Is Capitalism Crumbling?

Leftwingers are calling for the nationalisation of the banks. They may get their way. And then?

The severe economic crisis has dominated newspaper headlines – day after day for at least the past six months – like no other story in recent history. The massive layoffs, losses and bankruptcies have grown as familiar as the daily death-count in Iraq and Afghanistan. The ranks of the unemployed are overflowing and no job seems secure.

Not only is the situation spinning out of control, but workers are being reminded how little control they have over their lives. Their own futures are in the hands of business leaders and politicians, who themselves can do nothing more than follow the inhuman impulses of capital.

One bright spot, however, is the market for solution-peddlers and doom-prophesiers, which is booming. On the one hand, there are the experts claiming to know the secret for getting capitalism back on its feet and curing the system of its manic-depressive tendencies; while on the other hand, there is the minority that views the crisis as the beginning of the final collapse of capitalism.

The pages of this magazine, in contrast to that commotion, might seem calm, or even complacent. As in the quieter days before the crisis, we continue to advocate socialism in much the same tone and with the same arguments. Some readers might be wondering how this crisis affects socialists and how we are responding to it. How do we differ from those offering to solve the crisis or from those who say we are witnessing the end of capitalism?

Reformist solutions

As workers, socialists do not necessarily relish an economic crisis, as we face unemployment or wage cuts like everyone else. Being a socialist does not equip a person with a protective force-field to block the harmful consequences of capitalism. There’s no question that the working class, including socialists, will suffer the most from this crisis.

It is in this atmosphere of anxiety that reformists of all kinds step up to offer sure-fire ways to relieve capitalism of its hangover and keep it sober forever more. Most on the Left remain confident that greater intervention and regulation on the part of the state will pretty much do the trick, pointing to how well it apparently worked back in the 1930s. That is certainly debatable, but these ideas will probably be tested by reality soon enough. Even if such measures are more or less effective, the crisis still may drag on for several years – although no one is really in a position to make clear predictions.

The clear aim of reformists is to get capitalism back on its feet again, yet many on the Left like to spice up their own Keynesian reformism with revolutionary rhetoric. They are able to get away with this thanks to the widespread misconception that any involvement by the state in the economy is “socialistic.”

The more imaginative reformists have viewed bank nationalization, for instance, as an integral part of measures to both overcome the crisis and put in place a new system of socialist production – rather than being a temporary measure to prop up the crumbling financial system. Their brand of “socialism” may be very attractive as it offers something for everyone, but they are in fact peddling a form of state capitalism under a false label.

Take the Socialist Equality Party in the US, for instance, which back in September, at the time of the collapse of Lehman Brothers, confidently issued the following demand as part of a “socialist program”:

“The entire financial system must be taken out of private hands and nationalized in the form of a public utility under the democratic control of the working class, with provisions taken to safeguard the holdings of small depositors and share-holders. It must be subordinated to the social needs of the people and dedicated to developing and expanding the productive forces in order to eliminate poverty and unemployment and vastly improve the living standards and cultural level of the entire population.” (“The Wall Street Crisis and the Failure of American Capitalism”)

The author, Barry Grey, presents this demand as one part of a “socialist program that places the needs of the people before the profits and personal fortunes of the ruling elite,” necessary because “there is no solution within the framework of the profit system” to the “crisis of the American economic and political system.” So we can only suppose his nationalized financial system is operating in a “socialist” society (or a society that follows a “socialist program”).

But with socialism like this, who needs capitalism! There will still be a financial system, so one would have to assume that goods are paid for with money and thus produced for the market. There would be no need for any of that in a society where things are produced to directly meet people’s needs, as democratically determined by them. It may sound nice to say that the financial system will take the “form of a public utility under the democratic control of the working class” and be “subordinated to the social needs of the people”, but what would that mean in practice? (Even that “socialist program” sounds a bit dodgy, with its promise to “place the needs of the people before the profits and personal fortunes of the ruling elite,” as it assumes the continued existence of a wealthy ruling elite.)

Perhaps we should compliment the Socialist Equality Party for being “ahead of the curve” on this nationalization issue, as any good “vanguard party” should be, now that many capitalist governments are thinking about implementing that measure. And we might compliment them further if bank nationalization succeeds in stabilizing the financial system. But this organization and so many like it deserve our contempt for dressing up reformist measures to look revolutionary. Their sweet-sounding promises only block the path to revolution by utterly distorting the meaning of socialism.

A collapsing theory

On the other extreme from the reformists, or at least it would seem, are those who argue the final collapse of capitalism has begun and that efforts to prop up the system are doomed to fail.

The reasons given for this inevitable collapse vary quite a bit, however. Some argue, as many Marxists did back in the 1930s, that it is the result of capitalism’s internal contradictions, such as the tendency towards a declining rate of profit. But many more, including the adherents of peak oil theory, view the collapse as the result of capitalism colliding with some outside force that prevents the further accumulation and expansion that is the lifeblood of the system. 

Not only are there a myriad of reasons offered to explain the inevitable collapse, but there are starkly different conclusions reached about what will replace capitalism. There are those who see the collapse as radicalising the population and bringing workers around to a revolutionary standpoint; while others depict a prolonged period of social anarchy or even a return to a pre-industrial life, and advise people to head to the hills after stocking up on gold, guns and vegetable seeds.

Regardless of those particular differences, however, the idea of an inevitable collapse of capitalism clearly implies that a great historical change could take place regardless of our actions. Instead of socialism replacing capitalism, based on the conscious decisions and actions of workers, we would have capitalism ending at some point, and that collapse then stimulating a great social change – for better or worse.

One might wonder, though, what sort of society would exist in the interim, however brief it might be, between the collapse of the old and the emergence of the new. It would be “non-capitalist,” one would assume, but what would be the dividing line between the two? Is it possible for a society to not be capitalist, but still not be anything else either?

The reason for much of the confusion among the “catastrophists,” as they are sometimes called, is that – just like the reformists who confuse nationalization with socialism – they do not have a clear understanding of what capitalism is, exactly. That is to say, instead of understanding capitalism on the most essential level, as a system of commodity production in the pursuit of profit, they get caught up in the various forms of capitalism, and imagine that some are more capitalistic than others.

It is certainly true that forms of capitalism or particular governments can collapse, but this should not be viewed as the collapse of capitalism itself. There are many examples of collapses to choose from, most notably the fall of the Weimer government in Germany that was followed by a fascist regime. For over a decade, Germany went through economic crisis, political upheaval, and a catastrophic war. With no exaggeration, one can speak of that period as a collapse of civilization. Yet throughout it all the capitalist system remained intact.

It is easier to speak of the “collapse of capitalism” if a person has no clear idea of what capitalism means. And if its meaning is unclear, then the understanding of socialism will also be a muddle (just like those reformists who mistake state capitalism for socialism). It is important, therefore, to distinguish between an economic or political collapse, and the end of capitalism itself, which only workers can bring about by replacing it with socialism.

Optimism in depression

The criticism of those two tendencies might lead some to believe that we offer no solution to the crisis, or that we ignore the objective factors of reality and overemphasize the subjective ones.

We do in fact have a solution to this crisis and to economic crisis in general. But our approach to the problem is similar to how we approach other problems, such as the destruction of the environment or war, in that we do not propose a separate solution for each problem. This isn’t because we are indifferent to the problems, but because we recognize the relation between individual problems and the capitalist system.

In a sense, to solve one problem requires the solution of all of them. The fundamental solution to the problem of crisis, for instance, requires the introduction of a new system of production and consumption no longer mediated by the market, where there would no longer be any basis for crises. In other words, socialism is the solution to this particular crisis and the problem of crisis itself, along with every other social problem that is specific to capitalism.

As for objective versus subjective elements, we would certainly recognize that the objective reality of the crisis will have an impact on how people view capitalism. This new situation may create a more favourable environment for explaining socialism.

Already, in the past six months, there has been a tremendous shift in “public opinion”, so that now it is almost fashionable to rebuke bankers for their greed and ignorance. There is no question that more people than ever are wondering whether capitalism is indeed the best of all possible worlds.

Of course, even while the changing reality has stimulated thought and debate, the conclusions people are reaching vary. Many see the crisis as the bankruptcy of “neo-liberalism”, rather than capitalism itself, while the religious minded might even say it is punishment from God. No matter how much the objective reality may influence ideas and test theories, it will not directly deposit the concept of socialism in a person’s mind.

So we still have the task of explaining socialism, and it is more important than ever as workers suffer under the crisis. That explanation, as always, is based on the recognition of the fundamental contradictions and limitations of capitalism, and the realization that this (obsolete) system cannot be reformed beyond a certain point. It is during a crisis that those contradictions and limitations are most evident. Marx describes how the “contradictions and antagonisms of bourgeois production are strikingly revealed” during a crisis of the world market, which is a moment when there is a “real concentration and forcible adjustment” of those contradictions (Theories of Surplus Value).

With the problems so plain to see, and the limitations of capitalism so palpable, the explanation of socialism as the solution may very well begin to seem more concrete and practical – and urgent – than before.


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