To report the death of capitalism is to exaggerate, to say the least, given we find ourselves subject to austerity measures as the global economy stumbles from one crisis to another in a little under 4 years. In the past capital has been likened to a vampire insofar as it is parasitic in its relation to labour. But it is no longer a suave count as capital is seemingly dead when it comes to the suffering of ordinary people. At the same time it is still capable of violent bursts of energy and it is mindlessly destructive in the pursuit of it's sustenance. So it seems appropriate to describe the current order as zombie capitalism, it requires a minimum of 3% compound growth in order to continue and that translates into a need for profitable investments of $1.5 trillion. In the future the system might demand even more, maybe $3 trillion in growth and we are struggling to find $1.5 trillion right now. One day the banking sector could be so big that it cannot be saved and we will be dragged into the abyss as it collapses. For us to gauge where we are today, and where we might be heading, it is important to remember the causes of the Crash of 2008.
|A Popular Capitalism?|
The structures of monopoly power was undermined, with the state-monopoly capitalism being displaced in the meantime as the system was opened up to fearsome international competition. Ultimately the intensity of global competition led to lower corporate profits in non-financial domains. The early signs of a hegemonic shift of power towards East Asia came as uneven geographical development and inter-territorial competition had become key factors in capitalist development. The most fluid and mobile form of capital was utilised to reallocate capital resources at a global level, which led to the deindustrialisation in traditional heartlands of industry whilst new forms of industrialisation and resource extraction began in emergent markets. The character of these new forms might be labelled appropriately as ultra-oppressive, for instance in the Congo around 4 million people have been killed for the extraction of coltan. The ultimate aim was to enhance the profitability of financial corporations, thus the need for new ways to absorb risks through the creation of fictitious capital markets.
|There is No such Thing as Society.|
The increase of sagging effective demand was accomplished by pushing the debt economy - in governmental, corporate and household spheres - to its limits. This became standard method in the West, so it should be no surprise that in the US the household debt relative to income doubled from 1982 to 2007. By 2007 the ratio of financial assets to GDP had doubled since the early 80s. Incidentally the household debt in the UK was around £1,560 billion in 2010 and may rise to £2,126 billion by 2015 as a result of the cuts. The compensation for anemic rates of return in production came in the construction of a whole series of asset market bubbles and culminated in the property bubble that burst around 2007. Each of these asset bubbles drew upon finance capital and were facilitated by extensive financial innovations, specifically derivatives. The control of assets and resources at the heart of international finance became central to the system in the last 30 years. We no longer make things, we just make money out of money.
|There is no Alternative.|
The pressure is on for the ruling class to crank out profitable investments for $1.5 trillion, so it can meet that minimum of 3% growth for the time being. The state's reaction to the crises has opened a door which we're being led through and we don't yet know what is on the other side, it is just a mysterious darkness to us right now. This is nothing new, with the Crash of 1929 came such an opening and we all know what happened in Europe as Germans were marched into the darkness. Then there was the crisis of 1973 in Britain as a result of the oil crisis, which led to the collapse of the Heath government then the pathetic reign of a weak Labour government and then the emergence in 1979 of Thatcherism. This is not cheap fear-mongering, it doesn't seem realistic that either of these will emerge but we have to keep in mind what is possible. We might take comfort in the fact that when the Americans were marched into the same abyss it was the New Deal which emerged and not National Socialism. But it is not necessarily the case that history is on our side.
|We're All in this Together.|