A summary of ‘How will capitalism end?’ By Wolfgang Streek, New Left Review, May/June 2014
This is a summary of a recent article by Wolfgang Streeck in the latest edition of the New Left Review. Here, Streeck sets out what I consider to be a very persuasive and coherent argument about capitalism’s future.
The New Left Review is a subscription journal to which I personally subscribe. This is why I offer this summary. I would also be willing to send the article to anyone who contacts me about this…
How will capitalism end?
Streeck argues that capitalism is now in a state of terminal demise. The symptoms of this ‘critical trend’ are three-fold and most manifest in its core Western ‘de-industrialised’ economies. They are: (1) Persistent and long-term decreasing growth rates; (2) Increasing and unsustainable levels of public and private debt; and (3) Unrelenting increases in inequality, reaching now historic levels.
Three symptoms of capitalism’s ‘critical trend’ in its core economies:
(1) Declining growth rates
(2) Ever-growing debt
(3) Ever-rising inequality
These three processes are, of course, interrelated and often mutually reinforcing. They are rendering capitalism in a situation in which it cannot keep its social promises of collective progress any longer. At the same time, all the ‘wisest’ sages in the land can offer no remedy for its moribund condition. Finally, Streeck argues that capitalism’s slow death has actually been caused by too much success. Drawing from the work of Karl Polanyi, Streeck argues that the combination of its outright Cold War political and ideological victory and the neo-liberal revolution has hugely eviscerated the previous social and political forces and institutions (trade unions, social movements, left-wing parties) that served to save capitalism from its in-built tendency to push beyond the limits of human, social, and environmental stability and sustainability. Thus, in the absence (or severe lack) of countervailing social resistance, this ‘spectacularly successful onslaught of markets’ is gorging on the life forces that makes capitalism’s very existence as a social system possible.
A mere stopgap
Streeck goes on to argue that the actions taken by Western governments to avert financial and economic collapse in 2008 were a mere stopgap, and, indeed, are setting the scene for a larger, more perilous crash. This view is shared even by capitalist elites themselves such as the Bank of International Settlements and the US Federal Reserve Chairman Ben Bernanke! Essentially, the world economy has been on a life-support machine of unlimited fiat money for several years now, fuelling asset bubbles in financial, commodity, and property markets, and any report or rumour of the central bankers removing this support provokes fear and disorder on global markets.
Capitalism’s and democracy’s messy divorce
Capital accumulation’s slowdown and stagnation leads it into unavoidable conflict with the ordinary working population who produce surplus-value – capital’s life-blood. Thus, unsurprisingly, what we see now is an increasingly strong-armed attempt to intensify the exploitation of people and nature. At the same time, the rise to political dominance of financial capital has also made a huge contribution to the denigration of democracy. Power over key economic policy areas and political decisions are withdrawn beyond the reach of democratic control, handed to ‘independent’ (read ex-banker) agencies and individuals and supranational undemocratic, executive bodies like the dreaded ‘Troika’ – the IMF, European Commission, and European Central Bank. At the same time, Western governments are increasing their activity in electronic surveillance of their own citizens, and clamping down harder on industrial action and political protest. Gradually, Western elites are re-developing a disdain for ‘egalitarian’ democracy and remembering their admiration for the efficiency of authoritarian regimes like China and Russia.
This is entirely unsurprisingly, since, for most of its history, capitalism has been democracy’s fiercest adversary, and they only really made what seems a temporary peace in the post-war era of the Keynesian social contract. This contract between capital and labour – shared prosperity for higher productivity – could have only lasted as long as corporate profits remained high. The continuous fall in profitability from the 1960s, hitting a nadir in the mid-1970s, heralded a counter-reaction in the form of neo-liberalism. It was Reagan and Thatcher who first violently tore up this social contract.
Five systemic disorders
Moving on, Streeck identifies five ‘disorders’ of the contemporary capitalist system. These are: (1) stagnation; (2) oligarchic redistribution; (3) the plundering of the public domain; (4) corruption; and (5) global anarchy.
Here, Streeck brings more evidence to bear here on how capitalist elites themselves are resigned to very low long-term growth rates. Unsurprisingly, he expects continued low growth (and profitability and, therefore, investment) to provoke ‘ever new ways…to exploit nature, extend and intensify working time, and encourage what the jargon calls creative finance, in a desperate efforts to keep profits up and capital accumulation going’. He notes that low growth will not provide states with the resources needed to appease populations and address social conflicts. With capital accumulation continually reliant on asset markets, the overall prognosis is one of ‘stagnation with a chance of bubbles’.
(2) Oligarchic distribution
The top-heavy financial sectors of many core economies will continue to generate a particularly regressive form of redistribution; in effect, ‘extraction of resources from increasingly impoverished, declining societies’.1
Streeck notes that, with their wealth generated increasingly on financial markets (and via transnational production networks, I would add), ‘plutonomic capitalists’ are caring ever less about their fellow citizens, evading taxes, and shifting their fortunes to safe havens overseas.
(3) Plunder of the public purse
Streeck identifies ‘underfunding’ and privatisation as the dominant mechanisms of public resource plunder. He outlines a historical shift since the 1970s from ‘tax state’ to ‘debt state’ and now on to ‘austerity state’. Regardless of endless evidence of corruption, incompetence, exorbitant cost, and waste, the privatisation game continues apace in the core economies and beyond.
Through this public plunder, Streeck highlights the exacerbation of one of the fundamental tensions of capitalist development described by Marx: on the one hand, you have a system of private ownership and accumulation of wealth in which individuals and corporations endeavour and lobby to minimise their public contributions and maximise what they can extract from the state, yet, on the other hand, their continued capital accumulation depends on the public goods – infrastructure, education, health, etc – that the state provides. This, for Streeck, is one key way in which capital’s triumphant victory is facilitating its ultimate demise.
Corruption scandals have grown in number and scale over recent decades, and Streeck attributes this both to the rise of finance – an industry in which the boundaries between legal and illegal, and corporate and political power are blurred or overlapping; and in which the rewards are immense and the punishments comparably minute – and a growing desperation to maintain profits.
Streeck argues that the case for an ethical capitalism lacks popular credibility: ‘public perceptions of capitalism are now deeply cynical, the whole system commonly perceived as a world of dirty tricks for ensuring the further enrichment of the already rich’. In short, capitalism ‘has become more than ever synonymous with corruption’.
(5) Global anarchy
In short, Streeck here identifies capitalism’s weakening centre as embodied by the US. US state power is weakening, it is militarily overstretched and almost universally reviled or distrusted, the dollar is under pressure, and this has destabilising effects in the global periphery too.
Streeck’s ultimate conclusion is that ‘capitalism, as a social order held together by a promise of boundless collective progress, is in a critical condition’. You’ve got stagnation, growing debt, and inequality. You’ve currently got the global financial system bubbling on a life-support machine of ‘unlimited synthetic liquidity’. You’ve got the gradual evisceration of democracy. You’ve got the traditional social and political institutions for constraining capitalism’s relentless march in a parlously weakened state.
Instead of more old-fashioned Marxist, modernist views of the only possible death of capitalism as murder by revolutionary proletarian social forces, Streeck here ultimately proposes almost capitalism’s suicide by excess – death after a ‘long and painful period of cumulative decay’.
As I say, I found Streeck’s argument persuasive enough to summarise it here. I understand that the focus of his attention here is on the state of the capitalist system itself. Yet, I think that the necessary complement to this piece would be a sociological overview of counter-hegemonic social and political forces. Though I agree they have been greatly undermined in recent decades, we are undoubtedly experiencing a gradual revival at all levels – from the international to the local. If capitalism remains a weak, wounded animal, flailing around for enemies to repress and blood to suck, this will undoubtedly provoke greater social response and organisation. In short, the future for capitalism will be determined, as ever, by the conflict between threatened elites and angered and disillusioned working people with ever less to lose.