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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 2004

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


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