financial instability, with new economic tremors appearing all the time and the effects spreading globally. The one bright spot in the world economy, from a growth standpoint, has been the seemingly unstoppable expansion of a handful of emerging economies, particularly China. Yet, the continuing stability of China is now also in question. Hence, the general consensus among informed economic observers is that the world capitalist economy is facing the threat of long-run economic stagnation (complicated by the prospect of further financial deleveraging), sometimes referred to as the problem of “lost decades.”2 It is this issue of the stagnation of the capitalist economy, even more than that of financial crisis or recession, that has now emerged as the big question worldwide.

Within the United States dramatic examples of the shift in focus from financial crisis to economic stagnation are not difficult to find. Ben Bernanke, chairman of the Federal Reserve Board, began a 2011 speech in Jackson Hole, Wyoming, entitled “The Near- and Longer-Term Prospects for the U.S. Economy,” with the words: “The financial crisis and the subsequent slow recovery have caused some to question whether the United States…might not now be facing a prolonged period of stagnation, regardless of its public policy choices. Might not the very slow pace of economic expansion of the past few years, not only in the United States but also in a number of other advanced economies, morph into something far more long-lasting?” Bernanke responded that he thought such an outcome unlikely if the right actions were taken: “Notwithstanding the severe difficulties we currently face, I do not expect the long-run growth potential of the U.S. economy to be materially affected by the crisis and the recession if—and I stress if—our country takes the necessary steps to secure that outcome.” One would of course have expected such a declaration to be followed by a clear statement as to what those “necessary steps” were. Yet, this was missing from his analysis; his biggest point simply being that the nation needs to get its fiscal house in order.3

Robert E. Hall, then president of the American Economic Association (AEA), provided a different approach in an address to the AEA in January 2011, entitled “The Long Slump.” A “slump,” as Hall defined it, is the period of above-normal unemployment that begins with a sharp contraction of the economy and lasts until normal employment has been restored. The “worst slump in US history,” Hall stated, was “the Great Depression in which the economy contracted from 1929 to 1933 and failed to return to normal until the buildup for World War II.” Hall labeled the period of prolonged slow growth in which the U.S. economy is now trapped “The Great Slump.” With government seemingly unable to provide the economy with the needed stimulus, he observed, there was no visible way out: “The slump may last many years.”4

In June 2010, Paul Krugman wrote that the advanced economies were currently caught in what he termed the “Third Depression” (the first two being the Long Depression following the Panic of 1873 and the Great Depression of the 1930s). The defining characteristic of such depressions was not negative economic growth, as in the trough of the business cycle, but rather protracted slow growth once economic recovery had commenced. In such a long, drawn-out recovery “episodes of improvement were never enough to undo the damage of the initial slump, and were followed by relapses.” In November 2011, Krugman referred to “The Return of Secular Stagnation,” resurrecting the secular stagnation hypothesis of the late 1930s to early ‘50s (although in this case, according to Krugman, the excess savings inducing stagnation are global rather than national).5

Books too have been appearing on the stagnation theme. In 2011, Tyler Cowen published The Great Stagnation, which quickly became a bestseller. For Cowen the U.S. economy has been characterized by a “a multi-decade stagnation…. Even before the financial crisis came along, there was no new net job creation in the last decade…. Around the globe, the populous countries that have been wealthy for some time share one common feature: Their rates of economic growth have slowed down since about 1970.”6 If creeping stagnation has been a problem for the U.S. and other advanced economies for some time, Thomas Palley, in his 2012 book, From Financial Crisis to Stagnation, sees today’s Great Stagnation itself as being set off by the Great Financial Crisis that preceded it, and as representing the failure of neoliberal economic policy.7

Such worries are not confined to the United States, given the sluggish economic growth in Japan and Europe as well. Christine Lagarde, managing director of the IMF, gave a speech in Washington in September 2011 in which she stated that the world economy has “entered a dangerous new phase of the crisis…. Overall, global growth is continuing, but slowing down,” taking the form of an “anemic and bumpy recovery.” Fundamental to this dangerous new phase of crisis was “core instability,” or weaknesses in the Triad—North America, Europe, and Japan—along with continuing financial imbalances “sapping growth.” The big concern was the possibility of another “lost decade” for the world economy as a whole. In November 2011 Lagarde singled out China as a potential weak link in the world economic system, rather than a permanent counter to world economic stagnation.8

The fact that these rising concerns with respect to the slowing down of the wealthy Triad economies have a real basis, not just in the last two decades but also in long-term trends since the 1960s, can be seen in Chart 1. This shows the declining real growth rates of the Triad economies in the decades from the 1960s to the present. The slowdowns were sharpest in Japan and Europe. But the United States too experienced a huge drop in economic growth after the 1960s, and was unable to regain its earlier trend-rate of growth despite the massive stimuli offered by military-spending increases, financial bubbles, a growing sales effort, and continuing exploitation of the privileged position of the dollar as the hegemonic currency. The bursting of the New Economy stock market bubble in 2000 seriously weakened the U.S. economy, which was only saved from a much larger disaster by the rapid rise of the housing bubble in its place. The bursting of the latter in Great Financial Crisis of 2007–09 brought the underlying conditions of stagnation to the surface.

Chart 1. Average Annual Real Economic Growth Rates, the United States, European Union, and Japan

Source: Data for U.S. from Bureau of Economic Analysis, National Income and Product Accounts, Table 1.1.1. Percent Change from Preceding Period in Real Gross Domestic Product, http://bea.gov/national/nipaweb/SelectTable.asp; Data for Japan and the European Union from World Bank, WDI database, http://databank.worldbank.org.

Hence, long-term economic slowdown, as Chart 1 indicates, preceded the financial crisis. In the U.S case, the rate of growth for the 1970s (which was slightly higher than that of the two subsequent decades) was 27 percent less than in the 1960s. In 2000–2011 the rate of growth was 63 percent below that of the 1960s.9 It was this underlying stagnation tendency, as we shall argue in this book, which was the reason the economy became so dependent on financialization—or a decades-long series of ever-larger speculative financial bubbles.10 In fact, a dangerous feedback loop between stagnation and financial bubbles has now emerged, reflecting the fact that stagnation and financialization are increasingly interdependent phenomena: a problem that we refer to in this book as the stagnation-financialization trap.

The Denial of History

Although the tendency to stagnation or a long period of anemic growth is increasingly recognized even within the economic mainstream as a major issue, broad historical and theoretical understandings of this and its relation to capitalist development are lacking within establishment circles. The reason for this we believe can be traced to the fact that neoclassical economists and mainstream social science generally have long abandoned any meaningful historical analysis. Their abstract models, geared more to legitimizing the system than to understanding its laws of motion, have become increasingly other-worldly—constructed around such unreal assumptions as perfect and pure competition, perfect information, perfect rationality (or rational expectations), and the market efficiency hypothesis. The elegant mathematical models developed on the basis of these rarefied constructions often have more to do with beauty in the sense of ideal perfection, than with the messy world of material reality. The results therefore are about as relevant to today’s reality as the medieval debates on the number of angels that could fit on the end of a pin were to theirs. This is an economics that has gone the way of stark idealism—removed altogether from material conditions. As Krugman put it, “the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth.”11

John Kenneth Galbraith, in The Economics of Innocent Fraud, provided a still stronger condemnation of prevailing economic and social science, arguing that in recent decades the system itself had been fraudulently “renamed” from capitalism to “the market system.” The advantage of the latter term from an establishment perspective was: “There was no adverse history here, in fact no history at all. It would have been hard, indeed, to find a more meaningless designation—this is a reason for the choice…. So it is of the market system we teach the young…. No individual or firm is thus dominant. No economic power is evoked. There is nothing here from Marx or Engels. There is only the impersonal market, a not wholly innocent fraud.” Along with this, “the phrase ‘monopoly capitalism,’ once in common use,” Galbraith charged, “has been dropped from the academic and political lexicon.” Perhaps worst of all, the growing likelihood of a severe crisis and a long-term slowdown in the economy was systematically hidden from view by this fraudulent displacement of the very idea of capitalism (and even of the corporate system).12

The continuing influence of Galbraith’s “economics of innocent fraud” and the absurd results it generates can be seen in a 2010 speech by Bernanke at Princeton, entitled “Implications of the Financial Crisis for Economics.” The primary reason the “standard [macroeconomic] models” had failed to see the Great Financial Crisis coming, Bernanke admitted, was that these models “were designed for…non-crisis periods” only. In other words, the conventional models employed by orthodox economists were constructed (intentionally or unintentionally) so as to exclude the very possibility of a major crisis or a long-term period of deepening economic stagnation. As long as economic growth appeared robust, Bernanke told his listeners, the models proved “quite useful.” The problem, then, he insisted, was not so much that the models on which economic analysis and policy were based were “irrelevant or at least significantly flawed.” Rather the bursting of the financial bubble and the subsequent crisis represented events that were not supposed to happen, and that the models were never meant to explain.13 This is similar to a meteorologist who has constructed a model that predicts perpetual sunny days interrupted by the occasional minor shower and when the big storm comes claims in the model’s defense that it was never intended to account for the possibility of such unlikely and unforeseen events.14

All of this points to the lack within mainstream economics and social science of a reasoned historical interpretation. “Most of the fundamental errors committed in economic analysis,” Joseph Schumpeter wrote in his History of Economic Analysis, “are due to lack of historical experience” or historical understanding. For Schumpeter, this contrasts sharply with the approach of Marx, who “was the first economist of top rank to see and to teach systematically how economic theory may be turned into historical analysis and how the historical narrative may be turned into histoire raisonnée.”15 Today conventional social scientists have all too often become narrow specialists or technicians concerned with one little corner of reality—or worse still, developers of models that in their extreme abstraction fall prey to Whitehead’s fallacy of misplaced concreteness.16 They seldom recognize the importance of the old Hegelian adage that “the truth is the whole”—and hence can only be understood genetically in its process of becoming.17

These self-imposed blinders of mainstream social science were dramatically evident in the failure of economics and social science generally to recognize even the possibility of economic and social catastrophe in today’s capitalism. In his presidential address to the American Economic Association in 2003, Robert Lucas flatly declared that the “central problem of depression prevention has been solved.” The idea that the economy was now free of major crisis tendencies, due to the advent of new, improved monetary policies, became the conventional macroeconomic wisdom—referred to by none other than Bernanke in 2004 as the coming of the Great Moderation.18 Yet, it took only a few years for the bursting of the housing bubble to prove how illusory these notions of the end of history were.

Naturally, not everyone was completely caught off guard by the Great Financial Crisis. As early as 2002, two years before Bernanke coined the term the “Great Moderation,” a substantial number of independent, informed political-economic commentators—ourselves amongst them—had drawn attention to the growth of an enormous real estate or housing bubble. Writing as editors of Monthly Review, we first mentioned the bursting of the real estate/housing bubble as a potential devastating force in the U.S. economy in November 2002. This was followed up with an article the following spring entitled “What Recovery?” in which we contended, “The housing bubble may well be stretched about as thin as it can get without bursting.” As the problem became worse, one of us wrote a piece for the May 2006 issue of Monthly Review on “The Household Debt Bubble” pointing to the unsustainable borrowing on home mortgages, with the greatest burden falling on workers and subprime borrowers. The housing bubble, the article argued, had allowed the U.S. economy to recover from the bursting of the stock market bubble, but this pointed to the likelihood of a further and possibly greater “financial meltdown” a little ways down the road, which could be triggered by increases in interest rates then already beginning. So, while some aspects of the crisis that arose in the summer of 2007 came as a surprise to us, the general course of events did not.19

Monthly Review had long focused on the problem of financialization and its relation to underlying stagnation tendencies in the economy. But the realization that a devastating crisis was in the making as a result of the buildup of the housing bubble was not unique to us; rather it was quite widespread among heterodox observers, even penetrating into the business literature. This included, most notably, Dean Baker, Stephen Roach, John Cassidy, Robert Shiller, and Kevin Phillips—while also extending to pragmatic business publications like Business Week and The Economist. In August 2002 Baker wrote a report for the Center for Economic Policy Research, entitled “The Run-up in Home Prices: Is It Real or Is It Another Bubble?” The same month Business Week warned: “The investors who buy many of the [mortgage] loans they securitize—may soon decide that enough is enough…. If [interest] rates go higher, the burden of debt service will increase…. Approximately 30 percent of outstanding mortgage debt has adjustable rates…. A credit crunch could set in if a rate rise triggers a wave of defaults by holders of adjustable mortgages.” On September 22, 2002 Stephen Roach wrote an op-ed piece for the New York Times on “The Costs of Bursting Bubbles” in which he stated, “There is good reason to believe that both the property [real estate] and consumer bubbles will burst in the not-so-distant future.” In November 2002, New Yorker economic columnist John Cassidy published an article entitled, “The Next Crash: Is the Housing Market a Bubble That’s About to Burst?” The following year, Yale economist Robert Shiller co-authored a prescient Brookings Institution paper entitled “Is There a Bubble in the Housing Market?” The Economist in June 2005 stated, “The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops.” Political commentator Kevin Phillips continually warned of the dangers of financialization, commenting in 2006 that homes had become “tools of speculative finance” and that “the United States had exchanged a stock-market bubble for the larger credit bubble,” presaging financial collapse.20

In fact warnings of a housing bubble and the threat of a severe financial collapse in the four years leading up to the crisis were so numerous as to make it difficult, if not impossible, to catalogue them all. The problem, then, was not that no one saw the Great Financial Crisis coming. Rather the difficulty was that the financial world, driven by their endless desire for more, and orthodox economists, prey to the worship of their increasingly irrelevant models, were simply oblivious to the warnings of heterodox economic observers all around them. Mainstream economists had increasingly retreated back into a Say’s Law view (the notion that supply creates its own demand), which argued that severe economic crises were virtually impossible.21

The failure of orthodox economics to perceive the financial bubble prior to the Great Financial Crisis is now well established in the literature.22 What we are suggesting here, however, is something different: that the same economics of innocent fraud has hindered orthodox economists from perceiving until now an even bigger fault line of the mature capitalist economy, the tendency to long-term economic stagnation. Indeed, it is the slow growth or stagnation that has been festering for decades which explains not only financialization, manifested in a string of financial bubbles, but also the deep economic malaise that has set in during the period of financial deleveraging. A realistic analysis today thus requires close examination of the dangerous feedback loops between stagnation and financialization.

In How Markets Fail Cassidy argues that the two most prescient economic analyses of our current economic malaise, and its relation to the dual phenomena of financialization and stagnation, were provided by: (1) Hyman Minsky, a heterodox, post-Keynesian economist, who developed a theory of financial instability in relation to contemporary capitalism, and (2) Paul Sweezy, a Marxist economist, who saw what he termed the “financialization of the capital accumulation process” as a response to the stagnation tendency of mature monopoly-capitalist economies.23

As Cassidy observes about the tradition that grew up around Sweezy:

During the 1980s and ‘90s, a diminishing band of Marxist economists, centered around The Monthly Review, a small New York journal that had been eking out an existence since the 1940s, focused on what they termed the “financialization” of U.S. capitalism, pointing out that employment in the financial sector, trading volumes in the speculative markets, and the earnings of Wall Street firms were all rising sharply. Between 1980 and 2000, financial industry profits rose from $32.4 billion to $195.8 billion, according to figures from the Commerce Department, and the financial sector’s share of all domestically produced profits went from 19 percent to 29 percent.
Paul Sweezy, a Harvard-trained octogenarian who had emerged from the same Cambridge cohort as Galbraith and Samuelson, and who wrote what is still the best introduction to Marxist economics, was the leader of the left-wing dissidents. To a free market economist, the rise of Wall Street was a natural outgrowth of the U.S. economy’s competitive advantage in the sector. Sweezy said it reflected an increasingly desperate effort to head off economic stagnation. With wages growing slowly, if at all, and with investment opportunities insufficient to soak up all the [actual and potential] profits that corporations were generating, the issuance of debt and the incessant creation of new objects of financial speculation were necessary to keep spending growing. “Is the casino society a significant drag on economic growth?” Sweezy asked in a 1987 article he cowrote with Harry Magdoff. “Again, absolutely not. What growth the economy has experienced in recent years, apart from that attributable to an unprecedented peacetime military build-up, has been almost entirely due to the financial explosion.”24

For Cassidy, it was the reasoned historical analysis of capitalism developed by Minsky and Sweezy that allowed each of them to perceive the dramatic transformations leading up to the early twenty-first century crisis. “Minsky and Sweezy didn’t agree on everything, but their highly developed critical faculties allowed them to see, well before many mainstream economists, that a new model of financially driven capitalism had emerged.” Indeed, the “wordwide slump” that had its origins in the United States in 2007 “demonstrated that Minsky and Sweezy had been right when they said the fortunes of the economy at large couldn’t be divorced from what happened on Wall Street.” For Sweezy, in particular, stagnation and financialization represented coevolutionary phenomena caught in a “symbiotic embrace.”25

Minsky’s analysis pointed to what has become known as the Minsky Moment, or the advent of financial crisis. In contrast, Sweezy’s work on financialization, which he saw as a broad trend encompassing a stream of bubble-bursting events, stressed the causal role of what could be called the Sweezy Normal State of stagnation in mature monopoly-capitalist economies. It is the Sweezy Normal State and its relation to financialization with the rise of monopoly-finance capital—together with the globalized impact of these phenomena on the global South, particularly China—which forms the content of this book.

“Why Stagnation?”

On March 27, 1947, a now legendary debate on the future of capitalism took place at Harvard University between Sweezy and Schumpeter, two of its most popular and influential economists. As Paul Samuelson was to declare decades later, in the early 1970s: “Recent events on college campuses have recalled to my inward eye one of the great happenings in my own lifetime. It took place at Harvard back in the days when giants walked the earth and Harvard Yard. Joseph Schumpeter, Harvard’s brilliant economist and social prophet, was to debate Paul Sweezy on ‘The Future of Capitalism,’ Wassily Leontief was in the chair as the moderator and the Littauer Auditorium could not accommodate the packed house.”26

The debate between Sweezy and Schumpeter was part of the larger debate on stagnation in the 1930s through the early ‘50s, brought on by the Great Depression. Sweezy argued on the basis of Marx and Keynes that “accumulation is the primary factor” in capitalist development, yet noted that its influence was waning. “There is no mechanism in the system,” he explained “for adjusting investment opportunities to the way capitalists want to accumulate and no reason to suppose that if investment opportunities are inadequate capitalists will turn to consumption—quite the contrary.” Hence, the motor was removed from the capitalist economy, which tended—without some external force, such as “the outside shot in the arm of a war”—toward long-run stagnation. Schumpeter, taking a more conservative and “Austrian” approach, apparently argued that a long cycle (Kondratieff) expansion might commence in the late 1950s, peaking in the late ‘80s; and yet the wind was likely to go out of the sails of the U.S. economy due to the waning of the entrepreneurial function and the rise of corporations and the state. Schumpeter did not deny the stagnationist tendency of the economy but thought growth was weighed down rather than stimulated by New Deal-type intrusions in the economy.27

Nearly twenty years later, Sweezy, writing with Paul Baran, published their now classic study, Monopoly Capital, which was to have a strong influence on New Left economics in the 1970s. “The normal state of the monopoly capitalist economy,” they declared, “is stagnation.”28 According to this argument, the rise of the giant monopolistic (or oligopolistic) corporations had led to a tendency for the actual and potential investment-seeking surplus in society to rise. The very conditions of exploitation (or high price markups on unit labor costs) meant both that inequality in society increased and that more and more surplus capital tended to accumulate actually and potentially within the giant firms and in the hands of wealthy investors, who were unable to find profitable investment outlets sufficient to absorb all of the investment-seeking surplus. Hence, the economy became increasingly dependent on external stimuli such as higher government spending (particularly on the military), a rising sales effort, and financial expansion to maintain growth.29 Such external stimuli, as Sweezy was later to explain, were “not part of the internal logic of the economy itself,” falling “outside the scope of mainstream economics from which historical, political, and sociological considerations are carefully excluded.”30

All of these external stimuli were self-limiting, and/or generated further long-run contradictions, leading to the resumption of stagnation tendencies. Sending capital investment abroad did little to abate the problem since the return flow of profits and other business returns, under conditions of unequal exchange between global North and South and U.S. hegemony in general, tended to overwhelm the outward flow. A truly epoch-making innovation, playing the role of the steam engine, the railroad, or the automobile in the nineteenth and early-to-mid-twentieth centuries, might alter the situation. But such history-changing innovations of the kind that would alter the entire geography and scale of accumulation were not to be counted on and were probably less likely under mature monopoly-capitalist conditions. The result was that the economy, despite its ordinary ups and downs, tended to sink into a normal state of long-run slow growth, rather than the robust growth assumed by orthodox economics. In essence an economy in which decisions on savings and investment are made privately tends to fall into a stagnation trap: existing demand is insufficient to absorb all of the actual and potential savings (or surplus) available, output falls, and there is no automatic mechanism that generates full recovery.31

Stagnation theory, in this sense, did not mean that strong economic growth for a time was impossible in mature capitalist economies—simply that stagnation was the normal case and that robust growth had to be explained as the result of special historical factors. This reversed the logic characteristic of neoclassical economics, which assumed that rapid growth was natural under capitalism, except when outside forces, such as the state or trade unions, interfered with the smooth operation of the market. Stagnation also did not necessarily mean deep downturns with negative growth, but rather a slowing down of the trend-rate of growth due to overaccumulation. Net investment (i.e., investment beyond that covered by depreciation funds) atrophied, since with rising productivity what little investment was called for could be met through depreciation funds alone. Stagnation thus assumed steady technological progress and rising productivity as its basis. It was not that the economy was not productive enough; rather it was too productive to absorb the entire investment-seeking surplus generated within production.

Baran and Sweezy’s Monopoly Capital was published at the very height of the post-Second War boom and during the Vietnam War period. In the mid–1970s the U.S. economy slowed down drastically, ending a period of rapid expansion that had been fueled by: (1) the build up of consumer liquidity during the war; (2) the second great wave of automobilization in the United States (including the construction of the Interstate highway system); (3) a period of cheap energy based on the massive exploitation of oil; (4) the rebuilding of the war-torn European and Japanese economies; (5) two regional wars in Asia, and Cold War military spending in general; and (6) a period of unrivaled U.S. hegemony. As the external conditions lifting the economy during these years gradually waned, conditions of stagnation reemerged.

However, in the 1970s growing debt and the related casino economy emerged as a means of propping up U.S. capitalism, and by the 1980s the surplus capital from the entire world was drawn into the speculative whirlwind of a new, financialized economy centered in Wall Street. Paul Sweezy and Harry Magdoff were among the earliest and most persistent analysts of this new process of financialization, seeing it not simply in Minsky-like terms of periodic financial crises, but as a drug or stimulant, akin to those sometimes used by athletes, that had emerged within the system to keep the economy going despite what they called “creeping stagnation.”32 “Finance,” they wrote in 1977, “acts as an accelerator of the business cycle, pushing it farther and faster along on the way up and steepening the decline on the way down.” Agreeing with Minsky on financial instability, they nonetheless argued that “by focusing almost entirely on the financial aspects he overlooks other long term-factors which give a more solid base to the long wave of prosperity, and he likewise ignores the petering out of the boom-sustaining conditions as well as the resurgence of stagnation tendencies.” The underlying problem remained the Sweezy Normal State of stagnation, now complicated by an addiction to debt-based stimuli.33

On March 22, 1982, almost thirty-five years to the day from his legendary debate with Schumpeter at Harvard, Sweezy delivered a talk at the Harvard Economics Club entitled, “Why Stagnation?”34 Here he recounted the origins of the great stagnation debate that had arisen at Harvard in the late 1930s, when a deep recession appeared in 1937, before full recovery from the Great Depression had occurred. This raised the question, as Alvin Hansen, Keynes’ leading follower in the United States, posed it in his 1938 book, of Full Recovery or Stagnation? Schumpeter in his 1942 treatise, Capitalism, Socialism, and Democracy, labeled Hansen’s stagnationist analysis “the theory of vanishing investment opportunity” and countered it with his own argument that the real problem preventing full recovery was the New Deal itself. It was this that led up to the Sweezy-Schumpeter debate in 1947.35

In 1982, speaking three-and-a-half decades after his famous debate with Schumpeter, Sweezy told his listeners at the Harvard Economics Club that the stagnation question arising out of the Great Depression had been “dropped without any satisfactory answer…. Reality is now posing it again,” demonstrating that “the burial of stagnation was, to say the least, premature.” However, what had fundamentally changed things since (beyond the growth in government spending) was the increased reliance on the promotion of credit/debt as a long-term stimulus to counter stagnation:

Let me digress for a moment to point out that the fact that the overall performance of the economy in recent years has not been much worse than it actually has been, or as bad as it was in the 1930s, is largely owing to three causes: (1) the much greater role of government spending and government deficits; (2) the enormous growth of consumer debt, including residential mortgage debt, especially during the 1970s; and (3) the ballooning of the financial sector of the economy which, apart from the growth of debt as such, includes an explosion of all kinds of speculation, old and new, which in turn generates more than a mere trickledown of purchasing power into the “real” economy, mostly in the form of increased demand for luxury goods. These are important forces counteracting stagnation as long as they last, but there is always the danger that if carried too far they will erupt in an old-fashioned panic of a kind we haven’t seen since 1929–33 period. 36

There could hardly have been a more far-sighted description of the contradictions of U.S. capitalism, pointing ahead to the Great Financial Crisis of 2007–09, and to the conditions of severe economic stagnation that arose in its wake. These warnings, however, went unheeded, and no resurrection of the stagnation debate occurred in the 1980s.

Addressing the failure of younger generations of left economists to take up the question, Magdoff and Sweezy observed in Stagnation and the Financial Explosion in 1987:

We both reached adulthood during the 1930s, and it was then that we received our initiation into the realities of capitalist economics and politics. For us economic stagnation in its most agonizing and pervasive form, including its far-reaching ramifications in every aspect of social life, was an overwhelming personal experience. We know what it is and what it can mean; we do not need elaborate definitions or explanations. But we have gradually learned, not altogether to our surprise of course, that younger people who grew up in the 1940s or later not only do not share but also do not understand these perceptions. The economic environment of the war and postwar periods that played such an important part in shaping their experiences was very different. For them stagnation tends to be a rather vague term, equivalent perhaps to a longer-than-usual recession but with no implications of possible grave political and international repercussions. Under these circumstances, they find it hard to relate to what they are likely to regard as our obsession with the problem of stagnation. They are not quite sure what we are talking about or what all the fuss is over. There is a temptation to say: just wait and see, you’ll find out soon enough.37

Yet, rather than ending with such a pronouncement, Madgoff and Sweezy went on to explain in the remainder of their book why a stagnation tendency was so deeply embedded in mature monopoly-capitalist societies, prone to market saturation, and why financialization had emerged as a desperate and ultimately dangerous savior. In their chapter on “Production and Finance,” they introduced a systematic analysis of the relation of the productive base of the economy to the financial superstructure (or as they also called it the relation of the “real economy” to finance), accounting for the increasingly shaky financial structure on top of a “stagnant productive sector.”38

In his final article, “More (or Less) on Globalization,” written in 1997, fifty years after the Sweezy-Schumpeter debate, Sweezy depicted the overaccumulation problem of developed capitalism in terms of three conditions: (1) growing monopolization at the global level with the expansion of multinational corporations, (2) the slowing down (or deepening stagnation) of the Triad economies, and (3) the “financialization of accumulation process.” For Sweezy, these three trends were “intricately related” and anyone wanting to understand the future of the capitalist economy needed to focus on their interrelation, and their presence within a capitalist system that was more and more globalized.39

Monopoly-Finance Capital and the Great Stagnation

Our own analysis in this book begins in many ways where Sweezy (and Harry Magdoff) left off, and carries forward as well the analysis of John Bellamy Foster and Fred Magdoff in The Great Financial Crisis: Causes and Consequences (2009).40 What Sweezy called the “intricately related” aspects of monopolization, stagnation, financialization, and globalization have produced a new historical phase, which we refer to as “monopoly-finance capital.” In this period the Triad economies are locked in a stagnation-financialization trap, while linked to the growth in the emerging economies via the global labor arbitrage—whereby multinational corporations exploit the differences in wage levels in the world in order to extract surplus profits. The result is the worsening of the overall problem of surplus capital absorption and financial instability in the center of the world economy. In this book we are particularly concerned with how this is working out at the global level, with considerable focus (in the later chapters) on how this is related to the Chinese economy.

Yet, the central problem remains overaccumulation within the Triad, where the United States, despite its declining hegemony, still constitutes the trend-setting force in the world system of accumulation. The deepening effects of stagnation in the U.S. economy can be seen in Chart 2, showing the long-run downward trend in the growth rate of industrial production in the United States.

Chart 2. Industrial Production Index

Source: FRED Graph Observations, Economic Research Division, Federal Reserve Board of St. Louis, Industrial Production Index (INDPRO), Index 2007=100, Monthly, Seasonally Adjusted, http://research.stlouisfed.org/fred2.

Note: Chart 2 uses a twenty-year moving average. Moving averages are meant to smooth out fluctuations in order to highlight longer trends.

Nor is the United States alone in this respect. Since the 1960s West Germany, France, the United Kingdom, Italy, and Japan have all seen even larger declines, when compared to the United States, in their trend-rates of growth of industrial production. In the case of Japan industrial production rose by 16.7 percent in 1960–70 and by a mere 0.04 percent in 1990–2010.41

The story shown in Chart 2 is one of deepening stagnation of production—already emphasized by Sweezy and Magdoff in the 1970s and ‘80s. Chart 3, in contrast, reveals that this led—especially from the 1980s on—to a shift in the economy from production to speculative finance as the main stimulus to growth. Thus the FIRE (finance, insurance, and real estate) portion of national income expanded from 35 percent of the goods-production share in the early 1980s to over 65 percent in recent years. The so-called economic booms of the 1980s and ‘90s were powered by the rapid growth of financial speculation leveraged by increasing debt, primarily in the private sector.

Chart 3. Share of GDP Going to FIRE (Finance, Insurance, and Real Estate) as Percent of Total Goods-Producing Industries Share

Source: Calculated from Bureau of Economic Analysis, National Income and Product Accounts Table 6.1. National Income without Capital Consumption Adjustment, http://www.bea.gov/national/nipaweb/SelectTable.asp.

The dramatic rise in the share of income associated with finance relative to goods production industries has not, however, been accompanied by an equally dramatic rise of the share of jobs in financial services as opposed to industrial production. Thus employment in FIRE as a percentage of employment in goods production over the last two decades has remained flat at about 22 percent. This suggests that the big increase in income associated with finance when compared to production has resulted in outsized gains for a relatively few income recipients rather than a corresponding increase in jobs.42

The rapid expansion of FIRE in relation to goods production in the U.S. economy is a manifestation of the long-run financialization of the economy, i.e., the shift of the center of gravity of economic activity increasingly from production (and production-related services) to speculative finance. In the face of market saturation and vanishing profitable investment opportunities in the “real economy,” capital formation or real investment gave way before the increased speculative use of the economic surplus of society in pursuit of capital gains through asset inflation. As Magdoff and Sweezy explained as early as the 1970s, this could have an indirect effect in stimulating the economy, primarily by spurring luxury consumption. This has become known as the “wealth effect,” whereby a portion of the capital gains associated with asset appreciation in the stock market, real estate market, etc. is spent on goods and services for the well-to-do, adding to the effective demand in the economy.43

Yet, the stimulus provided by financialization has not prevented a multi-decade decline in the role of investment in the U.S. economy. Thus net private nonresidential fixed investment dropped from 4 percent of GDP in the 1970s to 3.8 percent in the ‘80s, 3 percent in the ‘90s, and 2.4 percent in 2000–2010.44 At the heart of the matter is the declining long-term growth rate of investment in manufacturing, and more particularly in manufacturing structures (construction of new or refurbished manufacturing plants and facilities), as shown in Chart 4.45

Chart 4. Growth Rate of Real Investment in Manufacturing Structures

Source: Bureau of Economic Analysis, National Income and Product Accounts, Table 5.4.1. Percent Change from Preceding Period in Real Private Fixed Investment in Structures by Type, http://bea.gov/national/nipaweb/SelectTable.asp.

Even with declining rates of investment growth, productivity increases in industry have continued, leading to the expansion of excess productive capacity (an indication of the overaccumulation of capital). This can be seen in Chart 5 showing the long-term slide in capacity utilization in manufacturing. High and rising levels of unused (or excess) capacity have a negative effect on investment since corporations are naturally reluctant to invest in industries where a large portion of the existing capacity is standing idle. The U.S. automobile industry leading up to and during the Great Recession (like the worldwide industry) was faced with huge amounts of unused capacity—equal to approximately one-third of its total capacity. A 2008 Businessweek article underscored the global auto glut: “With sales tanking from Beijing to Boston, automakers find themselves in an embarrassing position. Having indulged in a global orgy of factory-building in recent years, the industry has the capacity to make an astounding 94 million vehicles each year. That’s about 34 million too many based on current sales, according to researcher CSM Worldwide, or the output of about 100 plants.”46

Chart 5: Manufacturing Capacity Utilization

Source: Economic Report of the President, 1998, 2005, and 2012, Table B-52.

The decreasing utilization of productive capacity is paralleled by what we referred to in 2004 as “The Stagnation of Employment,” or the growing unemployment and underemployment that characterizes both the U.S. economy and the economies of the Triad in general. According to the alternative labor underutilization measure, U6, of the Bureau of Labor Statistics, a full 14.9 percent of the civilian work force (plus marginally attached workers) were unemployed or underemployed on a seasonally adjusted basis in the United States in February 2012.47

In these circumstances, the U.S. economy, as we have seen, has become chronically dependent on the ballooning of the financial superstructure to keep things going. Industrial corporations themselves have became financialized entities, operating more like banks in financing sales of their products, and often engaging in speculation on commodities and currencies. Today they are more inclined to pursue the immediate, sure-fire gains available through merger, acquisition, and enhanced monopoly power than to commit their capital to the uncertain exigencies associated with the expansion of productive activity. Political-economic power has followed the financial growth curve of the economy, with the economic base of political hegemony shifting from the real economy of production to the financial world, and increasingly serving the interests of the latter, in what became known as the neoliberal age.48

The main key to understanding these developments, however, remains the Sweezy Normal State. The long-term trends associated with economic growth, industrial production, investment, financialization, and capacity utilization (as shown in Charts 1–5 above) all point to the same phenomenon of a long-term economic slowdown in the U.S. and the other advanced industrial economies.

A central cause of this stagnation tendency is the high, and today rapidly increasing, price markups of monopolistic corporations, giving rise to growing problems of surplus capital absorption. Taking the nonfarm business sector as a whole, the price markup on unit labor costs (the ratio of prices to unit labor costs) for the U.S. economy over the entire post-Second World War period averaged 1.57, with a low of around 1.50 in the late 1940s. However, from the late 1990s to the present the markup on unit labor costs—what the great Polish economist Michal Kalecki referred to as the “degree of monopoly”—has climbed sharply, to 1.75 in the final quarter of 2011. As stated in The Economic Report of the President, 2012: “The markup has now risen to its highest level in post-World War II history, with much of that increase taking place over the past four years. Because the markup of prices over unit labor costs is the inverse of the labor share of output, saying that an increase in the price markup is the highest in postwar history is equivalent to saying that the labor share of output has fallen to its lowest level.”49

The Ambiguity of Global Competition

In line with the foregoing, the last few decades have seen the intensification of a growing trend today towards monopolization in the U.S. and global economies, reflected in: (1) concentration and centralization of capital on a world scale, (2) growth of monopoly power and profits, (3) the developing global supply chains of multinational corporations, and (4) the rise of monopolistic finance. The total annual revenue of the five hundred largest corporations in the world (known as the Global 500) was equal in 2004–08 to around 40 percent of world income, with sharp increases since the 1990s.50 This strong monopolization tendency, however, is scarcely perceived today in the face of what is characterized in the conventional wisdom as ever-greater competition between firms, workers, and states.

We call this problem of mistaken identity, in which growing monopolization is misconstrued as growing competition, the “ambiguity of competition.” From the days of Adam Smith to the present the development of monopoly power has always been seen as a constraint on free competition, particularly in the domain of price competition. As Smith put it in The Wealth of Nations, “The price of monopoly is upon every occasion the highest which can be got. The natural price, or the price of free competition, on the contrary, is the lowest which can be taken.”51 For classical political economists in the nineteenth century competition was only intense if there were numerous small firms. However, Karl Marx had already pointed in Capital to the concentration and centralization of capital, whereby bigger firms beat smaller ones and frequently absorbed the latter through mergers and acquisitions.52 This led to a vast transformation of industry in the last quarter of the nineteenth century and the beginning of the twentieth century, as production came to be dominated by a relatively small number of giant corporations. As John Munkirs wrote in 1985 in The Transformation of American Capitalism, “The genesis of monopoly capitalism (1860s to 1920s) created a stark dichotomy between society’s professed belief in Adam Smith’s competitive market structure capitalism and economic reality.”53

In the 1920s and ‘30s important innovations in economic theory were introduced designed to account for this new reality, under the rubric of “the theory of imperfect competition.” The three most important pioneering attempts to alter mainstream economic theory to take account of monopoly power were developed by Edward H. Chamberlin in The Theory of Monopolistic Competition (1933), Joan Robinson in The Economics of Imperfect Competition (1933), and Sweezy in “Demand Under Conditions of Oligopoly” (1939).54 As Robinson wrote, “We see on every side a drift toward monopolisation under the names of restriction schemes, quota systems, rationalisation, and the growth of giant companies.”55 In Chamberlin’s terms, “The idea of a purely competitive system is inadmissible; for not only does it ignore the fact that the monopoly influence is felt in varying degrees throughout the system, but it sweeps it aside altogether…. In fact, as will be shown later, if either element [competition or monopoly] is to be omitted from the picture, the assumption of ubiquitous monopoly has much more in its favor.”56

These analyses considered a wide varieties of monopolistic and semi-monopolistic situations, describing how price competition was diminished with monopoly, how firms were able to set their own prices partly through “product differentiation” (a term coined by Chamberlin), and how industries were increasingly dominated by oligopolies (a few giant firms) with considerable monopoly power.

Chamberlin, who also introduced the concept of oligopoly into economic theory, emphasized its role in the very first chapter of his Theory of Monopolistic Competition. Sweezy’s “Demand Under Conditions of Oligopoly” introduced a theory of oligopolistic pricing, which argued that any price-cutting by giant oligopolistic firms was enormously destructive, leading to actual price warfare, in which firms would each lower their prices in order to retain market share and all would see their profits decline. Hence, large firms in mature, concentrated industries soon learned to collude indirectly in raising rather than lowering prices, with the result that prices (and more importantly profit margins) tended to go only one way—up.57 The most frequent result of monopolistic (including oligopolistic) competition and the constraints on price competition it imposed, according to Chamberlin, was “excess productive capacity, for which there is no automatic corrective…. The surplus capacity is never cast off, and the result is high prices and waste.”58

Since these theories of monopolistic competition challenged the notion of a freely competitive system, threatening the whole structure of orthodox economics, they were shunted aside—in an early version of the economics of innocent fraud—into a marginal realm within economics. A set of exceptions to perfect competition was recognized, but this was treated as outside the general model of the economy, which remained a world of perfect and pure competition. At the same time, economists introduced intermediary notions such as “workable competition” (a vague notion that in practice effective competition somehow continued) together with the idea of a new competition geared less to price competition than to innovation, i.e., the perennial gale of Schumpeterian “creative destruction.”

Imperfect competition theory itself was reshaped to conform to the needs of economic orthodoxy. Hence, the notion of “monopolistic competition” was redefined simply to relate to conditions where numerous small firms were able to exploit favorable locations or product differentiation, while excluding oligopoly (the typical case) from the concept. Chamberlin himself was driven to object that oligopoly had been the starting point for monopolistic competition theory and its exclusion from the theory of monopolistic competition was absurd. “Monopolistic competition,” he complained, was “converted from an almost universal phenomenon, which it surely is…to the relatively unimportant one of differentiated products in the restricted case of ‘large numbers.’”59

Competition was therefore redefined in public discourse to mean “workable competition” as a vague analogue to perfect competition, while economists in their basic models continued to hold onto the abstract notion of perfect and/or pure competition. Instances of oligopolistic rivalry—i.e., the intense battles between quasi-monopolistic firms over markets, product differentiation, and low cost position (but seldom encompassing price cutting in final consumption markets)—were often erroneously treated as if they exemplified Smithian competition. Orthodox figures such as Milton Friedman meanwhile continued to argue that oligopolistic rivalry was the very antithesis of competition.

It is this confused situation that gives rise to the ambiguity of competition.60 As Munkirs stated in The Transformation of American Capitalism: “Within the business community and the economics profession, [John Maurice] Clark’s concept of ‘workable competition’ and Schumpeter’s ‘gales of creative destruction’ were christened ‘the new competition.’ Simply by assigning a new meaning to the term competition, the ill effects of monopolistically competitive market structures were defined out of existence. Yet the real world does exist.”61

In contrast, radical and Marxian thinkers were dedicated to a realistic historical outlook, and, as they had no reason to hold on to the notion of free competition where it contradicted such reality, continued to analyze the growing role of monopoly in the modern economic system. For economist Rudolf Hilferding in Austria and Germany, such monopolization was characterized as the growth of “finance capital.”62 Lenin, following Hilferding, wrote of what he called “the monopoly stage of capitalism”—seeing this as the basis of modern imperialism.63 The iconoclastic U.S. economist Thorstein Veblen developed an early theory of monopoly capitalism as part of his critique of “absentee ownership.”64

Within the terrain of critical economics from the 1930s to ‘70s, Kalecki and Josef Steindl developed theories of the widening degree of monopoly and its relation to maturity and stagnation.65 The purpose of Baran and Sweezy’s Monopoly Capital, which drew much of its inspiration from Kalecki and Steindl, was “to begin the process of systematically analyzing monopoly capitalism on the basis of the experience of the most developed monopoly capitalist society”—the United States.66 Likewise such works as Harry Magdoff’s Age of Imperialism (1969), James O’Connor’s The Fiscal Crisis of the State (1973), and Harry Braverman’s Labor and Monopoly Capital (1974) relied on the concept of monopoly capital.67

Our own line of inquiry in this book builds on such analyses, attempting to understand the current phase of monopoly-finance capital, in which stagnation and financialization have emerged as interrelated trends on a global scale. Here the paradox of an economy where financialization rather than capital accumulation has now become the motor of the system is explored.

The Globalization of Monopoly Capital, U.S. Hegemonic
Decline, and the Rise of China

Still, even on the left the role of monopolization is far from universally accepted today, largely because of the changes in perception brought on by increased international competition (or transnational oligopolistic rivalry). In the 1970s core U.S. industries, such as steel and automobiles, began to be affected by international competition, seemingly undermining the power of U.S. monopoly capital.68 The rise of multinational corporations, primarily in the Triad, was the vehicle for this enhanced world competition. This caused Joan Robinson to quip, “Modern industry is a system not so much of monopolistic competition as of competitive monopolies.”69

Some observers saw this process of the creation of global oligopolies, which necessarily involved the amalgamation or destruction of the weaker of the national oligopolistic firms, as a return of the nineteenth-century-style competitive system. They were mistaken.

The theory of the multinational corporation, as developed by Stephen Hymer (who is still the definitional economic theorist in this area), saw the rise of these globe-trotting firms as the product of the growth of the concentration and centralization of capital and monopoly power worldwide. Rather than a competitive market structure, as envisioned in orthodox economics, what was emerging was a system of global oligopolistic rivalry for the domination of world production by a smaller and smaller number of global corporations. Hymer went on to connect this to Marx’s theory of the industrial reserve army of the unemployed, explaining that the monopolistic multinational corporations were in the process of creating a new international division of labor based on the formation of a global reserve army, and the exploitation of wage differentials worldwide (or the global labor arbitrage).70 This global restructuring of production adopted a divide and rule approach to labor worldwide.

These changes were accompanied by a shift of the United States, beginning in around 1980s, from a massive surplus to a massive deficit country in its current account (the combined balances on trade in goods and services, income, and net unilateral transfers), turning it into the consumption engine of the world economy or “buyer of last resort.”71 All of this was made possible by U.S. dollar hegemony, coupled with financialization, whereby, as Yanis Varoufakis has argued, the United States became the Global Minotaur, borrowing and consuming out of proportion to its own production while providing markets for the exports of other countries.72 This can be seen in Chart 6, showing the growth of the U.S. current account deficit (a good part of which results from the deficit in the trade in goods and services) as a percent of GDP. During the last thirty years the United State has turned into the world’s largest borrower, exploiting its position of financial hegemony and drawing in surplus capital from the rest of the world—while ultimately compounding its underlying problem of overaccumulation.

Chart 6. U.S. Current Account Balance

Source: St. Louis Federal Reserve FRED database, http://research.stlouisfed.org/fred.

At the same time, the global labor arbitrage promoted by multinational corporations was restructuring the world economy, transferring much of world production to the global South. The giant corporations developed ever more complex supply chains extending to low-wage countries, with the final goods aimed primarily at markets in the global North, and the surplus seized in considerable part by the omnipresent multinational firms themselves. In the 1960s 6 percent of total U.S. corporate profits came from abroad. By the 1990s this had risen to 15 percent, and in 2000–2010 to 21 percent. 73

The biggest question mark generated by this new phase of accumulation today is the rapid growth of a few large emerging economies, particularly China and India. The vagaries of an accumulation system in these countries based on the exploitation of massive reserve armies of workers (in China a “floating population” of peasants) in the hundreds of millions, which cannot be absorbed internally through the standard industrialization process, makes the future of the new Asia uncertain. The imperial rent exacted by multinationals, who also control the global supply chains, means that emerging economies face what may appear to be an open door to the world market, but must proceed along paths controlled from outside.74 The vast inequality built into a model of export-oriented development based on low-wage labor creates internal fault lines for emerging economies. China is now the site of continual mass protests, occurring on a scale of hundreds of thousands annually. In an article entitled “Is China Ripe for Revolution?” in the February 12, 2012 New York Times, Stephen R. Platt wrote that the Taiping Rebellion of the nineteenth century might stand as a historical reminder of the possibility of another major “revolution from within” in that country (in which case, he notes, Washington would mostly likely find itself “hoping for that revolution to fail”).75

In many ways the world situation, with minor modifications, conforms to the diagnosis provided by Che Guevara at the Afro-Asian Conference in Algeria in 1965: “Ever since monopoly capital took over the world, it has kept the greater part of humanity in poverty, dividing all the profits among the group of the most powerful countries…. There should be no more talk about developing mutually beneficial trade based on prices forced on the backward countries by the law of value and the international relations of unequal exchange that result from the law of value.”76 If some emerging economies are now developing rapidly, the dominant reality is the global labor arbitrage that is increasing the level of exploitation worldwide, the greatest burden of which is falling on the global South.

An underlying premise throughout our analysis is that imperialist divisions within the world remain and are even deepening, enforcing wide disparities in living conditions. Still, in the age of global monopoly-finance capital working people everywhere are increasingly suffering—a phenomenon that Michael Yates has referred to as “The Great Inequality.”77 Entrenched and expanding monopolies of wealth, income, and power are aimed at serving the interests of a miniscule portion of the world population, now known as the 1%—or the global ruling classes of contemporary monopoly-finance capital. The world is being subjected to a process of monopolistic capital accumulation so extreme and distorted that not only has it produced the Great Inequality and conditions of stagnation and financial instability, but also the entire planet as a place of human habitation is being put in peril in order to sustain this very system.78 Hence, the future of humanity—if there is to be one at all—now lies with the 99%. “If the system itself is at fault,” Gar Alperovitz observes in his America Beyond Capitalism, “then self evidently—indeed, by definition—a solution would ultimately require the development of a new system.”79


↩ Frederick Engels, The Condition of the Working Class in England (Chicago: Academy of Chicago Press, 1964), 32.
↩ Menzie D. Chinn and Jeffry A. Frieden, Lost Decades (New York: Norton, 2011).
↩ Ben S. Bernanke, “The Near- and Longer-Term Prospects for the U.S. Economy,” Speech to the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming, August 26, 2011, http://federalreserve.gov.
↩ Robert E. Hall, “The Long Slump,” American Economic Review 101 (April 2011): 431–32, 467–68.
↩ Paul Krugman, “The Third Depression,” New York Times, June 27, 2010, http://nytimes.com, “Third Depression Watch,” May 25, 2011, http://krugman.blogs.nytimes.com, “The Return of Secular Stagnation,” November 8, 2011, http://krugman.blogs.nytimes.com.
↩ Tyler Cowen, The Great Stagnation (New York: Dutton, 2011), 5–8.
↩ Thomas I. Palley, From Financial Crisis to Stagnation (Cambridge: Cambridge University Press, 2012), 3, 141–53. An earlier presentation of Palley’s views on financialization and stagnation can be found in Thomas I. Palley, “The Limits of Minsky’s Financial Instability Hypothesis as an Explanation of the Crisis,” Monthly Review 61, no. 11 (April 2010): 28–43.
↩ Christine Lagarde, “Global Economic Challenges and Global Economic Solutions,” Address at the Woodrow Wilson Center, Washington, D.C., September 15, 2011, http://imf.org, “An Address to the 2011 International Finance Forum,” Beijing, November 9, 2011, http://imf.org.
↩ Others have pointed to the longer-term decline in growth rates. See James H. Stock and Mark W. Watson, “Disentangling the Channels of the 2007-2009 Recession,” Brookings Panel on Economic Activity (March 22-23, 2012): 5, 44 (Table 10), http://www.brookings.edu.
↩ On the empirical recurrence of financial bubbles see Carmen M. Reinhart and Kenneth S. Rogoff, This Time is Different (Princeton: Princeton University Press, 2009).
↩ Paul Krugman, “How Did Economists Get It So Wrong?,” New York Times, September 2, 2009, http://nytimes.com.
↩ John Kenneth Galbraith, The Economics of Innocent Fraud (Boston: Houghton Mifflin, 2004), 6–7, 12.
↩ Ben S. Bernanke, “Implications of the Financial Crisis for Economics,” speech at Conference Co-Sponsored by the Bendheim Center for Finance and the Center for Economic Policy Studies, Princeton, New Jersey, September 24, 2010, http://federalreserve.gov. Bernanke’s explanation of the failure of the prevailing economic models was similar to that of his predecessor as chairman of the Federal Reserve Board, Alan Greenspan, who told the House Committee of Government Oversight and Reform on October 23, 2008: “The whole intellectual edifice…collapsed in the summer of last year because the data inputted into the risk management models generally covered only the last two decades, a period of euphoria. Had instead the models been fitted more appropriately to historic periods of stress, capital requirements would have been much higher and the financial world would be in far better shape today.” “Greenspan Testimony on Sources of Financial Crisis,” Wall Street Journal, October 23, 2008, http://blogs.wsj.com.
↩ Ironically, Bernanke himself earned his academic reputation for work on the Great Depression—but at a time when this was no longer seen as a historical phenomenon, requiring an understanding of developing economic contradictions, but simply as a momentary policy error on the part of central bankers. See Ben Bernanke, Essays on the Great Depression (Princeton: Princeton University Press, 2000).
↩ Joseph Schumpeter, A History of Economic Analysis (New York: Oxford University Press, 1954), 13, and Capitalism, Socialism, and Democracy (New York: Harper and Brothers, 1942), 44.
↩ Alfred North Whitehad, Science and the Modern World (New York: Free Press, 1925), 51.
↩ Georg Wilhelm Friedrich Hegel, The Phenomenology of Spirit (New York: Oxford University Press, 1977), 11.
↩ Robert E. Lucas, Jr., “Macroeconomic Priorities,” American Economic Review 93, no. 1 (March 2003): 1; Ben Bernanke, “The Great Moderation,” Address to the Eastern Economic Asssociation, February 20, 2004, http://federalreserve.gov.
↩ This paragraph and some other parts of this introduction draw on John Bellamy Foster, “The Age of Monopoly-Finance Capital,” Monthly Review 61, no. 9 (February 2010): 1–13; see also Harry Magdoff and Robert W. McChesney, “Crises: One After Another for the Life of the System,” Monthly Review 54, no. 6 (November 1992): 47–49; John Bellamy Foster and Robert W. McChesney,“What Recovery?” Monthly Review 54, no. 11 (April 2003): 5–6; John Bellamy Foster, “The Household Debt Bubble,” Monthly Review 58, no. 1 (May 2006): 1–11; and John Bellamy Foster and Fred Magdoff, The Great Financial Crisis (New York: Monthly Review Press, 2009).
↩ John Cassidy, How Markets Fail (New York: Farrar, Straus and Giroux, 2009), 18–20; Dean Baker, “The Run-Up in Home Prices: Is It Real or Is It Another Bubble?” Center for Economic and Policy Research, Briefing Paper (August 2002), http://www.cepr.net; “Consumer Credit: A Crunch May Be Coming,” Business Week, August 12, 2002, http://businessweek.com; Stephen S. Roach, “The Costs of Bursting Bubbles,” New York Times, September 22, 2002, http://newyorktimes.com; John Cassidy, “The Next Crash: Is the Housing Market a Bubble That’s About to Burst?,” The New Yorker, November 11, 2002, http://newyorker.com; “The Global Housing Boom: In Come the Waves,” Economist, June 16, 2005, http://economist.com; Karl E. Case and Robert J. Shiller, Is There a Bubble in the Housing Market? Cowles Foundation Paper No.1089 (New Haven: Yale University Cowles Foundation); Kevin Phillips, American Theocracy (New York: Viking, 2006), 375–78.
↩ It was once thought that Keynes had forever vanquished Say’s Law as logically and empirically fallacious. See John Kenneth Galbraith, The Economics of Peace and Laughter (New York: New American Library, 1971), 62–63. Neoclassical model builders, however, soon saw the need to resurrect it both directly and indirectly, in the process of resurrecting pre-Keynesian views generally. As Robert Skidelsky writes in Keynes: The Return of the Master (New York: Perseus, 2009), 112: “Mainstream macroeconomics today is based on supply, not demand. It has reasserted a version of Say’s Law—that supply creates its own demand—which Keynes repudiated. Thus, both New Classicals and New Keynesians believe that the growth of real GDP in the long run depends on the increase in the supply of factor inputs and technological progress.” For a refutation of attempts to resurrect Say’s Law see Steve Keen, Debunking Economics (London: Zed Books, 2011), 209–18.
↩ See Cassidy, How Markets Fail; Krugman, “How Did Economists Get It So Wrong?”
↩ Paul M. Sweezy, “More (or Less) on Globalization,” Monthly Review 49, no. 4 (September 1997): 3–4. The best short introduction to Minsky’s theory is Hyman Minsky, “Hyman P. Minksy (1919–1996)” (an autobiographical article originally written in 1992), in Philip Arestis and Malcolm C. Sawyer, eds., A Biographical Dictionary of Dissenting Economists (Northamption, MA: Edward Elgar, 2000), 411–16.
↩ Cassidy, How Markets Fail, 215–16. On the relation of Minsky’s and Sweezy’s analysis see Harry Magdoff and Paul M. Sweezy, The End of Prosperity (New York: Monthly Review Press, 1977), 133–36; John Bellamy Foster and Fred Magdoff, The Great Financial Crisis (New York: Monthly Review Press, 2009), 17–19.
↩ Cassidy, How Markets Fail, 332; Harry Magdoff and Paul M. Sweezy, Stagnation and the Financial Explosion (New York: Monthly Review Press, 1987), 143.
↩ Paul A. Samuelson, Collected Scientific Papers, vol. 3 (Cambridge, MA: MIT Press, 1972), 710.
↩ See John Bellamy Foster, “On the Laws of Capitalism: 1. Insights from the Sweezy-Schumpeter Debate” and Paul M. Sweezy, “On the Laws of Capitalism: 2. The Laws of Capitalism,” Monthly Review 63, no. 1 (May 2011): 1–16; “Schumpeter Sees Peaceful Socialist Spread as Sweezy Remains Skeptical,” Harvard Crimson, March 28, 1947, http://thecrimson.com.
↩ Paul A. Baran and Paul M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966), 108.
↩ Although Sweezy was later to fault his and Baran’s work in Monopoly Capital for the failure to emphasize the role of finance in combating stagnation, the recognition of this was not missing from their book, since the final section of the chapter on the sales effort was devoted to the role of FIRE (finance, insurance, and real estate) in countering stagnation. See Paul M. Sweezy, “Monopoly Capital After Twenty-Five Years,” Monthly Review 43, no. 7 (December 1991): 52–57; Baran and Sweezy, Monopoly Capital, 139–41. An even more developed argument on the increasing structural role of debt was presented by Harry Magdoff in 1965. See Paul M. Sweezy and Harry Magdoff, The Dynamics of U.S. Capitalism (New York: Monthly Review Press, 1972), 13–16.
↩ Sweezy, “Monopoly Capital After Twenty-Five Years,” 52–53.
↩ Compare Michael J. Piore and Charles F. Sabel, The Second Industrial Divide (New York: Basic Books, 1984), 73.
↩ Magdoff and Sweezy, The End of Prosperity ,111–24.
↩ Ibid., 133–36. On the relation of the Minsky Moment to the Sweezy Normal State in the context of the present crisis see John Bellamy Foster and Robert W. McChesney, “Listen Keynesians, It’s the System!,” Monthly Review 61, no. 11 (April 2010): 44–56.
↩ Magdoff and Sweezy, Stagnation and the Financial Explosion, 29–32.
↩ On the 1930s stagnation debate see William E. Stoneman, A History of the Economic Analysis of the Great Depression in America (New York: Garland Publishing, 1979). The relation of this to the development of left economics in the United States is discussed in John Bellamy Foster, “What is Stagnation?” in Bob Cherry, et. al., The Imperiled Economy: Macroeconomics from a Left Perspective (New York: Union for Radical Political Economics, 1987), 59–70.
↩ Magdoff and Sweezy, Stagnation and the Financial Explosion, 32–34.
↩ Ibid., 11–12.
↩ Ibid., 93–105.
↩ Sweezy, “More (or Less) on Globalization.”
↩ Much of that analysis was worked out in a series of annual assessments of the economy that we ourselves wrote, together with Harry Magdoff, in the April issues of Monthly Review during the years 2001–04.
↩ Economic Report of the President, 2012, Table B-108; Economic Report of the President, 1986, B-108.
↩ The data for employment is to be found in Bureau of Economic Analysis, National Income and Product Accounts, Table 6.4, http://www.bea.gov/national/nipaweb/SelectTable.asp. The relation between FIRE and goods production was highlighted in a table twenty-five years ago by Magdoff and Sweezy, Stagnation and the Financial Explosion, 23. The stagnation of employment has been a growing concern throughout the financialization era, with its financial crashes, jobless recoveries, and declining employment to population ratios. See John Bellamy Foster, Harry Magdoff, and Robert W. McChesney, “The Stagnation of Employment,” Monthly Review 55, no. 11 (April 2004): 3–17.
↩ The wealth effect in this sense was a persistent theme for Alan Greenspan. See, for example, Alan Greenspan, “The Great Malaise,” Challenge 30, no. 6 (December 1987): 11–14; “Tracking the Wealth Effect,” New York Times, February 24, 2000, http://newyorktimes.com.
↩ Bureau of Economic Analysis, National Income and Product Accounts, Table 5.2.5, Gross and Net Domestic Investment by Major Type (last Revised August 8, 2011; accessed March 15, 2012), http://bea.gov; Table 1.1.5. Gross Domestic Product.
↩ For an analysis of these shifts in investment in the early 1980s see Magdoff and Sweezy, Stagnation and Financial Explosion, 68–78.
↩ David Welch, “Automakers’ Overcapacity Problem,” Bloomberg Businessweek, December 31, 2008, http://businessweek.com.
↩ Foster, Magdoff, and McChesney, “The Stagnation of Employment,” 3–17; Fred Magdoff, “The Jobs Disaster in the United States,” Monthly Review 63, no. 2 (June 2011): 24–37; U.S. Bureau of Labor Statistics, Household Data. Table A-15. Alternative Measures of Labor Underutilization (last modified March 9, 2012, accessed March 19, 2012), http://www.bls.gov/news.release/empsit.t15.htm.
↩ On the growing interface between financial and political power see John Bellamy Foster and Hannah Holleman, “The Financial Power Elite,” Monthly Review 62, no. 1 (May 2010): 1–19; Simon Johnson and James Kwak, 13 Bankers (New York: Pantheon 2010); and Greta Krippner, Capitalizing on Crisis (Cambridge, MA: Harvard University Press, 2011). For a pioneering work in linking neoliberalism to financialization see Gérard Duménil and Dominque Lévy, Capital Resurgent: Roots of the Neoliberal Revolution (Cambridge, MA: Harvard University Press, 2004).
↩ Council of Economic Advisers, The Economic Report of the President, 2012, 64–65.
↩ See John Bellamy Foster, Robert W. McChesney, and R. Jamil Jonna, “Monopoly and Competition in Twenty-First Century Capitalism,” Monthly Review 62, no. 11 (April 2011): 12–13.
↩ Adam Smith, The Wealth of Nations (New York: Modern Library, 1937), 61.
↩ Karl Marx, Capital, vol. 1 (London: Penguin, 1976), 778–81.
↩ John R. Munkirs, The Transformation of American Capitalism (New York: M.E. Sharpe, 1985), 20.
↩ Edward Hastings Chamberlin, The Theory of Monopolistic Competition (Cambridge, MA: Harvard University Press, 1962); Joan Robinson, The Economics of Imperfect Competition (London: Macmillan, 1965); Paul M. Sweezy, “Demand Under Conditions of Oligopoly,” The Journal of Political Economy 47, no. 4 (August 1939): 568–73. Robinson’s work on imperfect competition was not initially concerned with theorizing oligopoly. See Edward Hastings Chamberlin, Towards a More General Theory of Value (New York: Oxford University Press, 1957), 27–28.
↩ Robinson, The Economics of Imperfect Competition, 307.
↩ Chamberlin, The Theory of Monopolistic Competition, 11.
↩ Sweezy, “Demand Under Conditions of Oligopoly”; Paul M. Sweezy, Four Lectures on Marxism (New York: Monthly Review Press, 1981), 63.
↩ Chamberlin, Ibid., 109.
↩ Chamberlin, Towards a More General Theory of Value, 33.
↩ See Foster and McChesney, “Monopoly and Competition in Twenty-First Century Capitalism.”
↩ Munkirs, The Transformation of American Capitalism, 35.
↩ Rudolf Hilferding, Finance Capital (London: Routledge, 1981).
↩ V.I. Lenin, Imperialism, the Highest Stage of Capitalism (New York: International Publishers, 1939), 88.
↩ Thorstein Veblen, The Theory of Business Enterprise (Clifton, NJ: Augustus M. Kelley, 1975), and Absentee Ownership and Business Enterprise in Recent Times (New York: Augustus M. Kelley, 1964).
↩ See especially Michal Kalecki, Theory of Economic Dynamics (New York: Augustus M. Kelley, 1969); Josef Steindl, Maturity and Stagnation in American Capitalism (New York: Monthly Review Press, 1976).
↩ Baran and Sweezy, Monopoly Capital, 7.
↩ Harry Magdoff, The Age of Imperialism (New York: Monthly Review Press, 1969); James O’Connor, The Fiscal Crisis of the State (New York: St. Martin’s Press, 1973); Harry Braverman, Labor and Monopoly Capital (New York: Monthly Review Press, 1974).
↩ The decline of the steel industry was first explained on the left in terms of the monopoly capital/stagnation argument. See Harry Magdoff and Paul M. Sweezy, The Deepening Crisis of U.S. Capitalism (New York: Monthly Review Press, 1981), 23–30.
↩ Joan Robinson, Economic Heresies (New York: Basic Books, 1973), 103.
↩ See Stephen Hymer, The Multinational Corporation (Cambridge: Cambridge University Press, 1979).
↩ Palley, From Financial Crisis to Stagnation, 116.
↩ Yanis Varoufakis, The Global Minotaur (London: Zed, 2011).
↩ Council of Economic Advisers, Economic Report of the President, 2012, Table B-91, “Corporate Profits by Industry, 1963-2011” (Includes corporate profits with inventory valuation adjustment and without capital consumption adjustment.)
↩ On the imperial rent of oligopoly-finance capital see Samir Amin, The Worldwide Law of Value (New York: Monthly Review Press, 2010).
↩ Stephen R. Platt, “Is China Ripe for a Revolution?,” New York Times, February 12, 2012, http://newyorktimes.org.
↩ Che Guevara, “Speech at the Afro-Asian Conference in Algeria,” February 24, 1965, http://marxists.org.
↩ Michael Yates, “The Great Inequality,” Monthly Review 63, no. 10 (March 2012): 1–18.
↩ On the planetary ecological crisis see John Bellamy Foster, Brett Clark, and Richard York, The Ecological Rift (New York: Monthly Review Press, 2010).
↩ Gar Alperovitz, America Beyond Capitalism (Takoma Park, MD: Democracy Collaborative Press, 2011), 3.

Don’t Just Do Something,Talk by Slavoj Zizek

One of the most striking things about the reaction to the current financial meltdown is that, as one of the participants put it: ‘No one really knows what to do.’ The reason is that expectations are part of the game: how the market reacts to a particular intervention depends not only on how much bankers and traders trust the interventions, but even more on how much they think others will trust them. Keynes compared the stock market to a competition in which the participants have to pick several pretty girls from a hundred photographs: ‘It is not a case of choosing those which, to the best of one’s judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligence to anticipating what average opinion expects the average opinion to be.‘ We are forced to make choices without having the knowledge that would enable us to make them; or, as John Gray has put it: ‘We are forced to live as if we were free.’

Joseph Stiglitz recently wrote that, although there is a growing consensus among economists that any bailout based on Henry Paulson’s plan won’t work, ‘it is impossible for politicians to do nothing in such a crisis. So we may have to pray that an agreement crafted with the toxic mix of special interests, misguided economics and right-wing ideologies that produced the crisis can somehow produce a rescue plan that works – or whose failure doesn’t do too much damage.’ He’s right: since markets are effectively based on beliefs (even beliefs about other people’s beliefs), how the markets react to the bailout depends not only on its real consequences, but on the belief of the markets in the plan’s efficiency. The bailout may work even if it is economically wrong.

There is a close similarity between the speeches George W. Bush has given since the crisis began and his addresses to the American people after 9/11. Both times, he evoked the threat to the American way of life and the necessity of fast and decisive action to cope with the danger. Both times, he called for the partial suspension of American values (guarantees of individual freedom, market capitalism) in order to save the same values.

Faced with a disaster over which we have no real influence, people will often say, stupidly, ‘Don’t just talk, do something!’ Perhaps, lately, we have been doing too much. Maybe it is time to step back, think and say the right thing. True, we often talk about doing something instead of actually doing it – but sometimes we do things in order to avoid talking and thinking about them. Like quickly throwing $700 billion at a problem instead of reflecting on how it came about.

On 23 September, the Republican senator Jim Bunning called the US Treasury’s plan for the biggest financial bailout since the Great Depression ‘un-American’:

Someone must take those losses. We can either let the people who made bad decisions bear the consequences of their actions, or we can spread that pain to others. And that is exactly what the Secretary proposes to do: take Wall Street’s pain and spread it to the taxpayers … This massive bailout is not the solution, it is financial socialism, and it is un-American.

Bunning was the first publicly to give the reasoning behind the GOP revolt against the bailout plan, which climaxed in its rejection on 29 September. The resistance was formulated in terms of ‘class warfare’, Wall Street against Main Street: why should we help those responsible (‘Wall Street’) and let ordinary borrowers (on ‘Main Street’) pay the price for it? Is this not a clear case of what economists call ‘moral hazard’? This is the risk that someone will behave immorally because insurance, the law or some other agency protects them against any loss that his behaviour might cause: if I am insured against fire, for example, I might take fewer fire precautions (or even burn down my premises if they are losing me money). The same goes for big banks, which are protected against big losses yet able to retain their profits.That the criticism of the bailout plan came from conservative Republicans as well as the left should make us think. What left and right share in this case is their contempt for big speculators and corporate managers who profit from risky decisions but are protected from failures by ‘golden parachutes’. In this respect, the Enron scandal of January 2002 can be interpreted as an ironic commentary on the notion of a risk society. Thousands of employees who lost their jobs and savings were certainly exposed to risk, and had little choice in the matter. However, the top managers, who knew about the risk and also had the opportunity to intervene in the situation, minimised their exposure by cashing in their stocks and options before the bankruptcy. So while it is true that we live in a society that demands risky choices, it is one in which the powerful do the choosing, while others do the risking.

If the bailout plan really is a ‘socialist’ measure, it is a very peculiar one: a ‘socialist’ measure whose aim is to help not the poor but the rich, not those who borrow but those who lend. ‘Socialism’ is OK, it seems, when it serves to save capitalism. But what if ‘moral hazard’ is inscribed in the fundamental structure of capitalism? The problem is that there is no way to separate the welfare of Main Street from that of Wall Street. Their relationship is non-transitive: what is good for Wall Street isn’t necessarily good for Main Street, but Main Street can’t thrive if Wall Street isn’t doing well – and this asymmetry gives an a priori advantage to Wall Street.

The standard ‘trickle-down’ argument against redistribution (through progressive taxation etc) is that instead of making the poor richer, it makes the rich poorer. However, this apparently anti-interventionist attitude actually contains an argument for the current state intervention: although we all want the poor to get better, it is counter-productive to help them directly, since they are not the dynamic and productive element; the only intervention needed is to help the rich get richer, and then the profits will automatically spread down to the poor. Throw enough money at Wall Street, and it will eventually trickle down to Main Street. If you want people to have money to build, don’t give it to them directly, help those who are lending it to them. This is the only way to create genuine prosperity – otherwise, the state is merely distributing money to the needy at the expense of those who create wealth.

It is all too easy to dismiss this line of reasoning as a hypocritical defence of the rich. The problem is that as long as we are stuck with capitalism, there is a truth in it: the collapse of Wall Street really will hit ordinary workers. That is why the Democrats who supported the bailout were not being inconsistent with their leftist leanings. They would fairly be called inconsistent only if we accept the premise of Republican populists that capitalism and the free market economy are a popular, working-class affair, while state interventions are an upper-class strategy to exploit hard-working ordinary people.

There is nothing new in strong state interventions into the banking system and the economy in general. The meltdown itself is the result of such an intervention: when, in 2001, the dotcom bubble burst, it was decided to make it easier to get credit in order to redirect growth into housing. Indeed, political decisions are responsible for the texture of international economic relations in general. A couple of years ago, a CNN report on Mali described the reality of the international ‘free market’. The two pillars of the Mali economy are cotton in the south and cattle in the north, and both are in trouble because of the way that Western powers violate the same rules that they impose so brutally on Third World nations. Mali produces cotton of the highest quality, but the US government spends more money to support its cotton farmers than the entire state budget of Mali, so it is small wonder that Mali can’t compete. In the north, the European Union is the culprit: the EU subsidises every single cow to the tune of five hundred euros a year. The Mali minister for the economy said: we don’t need your help or advice or lectures on the beneficial effects of abolishing excessive state regulations; just, please, stick to your own rules about the free market and our troubles will be over. Where are the Republican defenders of the free market here? Nowhere, because the collapse of Mali is the consequence of what it means for the US to put ‘our country first’.

What all this indicates is that the market is never neutral: its operations are always regulated by political decisions. The real dilemma is not ‘state intervention or not?’ but ‘what kind of state intervention?’ And this is true politics: the struggle to define the conditions that govern our lives. The debate about the bailout deals with decisions about the fundamental features of our social and economic life, even mobilising the ghost of class struggle. As with many truly political issues, this one is non-partisan. There is no ‘objective’ expert position that should simply be applied: one has to take a political decision.
On 24 September, John McCain suspended his campaign and went to Washington, proclaiming that it was time to put aside party differences. Was this gesture really a sign of his readiness to end partisan politics in order to deal with the real problems that concern us all? Definitely not: it was a ‘Mr McCain goes to Washington’ moment. Politics is precisely the struggle to define the ‘neutral’ terrain, which is why McCain’s proposal to reach across party lines was pure political posturing, a partisan politics in the guise of non-partisanship, a desperate attempt to impose his position as universal-apolitical. What is even worse than ‘partisan politics’ is a partisan politics that tries to mask itself as non-partisan: by imposing itself as the voice of the Whole, such a politics reduces its opponents by making them agents of particular interests.

This is why Obama was right to reject McCain’s call to postpone the first presidential debate and to point out that the meltdown makes a political debate about how the two candidates would handle the crisis all the more urgent. In the 1992 election, Clinton won with the motto ‘It’s the economy, stupid!’ The Democrats need to get a new message across: ‘It’s the POLITICAL economy, stupid!’ The US doesn’t need less politics, it needs more.

Structural Crisis in the World-System: Where Do We Go from Here? by Immanuel Wallerstein

I have written repeatedly on the structural crisis in the world-system, most recently in New Left Review in 2010.2 So, I shall just summarize my position, without arguing it in detail. I shall state my position as a set of premises. Not everyone agrees with these premises, which are my picture of where we are at the present time. On the basis of this picture, I propose to speak to the question, where do we go from here?

Premise No. 1 is that all systems—from the astronomical universe to the smallest physical phenomena, and including of course historical social systems—have lives. They come into existence at some point, which needs to be explained. They have “normal” lives, the rules of which need to be explicated. The functioning of their normal lives tends, over time, to move them far from equilibrium, at which point they enter a structural crisis, and in due course cease to exist. The functioning of their normal lives has to be analyzed in terms of cyclical rhythms and secular trends. The cyclical rhythms are sets of systemic fluctuations (upturns and downturns), in which the system regularly returns to equilibrium. However, it is a moving equilibrium since, at the end of a downturn, the system never returns to exactly where it was at the beginning of the upturn. This is because secular trends (slow, long-term increases in some systemic characteristic) push the curve slowly upward, as measured by some percentage of that characteristic in the system.

Eventually, the secular trends move the system too near its asymptotes, and the system is unable to continue its normal, regular, slow upward push. Thereupon, it begins to fluctuate wildly and repeatedly, leading to a bifurcation—that is, to a chaotic situation in which a stable equilibrium cannot be maintained. In such a chaotic situation, there are two quite divergent possibilities of recreating order out of chaos, or a new stable system. This period we may call the structural crisis of the system, and there is a system-wide battle—for historical social systems, a political battle—over which of two alternative possible outcomes will be collectively “chosen.”

Premise No. 2 is the description of the most important characteristics of how the capitalist world-economy has operated as a historical social system. The driving underlying objective of capitalists in a capitalist system is the endless accumulation of capital, wherever and however this accumulation may be achieved. Since such accumulation requires the appropriation of surplus value, this drive precipitates the class struggle.

Serious capital accumulation is only possible when one firm or a small group of firms has a quasi-monopoly of world-economy-wide production. Possessing such a quasi-monopoly depends on the active support of one or more states. We call such quasi-monopolies leading industries, and they foster considerable forward and backward linkages. Over time, however, all such quasi-monopolies are self-liquidating, since new producers (attracted by the very high level of profit) are able, in one way or another, to enter the market and reduce the degree of monopoly. Increased competition reduces sales prices but also reduces the level of profit and therefore the possibility of significant capital accumulation. We can call the relation of monopolized to competitive productive activities a core-periphery relationship.

The existence of a quasi-monopoly permits the expansion of the world-economy in terms of growth and allows for trickle-down benefits to large sectors of the world-system’s populations. The exhaustion of the quasi-monopoly leads to a system-wide stagnation that reduces the interest of capitalists in accumulation through productive enterprises. Erstwhile leading industries shift location to zones with lower costs of production, sacrificing increased transactions costs for lowered production costs (notably wage costs). The countries to which the industries are relocated consider this relocation to constitute “development,” but they are essentially the recipients of cast-off, erstwhile core-like operations. Meanwhile, unemployment grows in the zones in which the industries are relocated, and former trickle-down advantages are reversed, or partially reversed.

This cyclical process is often called Kondratieff long waves, and has in the past tended to last an average of fifty to sixty years for the entire cycle.3 Such cycles have been occurring over the past five hundred years. One systemic consequence is a constant slow shift in the location of the zones that are most favored economically, without, however, changing the proportion of zones that are so favored.

A second major cyclical rhythm of the capitalist world-economy is that involving the interstate system. All states within the world-system are theoretically sovereign but actually highly constrained by the processes of the interstate system. Some states are, however, stronger than others, meaning that they have greater control over internal fragmentation and outside intrusion. No state, nonetheless, is wholly sovereign.

In a system of multiple states, there are rather long cycles in which one state manages to become for a relatively brief time the hegemonic power. To be a hegemonic power is to achieve a quasi-monopoly of geopolitical power, in which the state in question is able to impose its rules, its order, on the system as a whole, in ways that favor the maximization of accumulation of capital to enterprises located within its borders.

Achieving the position of being the hegemonic power is not easy, and has only been truly achieved three times in the five-hundred-year history of the modern world-system—the United Provinces in the mid-seventeenth century, the United Kingdom in the mid-nineteenth century, and the United States in the mid-twentieth century.4

True hegemony has lasted, on average, only twenty-five years. Like quasi-monopolies of leading industries, quasi-monopolies of geopolitical power are self-liquidating. Other states improve their economic, and then their political and cultural, positions and become less willing to accept the “leadership” of the erstwhile hegemonic power.

Premise No. 3 is a reading of what has happened in the modern world-system from 1945 to 2010. I divide this into two periods: 1945 to circa 1970; circa 1970-2010. Once again, I summarize what I have argued at length previously. The period 1945-circa 1970 was one of great economic expansion in the world-economy, indeed by far the most expansive Kondratieff A-period in the history of the capitalist world-economy. When the quasi-monopolies were breached, the world-system entered a Kondratieff B-downturn in which it still finds itself. Predictably, capitalists since the 1970s have shifted their focus from the production arena to the financial arena. The world-system then entered the most extensive continuous series of speculative bubbles in the history of the modern world-system, with the greatest level of multiple indebtednesses.

The period 1945 to circa 1970 was also the period of full U.S. hegemony in the world-system. Once the United States had made a deal with the only other militarily strong state, the Soviet Union (a deal rhetorically called “Yalta”), U.S. hegemony was essentially unchallenged. But then once the geopolitical quasi-monopoly was breached, the United States entered into a period of hegemonic decline, which has escalated from a slow decline into a precipitate one during the presidency of George W. Bush.5 U.S. hegemony was far more extensive and total than those of previous hegemonic powers, and its full decline promises to be the swiftest and most total.

There is one other element to put into the picture—the world-revolution of 1968, which occurred essentially between 1966 and 1970, and took place in all three major geopolitical zones of the world-system of the time: the pan-European world (the “West”), the Socialist bloc (the “East”), and the third world (the “South”).6

There were two common elements to these local political uprisings. The first was the condemnation not only of U.S. hegemony but also of Soviet “collusion” with the United States. The second was the rejection not only of dominant “centrist liberalism” but also of the fact that the traditional antisystemic movements (the “Old Left”) had essentially become avatars of centrist liberalism (as had mainstream conservative movements).7

While the actual uprisings of 1968 did not last very long, there were two main consequences in the political-ideological sphere. The first was that centrist liberalism ended its long reign (1848-1968) as the only legitimate ideological position, and both the radical left and the conservative right resumed their roles as autonomous ideological contestants in the world-system.

The second consequence, for the left, was the end of the legitimacy of the Old Left’s claim to be the prime national political actor on behalf of the left, to which all other movements had to subordinate themselves. The so-called forgotten peoples (women, ethnic/racial/religious “minorities,” “indigenous” nations, persons of non-heterosexual sexual orientations), as well as those concerned with ecological or peace issues, asserted their right to be considered prime actors on an equal level with the historical subjects of the traditional antisystemic movements. They rejected definitively the claim of the traditional movements to control their political activities and were successful in their new demand for autonomy. After 1968, the Old Left movements acceded to their political claim to equal current status for their demands, in place of deferring these demands to a post-revolutionary future.

Politically, what happened in the twenty-five years succeeding 1968 is that the reinvigorated world right asserted itself more effectively than the more fragmented world left. The world right, led by the Reagan Republicans and the Thatcher Conservatives, transformed world discourse and political priorities.

The buzzword “globalization” replaced the previous buzzword “development.” The so-called Washington Consensus preached privatization of state productive enterprises, reduction of state expenditures, opening of the frontiers to uncontrolled entry of commodities and capital, and the orientation to production for export. The prime objectives were to reverse all the gains of the lower strata during the Kondratieff A-period. The world right sought to reduce all the major costs of production, to destroy the welfare state in all its versions, and to slow down the decline of U.S. power in the world-system.

Mrs. Thatcher coined the slogan, “There is no alternative” or TINA. To ensure that, in fact, there would be no alternative, the International Monetary Fund, backed by the U.S. Treasury, made as a condition of all financial assistance to countries with budgetary crises adherence to its strict neoliberal conditions.

These draconian tactics worked for about twenty years, bringing about the collapse of regimes led by the Old Left or the conversion of Old Left parties to adherence to the doctrine of the primacy of the market. But by the mid-1990s, there surfaced a significant degree of popular resistance to the Washington Consensus, whose three main moments were the neo-Zapatista uprising in Chiapas on January 1, 1994; the demonstrations at the Seattle meeting of the World Trade Organization in Seattle, which scuttled the attempt to enact worldwide constraints on intellectual property rights; and the founding of the World Social Forum in Porto Alegre in 2001.

The Asian debt crisis in 1997 and the collapse of the U.S. housing bubble in 2008 brought us to our current public discussion of the so-called financial crisis in the world-system, which is, in fact, nothing but the next-to-last bubble in the cascading series of debt crises since the 1970s.

Premise No. 4 is the description of what happens in a structural crisis, which the world-system is in at the present time, has been in at least since the 1970s, and shall continue to be in until probably circa 2050. The primary characteristic of a structural crisis is chaos. Chaos is not a situation of totally random happenings. It is a situation of rapid and constant fluctuations in all the parameters of the historical system. This includes not only the world-economy, the interstate system, and cultural-ideological currents, but also the availability of life resources, climatic conditions, and pandemics.

The constant and relatively rapid shifts in immediate conditions make even short-term calculations highly problematic—for the states, for enterprises, for social groups, and for households. The uncertainty makes producers very cautious about producing since it is far from certain that there are customers for their products. This is a vicious circle, since reduced production means reduced employment, which means fewer customers for producers. The uncertainty is compounded by the rapid shifts in currency exchange rates.

Market speculation is the best alternative for those who hold resources. But even speculation requires a level of short-term assurance that reduces risk to manageable proportions. As the degree of risk increases, speculation becomes more nearly a game of pure chance, in which there are occasional big winners and mainly big losers.

At the household level, the degree of uncertainty pushes popular opinion both to make demands for protection and protectionism and to search for scapegoats as well as true profiteers. Popular unrest determines the behavior of the political actors, pushing them into so-called extremist positions. The rise of extremism (“The center cannot hold”) pushes both national and world political situations toward gridlock.

There can be moments of respite for particular states or for the world-system as a whole, but these moments can also be rapidly undone. One of the elements undoing the respites are sharp rises in the costs of all the basic inputs both to production and daily life—energy, food, water, breathable air. In addition, the funds to prevent or at least reduce the damages of climate change and pandemics are insufficient.

Finally, the significant increase in the living standards of segments of the populations of the so-called BRIC countries (Brazil, Russia, India, China, and some others) actually compounds the problems of capital accumulation for capitalists by spreading out the surplus-value and thus reducing the amounts available for the thin upper crust of the world’s populations. The development of the so-called emerging economies actually compounds the strain on existing world resources and thereby also compounds the problem for these countries of effective demand, threatening their ability to maintain their economic growth of the last decade or two.

Davos versus Porto Alegre

All in all, it is not a pretty picture, and brings us to the political question, What can we do in this kind of situation? But first, who are the actors in the political battle? In a structural crisis, the only certainty is that the existing system—the capitalist world-economy—cannot survive. What is impossible to know is what the successor system will be. One can envisage the battle as one between two groups that I have labeled “the spirit of Davos” and “the spirit of Porto Alegre.”

The objective of the two groups is totally opposite. The proponents of “the spirit of Davos” want a different system—one that is “non-capitalist” but still retains three essential features of the present system: hierarchy, exploitation, and polarization. The proponents of “the spirit of Porto Alegre” want the kind of system that has never existed heretofore, one that is relatively democratic and relatively egalitarian. I call these two positions “spirits” because there are no central organizations on either side of this struggle, and indeed, the proponents inside each current are deeply divided as to their strategy.

The proponents of the spirit of Davos are divided between those who proffer the iron fist, seeking to crush opponents at all levels, and those who wish to co-opt the proponents of transformation by fake signs of progress (such as “green capitalism” or “poverty reduction”).

There is division as well among the proponents of the spirit of Porto Alegre. There are those who want a strategy and a reconstructed world that is horizontal and decentralized in its organization, and insist on the rights of groups as well as of individuals as a permanent feature of a future world-system. And there are those who are seeking once again to create a new international that is vertical in its structure and homogenizing in its long-term objectives.

This is a confusing political picture, compounded by the fact that large parts of the political establishments and their reflections in the media, the punditry, and academia still insist on talking the language of a passing, momentary difficulty in an essentially equilibrated capitalist system. This creates a fog within which it is difficult to debate the real issues. Yet we must.

I think it is important to distinguish between short-term political action (the short term being the next three to five years at most) and medium-term action aimed at enabling the spirit of Porto Alegre to prevail in the battle for the new “order out of chaos” that will be collectively “chosen.”

In the short term, one consideration takes precedence over all others—to minimize the pain. The chaotic fluctuations wreak enormous pain on weaker states, weaker groups, weaker households in all parts of the world-system. The world’s governments, increasingly indebted, increasingly lacking financial resources, are constantly making choices of all kinds. The struggle to guarantee that the cuts in revenue allocation fall least on the weakest and most on the strongest is a constant battle. It is a battle that, in the short run, requires left forces always to choose the so-called lesser evil, however distasteful that is. Of course, one can always debate what the lesser evil in a given situation is, but there is never an alternative to that choice in the short term. Otherwise, one maximizes rather than minimizes the pain.

The medium-term option is the exact opposite. There is no halfway house between the spirit of Davos and the spirit of Porto Alegre. There are no compromises. Either we shall have a significantly better world-system (one that is relatively democratic and relatively egalitarian) or we shall have one that is at least as bad and, quite possibly, far worse. The strategy for this choice is to mobilize support everywhere at every moment in every way. I see a medley of tactics that might move us in the right direction.

The first is to place great emphasis on serious intellectual analysis—not in a discussion conducted merely by intellectuals, but throughout the populations of the world. It must be a discussion animated by a large openness of spirit among all those who are inspired, however they define it, by the spirit of Porto Alegre. This seems anodyne to recommend. But the fact is that we have never really had this in the past, and without it we cannot hope to proceed, much less to prevail.

A second tactic is to reject categorically the goal of economic growth and replace it with the goal of maximum decommodification—what the movements of indigenous nations in the Americas are calling buen vivir. This means not only resisting the increased drive to commodification of the last thirty years—of education, of health structures, of the body, of water and air—but decommodifying as well agricultural and industrial production. How this is done is not immediately obvious, and what it entails we shall only know by experimenting widely with it.

A third approach is an effort to create local and regional self-sufficiencies, especially in the basic elements of life such as food and shelter. The globalization we want is not a single totally integrated division of labor but an “alterglobalization” of multiple autonomies that interconnect in seeking to create a “universal universalism” composed of the multiple universalisms that exist. We must undermine the provincial claims of particular universalisms to impose themselves on the rest of us.8

A fourth derives immediately from the importance of the autonomies. We must struggle immediately to end the existence of foreign military bases, by anyone, anywhere, for any reason. The United States has the widest collection of bases, but it is not the only state to have such bases. Of course, the reduction of bases will also enable us to reduce the amount of the world’s resources we spend on military machines, equipment, and personnel, and permit the allocation of these resources for better uses.

A fifth tactic that goes along with local autonomies is the aggressive pursuit of ending the fundamental social inequalities of gender, race, ethnicity, religion, sexualities—and there are others. This is now a piety among the world left, but has it been a real priority for all of us? I do not think so.

And, of course, we cannot expect a better world-system circa 2050 if, in the interim, any of the three pending supercalamities occurs: irrevocable climate change, vast pandemics, and nuclear war.

Have I created a naive list of non-realizable tactics by the world left, the proponents of the spirit of Porto Alegre, for the next thirty to fifty years? I do not think so. The one encouraging feature about a systemic crisis is the degree to which it increases the viability of agency, of what we call “free will.” In a normally functioning historical system, even great social effort is limited in its effects because of the efficacy of the pressures to return to equilibrium. But when the system is far from equilibrium, every little input has great effect, and the totality of our inputs—made every nanosecond in every nanospace—can (can, not will) add up to enough to tilt the balance of the collective “choice” in the bifurcation.


↩ This essay is based on a talk given at the conference, “Global Crisis: Rethinking Economy and Society,” University of Chicago, December 3-5, 2010, Session on “Understanding the Crisis Historically.”
↩ Immanuel Wallerstein, “Structural Crises,” New Left Review, no. 62 (March-April 2010): 133-42. An earlier, more extensive discussion of this topic is to be found in Utopistics, or, Historical Choices of the Twenty-first Century (New York: The New Press, 1998), esp. chapter 2.
↩ For a broader explanation of how Kondratieff cycles work, see the Prologue to the new edition of Volume III of The Modern World-System (Berkeley, CA: University of California Press, 2011).
↩ For a broader explication of how the hegemonic cycle works, see the Prologue to the new edition of Volume II of The Modern World-System (Berkeley, CA: University of California Press, 2011).
↩ See my “Precipitate Decline: The Advent of Multipolarity,” Harvard International Review (Spring 2007): 54-59.
↩ See my “1968, Revolution in the World-System: Theses and Queries,” Theory and Society, XVIII (July 4, 1989): 431-49; also with Giovanni Arrighi and Terence K. Hopkins, “1989, the Continuation of 1968,” Review, XV, no. 2 (Spring 1992): 221-42.
↩ On the explanation of the ways in which radicals and conservatives became avatars of centrist liberalism, see “Centrist Liberalism as Ideology,” chapter 1, The Modern World-System, IV: The Triumph of Centrist Liberalism, 1789-1914 (Berkeley, CA: University of California Press, 2011).
↩ I have argued the case for this in European Universalism: The Rhetoric of Power (New York: The New Press, 2006).

Published in Monthly Review 2011, Volume 62, Issue 10 (March)
Retrieved 05/09/12 from http://monthlyreview.org/2011/03/01/structural-crisis-in-the-world-system

Structural Crisis Needs Structural Change by István Mészáros

István Mészáros

When stressing the need for a radical structural change it must be made clear right from the beginning that this is not a call for an unrealizable utopia. On the contrary, the primary defining characteristic of modern utopian theories was precisely the projection that their intended improvement in the conditions of the workers’ lives could be achieved well within the existing structural framework of the criticized societies. Thus Robert Owen of New Lanark, for instance, who had an ultimately untenable business partnership with the utilitarian liberal philosopher Jeremy Bentham, attempted the general realization of his enlightened social and educational reforms in that spirit. He was asking for theimpossible. As we also know, the high-sounding “utilitarian” moral principle of “the greatest good for the greatest number” came to nothing since its Benthamite advocacy. The problem for us is that without a proper assessment of the nature of the economic and social crisis of our time—which by now cannot be denied by the defenders of the capitalist order even if they reject the need for a major change—the likelihood of success in this respect is negligible. The demise of the “Welfare State” even in the mere handful of the privileged countries where it has been once instituted offers a sobering lesson on this score.

Let me start by quoting a recent article by the editors of the authoritative daily newspaper of the international bourgeoisie, The Financial Times.

Talking about the dangerous financial crisis—acknowledged now by the editors themselves to be dangerous—they end their article with these words: “Both sides [the U.S. Democrats and the Republicans] are to blame for a vacuum of leadership and responsible deliberation. It is a serious failure of governance and more dangerous than Washington believes.”1 This is all that we get as editorial wisdom about the substantive issue of “sovereign indebtedness” and mounting budget deficits. What makes the Financial Times editorial even more vacuous than the “vacuum of leadership” deplored by the journal is the sonorous subtitle of this article:“Washington must stop posturing and start governing.” As if editorials like this could amount to more than posturing in the name of “governing”! For the grave issue at stake is the catastrophic indebtedness of the “power-house” of global capitalism, the United States of America, where the government’s debt alone (without adding corporate and private individual indebtedness) is counted already in well above 14 trillion dollars—flashed up in large illuminated numbers on the façade of a New York public building indicating the irresistible trend of rising debt.

The point I wish to stress is that the crisis we have to face is a profound and deepening structural crisis which needs the adoption of far-reaching structural remedies in order to achieve a sustainable solution. It must also be stressed that the structural crisis of our time did not originate in 2007, with the “bursting of the US housing bubble,” but at least four decades earlier. I spoke about it in such terms way back in 1967, well before the May 1968 explosion in France,2 and I wrote in 1971, in the Preface to the Third Edition of Marx’s Theory of Alienation, that the unfolding events and developments “dramatically underlined the intensification of the global structural crisis of capital.”

In this respect it is necessary to clarify the relevant differences between types or modalities of crisis. It is not a matter of indifference whether a crisis in the social sphere can be considered a periodic/conjunctural crisis, or something much more fundamental than that. For, obviously, the way of dealing with a fundamental structural crisis cannot be conceptualized in terms of the categories of periodic or conjunctural crises. The crucial difference between the two sharply contrasting types of crises is that the periodic or conjunctural crises unfold and are more or less successfully resolved within the established framework, whereas the fundamental crisis affects that framework itself in its entirety.

In general terms, this distinction is not simply a question of the apparent severity of the contrasting types of crises. For a periodic or conjunctural crisis can be dramatically severe—as the “Great World Economic Crisis of 1929–1933” happened to be—yet capable of a solution within the parameters of the given system. And in the same way, but in the opposite sense, the “non-explosive” character of a prolonged structural crisis, in contrast to the “great thunderstorms” (in Marx’s words) through which periodic conjunctural crises can discharge and resolve themselves, may lead to fundamentally misconceived strategies, as a result of the misinterpretation of the absence of “thunderstorms”; as if their absence was the overwhelming evidence for the indefinite stability of “organized capitalism” and of the “integration of the working class.”

It cannot be stressed enough that the crisis in our time is not intelligible without being referred to the broad overall social framework. This means that in order to clarify the nature of the persistent and deepening crisis all over the world today we must focus attention on the crisis of the capital system in its entirety. For the crisis of capital we are experiencing is an all-embracing structural crisis.

Let us see, summed up as briefly as possible, the defining characteristics of the structural crisis we are concerned with.

The historical novelty of today’s crisis is manifest under four main aspects:

  • its character is universal, rather than restricted to one particular sphere (e.g., financial, or commercial, or affecting this or that particular branch of production, or applying to this rather than that type of labor, with its specific range of skills and degrees of productivity, etc.);
  • its scope is truly global (in the most threateningly literal sense of the term), rather than confined to a particular set of countries (as all major crises have been in the past);
  • its time scale is extended, continuous—if you like: permanent—rather than limited andcyclic, as all former crises of capital happened to be;
  • its mode of unfolding might be called creeping—in contrast to the more spectacular and dramatic eruptions and collapses of the past—while adding the proviso that even the most vehement or violent convulsions cannot be excluded as far as the future is concerned: i.e., when the complex machinery now actively engaged in ‘crisis-management’ and in the more or less temporary ‘displacement’ of the growing contradictions runs out of steam.

[Here] it is necessary to make some general points about the criteria of a structural crisis, as well as about the forms in which its solution may be envisaged.

To put it in the simplest and most general terms, a structural crisis affects the totality of a social complex, in all its relations with its constituent parts or sub-complexes, as well as with other complexes to which it is linked. By contrast, a non-structural crisis affects only some parts of the complex in question, and thus no matter how severe it might be with regard to the affected parts, it cannot endanger the continued survival of the overall structure.

Accordingly, the displacement of contradictions is feasible only while the crisis is partial, relative and internally manageable by the system, requiring no more than shifts—even if major ones—within the relatively autonomous system itself. By the same token, a structural crisis calls into question the very existence of the overall complex concerned, postulating its transcendence and replacement by some alternative complex.

The same contrast may be expressed in terms of the limits any particular social complex happens to have in its immediacy, at any given time, as compared to those beyond which it cannot conceivably go. Thus, a structural crisis is not concerned with the immediatelimits but with the ultimate limits of a global structure….3

Thus, in a fairly obvious sense, nothing could be more serious than the structural crisis of capital’s mode of social metabolic reproduction which defines the ultimate limits of the established order. But even though profoundly serious in its all-important general parameters, on the face of it the structural crisis may not appear to be of such a deciding importance when compared to the dramatic vicissitudes of a major conjunctural crisis. For the “thunderstorms” through which the conjunctural crises discharge themselves are rather paradoxical in the sense that in their mode of unfolding they not only discharge (and impose)but also resolve themselves, to the degree to which that is feasible under the circumstances. This they can do precisely because of their partial character which does not call into question the ultimate limits of the established global structure. At the same time, however (and for the same reason), they can only “resolve” the underlying deep-seated structural problems—which necessarily reassert themselves again and again in the form of the specific conjunctural crises—in a strictly partial and temporally also most limited way. Until, that is, the next conjunctural crisis appears on society’s horizon.

By contrast, in view of the inescapably complex and prolonged nature of the structural crisis, unfolding in historical time in an epochal and not episodic/instantaneous sense, it is the cumulative interrelationship of the whole that decides the issue, even under the false appearance of “normality.” This is because in the structural crisis everything is at stake, involving the all-embracing ultimate limits of the given order of which there cannot possibly be a “symbolic/paradigmatic” particular instance. Without understanding the overall systemic connections and implications of the particular events and developments we lose sight of the really significant changes and of the corresponding levers of potential strategic intervention to positively affect them, in the interest of the necessary systemic transformation. Our social responsibility therefore calls for an uncompromising critical awareness of the emerging cumulative interrelationship, instead of looking for comforting reassurances in the world of illusory normality until the house collapses over our head.

It is necessary to underline here that for nearly three decades after the Second World War the successful economic expansion in the dominant capitalist countries generated the illusion even among some major intellectuals of the left that the historic phase of “crisis capitalism” had been overcome, leaving its place to what they called “advanced organized capitalism.” I want to illustrate this problem by quoting some passages from the work of one of the greatest militant intellectuals of the twentieth century, Jean-Paul Sartre, for whom, as you may well know from my book on Sartre, I have the highest regard. However, the fact is that the adoption of the notion that by overcoming “crisis capitalism” the established order turned itself into “advanced capitalism” created some major dilemmas for Sartre. This is all the more significant because no one can deny Sartre’s fully committed search for a viable emancipatory solution and his great personal integrity. In relation to our problem we have to recall that in the important interview given to the Italian Manifesto group—after outlining his conception of the insuperably negative implications of his own explanatory category of the unavoidably detrimental institutionalization of what he called the “fused group” in his Critique of Dialectical Reason—he had to come to the painful conclusion that “While I recognize the need of an organization, I must confess that I don’t see how the problems which confront any stabilized structure could be resolved.”4

Here the difficulty is that the terms of Sartre’s social analysis are set up in such a way that the various factors and correlations that in reality belong together, constituting different facets of fundamentally the same societal complex, are depicted by him in the form of most problematical dichotomies and oppositions, generating thereby insoluble dilemmas and an unavoidable defeat for the emancipatory social forces. This is clearly shown by the exchange between the Manifesto group and Sartre:

Manifesto: On what precise bases can one prepare a revolutionary alternative?

Sartre: I repeat, more on the basis of ‘alienation’ than on ‘needs.’ In short on the reconstruction of the individual and of freedom—the need for which is so pressing that even the most refined techniques of integration cannot afford to discount it.5

Thus Sartre in this way, in his strategic assessment of how to overcome the oppressive character of capitalist reality, sets up a totally untenable opposition between the workers’ “alienation” and their allegedly satisfied “needs,” thereby making it all the more difficult to envisage a practically feasible positive outcome. And here the problem is not simply that he grants far too much credibility to the fashionable but extremely superficial sociological explanation of the so-called “refined techniques of integration” in relation to the workers. Unfortunately it is much more serious than that.

Indeed the really disturbing problem at stake is the evaluation of the viability of “advanced capitalism” itself and the associated postulate of working class “integration” which Sartre happens to share at the time to a large extent with Herbert Marcuse. For in actuality the truth of the matter is that in contrast to the undoubtedly feasible integration of some particular workers into the capitalist order, the class of labor—the structural antagonist of capital,representing the only historically sustainable hegemonic alternative to the capital system—cannot be integrated into capital’s alienating and exploitative framework of societal reproduction. What makes that impossible is the underlying structural antagonism between capital and labor, emanating with insurmountable necessity from the class reality of antagonistic domination and subordination.

In this discourse even the minimal plausibility of the Marcuse/Sartre type of false alternative between continuing alienation and “satisfied need” is “established” on the basis of the derailing compartmentalization of capital’s suicidally untenable globally entrenched structural interdeterminations upon which in fact the elementary systemic viability of capital’s one and only ruling societal metabolic order is necessarily premised. Thus it is extremely problematical to separate “advanced capitalism” from the so-called “marginal zones” and from the “third world.” As if the reproductive order of the postulated “advanced capitalism” could sustain itself for any length of time, let alone indefinitely in the future, without the ongoing exploitation of the misconceived “marginal zones” and the imperialistically dominated “third world”!

It is necessary to quote here the relevant passage in which these problems are spelled out by Sartre. The revealing Manifesto interview passage in question reads as follows:

Advanced capitalism, in relation to its awareness of its own condition, and despite the enormous disparities in the distribution of income, manages to satisfy the elementary needs of the majority of the working class—there remains of course the marginal zones, 15 percent of workers in the United States, the blacks and the immigrants; there remain the elderly; there remains, on the global scale, the third world. But capitalism satisfies certain primary needs, and also satisfies certain needs which it has artificially created: for instance the need of a car. It is this situation which has caused me to revise my ‘theory of needs,’ since these needs are no longer, in a situation of advanced capitalism, in systematic opposition to the system. On the contrary, they partly become, under the control of that system, an instrument of integration of the proletariat into certain processes engendered and directed by profit. The worker exhausts himself in producing a car and in earning enough to buy one; this acquisition gives him the impression of having satisfied a ‘need.’ The system which exploits him provides him simultaneously with a goal and with the possibility of reaching it. The consciousness of the intolerable character of the system must therefore no longer be sought in the impossibility of satisfying elementary needs but, above all else, in the consciousness of alienation—in other words, in the fact that this life is not worth living and has no meaning, that this mechanism is a deceptive mechanism, that these needs are artificially created, that they are false, that they are exhausting and only serve profit. But to unite the class on this basis is even more difficult.6

If we accept at face value this characterization of the “advanced capitalist” order, in that case the task of producing emancipatory consciousness is not only “more difficult” but quiteimpossible. But the dubious ground on which we can reach such a prioristic imperatival and pessimistic/self-defeating conclusion—prescribing from the height of the intellectual’s “new theory of needs” the abandonment by the workers of their “acquisitive artificial needs,” instantiated by the motor car, and their replacement by the thoroughly abstract postulate which posits for them that “this life is not worth living and has no meaning” (a noble but rather abstract imperatival postulate effectively contradicted in reality by the tangible need of the members of the working class for securing the conditions of their economically sustainable existence)—is both the acceptance of a set of totally untenable assertions and the equally untenable omission of some vital determining features of the actually existing capital system in its historically irreversible structural crisis.

For a start, to talk about “advanced capitalism”—when the capital system as a mode of social metabolic reproduction finds itself in its descending phase of historical development, and therefore is only capitalistically advanced but in no other sense at all, thereby capable of sustaining itself only in an ever more destructive and therefore ultimately also self-destructive way—is extremely problematical. Another assertion: the characterization of theoverwhelming majority of humankind—in the category of poverty, including the “blacks and the immigrants,” the “elderly,” and, “on the global scale, the third world”as belonging to the “marginal zones” (in affinity with Marcuse’s “outsiders”), is no less untenable. For in reality it is the “advanced capitalist world” that constitutes the long term totally unsustainable privileged margin of the overall system, with its ruthless “elementary need-denial” to the greater part of the world, and not what is described by Sartre in his Manifesto interview as the “marginal zones.” Even with regard to the United States of America the margin of poverty is greatly underrated, at merely 15 percent. Besides, the characterization of the workers’ motor cars as nothing more than purely “artificial needs” which “only serve profit” could not be more one-sided. For, in contrast to many intellectuals, not even the relatively well-off particular workers, let alone the members of the class of labor as a whole, have the luxury of finding their place of work next door to their bedroom.

At the same time, on the side of the astonishing omissions, some of the gravest structural contradictions and failures are missing from Sartre’s depiction of “advanced capitalism,” virtually emptying the whole concept of meaning. In this sense one of the most important substantive needs without which no society—past, present, or future—could survive, is the need for work. Both for the productively active individuals—embracing all of them in a fully emancipated social order—and for society in general in its historically sustainable relationship to nature. The necessary failure to solve this fundamental structural problem, affecting allcategories of work not only in the “third world” but even in the most privileged countries of “advanced capitalism,” with its perilously rising unemployment, constitutes one of theabsolute limits of the capital system in its entirety. Another grave problem which underscores the present and future historical unviability of capital is the calamitous shift toward theparasitic sectors of the economy—like the crisis-producing adventurist speculation which plagues (as a matter of objective necessity, often misrepresented as systemically irrelevantpersonal failure) the financial sector and the institutionalized/legally buttressed fraudulenceclosely associated with it—in contradistinction to the productive branches of socioeconomic life required for the satisfaction of genuine human need. This is a shift that stands in menacingly sharp contrast to the ascending phase of capital’s historic development, when the prodigious systemic expansionary dynamism (including the industrial revolution) was overwhelmingly due to socially viable and further enhanceable productive achievements. We have to add to all this the massively wasteful economic burdens imposed on society in an authoritarian way by the state and the military/industrial complex—with the permanent arms industry and the corresponding wars—as an integral part of the perverse “economic growth” of “advanced organized capitalism.” And to mention just one more of the catastrophic implications of “advanced” capital’s systemic development, we must bear in mind the prohibitively wasteful global ecological encroachment of our no longer tenable mode of social metabolic reproduction on the finite planetary world,7 with its rapacious exploitation of the non-renewable material resources and the increasingly more dangerous destruction of nature. Saying this is not “being wise after the event.” I wrote in the same period when Sartre gave his Manifesto interview that:

Another basic contradiction of the capitalist system of control is that it cannot separate “advance” from destruction, nor “progress” from waste—however catastrophic the results. The more it unlocks the powers of productivity, the more it must unleash the powers of destruction; and the more it extends the volume of production, the more it must bury everything under mountains of suffocating waste. The concept of economy is radically incompatible with the “economy” of capital production which, of necessity, adds insult to injury by first using up with rapacious wastefulness the limited resources of our planet, and then further aggravates the outcome by polluting and poisoning the human environment with its mass-produced waste and effluence.8

Thus the problematical assertions and the seminally important omissions of Sartre’s characterization of “advanced capitalism” greatly weaken the power of negation of his emancipatory discourse. His dichotomous principle which repeatedly asserts the “irreducibility of the cultural order to the natural order” is always on the look out for finding solutions in terms of the “cultural order,” at the level of the individuals’ consciousness, through the committed intellectual’s “work of consciousness upon consciousness.” He appeals to the idea that the required solution lies in increasing the “consciousness of alienation”—that is, in terms of his “cultural order”—while at the same time discarding the viability of grounding the revolutionary strategy on need belonging to the “natural order.” Material need which is said to be already satisfied for the majority of the workers and which in any case constitutes a “deceptive and false mechanism” and an “instrument of integration of the proletariat.”

To be sure, Sartre is deeply concerned with the challenge of addressing the issue of how to increase “the consciousness of the intolerable character of the system.” But, as a matter of unavoidable consideration, the leverage itself indicated as the vital condition of success—the power of the “consciousness of alienation” stressed by Sartre—would itself badly need some objective underpinning. Otherwise, the idea (even setting aside the indicated leverage’s weakness of self-referential circularity) that it somehow “can prevail over against the intolerable character of the system” is bound to be dismissed as a noble but ineffectivecultural advocacy. That this is problematic even in Sartre’s own terms of reference is indicated by his rather pessimistic words wherein he shows that the need is to defeat the materially and culturally destructive and structurally entrenched reality of “this miserable ensemble which is our planet,” with its “horrible, ugly, bad determinations, without hope.”

Accordingly, the primary question concerns the—demonstrability or not—of the objectively intolerable character of the system itself. For if the demonstrable intolerability of the system is missing in substantive terms, as proclaimed by the notion of “advanced capitalism’s” ability to satisfy material needs except in the “marginal zones,” then the “long and patient labor in the construction of consciousness” advocated by Sartre remains well-nigh impossible.9 It is that objective grounding that needs to be (and in actuality can be) established in its own comprehensive terms of reference, requiring the radical demystification of the increasing destructiveness of “advanced capitalism.” The “consciousness of the intolerable character of the system” can only be built on that objective grounding—which includes the suffering caused by “advanced” capital’s failure to satisfy even the elementary need for food not only in “marginal zones” but for countless millions, as clearly evidenced by food riots in many countries—so as to be able to overcome the postulated dichotomy between the cultural order and the natural order.

In its ascending phase the capital system was successfully asserting its productive accomplishments on the basis of its internal expansionary dynamism—still without the imperative of a monopolistic/imperialist drive of the capitalistically most advanced countries for militarily secured world domination. Yet, through the historically irreversible circumstance of entering the productively descending phase, the capital system had become inseparable from an ever-intensifying need for the militaristic/monopolistic extension and overstretch of its structural framework, tending in due course on the internal productive plane toward the establishment and the criminally wasteful operation of a “permanent arms industry,” together with the wars necessarily associated with it.

In fact well before the outbreak of the First World War Rosa Luxemburg clearly identified the nature of this fateful monopolistic/imperialist development on the destructively productive plane by writing in her book on The Accumulation of Capital about the role of massive militarist production that: “Capital itself ultimately controls this automatic and rhythmic movement of militarist production through the legislature and a press whose function is to mould so-called ‘public opinion.’ That is why this particular province of capitalist accumulation at first seems capable of infinite expansion.”10

In another respect, the increasingly wasteful utilization of energy and vital material strategic resources carried with it not only the ever more destructive articulation of capital’s self-assertive structural determinations on the (by legislatively manipulated “public opinion” never even questioned, let alone properly regulated) military plane but also with regard to the increasingly destructive encroachment of capital-expansion on nature. Ironically but by no means surprisingly, this turn of regressive historical development of the capital system as such also carried with it some bitterly negative consequences for the international organization of labor.

Indeed, this new articulation of the capital system in the last third of the nineteenth century, with its monopolistic imperialist phase inseparable from its fully extended global ascendancy, opened up a new modality of (most antagonistic and ultimately untenable) expansionary dynamism at the overwhelming benefit of a mere handful of privileged imperialist countries, postponing thereby the “moment of truth” that goes with the system’s irrepressible structural crisis in our own time. This type of monopolistic imperialist development inevitably gave a major boost to the possibility of militaristic capital-expansion and accumulation, no matter how great a price had to be paid in due course for the ever-intensifying destructiveness of the new expansionary dynamism. Indeed, the militarily underpinned monopolistic dynamism had to assume the form of even two devastating global wars, as well as the total annihilation of humankind implicit in a potential Third World War, in addition to the ongoing perilous destruction of nature that became evident in the second half of the twentieth century.

In our time we are experiencing the deepening structural crisis of the capital system. Its destructiveness is visible everywhere, and it shows no signs of diminishing. With regard to the future it is crucial how we conceptualize the nature of the crisis in order to envisage its solution. For the same reason it is also necessary to re-examine some of the major solutions projected in the past. Here it is not possible to do more than to mention, with stenographic brevity, the contrasting approaches which have been offered, indicating at the same time what happened to them in actuality.

First, we have to remember that it was to his merit that liberal philosopher John Stuart Mill considered how problematical endless capitalist growth might be, suggesting as the solution of this problem the “stationary state of the economy.” Naturally, such a “stationary state” under the capital system could be nothing more than wishful thinking, because it is totally incompatible with the imperative of capital-expansion and accumulation. Even today, when so much destructiveness is caused by unqualified growth and the most wasteful allocation of our vital energy and strategic material resources, the mythology of growth is constantly reasserted, coupled with the wishful projection of “reducing our carbon imprint” by the year 2050, while in reality moving in the opposite direction. Thus the reality of liberalism turned out to be the aggressive destructiveness of neoliberalism.

Similar fate affected the social democratic perspective. Marx clearly formulated his warnings about this danger in his Critique of the Gotha Programme, but they were totally ignored. Here, too, the contradiction between the promised Bernsteinian “evolutionary socialism” and its realization everywhere turned out to be striking. Not only in virtue of the capitulation of social-democratic parties and governments to the lure of imperialist wars but also through the transformation of social democracy in general—including British “New Labour”—into more or less open versions of neo-liberalism, abandoning not only the “road of evolutionary socialism” but even the once promised implementation of significant social reform.

Moreover, a much propagandized solution to the gruesome inequalities of the capital system was the promised worldwide diffusion of the “Welfare State” after the Second World War. However, the prosaic reality of this claimed historic achievement turned out to be not only the utter failure to institute the Welfare State in any part of the so-called “Third World,” but the ongoing liquidation of the relative achievements of the postwar Welfare State—in the field of social security, health care, and education—even in the handful of privileged capitalist countries where they were once instituted.

And of course we cannot disregard the promise to realize the highest phase of socialism (by Stalin and others) through the overthrow and abolition of capitalism. For, tragically, seven decades after the October Revolution the reality turned out to be the restoration of capitalism in a regressive neoliberal form in the countries of the former Soviet Union and Eastern Europe.

The common denominator of all of these failed attempts—despite some of their major differences—is that they all tried to accomplish their objectives within the structural framework of the established social metabolic order. However, as painful historical experience teaches us, our problem is not simply “the overthrow of capitalism.” For even to the extent to which that objective can be accomplished, it is bound to be only a very unstable achievement, because whatever can be overthrown can be also restored. The real—and much more difficult—issue is the necessity of radical structural change.

The tangible meaning of such structural change is the complete eradication of capital itself from the social metabolic process. In other words, the eradication of capital from the metabolic process of societal reproduction.

Capital itself is an all-embracing mode of control; which means that it either controls everything or it implodes as a system of societal reproductive control. Consequently, capital as such cannot be controlled in some of its aspects while leaving the rest at its place. All attempted measures and modalities of “controlling” capital’s various functions on a lasting basis have failed in the past. In view of its structurally entrenched uncontrollability—which means that there is no conceivable leverage within the structural framework of the capital system itself through which the system itself could be brought under lasting control—capital must be completely eradicated. This is the central meaning of Marx’s lifework.

In our time the question of control—through the institution of structural change in response to our deepening structural crisis—is becoming urgent not only in the financial sector, due to the wasted trillions of dollars, but everywhere. The leading capitalist financial journals complain that “China is sitting on three trillion dollars of cash,” wishfully projecting again solutions through the “better use of that money.” But the sobering truth is that the total worsening indebtedness of capitalism amounts to ten times more than China’s “unused dollars.” Besides, even if the huge current indebtedness could be eliminated somehow, although no one can say how, the real question would remain: How was it generated in the first place, and how can be made sure that it is not generated again in the future? This is why the productive dimension of the system—namely the capital relation itself—is what must be fundamentally changed in order to overcome the structural crisis through the appropriate structural change.

The dramatic financial crisis which we experienced in the last three years is only one aspect of the capital system’s three-pronged destructiveness:

  1. in the military field, with capital’s interminable wars since the onset of monopolistic imperialism in the final decades of the nineteenth century, and its ever more devastating weapons of mass destruction in the last sixty years;
  2. the intensification through capital’s obvious destructive impact on ecology directly affecting and endangering by now the elementary natural foundation of human existence itself; and
  3. in the domain of material production an ever-increasing waste, due to the advancement of “destructive production” in place of the once eulogized “creative” or “productive destruction.”

These are the grave systemic problems of our structural crisis which can only be solved by a comprehensive structural change.

In conclusion, let me quote the last five lines of The Dialectic of Structure and History. They read as follows:

“Naturally, historical dialectic in the abstract cannot offer any guarantee for a positive outcome. To expect that would mean renouncing our role in developing social consciousness, which is integral to the historical dialectic. Radicalizing social consciousness in an emancipatory spirit is what we need for the future, and we need it more than ever before.”11


  1. ↩ “Breaking the US budget impasse,” The Financial Times, June 1, 2011, http://ft.com.
  2. ↩ See my 2009 Denate Socialista interview, republished as “The Tasks Ahead,” in The Structural Crisis of Capital (New York: Monthly Review Press, 2010), 173–202.
  3. ↩ This quotation is taken from Section 18.2.1 of Beyond Capital (New York: Monthly Review Press, 1995), 680–82.
  4. ↩ Sartre’s interview given to the Italian Manifesto group was published as “Masses, Spontaneity, Party” in Ralph Milliband and John Saville, eds., The Socialist Register, 1970 (London: Merlin Press, 1970), 245.
  5. ↩ Ibid., 242.
  6. ↩ Ibid., 238–39.
  7. ↩ The gravity of this problem can no longer be ignored. To realize its magnitude it is enough to quote a passage from an excellent book which offers a comprehensive account of the unfolding process of planetary destructiveness as a result of crossing some prohibitive thresholds and boundaries put into relief by environmental science: “these thresholds have in some cases already been crossed and in other cases will soon be crossed with the continuation of business as usual. Moreover, this can be attributed in each and every case to a primary cause: the current pattern of global socioeconomic development, that is, the capitalist mode of production and its expansionary tendencies. The whole problem can be called ‘the global ecological rift,’ referring to the overall break in the human relation to nature arising from an alienated system of capital accumulation without end. All of this suggests that the use of the term Anthropocene to describe a new geological epoch, displacing the Holocene, is both a description of a new burden falling on humanity and a recognition of an immense crisis—a potential terminal event in geological evolution that could destroy the world as we know it. On the one hand, there has been a great acceleration of the human impact on the planetary system since the Industrial Revolution, and particularly since 1945—to the point that biogeochemical cycles, the atmosphere, the ocean, and the earth system as a whole, can no longer be seen as largely impervious to the human economy. On the other hand, the current course on which the world is headed could be described not so much as the appearance of a stable new geological epoch (the Anthropocene), as an end-Holocene, or more ominously, end-Quarternary, terminal event, which is a way of referring to the mass extinctions that often separate geological eras. Planetary boundaries and tipping points, leading to the irreversible degradation of the conditions of life on Earth, may soon be reached, science tells us, with a continuation of today’s business as usual. The Anthropocene may be the shortest flicker in geological time, soon snuffed out.” John Bellamy Foster, Brett Clark, and Richard York, The Ecological Rift: Capitalism’s War on the Earth (New York: Monthly Review Press, 2010), 18–19.
  8. ↩ See my Isaac Deutscher Memorial Lecture, The Necessity of Social Control, delivered at the London School of Economics on January 26, 1971. Italics in the original. Reprinted in Beyond Capital, 872-97.
  9. ↩ Sartre, 239.
  10. ↩ Rosa Luxemburg, The Accumulation of Capital (London: Routledge, 1963), 466.
  11. ↩ István Mészáros, Social Structure and Forms of Consciousness, vol. 2: The Dialectic of Structure and History (New York: Monthly Review Press, 2011), 483.

Published in Monthly Review, 

Retrieved 05/07/12 from: http://monthlyreview.org/2012/03/01/structural-crisis-needs-structural-change