Since we wrote the article ‘Are we reliving a crash like 1929?', the media has already changed its tone, no longer playing down the extreme gravity of the present economic crisis or its similarities with 1929. But it is important to put all the current talk about ‘the end of capitalism' into a clear perspective.
As the world's media documented the global financial crisis the IMF issued a report using less sensational language, but admitting the same recession. "The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s." The IMF also knew that the future is looking difficult: "The situation is exceptionally uncertain and subject to considerable downside risks."
Recent headlines have been more succinct when they have proclaimed the ‘disaster', ‘hurricane', ‘tsunami' or ‘tectonic shifts' that capitalism faces. Markets are in ‘turmoil', ‘meltdown' or ‘mayhem'. A head of an equities trading firm described a "horrendous, cataclysmic end-of-the-world environment." A broker said "Nothing will be like it was before" as "The world as we know it is going down." Some drew back from announcing Armageddon, but the French Prime Minister said the world was at least on the edge of the abyss. ‘Abyss' conjures up visions of the bottomless pit, primal chaos and catastrophe. For the religious, it can mean hell.
For once politicians and media were telling a sort of truth. They mostly don't think that we're going to have an exact replica of the Depression of the 1930s, but admit that capitalism's crisis will not be limited to the finance sector, and will go on to have its impact on industry, trade, jobs and all our lives. It will, as they say in the US, go from Wall Street to Main Street.
It is the end of an era, but not in the way they say
There has been a lot of propaganda surrounding this latest lurch in the crisis. With the massive intervention of the state around the world the demise of ‘neoliberalism' has been proclaimed by the Right and Left. Conservative Shadow Chancellor, George Osborne, thought "laissez faire is dead". The Socialist Workers Party celebrated the end of Reaganomics and Thatcherism as "free market capitalism has imploded and "history sweeps away a failed ideology". Francis Fukuyama (who once declared that history was dead) even thought that "the Reagan era should have ended some time ago".
What these remarks have in common is an idea that somehow the state has played a lesser role during the last 30 years, only re-asserting itself in this time of crisis. In reality the economic crisis is a crisis of state capitalism, within which ‘neoliberalism' was a particular ideology (supported by the Right and attacked by the Left with its own variety of state capitalist ideology). It was precisely because of the experience of the 1929 Crash that the already growing role of the state was accelerated. Official figures show that the US federal government was 3 percent of the economy in 1929, as opposed to 20 percent today - and that's not even beginning to account for all the areas of control that the 50 individual states and state bodies like the Federal Reserve have throughout the economy.
This is one of the essential lessons from capitalism's crisis over the last year. The bankruptcy of capitalism can't be hidden. The state has had to come up with plans to rescue banks, insurance companies, currencies and money markets. It has not acted to help out the working class in any way whatsoever. Also, the extent of the debt that was holding back a ‘crash' was only possible through the sustained intervention of the state and international economic bodies such as the World Bank and the IMF. With the massive injection of funds into the financial sector there will be even more likelihood of attacks on the living standards of the vast majority of the world's population, in a lethal combination of recession, growing inflation and unemployment, and government cuts.
It is the end of an era because material reality has shown the degree to which the economic crisis can get out of control. It has also demonstrated that capitalism is utterly reliant on the state. Most of those who set themselves up as opponents of ‘neo-liberalism' were supporters of the ‘protective' powers of the state. It's even clearer now that the state is there only to protect capitalism.
Watershed for capitalism
Lies are exposed by material reality. The so-called ‘celtic tiger' of the Irish economy has, in the face of the storm, gone the same way as the rest. India's ‘emerging' economy is not in such great shakes either as many sectors are already being impacted by the extent of the crisis. With the development of a recession China will suffer a sever contraction of the markets where it hopes to sell its goods.
More importantly it shows that capitalism is a global system. There's been a lot of talk about greedy bankers and the need for more regulation, but there's a general admission that we've been witnessing something that is ‘systemic', that is, it's a crisis of a world system.
Billionaire financier George Soros, looking at the economic policies pursued in recent decades said in a television interview that "This whole enormous construct is built on false conceptions," adding "You can go a very long way. But in the end, reality rears its ugly head and that's what happened now."  It rears its ugly head, and then reality bites.
Robert Zoellick the President of the World Bank said that the crisis was a "man-made catastrophe" that would have real consequences for real people. He warned that "For the poor, the costs of the crisis could be lifelong," and for "The poorest and most vulnerable groups risk the most serious - and in some cases permanent damage". This is why he thought that "populations around the world will respond with anger and fear."
That is indeed the prospect that the latest stage in the crisis opens up. It should be compared with what happened after the fall of the Berlin Wall.
2007-08 in comparison to 1989-91
The wall came down in 1989. The countries of eastern Europe broke away from the USSR, which itself broke up into 15 parts in 1991. People like Fukuyama talked about the end of history, the end of communism, the end of the class struggle. What existed in eastern Europe was a particular stalinist form of state capitalism, and, history, as has unsurprisingly been revealed, had not come to an end. However, the working class was just a bystander while great events occurred, and the bourgeoisie conducted a whole campaign which put over the idea of a world in which there is no working class, just workers who are citizens like any others. This was one of the factors that led to disorientation in the working class throughout the 1990s.
But what about the crisis of 2007- 2008? How do Fukuyama and co respond to the bite of reality?
Fukuyama (in an article entitled "The Fall of America, Inc.") admits that "The scale of the Wall Street crackup could scarcely be more gargantuan" and thought that "Washington failed to adequately regulate the financial sector and allowed it to do tremendous harm to the rest of the society." Accordingly "there is a growing consensus on the need to re-regulate many parts of the economy" and "The entire American public sector-underfunded, deprofessionalized and demoralized-needs to be rebuilt and be given a new sense of pride. There are certain jobs that only the government can fulfil." In the end he thinks that what was wrong with the centrally planned economies of eastern Europe was that they were "welfare states on steroids". For him "a certain vision of capitalism has collapsed" and all that the American model of capitalism has to do is "reinvent itself once again". So, after all that, all that was wrong with the economies of eastern Europe was the "steroids."
In the 1990s, with the collapse of the USSR, there were many in the West who behaved as though they had achieved a great victory, not only over the Russian bloc, but also over the working class. The crisis of 2007-08 shows the working class what that ‘victory of capitalism' actually amounted to. It's true that the economic crises of the past have not always led to mass strikes or revolution. The example of the 1930s is there for all to see. But today's open crisis, in its depth and obviously global nature, is a material reality that it will surely not be possible to ignore, or to disguise.
There was no end of ‘history', or end to the class struggle, as the ideologues of the 1990s claimed. But also, today, we are not witnessing the ‘end of capitalism'. Ruling classes across the world have looked into the abyss, seen catastrophe, and despite all manner of imperialist antagonisms, co-ordinated a response. There will be further massive attacks on the working class, continuing the offensive on wages, jobs, services, pensions etc. That's the only perspective that capitalism has, and if there is no resistance to it, capitalism will drag humanity not only towards the abyss of poverty but towards outright self-destruction. The only alternative can come from the working class in its struggles. These are limited at present, but have been slowly developing over the last five years. In the period to come workers will feel even more intensely the effects of capitalism's crisis, but, with some of the illusions from both Right and Left discredited, there is more possibility that not only workers' struggles but workers' consciousness of capitalism will grow. This will be at the basis of the mass strikes to come. Growing consciousness of the reality of capitalism also helps the understanding that it has to be overthrown by the revolution of the working class.
 Financial Times 8/10/8
 Baltimore Sun 14/10/8
 Spiegel Online 10/10/8
 Daily Telegraph 13/10/8
 Socialist Worker 11/10/8
 Newsweek 13/10/8
 Daily Telegraph 13/10/8
 Daily Telegraph 13/10/8
 Newsweek 13/10/8