Rethinking capitalist crises

US hegemony is strong, and the economic model on which it rests is not about to unravel at any moment soon.

November 1, 2004
4 min read

My files are overflowing with three decades of articles proclaiming why this time a collapse of capitalism is really imminent. The pattern of failed predictions suggests something deeper than simply misreading trends or weak theory: otherwise, one would have expected the mistakes to have been corrected by now. The problem lies, I think, in the politicisation of theory: conclusions are predetermined because some are politically preferable to others.

This does not mean, of course, that a major breakdown will never occur, and so specific arguments such as those of Max Fraad-Wolff and Richard Wolff need to be addressed. They emphasise two particular vulnerabilities of US hegemony: the weaknesses of the US economy, and the resurfacing of inter-imperial rivalries as regional blocs mature.

But these ‘vulnerabilities’ must be seriously debated rather than accepted as gospel. The US boom of the 1990s was not simply based on stock-market inflation. It involved significant technological changes that have not ended and which are yet to spread throughout the economy. Moreover, the common emphasis that financialisation undermines the ‘real’ economy is simply wrong: as most industrialists will readily declare, financialisation has reallocated capital to where it is most profitable, and it provides the venture capital fundamental to capitalist innovation; it has also contributed to the management of risk that underpins globalisation and given the US access to global savings at low costs.

Nor is it at all evident that consumer debt is unsustainable. The costs of servicing that debt (monthly payments relative to income) are not historically striking; interest is low and unlikely to rise. A housing bubble does exist in particular markets, but a moderate decrease in housing prices (the most likely scenario) need not lead to wider economic repercussions.

The argument that we are on the verge of a new period of inter-imperial rivalry is, I believe, simply wrong. It misses the most significant development of the past half-century: the mutual interpenetration and internationalisation of national capitalist classes; the disputes between them are superficial. This was already evident in the 1970s, when the frictions that resulted from the re-emergence of Europe and Japan led not to any serious challenge to US hegemony but to a reconstitution of the system as a whole and even more powerful American domination. The current US trade deficit is one reflection of this structural interdependence. European and, especially, Asian governments are willing to keep buying treasury stocks as part of their development strategy of exporting products to the US through keeping their exchange rates low relative to the dollar. Private investors continue to invest in the US because it gives them access to the deepest and still safest financial markets, and because they acknowledge the long-term strength of the US economy.

Capitalism is indeed prone to recurring instabilities. This is all the more true at the present time because: a) the global system has become so complex; b) the recent weight given to financial markets in regulating global capitalism adds a powerful degree of volatility; and c) the US state is not omnipotent in managing this world order but depends on other states, which are, in turn, limited by the balance of social forces within their own boundaries.

The point, however, is that even if there were no way to block repeated localised crises from recurring, capitalism has managed to develop a capacity to contain these crises. One element in this management of crises is the labour movement. If the working class leaves capital with the flexibility to discover ways to escape a growing crisis, then that crisis will be limited.

Working-class solidarity has been undermined by neo-liberalism: workers have increased their consumption, but the way in which they get access to consumption has changed. Rather than depending on collective action to win wage increases and expand the social wage, consumption is improved through the individualised survival strategies that Max and Richard mention: more family members working, more overtime, more debt, support for lower taxes, pensions that depend on the stock market. Neo-liberalism rests on the intensification of competition and much of the working class has itself internalised ‘competitiveness’.

My point is not that capitalism will never unravel (anything is possible), but that we cannot base our strategy on the assumption that it will do so. After a quarter-century or more of neo-liberalism, we should not have to wait for more bad news to move on to building the political capacities to challenge capitalism as a way of organising social life.Sam Gindin worked for the Canadian Auto Workers for 27 years. He teaches at York University in Toronto


✹ Try our new pay-as-you-feel subscription — you choose how much to pay.

Greece’s heavy load
While the UK left is divided over how to respond to Brexit, the people of Greece continue to groan under the burden of EU-backed austerity. Jane Shallice reports

On the narcissism of small differences
In an interview with the TNI's Nick Buxton, social scientist and activist Susan George reflects on the French Presidential Elections.

Why Corbyn’s ‘unpopularity’ is exaggerated: Polls show he’s more popular than most other parties’ leaders – and on the up
Headlines about Jeremy Corbyn’s poor approval ratings in polls don’t tell the whole story, writes Alex Nunns

The media wants to demoralise Corbyn’s supporters – don’t let them succeed
Michael Calderbank looks at the results of yesterday's local elections

In light of Dunkirk: What have we learned from the (lack of) response in Calais?
Amy Corcoran and Sam Walton ask who helps refugees when it matters – and who stands on the sidelines

Osborne’s first day at work – activists to pulp Evening Standards for renewable energy
This isn’t just a stunt. A new worker’s cooperative is set to employ people on a real living wage in a recycling scheme that is heavily trolling George Osborne. Jenny Nelson writes

Red Pepper’s race section: open editorial meeting 24 May
On May 24th, we’ll be holding the third of Red Pepper’s Race Section Open Editorial Meetings.

Our activism will be intersectional, or it will be bullshit…
Reflecting on a year in the environmental and anti-racist movements, Plane Stupid activist, Ali Tamlit, calls for a renewed focus on the dangers of power and privilege and the means to overcome them.

West Yorkshire calls for devolution of politics
When communities feel that power is exercised by a remote elite, anger and alienation will grow. But genuine regional democracy offers a positive alternative, argue the Same Skies Collective

How to resist the exploitation of digital gig workers
For the first time in history, we have a mass migration of labour without an actual migration of workers. Mark Graham and Alex Wood explore the consequences

The Digital Liberties cross-party campaign
Access to the internet should be considered as vital as access to power and water writes Sophia Drakopoulou

#AndABlackWomanAtThat – part III: a discussion of power and privilege
In the final article of a three-part series, Sheri Carr gives a few pointers on how to be a good ally

Event: Take Back Control Croydon
Ken Loach, Dawn Foster & Soweto Kinch to speak in Croydon at the first event of a UK-wide series organised by The World Transformed and local activists

Red Pepper’s race section: open editorial meeting 19 April
On April 19th, we’ll be holding the second of Red Pepper’s Race Section Open Editorial Meetings.

Changing our attitude to Climate Change
Paul Allen of the Centre for Alternative Technology spells out what we need to do to break through the inaction over climate change

Introducing Trump’s Inner Circle
Donald Trump’s key allies are as alarming as the man himself

#AndABlackWomanAtThat – part II: a discussion of power and privilege
In the second article of a three-part series, Sheri Carr reflects on the silencing of black women and the flaws in safe spaces

Joint statement on George Osborne’s appointment to the Evening Standard
'We have come together to denounce this brazen conflict of interest and to champion the growing need for independent, truthful and representative media'

Confronting Brexit
Paul O’Connell and Michael Calderbank consider the conditions that led to the Brexit vote, and how the left in Britain should respond

On the right side of history: an interview with Mijente
Marienna Pope-Weidemann speaks to Reyna Wences, co-founder of Mijente, a radical Latinx and Chincanx organising network

Disrupting the City of London Corporation elections
The City of London Corporation is one of the most secretive and least understood institutions in the world, writes Luke Walter

#AndABlackWomanAtThat: a discussion of power and privilege
In the first article of a three-part series, Sheri Carr reflects on the oppression of her early life and how we must fight it, even in our own movement

Corbyn understands the needs of our communities
Ian Hodson reflects on the Copeland by-election and explains why Corbyn has the full support of The Bakers Food and Allied Workers Union

Red Pepper’s race section: open editorial meeting 15 March
On 15 March, we’ll be holding the first of Red Pepper’s Race Section open editorial meetings.

Social Workers Without Borders
Jenny Nelson speaks to Lauren Wroe about a group combining activism and social work with refugees

Growing up married
Laura Nicholson interviews Dr Eylem Atakav about her new film, Growing Up Married, which tells the stories of Turkey’s child brides

The Migrant Connections Festival: solidarity needs meaningful relationships
On March 4 & 5 Bethnal Green will host a migrant-led festival fostering community and solidarity for people of all backgrounds, writes Sohail Jannesari

Reclaiming Holloway Homes
The government is closing old, inner-city jails. Rebecca Roberts looks at what happens next

Intensification of state violence in the Kurdish provinces of Turkey
Oppression increases in the run up to Turkey’s constitutional referendum, writes Mehmet Ugur from Academics for Peace

Pass the domestic violence bill
Emma Snaith reports on the significance of the new anti-domestic violence bill