Capitalism Finished (In 30 Years)

Are we in a global recession or is it much more serious: a global depression?  Are we in a cyclical trough in the business cycle, or is something more profound - systemic - taking place?  These are questions that preoccupy the American sociologist and systems thinker Immanuel Wallerstein. Wallerstein, who is a Senior Research Scholar at Yale, was in Madrid recently speaking to a packed auditorium at the City University.  His appearance in Madrid was reported on by Ralf Streck in Telepolis.

Wallerstein takes the long view and looks at trends in 50-100-year cycles. For the past 300 years the world capitalist economy has been subjected to two major cycles. The first are the so-called Kondratieff cycles that historically were 50-60 years in length. And the other are the hegemonic cycles that are much longer in length. The United States began its rise as a hegemonic power in 1873 and reached full hegemonic dominance in 1945.  Since then it has been in a slow, inexorable decline and will continue to lose power to what Wallerstein calls the "semi-periphery" zone ( China, Brazil, India).  Since 1967-73 the world has been in a Kondratieff "B-Phase" characterized by declining profit rates from productive activities. In order to maintain higher profits productive activities have shifted from "Core" economies (industrialized West) to the periphery, trading lower transactions costs for lower labor costs.  Hence the collapse of Detroit and Essen and the expansion of manufacturing in China and India. But there is a ceiling on profits in this model, so capitalists resort to financial speculation to optimize returns - creating speculative bubbles. All bubbles eventually burst, and we are currently witnessing the simultaneous bursting of the financial derivatives, real estate and energy bubbles.

But won't the cycle begin anew with new innovations as in the past?  Wallerstein is skeptical, since the three basic components of capitalist production -- personnel, inputs, and taxation -- have steadily risen as a percentage of possible sales price, such that today they make it impossible to obtain the large profits from quasi-monopolized production that have always been the basis of significant capital accumulation. What comes after this prolonged period of depression? Wallerstein doesn't know, as he says in an interview with the Spanish daily Público.  When asked if capitalism would survive Wallerstein replies:

Definitivamente, no. Las posibilidades de acumulación del sistema han tocado techo. Podemos estar seguros de que en 30 años ya no viviremos bajo el sistema-mundo capitalista. Pero, ¿en qué sistema viviremos entonces? Podría ser un sistema mucho mejor o mucho peor. Todas las posibilidades están abiertas. La solución la encontraremos cuando se resuelva el conflicto entre lo que yo denomino el espíritu de Davos y el espíritu de Porto Alegre. Ahora bien, si no se afronta políticamente la cuestión del fin del capitalismo, es posible que lo que surja sea aún más extremo que el sistema actual, que en mi opinión es tremendamente injusto. (Definitely not. The potential accumulation of the system has reached its limits. We can be sure that in 30 years no longer live under the capitalist world system. But what system will we live in then? It could be a much better or much worse. All possibilities are open. The solution will be found when resolving the conflict between what I call the spirit of Davos and the spirit of Porto Alegre. However, if you are not facing the question of the political order of capitalism, it is possible that what emerges is even more extreme than the current system, which I think is terribly unfair.)

So, we are at a crossroads in the new global depression. Capitalism has run its course, and the politcial turbulence, if not total chaos, is our future. Will the world choose the path of Davos - i.e. a technocratic elite who hangs on to power with a new authoritarian world order?  Or is Porto Alegre and the World Social Forum the path for the future, a more egalitarian future as outlined in the Porto Alegre Manifesto (Wallerstein is one of 19 signatories)?

Why should we care what Immanuel Wallerstein thinks?  In addition to predicting this current global depression, Professor Wallenstin predicted the demise of the Soviet Union back in the 1970s, long before Ronald Reagan appeared on the scene.  And for the past decade he has endured the scorn or pundits for writing about the decline of American hegemony - something acknowledged today by all but the most delusional neo-conservatives.

Comments

[hattie]

The problem is that there is nowhere to run to. We live in a hegemonic system that has driven out its rivals and is now, itself, collapsing.

[David]

For some time I thought the authoritarian "command-capitalist" model of China or Putin's Russia would emerge as dominant successor system. But they are too reliant on American and EU consumption and are rapidly declining, leading to civil unrest.

We are entering a period of global political turmoil. What will emerge from the chaos?

[Clifford Vickrey]

I disagree with David's opinion that "managerialism," the model of capitalist authoritarianism he refers to, is in any way appealing or the wave of the future. The strength of both the Chinese and Russian economies has, even before the crisis, been overrated in the American press. Because we live with the unpleasant realities of our own system, and see only the meteoric growth figures in China and seemingly-implacable national unity, we tend to idealize alternative political systems. In much the same way, the entire political spectrum (mainstream Right included) praised the Soviet Union in the 1930s. In the eighties an entire literature on Japan's eclipse of the West emerged, when really Japan's growth in the 1980s was speculative.

Russia and China will not overtake Western styles of political economy because,

First, capitalist development, as Marx noted long ago, rests not only on objective development (factories and railroads) but also subjective development (the emergence of human capital). Bureaucratization and nationalist hysteria hinders the subjective side of development. Without norms of individual autonomy, the quality of economic elites in both countries will leave something to be desired.

Second, the bureaucratic elites in both countries engage in more infighting than the West sees. In China, every governmental succession is accompanied by arrests; half the country's budget goes to incompetent/corrupt regional administrations as China devolves into competing economic zones. In Russia, the Putinization of natural resources has proven grossly-inefficient. As it turns out, the more far-seeing oligarchs (like Khodovkorsky, sp?) were better captains of industry than the Kremlin siloviki.

Third, both countries' economic figures are inflated by the fact that they're developing. China is still undergoing the process of urbanization and industrialization seen in the West a century ago; it is largely, of course, a nation of peasants. It is very easy for an illiberal regime to develop an economy during this phase. In Russia, they're still recovering from the disasters of the Soviet and Yeltsin years, the latter of which is statistically the worst economic depression in recorded history. America's GDP during the FDR administration grew at meteoric (double-digit) rates, but such is the nature of economic recovery: it did not mean that people during the Depression were eating caviar.

That many consider these horrible regimes attractive proves the bankruptcy of neoliberal capitalism, and incompetent Western governments. Will socialism, which before the Soviet Union represented the best that European party politics had to offer--with such luminaries as Martov, Bernstein and Jaurès--make a comeback?

[mietwagen]

Sehr gute Seite. Ich habe es zu den Favoriten.