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.

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

Secrets and spies of Scotland Yard
A new Espionage Act threatens whistleblowers and journalists, writes Sarah Kavanagh

#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

How progressive is the ‘progressive alliance’?
We need an anti-austerity alliance, not a vaguely progressive alliance, argues Michael Calderbank

The YPJ: Fighting Isis on the frontline
Rahila Gupta talks to Kimmie Taylor about life on the frontline in Rojava

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

Report from the second Citizen’s Assembly of Podemos
Sol Trumbo Vila says the mandate from the Podemos Assembly is to go forwards in unity and with humility

Protect our public lands
Last summer Indigenous people travelled thousands of miles around the USA to tell their stories and build a movement. Julie Maldonado reports

From the frontlines
Red Pepper’s new race editor, Ashish Ghadiali, introduces a new space for black and minority progressive voices

How can we make the left sexy?
Jenny Nelson reports on a session at The World Transformed

In pictures: designing for change
Sana Iqbal, the designer behind the identity of The World Transformed festival and the accompanying cover of Red Pepper, talks about the importance of good design

Angry about the #MuslimBan? Here are 5 things to do
As well as protesting against Trump we have a lot of work to get on with here in the UK. Here's a list started by Platform

Who owns our land?
Guy Shrubsole gives some tips for finding out

Don’t delay – ditch coal
Take action this month with the Coal Action Network. By Anne Harris

Utopia: Work less play more
A shorter working week would benefit everyone, writes Madeleine Ellis-Petersen

Mum’s Colombian mine protest comes to London
Anne Harris reports on one woman’s fight against a multinational coal giant