Will capitalism recover?

By Brian O’Boyle

Capitalism is currently in a crisis of epic proportions. Capitalist production is inherenetly unstable and cyclical downturns are part and parcel of the normal workings of the system. This crisis is, however, different.

The profits rates that drove the ‘Golden Age’ have long since disappeared and in its attempts to revive them, global capital has overseen a series of imbalances that will be prove long-lasting and difficult to escape. Of these, the most evident has been that between China and the USA, but no less significant has been the imbalance between wage labour and capital.

The shift to a neoliberal policy regime in the 1980’s helped to sustain the ‘for profit’ system on the back of increased exploitation. Liberalised capital markets paved the way for a reassertion of capital dominance, and this in turn increased the levels of absolute surplus-value extracted from the working class.

The increasing importance of financial markets emerged as a consequence of this, and short-run speculative profit making increased dramatically. This proved functional to the system as a whole, as cheap credit and a series of bubbles provided the income streams for workers to consume.

Throughout this period the USA became known as the ‘buyer of last resort’ as vast quantities of foreign produced goods made their way into the American market. Americans continually took advantage of easy credit to consume ‘beyond their means’.

On the flip-side, the Chinese working class consumed far less than it produced and overtime their ruling class amassed vast quantities of foreign exchange. A symbiotic relationship therefore emerged as both sides needed the other to continue a relationship that was ultimately unsustainable.

China is now under massive pressure to spend is reserves, and as it has pumped billions into the global economy there are signs that the worst of the immediate depression could be over. Be that as it may, there is still the structural difficulty to deal with and it is far from certain that the US can continue in its role as the world’s big consumer.

This brings us to our second problem.

Neoliberalism was always premised on increasing exploitation, and as Marx was quick to point out, this inevitably leads to problems of overproduction (or underconsumption).

The logic of competitiveness means that from the perspective of the individual capitalist, wages are always a cost to be minimized. However, if this process is generalised, the demand for goods and services quickly dries up. After all, who will buy the mass of products if not the workers?

Cheap credit provided a temporary fix, but the solution is now worse than the problem, as the example of the sub-prime market (made up of those people most exploited by financial capital) makes clear.

Will the system recover? All we can say is that there are serious structural difficulties to be contended with, and that if capitalism is to escape this crisis, it will only do so on the backs of working people.

Bourgeois commentators continually talk of recovery in the hope of improving confidence. Yet sentiments cannot buy commodities, and as long as there is a central contradiction between social production and private accumulation any recovery will only be temporary.

This brings me to my final point. Whatever else we may say, it is undeniable that short of a global catastrophe (such as another world war) the ‘Golden Age’ of capitalism will not be repeated. Profit rates have been falling for over thirty years and while this crisis may not be terminal, one just like it surely will be.