The Decadence of Capitalism (xi): 40 years of open crisis show that capitalism's decline is terminal

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While the post war-boom led many to conclude that marxism was obsolete, that capitalism had discovered the secret of eternal youth,1 and that the working class was no longer a force for revolutionary change, a small minority of revolutionaries, very often working in conditions of almost complete isolation, remained loyal to the fundamental tenets of marxism. One of the most important of these was Paul Mattick in the USA. Mattick responded to Marcuse’s search for a new revolutionary subject by publishing Critique of Marcuse, one dimensional man in class society (1972), which reaffirmed the potential of the working class to overthrow capitalism. But his most lasting contribution was probably Marx and Keynes, the limits of the mixed economy, first published in 1969 but based on studies and essays from the 1950s onwards.

Although by the end of the 1960s the first signs of a renewed phase of open economic crisis were becoming visible (for example in the devaluation of the pound sterling in 1967), to argue that capitalism was still a system mined by a deep, structural crisis was very much to swim against the stream. But here was Mattick, more than 30 years after his major work “The permanent crisis” had summarised and developed Henryk Grossman’s theory of capitalist breakdown2, still insisting that capitalism remained a regressive social system, that the underlying contradictions in the accumulation process had not been conjured away and were fated to return to the surface. Focusing on the bourgeoisie’s use of the state to regulate the process of accumulation, whether in the Keynesian “mixed economy” form favoured in the west, or the Stalinist version in the east, he showed that the obligation to interfere with the workings of the law of value was not a sign of the system overcoming its contradictions (as Cardan, for example, had argued, particularly in Modern capitalism and revolution) but was precisely an expression of its decay:

Notwithstanding the long duration of rather ‘prosperous’ conditions in the industrially-advanced countries, there is no ground for the assumption that capital production has overcome its inherent contradictions through state intervention in the economy. The interventions themselves point to the persistence of the crisis of capital production, and the growth of government-determined production is a sure sign of the continuing decay of the private-enterprise economy [...] The Keynesian solution will stand exposed as a pseudo-solution, capable of postponing but not preventing the contradictory course of capital accumulation as predicted by Marx3

Thus Mattick maintained that “capitalism has ceased to be a socially progressive system of production and has become – notwithstanding all superficial appearances to the contrary – a regressive and destructive one.4 Thus at the opening of chapter 19, “The imperialist imperative”, Mattick affirms that the drive to war cannot be done away with by capital because it is a logical result of blockages in the process of accumulation. But while “waste production by way of war might bring about structural changes of world economy and shifts of political power conducive to a new period of capital expansion for the victorious capitalist powers”, he quickly adds that the bourgeoisie should not be too reassured by this: “this kind of optimism cannot prevail in view of the destructiveness of modern warfare which may well include the use of atomic weapons.”5 But for capitalism “the recognition that war may be suicide, which is by no means unanimous, does not affect the drift towards a new world war.”6 The perspective announced in the last sentence of the book, therefore, remains the one which revolutionaries had put forward at the time of the First World War: “socialism or barbarism”.

There are however some flaws in Mattick’s analysis of capitalist decadence in Marx and Keynes. On the one hand he sees the tendency to distort the law of value as an expression of decline; on the other hand, he claims that the fully statified countries of the eastern bloc were no longer subject to the law of value and thus to the tendency towards crises. He even argues that, from the point of view of private capital, these regimes “may be described as state-socialism simply because it centralises capital in the hands of the state”,7 even if from the point of view of the working class, it has to described as state capitalism. In any case, “the state capitalist system does not suffer that particular contradiction between profitable and non-profitable production which plagues private-property capitalism...the state capitalist system may produce profitably and non-profitably without facing stagnation.8 He develops the idea that the Stalinist states in some sense constitute a different system, profoundly antagonistic to western forms of capitalism – and it is here that he seems to find the driving force behind the Cold War, since he writes that imperialism today “differs from the imperialism and colonialism of laisser faire capitalism because capital competes for more than just raw-material sources, privileged markets, and capital exports; it also fights for its very life as a private-property system against new forms of capital production which are no longer subject to economic value relations and the competitive market mechanism.9 This interpretation goes along with Mattick’s argument that the eastern bloc countries do not, strictly speaking, have their own imperialist dynamic.

The group Internationalism in the US, which later became a section of the ICC, noticed this flaw, in the article it published in Internationalism n 2 in the early 70s, “State capitalism and the law of value, a response to Marx and Keynes”. The article showed that Mattick’s analyses of the Stalinist regimes serves to undermine the concept of decadence which he defends elsewhere: for if state socialism is not subject to crises; if it is indeed, as Mattick also argues, more favourable to cybernation and the development of the productive forces; if the Stalinist system is not pushed to follow its imperialist drives, then the material foundations for the communist revolution begin to disappear and the historic alternative posed by the epoch of decline has also been obscured:

Mattick’s use of the term state capitalism, then, is misnomer. State capitalism or ‘state socialism’, as Mattick describes it, as an exploitative but non-capitalist mode of production, bears a startling resemblance to Bruno Rizzi’s and Max Schachtman’s description of ‘bureaucratic collectivism’, worked out in the years preceding the Second World War. The economic breakdown of capitalism, of the mode of production based on the law of value, which Mattick argues is inevitable, leads not to the historical alternatives, socialism or barbarism, but to the alternative socialism or barbarism or ‘state socialism’.”

Reality has come down on the side of Internationalism’s article. It’s true that the crisis in the east did not generally take the same form as in the west. In general it manifested itself in underproduction rather than overproduction, certainly regarding consumer goods. But the inflation which ravaged these economies for decades, and which was often the spark for major workers’ struggles, was one sign that the bureaucracy had by no means conjured away the effects of the law of value. Above all, the collapse of the entire eastern bloc at the end of the 80s, however much it also reflected an impasse at the military and social level, was also the “revenge” of the law of value on regimes which had indeed tried to circumvent it. In this sense, just like Keynesianism, Stalinism revealed itself a “pseudo-solution capable of postponing but not preventing the contradictory course of capital accumulation.”10

Mattick had been steeled by the direct experience of the German revolution and by the defence of class positions against the triumphant counter-revolution of the 30s and 40s. Another “survivor” of the communist left, Marc Chirik, had also maintained his militancy in a period of reaction and imperialist war. He had been a key member of the Gauche Communiste de France whose contribution we looked at in the previous article. During the 1950s he was in Venezuela and temporarily cut off from organised activity. But in the early 60s he started to gather a circle of young comrades around him, forming the group Internacionalismo which based itself on the same principles as the GCF, including of course the notion of the decadence of capitalism. But whereas the latter group had struggled to hold out in a dark period for the workers’ movement, the Venezuelan group expressed something stirring within the consciousness of the world working class. It was able to recognise with startling clarity that the financial difficulties beginning to gnaw away at the apparently healthy body of capitalism actually signified a new plunge into crisis, which would be met by an undefeated generation of the working class. As it wrote in January 1968: "We are not prophets, nor can we claim to predict when and how events will unfold in the future. But of one thing are conscious and certain: the process in which capitalism is plunged today cannot be stopped and it leads directly to the crisis. And we are equally certain that the inverse process of developing class combativity which we are witnessing today will lead the working class to a bloody and direct struggle for the destruction of the bourgeois state". This group was one of the most lucid in interpreting the massive social movements in France in May of that year and Italy and elsewhere the following year as marking the end of the counter-revolution.

For Internacionalismo, these class movements were a response of the proletariat to the first effects of the world economic crisis, which had already produced a rise in unemployment and attempts to control wage rises. For others this was a mechanical application of outdated marxism: what May ‘68 showed above all was the proletariat’s direct revolt against the alienation of a fully functioning capitalist society. This was the view of the Situationists who dismissed the attempts to connect crisis and class struggle to the work of dinosaur-like sects. "As for the debris of the old non-Trotskyist ultra-leftism, they needed at least a major economic crisis. They subordinated any revolutionary movement to its return, and so saw nothing coming. Now that they have recognized a revolutionary crisis in May, they have to prove that this ‘invisible’ economic crisis was there in the spring of 68. Without any fear of being ridiculed, they are working at it now, producing schemas on the rise in unemployment and inflation. So for them, the economic crisis is no longer that terribly visible objective reality that was lived so hardly in 1929, but a son of eucharistic presence that supports their religion."11 In reality, as we have just seen, Internacionalismo’s view of the relationship between crisis and class struggle had not been doctored in retrospect: on the contrary, their faithfulness to the marxist method had enabled them to envisage, on the basis of a few unspectacular portents, the outbreak of movements like May68. The rather more noticeable deepening of the economic crisis after 1973 soon made it clear that it was the SI – who had more or less adopted Cardan’s theory of a capitalism that had overcome its economic contradictions –which was tied to a period in capitalism’s life that was now definitively over.

The hypothesis that May ‘68 reflected a profound resurgence of the working class was further strengthened by the international proliferation of groups and circles seeking to develop an authentically revolutionary critique of capitalism. Naturally, after such a long period of retreat, this new proletarian political movement was extremely heterogeneous and inexperienced. Reacting against the horrors of Stalinism, there was often a suspicion of the very notion of political organisation, a visceral reaction against anything that smacked of “Leninism” or the perceived rigidity of marxism. Some of these new groups lost themselves in frenetic activism which, lacking any long-term analysis, did not long survive the end of the first wave of international struggles begun in 1968. Others did not deny that there was a link between workers’ struggles and the crisis, but saw it from an entirely different standpoint: workers’ militancy had essentially produced the crisis by raising unrestrained wage demands and refusing to knuckle down to capitalist plans for restructuring. This view was put forward by the Groupe de Liaison pour l’Action des Travailleurs in France (one of Socialisme ou Barbarie’s many offshoots), and in particular by the workers’ autonomy current in Italy, which saw “traditional” marxism as hopelessly “objectivist” (we will come back to this in another article) in its understanding of the relationship between crisis and class struggle.

However, this new generation was also rediscovering the work of the communist left and an engagement with the theory of decadence was part of this process. Marc Chirik and some of the younger comrades from Internacialismo group had come to France and, in the heat of the 1968 events, helped to form the first nucleus of the group Révolution Internationale. From its inception, RI placed the conception of decadence at the heart of its political approach, and was able to convince a number of councilist and libertarian groups and individuals that their opposition to the unions, national liberation and capitalist democracy could only be properly understood and defended on the basis of a more coherent historical framework. The early issues of the journal Révolution Internationale saw the publication of a series on “The Decadence of Capitalism” which was later to be published as the first pamphlet of the International Communist Current. This text is available online12 and still contains the essential foundations of the ICC’s political method, above all in its broad historical sweep which goes from primitive communism through the various class societies before capitalism before examining the rise and decline of capitalism itself. As with the current series, basing itself on Marx’s notion of “epochs of social revolution”, it draws out some of the key elements and common characteristics of all class societies in periods when they have become a barrier to the development of mankind’s productive powers: intensification of wars between factions of the ruling class, growing role of the state, decomposition of ideological justifications, growing struggles of oppressed and exploited classes. Applying this general approach to the specifics of capitalist society, it attempts to show how capitalism since the beginning of the 20th century has in turn gone from being a “form of development” to a “fetter” on the productive forces, pointing to the phenomenon of world wars and numerous other imperialist conflicts, the revolutionary struggles that broke out in 1917, the enormous growth in the role of the state and the incredible waste of human labour through the development of the war economy and other forms of unproductive expenditure.

This general outlook, presented at a time when the first signs of a new economic crisis were becoming more than apparent, convinced a number of groups in other countries that a theory of decadence was an essential starting point for left communist positions. It was not only at the centre of the ICC’s platform but was also taken on board by other tendencies such as Revolutionary Perspectives and subsequently the Communist Workers Organisation in Britain. There were significant disagreements on the causes of capitalist decadence: the ICC pamphlet adopted Rosa Luxemburg’s analysis, broadly speaking, although its explanation of the post-war boom (seeing the reconstruction of war-shattered economies as a kind of new market) was later to be disputed within the ICC, and there have always been other views on economic questions in the ICC, in particular, comrades who favoured the Grossman-Mattick theory, which was also taken up by the CWO and others. But at this point in the re-emergence of the revolutionary movement, the “theory of decadence” seemed to be making significant gains.

Balance sheet of a moribund system

Our survey of the successive efforts of revolutionaries to understand the decline of capitalism has now reached the 1970s and 80s. But before looking at the developments – and the numerous regressions – that have taken place at the theoretical level since those decades and the present day, it seems useful to recall and update the balance sheet we drew in the first article in this series13, particularly at the economic level where there have been some dramatic developments since early 2008 when the first article appeared.

1. At the economic level

In the 70s and 80s the international class struggle went through a series of advances and retreats, but the economic crisis advanced inexorably, undermining the thesis of the autonomists that workers’ struggles themselves were the root cause of capitalism’s economic difficulties. The depression of the thirties, which coincided with a major historical defeat for the working class, had already provided a strong argument against the autonomists; and the visible evolution of the economic debacle even in times of retreat by the working class, such as we saw intermittently in the mid-70s and early 80s, and in a more sustained and profound way during the 1990s, implied that there was indeed an “objective” process at work here, something that was not fundamentally determined by the level of resistance coming from the working class. Nor was it subject to effective control by the bourgeoisie. Abandoning the Keynesian policies which had accompanied the boom years but which were now a source of runaway inflation, the bourgeoisie in the 80s now sought to “balance the books” with policies which set in motion a tide of mass unemployment and deindustrialisation in most of the key capitalist countries. In the decades that followed there were new attempts to stimulate growth by a massive recourse to debt, resulting in short-lived booms, but underneath accumulating profound tensions which were to explode to the surface with the crash of 2007-8. A general overview of the capitalist world economy since 1914 thus gives us the scenario not of a mode of production in ascent but of a system unable to escape its impasse whatever techniques it tries out:

  • 1914 to 1923: World War One and the first international wave of proletarian revolutions; the Communist International proclaims the dawn of the “epoch of wars and revolutions”;

  • 1924-29: brief recovery which does not relieve the post-war stagnation of the “old” economies and empires in the wake of the war; the “boom” is restricted mainly to the USA;

  • 1929: the exuberant expansion of US capital ends in a spectacular crash, precipitating the deepest and widest depression in capitalism’s history. There is no spontaneous revival of production as was the case with the cyclical crises of the early 19th century. State capitalist measures are used to re-launch the economy but they are part of a drive towards the Second World War;

  • 1945-67: a major development of state spending (Keynesian measures financed essentially through debt and based on unprecedented gains in productivity) create the conditions for a period of growth and prosperity unlike anything before it, although this excludes a large part of the “third world”;

  • 1967-2008: 40 years of open crisis, demonstrated in particular by the galloping inflation of the 70s and the mass unemployment of the 80s. However, particularly in the 1990s and early 2000s, the crisis is more “open” in some phases and in some parts of the globe than others. Elimination of restrictions on the movement of capital and on financial speculation; a whole series of industrial relocations to areas where labour power is cheap; development of new technologies and above all the resort to virtually unlimited credit for states, companies and households, create a “growth” bubble in which vast profits are made by small elites, frenzied industrial growth takes off in countries like China, and credit-card consumerism reaches new heights in the central capitalist countries. But the warning signs are discernable throughout this period: booms are regularly followed by busts (for example, the recessions of 1974-75, 1980-82, 1990-93, 2001-2, the stock market crash of 1987...). And after each recession the options open to capital become narrower, in marked contrast to the “busts” of the ascendant period when there was always the possibility of an outward expansion into geographic/economic areas hitherto outside of the capitalist circuit. Lacking this outlet to all intents and purposes, the capitalist class is increasingly forced to “cheat” the law of value which is condemning its system to collapse. This applies equally to the openly state capitalist policies of Keynesianism and Stalinism, which make no secret of their resolve to rein in the market through deficit financing and shoring up unprofitable economic sectors in order to sustain production, and the so-called “neo-liberal” policies which seemed to sweep all before them after the “revolutions” personified by Thatcher and Reagan. In reality, these policies are themselves emanations of the capitalist state, and with their encouragement of unlimited credit and speculation, they are in no way rooted in a respect for the classical laws of capitalist value production. In this sense, one of the most significant events prior to the current economic debacle is the collapse of the “Tigers” and “Dragons” of the far east in 1997, in which a phase of frenetic growth fuelled by (bad) debt suddenly comes up against a brick wall – the need to start paying it all back. This is a harbinger of what is to come, even if China and India subsequently step in to claim the role of “locomotive” that had been reserved for the other far eastern economies. Neither does the “technological revolution”, particularly in the sphere of computing, that was so hyped in the 90s and the beginning of the 2000s, save capitalism from its inner contradictions: it raises the organic composition of capital and thus lowers the profit rate, and this cannot be compensated by a real extension of the world market. Indeed it tends to aggravate the problem of overproduction by spewing out more and more commodities while simultaneously throwing more workers onto the dole;

  • 2008-... World capital’s crisis reaches a qualitative new situation in which the “solutions’ applied by the capitalist state over the previous four decades, and above all the recourse to credit, explode in the face of the politicians, financiers and bureaucrats who had been practising them so assiduously and with such misplaced confidence in the preceding period. Now the crisis rebounds to the very centres of world capitalism – to the USA and the Eurozone – and all the recipes used to maintain confidence in the possibilities of constant economic expansion are revealed to be worthless. The creation of an artificial market through credit is now displaying its historical limitations, as it threatens to destroy the value of money and generate runaway inflation; at the same time the reining in of credit and attempts by states to slash their spending in order to begin paying back their debts only further restrict the market. The net result is that capitalism is now entering a depression which is in essence deeper and more insoluble than the one in the 1930s. And as depression descends on the west, the great white hope of a country like China carrying the global economy on its shoulders is also proving to be a complete illusion: China’s industrial growth is based on its capacity to sell cheap goods to the west, and if this market dries up, China faces economic meltdown.

Conclusion: whereas in its ascendant phase, capitalism went through a cycle of crises which were both the expression of its internal contradictions and an indispensable moment in its global expansion, in the 20th and 21st century capitalism’s crisis, as Paul Mattick argued from the 30s onwards, is essentially permanent. Capitalism has now reached a stage where the palliatives it has used to keep itself alive have become an added factor in its mortal sickness.

2. At the military level

The drive towards imperialist war also expresses the historic impasse of the capitalist world economy:

The more the market contracts, the more bitter becomes the struggle for sources of raw materials, and for the mastery of world market. The economic struggle between different capitalist groups concentrates more and more taking on its most finished form in struggles between states. The aggravated economic struggle between states can only be finally resolved by military force. War becomes the sole means, not of resolving the international crisis, but through which each state tries to overcome its problems at the expense of its rivals.

The momentary solutions found by individual imperialisms in economic or military victories have the effect not simply of worsening the situation of opposing imperialisms, but of still further aggravating the world crisis, and of destroying huge quantities of the values built up over decades and centuries of social labour.

Capitalism in the imperialist epoch is like a building where the construction materials for the upper stories are taken from the lower ones and the foundations. The more frenetic the upward building, the weaker becomes the base supporting the whole edifice. The greater the appearance of power at the top, the more shaky the building is in reality. Capitalism, compelled as it is to dig beneath its own foundations, works furiously to undermine the world economy, hurling human society towards catastrophe and the abyss”.14

Imperialist wars, whether local or world-wide, are the purest expression of capitalism’s tendency to destroy itself, whether we are talking about the physical destruction of capital, the massacre of entire populations, or the immense sterilisation of value represented by military production, which is no longer restricted to phases of open warfare. The GCF’s recognition of the essentially irrational nature of war in the period of decadence was somewhat obscured by the reorganisation and reconstruction of the global economy that followed the Second World War, but the post-war boom was an exceptional phenomenon which can never be repeated. And whatever mode of international organisation adopted by the capitalist system in this era, war has also been permanent. After 1945, when the world was divided between two huge imperialist blocs, military conflict generally took the form of endless “national liberation” wars as the two superpowers vied for strategic dominance; after 1989, the collapse of the weaker Russian bloc, far from mitigating the drive to war, made direct involvement of the remaining superpower much more frequent, as we saw in the 1991Gulf war, in the Balkans at the end of the 90s, and Afghanistan and Iraq after 2001. These interventions by the USA were largely –and very unsuccessfully – aimed at stemming the centrifugal trend opened up by the dissolution of the old bloc system, which has seen an aggravation and proliferation of local rivalries, expressed in the horrific conflicts that have ravaged Africa from Rwanda and Congo to Ethiopia to Somalia, exacerbated tensions around the Israel-Palestine problem, and come close to producing a nuclear stand-off between India and Pakistan.

The first and second world wars brought about a major shift in the balance of power between the major capitalist countries, essentially to the benefit of the USA. Indeed the overwhelming domination of the USA after 1945 was a key factor in the post-war prosperity. But contrary to one of the slogans of the 1960s, war is not “the health of the state”. Just as its vastly bloated military sector helped bring about the collapse of the USSR, so the USA’s commitment to remaining the world’s gendarme has also become a factor in its own decline as an empire. The vast sums annihilated in the wars in Afghanistan and Iraq have not been offset by the quick profits nabbed by Halliburton or other crony capitalists; on the contrary they have helped to turn the USA from the world’s creditor into one of its principal debtors.

Some revolutionary organisations, like the Internationalist Communist Tendency, argue that war, and above all world war, is eminently rational as far as capitalism is concerned. They argue that by destroying the swollen mass of constant capital which is the source of the falling rate of profit, war in capitalism’s decadence has the effect of restoring the rate of profit and launching a new cycle of accumulation. This isn’t the moment to enter into this discussion, but even if such an analysis were right, this can no longer be a solution for capital. First because there is little evidence that the conditions for a Third World War – which require, among other things, the formation of stable imperialist blocs – are coming together in a world increasingly following the rule of “every man for himself”. And even if a Third World War was on the cards, it would certainly not initiate a new cycle of accumulation, but would almost certainly result in the obliteration of capitalism and probably of humanity15. That would be the final demonstration of capitalism’s irrationality, but none of us would be here to say “I told you so”.

3. At the ecological level

Since the 1970s revolutionaries have been obliged to recognise a new dimension to the diagnosis that capitalism has outlived its usefulness and has become a system bent on destruction: the increasing devastation of the natural environment, which is now threatening disaster on a planetary scale. The pollution and destruction of the natural world has been inherent to capitalist production from the beginning, but over the last century, and particularly since the end of the Second World War, it has been made all the more extensive and deeply rooted thanks to capitalism’s relentless occupation of every last corner of the planet. At the same time, and as a consequence of capitalism’s historic impasse, the spoliation of the atmosphere, the land, the seas, rivers and forests have been exacerbated by increasingly ferocious national competition for natural resources, cheap labour, and new markets. Ecological catastrophe, especially in the shape of global warming, has become a new horseman of capitalism’s apocalypse, and successive international summits have shown the inability of the bourgeoisie to take the most basic measures to stave it off.

A recent illustration: the most recent report from the International Energy Agency, a body not previously noted for making doom-laden predictions, argues that governments around the world have five years to reverse the course of climate change before it's too late. According to the IEA and a number of other scientific institutions, it is vital to ensure that global temperatures do not rise above 2 degrees. “To keep emissions below that target, civilization could continue with business as usual for only five more years before the total allowed budget of emissions would be ‘locked in.’ In that case, to meet the targets for warming, all new infrastructure built from 2017 onward would have to be completely emissions-free.”16 One month after this report came out, in November 2011, came the Durban summit which was heralded as a breakthrough because for the first time at any of these international meetings between states, it was agreed that there should be legally binding limits on carbon emissions. But these would have to be agreed in 2015 and would come into effect in 2020 – far too late according to the predictions of the IEA and many of the environmental bodies associated with the conference. Keith Allott, head of climate change at WWF-UK (World Wide Fund for Nature, Britain), said: "Governments have salvaged a path forward for negotiations, but we must be under no illusion — the outcome of Durban leaves us with the prospect of being legally bound to a world of 4C warming. This would be catastrophic for people and the natural world. Governments have spent crucial days focused on a handful of specific words in the negotiating text, but have paid little heed to repeated warnings from the scientific community that much stronger, urgent action is needed to cut emissions."17

The problem for the reformist conceptions of the ecologists is that capitalism is being strangled by its own contradictions and fights ever more desperately for its life. Caught in a crisis, capitalism cannot become less competitive, more cooperative, more rational, but is driven to the extremes of competition at all levels, and above all at the level of national state capitalist gladiators grappling in a barbarian Thunderdome for the least chance of immediate survival. It is forced to seek the most short-term profits, to sacrifice everything else to the idol of “economic growth” – ie, of the accumulation of capital, even if it is to the debt-addled and largely fictitious growth of these last few decades. No national economy can allow itself the least moment of sentiment when it comes to exploiting its national natural “property” to the absolute limit. Neither can there be, under the capitalist world economy, a structure of international law or governance that would be able to subordinate narrow national interests to the overall interests of the planet. Whatever the actual deadline posed by global warming, the ecological question as a whole provides further evidence that the continuing rule of the bourgeoisie, of the capitalist mode of production, has become a danger for the survival of humanity.

Let’s look at an edifying illustration of all this – and one which also elucidates the fact that the ecological danger, just like the economic crisis, cannot be separated from the threat of military conflict.

In recent months, oil companies have begun lining up for exploration rights to Baffin Bay, a hydrocarbon-rich region on Greenland’s western coast that until recently was too ice-choked for drilling. U.S. and Canadian diplomats have reopened a spat over navigation rights to a sea route through the Canadian Arctic that could cut shipping time and costs for long-haul tankers.

Even ownership of the North Pole has come into dispute, as Russia and Denmark pursue rival claims to the underlying seabed in hopes of locking up access to everything from fisheries to natural gas deposits.

The intense rivalry over Arctic development was highlighted in diplomatic cables released last week by the anti-secrecy Web site Wikileaks. Messages between U.S. diplomats revealed how northern nations, including the United States and Russia, have been manoeuvring to ensure access to shipping lanes as well as undersea oil and gas deposits that are estimated to contain up to 25 percent of the world’s untapped reserves.

In the cables, U.S. officials worried that bickering over resources might even lead to an arming of the Arctic. ‘While in the Arctic there is peace and stability, however, one cannot exclude that in the future there will be a redistribution of power, up to armed intervention,’ a 2009 State Department cable quoted a Russian ambassador as saying.”18

Thus: one of the most serious manifestations of global warming, the melting of the polar ice caps, which contains the possibility of cataclysmic flooding and a “feedback loop” of warming once the ice caps are no longer there to deflect the sun’s heat away from the Earth’s atmosphere, is immediately seen as a huge economic opportunity for a whole queue of nation states – with the ultimate consequence of burning more fossil fuels, further adding to the greenhouse effect. And at the same time, the struggle over dwindling resources – in this case oil and gas, but elsewhere it could be water or fertile land – produces a four or five way mini-imperialist conflict (Britain has also been involved in this dispute as well). This is a feedback loop of capitalism’s growing insanity.

The same article ends with the “good news” of a modest treaty signed between some of the contenders at the Artic Council meeting in Nuuk, Greenland. And we know how reliable are diplomatic treaties when it comes to forestalling capital’s inbuilt drive towards imperialist conflict.

The global disaster that capitalism is preparing can only be averted by a global revolution.

4. At the social level

What is the balance sheet of capitalism’s decline at the social level, and in particular for the main producer of capitalism’s wealth, the working class?

When the Communist International proclaimed, in 1919, that capitalism had entered its epoch of inner disintegration, it was also drawing a line under the period of social democracy, in which the struggle for durable reforms had been necessary and feasible. Revolution was necessary because henceforward capitalism could only make deeper and deeper attacks on working class living standards. As we have shown in previous articles in this series, this analysis was repeatedly confirmed over the next two decades, which saw the greatest depression in capitalism’s history and the horrors of the Second World War. But it came into question, even among revolutionaries, during the boom years of the 50s and 60s, when the working class of the central capitalist countries experienced unprecedented rises in wages, an impressive reduction in unemployment, and a series of state-backed welfare benefits: sickness pay, paid holidays, access to education and healthcare, and so on.

But do these advances really invalidate the claim, maintained by revolutionaries who adhere to the thesis that capitalism is in overall decline, that long-lasting reforms are no longer possible?

The issue here is not whether these gains were “real” or significant. They were and they do need to be explained. This is one of the reasons that the ICC, for example, opened up a debate about the causes of the post-war prosperity, internally and then in public. But what needs to be understood above all is the historic context in which these gains took place, because it can then be shown that they bear little resemblance to the steady improvement of working class living standards during the 19th century, the majority of them won through the organisation and struggle of the worker’s movement:

  • while it’s true that many of the post-war “reforms” were brought in to make sure that the war did not give rise to a wave of proletarian struggles on the model of 1917-19, the initiative for measures like the health service or full employment came directly from the capitalist state apparatus, particularly its left wing. They had the effect of increasing the working class’s confidence in the state and decreasing confidence in its own struggle;

  • even during the boom years, economic prosperity was severely limited. Large swathes of the working class, particularly in the third world but also in significant pockets of the central countries (example: the black workers and poor whites of the USA), were excluded from these gains. Throughout the “third world”, capital’s inability to integrate millions from the ruined peasantry and other strata into productive labour created the basis for today’s mega-slums, for world-wide malnutrition and poverty. And these masses were also the first victims of the inter-bloc rivalries which resulted in bloody proxy battles in a host of “underdeveloped” countries from Korea and Vietnam to the Middle East and the southern and eastern Africa;

  • further evidence of capitalism’s inability to really improve the quality of working class life can be seen at the level of the working day. One of the signs of “progress” in the 19th century was the continued lessening of the working day, from up to 18 hours in the early part of the century to the 8-hour day which was one of the main demands of the workers’ movement at the end of the century and which was formally granted in many countries between the 1900s and the 1930s. But since that time – and this includes the post-war boom - the working day has remained more or less stagnant, while technological development, far from freeing workers from drudgery, has led to de-skilling, widespread unemployment with more intensive exploitation of those that remain at work, longer journeys to work, and the boon of working non-stop away from the workplace thanks to mobile phones, lap-tops, and the internet;

  • whatever the gains made during the boom, they have been under more or less continuous assault for the past four decades and with the impending depression they are now being subject to even more massive attacks, with no prospect of any respite. Throughout the last four decades of crisis, capitalism has been relatively cautious in directly cutting wages imposing mass unemployment and dismantling the welfare state. The savage austerity measures now being foisted on countries like Greece are a harbinger of what is to come for workers everywhere.

On the broader social level, the decay of capitalism over such a long period carries a tremendous threat to the proletariat’s ability to become a class “for itself”. When the working class revived its struggles at the end of the 1960s, its capacity to develop a revolutionary consciousness was greatly hampered by the trauma of the counter-revolution it had been through – a counter-revolution which to a large extent had presented itself in the “proletarian” garb of Stalinism, making generations of workers deeply suspicious of their own political traditions and organisations. The fraudulent equation between Stalinism and communism was even pushed to the maximum when the Stalinist regimes collapsed at the end of the 80s, further eroding the self-confidence of the working class, its ability to evolve a political alternative to capitalism. Thus a product of capitalist decadence – Stalinist state capitalism – has been used by all factions of the bourgeoisie to stultify class consciousness.

During the 80s and 90s, the evolution of the economic crisis demanded the break-up of industrial concentrations and working class communities in the central countries, transferring much of industry to regions of the world where working class political traditions are not so strong. The creation of urban wastelands across much of the “developed’ world brought with it a weakening of class identity and a more general wearing away of social ties, with their counterpart in the search for a variety of false communities, which are not neutral but have terribly destructive effects. We can point to the attraction of a sector of disenfranchised white youth to extreme right wing gangs like the English Defence League in Britain; of Muslim youth, facing the same material situation, to fundamentalist Islam and jihadi politics. More generally we can point to the corrosive effects of gang culture in nearly all the urban centres of the industrialised countries, even if these have had their most spectacular impact on peripheral countries like Mexico where the country is gripped by an almost permanent civil war between unbelievably murderous drug gangs, some of them directly linked to a no less corrupt central state.

These phenomena – the frightening loss of any perspective for the future, the rise in nihilistic violence – are a slow ideological poison in the veins of the world’s exploited, making it increasingly difficult to see themselves as a unified class, a class whose essence is international solidarity.

At the end of the 80s there was a tendency in the ICC to see the waves of struggle of the 70s and 80s as more or less linear in their advance towards a revolutionary consciousness. This was criticised very sharply by Marc Chirik who, on the basis of interpreting terrorist bombings in France and the sudden implosion of the eastern bloc, was the first to put forward the idea that we were entering a new phase in the decadence of capitalism, which he described as a phase of decomposition. This new phase was determined fundamentally by a kind of social stalemate, where both the ruling class and the exploited class were unable to put forward their respective alternatives for the future of society: world war for the bourgeoisie, world revolution for the working class. But since capitalism can never stand still and its long-drawn out economic crisis was fated to plumb new depths, in the absence of any perspective society was doomed to rot on its feet, in turn bringing increasing obstacles to the development of working class consciousness.

Whether or not the theoretical parameters of the ICC’s concept of decomposition are accepted, essential to this analysis is its affirmation that this is the final phase of capitalism’s decay. The evidence that we are witnessing the last stages of the system’s decline, its actual death agony, has surely mounted considerably over the last few decades, to the point where “apocalyptic moods”, a recognition that we are on the edge of the abyss, have become more and more commonplace19. And yet, within the proletarian political movement, the theory of decadence is far from being unanimous. We will look at some of the arguments against the theory in the next article in this series.


1. See the previous article in this series in International Review 146

3. Paul Mattick, Marx and Keynes: The limits of the mixed economy, Merlin Press 1969, London (1980 reprint), Chapter 14, “The mixed economy”, p152 and 163.

4. Mattick op. cit., Chapter 19 “The imperialist imperative”, p 261-2.

5. Mattick, op. cit., p 274 and 275.

6. Ibid.

7. Mattick, op. cit., Chapter 22, “Value and socialism”, p321.

8. Mattick, op. cit., Chapter 20, “State-capitalism and the mixed economy”, p291.

9. Mattick, op. cit., Chapter 19, “The imperialist imperative”, p.264-5.

10. Another weakness in Marx and Keynes is Mattick’s dismissive attitude to Rosa Luxemburg and her concern with the problem of the realisation of surplus value. The only direct reference to Luxemburg in the book is where he writes: “at the turn of the century, the Marxist Rosa Luxemburg saw in the difficulties of surplus-value realisation the objective reasons for crises and wars and for capitalism’s eventual demise.

All this has little to do with Marx, who saw that the actual world of capitalism was at once a production and a circulation process, to be sure, but who held nevertheless that nothing circulates unless it is first produced, and for that reason gave priority to the problems of the production process. If the production of surplus-value is adequate to assure an accelerated capital expansion, there is little reason to assume that capitalism will falter in the sphere of circulation” (chapter 9, “Capitalism in crisis”, p91-2).

Beginning from the tautology that “nothing circulates unless it is first produced” and from the marxist idea that an adequate production of surplus-value permits an accelerated capital expansion, Mattick draws an unwarranted deduction when he claims that the surplus value in question would necessarily be realised on the market. The same kind of reasoning can be found in a previous passage, where he writes:“Commodity production creates its own market in so far as it is able to convert surplus-value into new capital. The market demand is a demand for consumption goods and capital goods. Accumulation can only be the accumulation of capital goods, for what is consumed is not accumulated but simply gone. It is the growth of capital in its physical form which allows for the realization of surplus-value outside the capital-labour exchange relations. So long as there exists an adequate and continuous demand for capital goods, there is no reason why commodities entering the market should not be sold.” (chapter 8, “The realisation of surplus value”, p76-7)

Contrast this with Marx’s view that “constant capital is never produced for its own sake, but solely because more of it is needed in spheres of production whose products go into individual consumption”. Capital Vol III, chapter 18, “The turnover of merchnts capital.” p.305.

In other words, it is the demand for means of consumption which pulls the demand for means of production, and not the other way round. As we noted in a previous article in this series, Mattick himself (in Economic crises and crisis theories) is aware of this contradiction between his conception and certain formulations in Marx, like the one cited above (see, footnote 20).

But we don’t wish to enter into this debate again here. The main problem is that although Mattick of course recognises Rosa as a marxist and a genuine revolutionary, he joins that trend of thought which rejects the problem she posed about the accumulation process as nonsense and outside the basic framework of marxism. As we have shown, this is not the case with all of Rosa’s critics, such as Rosdolsky (cf This essentially sectarian approach has greatly hampered the debate between marxists on this problem ever since.

11. Situationist International n 12, p6.

13 For a more detailed approach, supported by statistics relating to the overall course of the historic crisis, its impact on productive activity, workers’ living standards and so on, see the article in this issue: ‘Is capitalism a decadent mode of production and why?”

14. Report on the international situation, Gauche Communiste de France, July 1945.

15. This does not of course mean that humanity is any safer under an imperialist system that is becoming more and more chaotic. On the contrary. Without the discipline imposed by the old bloc system, devastating local and regional wars have become more likely, and their destructive potential has been greatly increased by the proliferation of nuclear weapons. At the same time, since they could very well break out in areas away from the capitalist heartlands, they are less dependent on another element which has held back the push towards world war since the onset of the crisis in the late 60s: the difficulty of mobilising the working class in the central capitalist countries for a direct imperialist clash.






Decadence of Capitalism