The historical significance of the impasse of the capitalist economy

The election of Donald Trump as President of the United States has considerably disrupted the world economic order in place since the end of the Second World War, with institutions regulating trade and currencies, and a certain consistency in the orientations of different national capitals. The American shift towards extreme protectionism and its rejection of all international cooperation has not only had an immediate impact on all the central countries of capitalism, but above all, has opened a period of uncertainty linked to the brutal and undoubtedly definitive erasure of all the efforts made until then by the international bourgeoisie to distance the capitalist economy from chaos and every man for himself as much as possible. Such a policy greatly contributes to destabilisation, particularly in economic and political terms, with inevitable consequences for the dynamics of the class struggle, the future scale of which remains difficult to measure today.

Marxism is not a dogmatic theory that provided all the answers 150 years ago. It is above all a method that borrows a fundamental approach from science: constantly verifying the validity of theory against the facts. Taking a step back from the situation does not mean detaching oneself from the facts, quite the contrary. The first question we have to ask ourselves as marxists in the face of these upheavals is whether our overall framework for analysing the historical trends of capitalism should be called into question or whether, on the contrary, current events confirm it. Then, based on this framework of analysis, we have to consider the impact that the combination of various factors – wars, economic crisis, trade destabilisation, climate change – has on capitalism, in order to provide our class with the clearest possible analysis of these upheavals and the challenges they pose for the future.

The extensive excerpts from the report on the economic crisis, ratified by our 26th International Congress in the spring of 2025, which we publish below, demonstrate the validity of our analytical framework and allow us to outline the historical perspectives. However, the process never stops, and in a situation as fluid as the one we are experiencing today, it is more important than ever for revolutionary organisations to continually deepen this framework.

Since the report was written, developments have only further confirmed the perspectives outlined by the Congress. The Trump administration's haphazard, volatile, but ultimately brutal implementation of tariffs has led to a previously unimaginable acceleration of every man for himself in the economic sphere, the evaporation of the ‘opportunities’ of globalisation and a brutal and chaotic disorganisation of production and logistics circuits (supply chains) throughout the world. Each national capital is pushed to take charge of strategic sectors of production which, moreover, cannot escape the reality of the saturation of the world market. This exacerbation of every man for himself greatly accentuates the crisis of overproduction.

The crisis of overproduction is therefore only exacerbated by the growing destabilisation of world trade, protectionist policies and, above all, the explosion in military spending. Far from putting an end to the bloody and endless conflicts that are undermining the planet, as Trump constantly boasts, the United States is the first to add fuel to the fire, as illustrated by the situation in Gaza, the conflict with Iran or, more recently, its aggressive policy towards Venezuela, which is increasing the pressure of the war economy on public accounts and on the overall health of capital itself. The historic divorce between the United States and Europe is reflected in particular in America’s blackmail of other NATO countries to buy and produce weapons for Ukraine and to increase their arms expenditure and production in order to take charge of their own defence.

All this is happening in a context of national bourgeoisies losing control of their political game, thus affecting their ability to cooperate and attempt a minimal regulation of a devastated global market. In the United States, factions of the ruling class are tearing each other apart over what policy to pursue. In Europe, states are finding it increasingly difficult to maintain consistency in defending the national capital and maintaining a stable policy for the future.

Such a panorama only confirms the state of decay of capitalism and the fact that the economic sphere, which, through artifices and circumventions of the fundamental laws of the system, had largely escaped this decay, but is now not only falling prey to it, but above all accelerating the infernal vortex that is dragging this system into decomposition.

So how can we continue to defend the idea that capitalism is still capable of launching new cycles of accumulation through the destruction of capital wrought by war, as organisations in the proletarian political milieu continue to argue?[1] The abysmal debt of all capitalist states, the gigantic losses linked to destruction and the war economy, the disorganisation of markets and the reality of chronic overproduction invalidate any idea of the possibility of an eternal development of the system.

How can we still defend the 19th-century vision of technological progress capable of increasing overall productivity? Today, technological progress is certainly incomparable to that of the ascendant period of capitalism. But on the one hand, it is almost exclusively directed towards the military sphere, a trend that began at the start of the decline, while, on the other hand, and above all, the productivity gains evaporate in overproduction due to the impossibility of selling all the goods produced and therefore of realising the total expected surplus value. They are therefore unable to contribute to a “new cycle of accumulation” – even if certain sectors or a number of companies can still do well – since the markets likely to offer the outlets necessary for the realisation of surplus value have long been saturated on a global scale.

Does this mean that the ICC sees the decline of the capitalist mode of production, and even more so its period of decomposition, as an inevitable dynamic that will pave a natural path towards communism? Not at all! Decomposition paves the way for the collapse of the capitalist system, but this does not open the path to communism but rather threatens to bring about the destruction of humanity and its environment if the working class fails to impose its perspective. And this perspective of communism will always remain the fruit of a life-and-death struggle against capital. That is why it is up to revolutionaries to be perfectly clear about the historical responsibility of the proletariat, which does not have an eternity before it to overcome its difficulties, to shake off the weight of bourgeois and petty-bourgeois ideologies and rediscover its identity as a revolutionary class bearing the only viable and possible future for humanity, that of communism.

In this context, the purpose of a congress report is to provide the organisation with a solid analytical framework for understanding the situation in the years to come. Taking a long-term view, a report cannot remain stuck in current events and must take a broader perspective, as was the aim of this report, in particular through two central questions for understanding recent economic events:

• the growing interaction between decomposition and economic crisis, which illustrates the turmoil in which bourgeois society finds itself from an economic point of view;
• the increasingly relentless nature of the impasse of overproduction.

 

1. The growing vortex of interdependence between decomposition and crisis

The interdependence between the economic crisis and the manifestations of decomposition at different levels is evident in a multitude of phenomena:

• on the one hand, overproduction has continued to shake the global economy: for example, a major crisis has erupted in German industry, particularly in the automobile industry, with Germany's economic problems mirroring those of the EU, while in the United States, a speculative stock market bubble has burst;
• on the other hand, disruption to global trade and production doubled in a matter of months. For example, due to attacks by the Houthis, 95% of ships that should have crossed the Red Sea had to be diverted. In 2023, drought caused delays in the Panama Canal, increasing the cost of goods and raw materials moving between the United States and China, as well as on other global shipping routes;
• and then, the ravages caused by the interaction of climate change and a capitalist economy suffering from more than 50 years of crisis are being felt around the world. Massive flooding in Pakistan, the effects of drought in Europe and elsewhere, devastating floods in Valencia, Spain's third largest city, have all destroyed or weakened local and regional economies.

The rising cost of living, destruction, transport problems and pollution have had a growing impact on the US economy. The effect of the Los Angeles fires is not limited to the destruction of buildings: "AccuWeather calculated its economic impact by examining not only losses related to property damage, but also lost wages due to the slowdown or shutdown of economic activity in the affected areas, infrastructure repairs, supply chain issues, and transportation difficulties. Even when homes and businesses are not destroyed, residents may be unable to work due to evacuations; businesses may close due to the dispersal of their customers or the inability of their suppliers to make deliveries. Smoke inhalation can have short-, medium- and long-term health consequences, which weigh heavily on overall economic activity." These effects may be further amplified by the waves of forest fires that rage throughout most of the year in the United States and Canada.

This economic, imperialist and ‘natural’ turmoil is accelerated by the political earthquake caused by Trump's election. Even before he came to power, the threat of tariffs and four more years of political chaos was imminent. "Uncertainty looms over 2025, including the risks of trade tensions and ongoing geopolitical challenges. The trade outlook for 2025 is clouded by potential policy changes, including higher tariffs that could disrupt global value chains and impact key trading partners. Such measures risk triggering retaliation and repercussions, affecting industries and economies throughout supply chains. The mere threat of tariffs creates unpredictability, weakening trade, investment and economic growth."[2]

This chaos and unpredictability of a “terra incognita” is shaking up the three main rival capitalist powers.

1.1. The United States

The world's largest economy is still in decline. A recovery was observed after the pandemic, but it was partly due to Biden's vast support plan, which aimed to reverse the decline of American industry. Manufacturing jobs, the main source of profits, have fallen by 35% since 1979. In 2023, there were 12.5 million manufacturing jobs, the same number as in 1946 (it should be borne in mind that the US population has more than doubled since then – from 141.4 million in 1946 to 336.4 million in 2023).

To cope with the growing impact of the economic crisis, the American bourgeoisie has borrowed more and more money. The United States has seen its debt-to-GDP ratio rise from 32% in 1980 to 123% in 2024. This means that it is drawing trillions of dollars from the rest of the global economy to repay its debts. Every year, the US government spends as much on debt repayment as it does on defence. In 2023, the gap between US spending and revenue was £1.8 trillion, nearly double the military budget! The new administration's barrage of attacks on federal civil servants is partly a response to their rampant growth. The irresponsible and brutal manner in which they are being carried out will have a chaotic impact on American capitalism. The sudden halt in public funding for essential services such as health care, tax collection, social security contributions, essential medical research, etc., will have increasingly harmful consequences for the economy and society.

Internationally, Trump's upheaval of the rules is generating great uncertainty and instability in the global economy. The imposition of tariffs on all US competitors, and the threat of even more draconian tariffs if governments tax American products “unfairly”, is creating tensions not only between the US and its rivals, but also between the rivals themselves.

This scorched earth policy will further plunge capitalism into crisis: "... Trump's proposed policies will not reduce the overall trade deficit. Reducing the bilateral deficit with China would only increase deficits with other countries. This is inevitable, given the persistent macroeconomic pressures. Furthermore, his discriminatory trade policies, with tariffs of 60% on China and 10-20% on others, are bound to spread. Trump and his acolytes will find that exports from other countries are replacing those from China through transhipments, assembly in other countries or direct competition... there will undoubtedly be retaliation. Such a spread of high tariffs in the United States and around the world is likely to lead to a rapid decline in global trade and production."[3]

Furthermore, this economic instability will be exacerbated by the Trump administration's deportation policy. The American Immigration Council has stated that deporting all undocumented immigrants could cost up to $315 billion and require between 220,000 and 409,000 new civil servants and law enforcement officers. It also indicated that deporting one million people per year would cost £967 billion over ten years. This number of migrants being sent back, combined with the loss of remittances, will also destabilise some regions of Central and Latin America and exacerbate the instability of American capitalism.

1.2. China

China is no longer the ‘saviour’ of the global economy that it was after 2007: its industrial overcapacity has become a runaway train dragging the global economy into an ever-deepening crisis: "Simply put, in many crucial economic sectors, China is producing far more output than it, or foreign markets, can sustainably absorb. As a result, the Chinese economy runs the risk of getting caught in a doom loop of falling prices, insolvency, factory closures, and, ultimately, job losses. Shrinking profits have forced producers to further increase output and more heavily discount their wares in order to generate cash to service their debts. Moreover, as factories are forced to close and industries consolidate, the firms left standing are not necessarily the most efficient or most profitable. Rather, the survivors tend to be those with the best access to government subsidies and cheap financing.[…]

“For the West, China’s overcapacity problem presents a long-term challenge that can’t be solved simply by erecting new trade barriers. For one thing, even if the United States and Europe were able to significantly limit the amount of Chinese goods reaching Western markets, it would not unravel the structural inefficiencies that have accumulated in China over decades of privileging industrial investment and production goals. Any course correction could take years of sustained Chinese policy to be successful. For another, Xi’s growing emphasis on making China economically self-sufficient—a strategy that is itself a response to perceived efforts by the West to isolate the country economically—has increased, rather than decreased, the pressures leading to overproduction. Moreover, efforts by Washington to prevent Beijing from flooding the United States with cheap goods in key sectors are only likely to create new inefficiencies within the U.S. economy, even as they shift China’s overproduction problem to other international markets."[4]

The above quote is an excellent description of the impact of the overproduction crisis on China and the global economy.

1.3. The EU, Russia, Israel

The German economic and political giant has been mired in economic and political crisis for the past two years. The political instability of the German bourgeoisie makes it even more difficult to manage the economic crisis that accelerated in 2024. The dramatic worsening of the crisis of overproduction in Germany, with the announcement of a wave of layoffs and company closures in the autumn of 2024, has revealed the fragility of this industrial giant in the face of the worsening global economic crisis. It is particularly affected by the Chinese crisis. This decline is accelerated by the German state's need to increase its defence spending and, as a result, reduce its public spending.

The economic turmoil of German capitalism is fundamentally an expression of the deep problems facing the EU as a whole: “The EU also benefitted from a favourable global environment. World trade burgeoned under multilateral rules. The safety of the US security umbrella freed up defence budgets to spend on other priorities. In a world of stable geopolitics, we had no reason to be concerned about rising dependencies on countries we expected to remain our friends.

“But the foundations on which we built are now being shaken.

 “The previous global paradigm is fading. The era of rapid world trade growth looks to have passed, with EU companies facing both greater competition from abroad and lower access to overseas markets. Europe has abruptly lost its most important supplier of energy, Russia. All the while, geopolitical stability is waning, and our dependencies have turned out to be vulnerabilities…

“The EU is entering the first period in its recent history in which growth will not be supported by rising populations. By 2040, the workforce is projected to shrink by close to 2 million workers each year. We will have to lean more on productivity to drive growth. If the EU were to maintain its average productivity growth rate since 2015, it would only be enough to keep GDP constant until 2050 – at a time when the EU is facing a series of new investment needs that will have to be financed through higher growth.

 “To digitalise and decarbonise the economy and increase our defence capacity, the investment share in Europe will have to rise by around 5 percentage points of GDP to levels last seen in the 1960s and 70s. This is unprecedented: for comparison, the additional investments provided by the Marshall Plan between 1948-51 amounted to around 1-2% of GDP annually.”[5]

It is estimated that the development of EU economies to meet this challenge, particularly in terms of armaments, will require €750-800 billion: a heavy investment in armaments of all kinds, offset by an inevitable reduction in social spending.

This increasingly unstable quagmire, composed of fundamental economic contradictions, manifestations of decomposition on various levels and imperialist tensions, as well as the interdependence of all these factors, is clearly wreaking havoc on the global economy. Added to this is the growing impact of the barbarity of war.

Russian capitalism appears to have withstood the impact of war and sanctions. In truth, this illusion is based on increased military spending, rising energy prices, booming investment in the war economy (the Russian capitalist class can only invest in Russia because of the sanctions) and rising public deficits. As we have already said, this situation masks the depth of the weakening of Russian capitalism by the war. The crushing weight of militarism is the most obvious proof of this. The domination of militarism over the economy is plunging Russia back into the instability of the former USSR: "In short, 40 years after Mikhail Gorbachev came to power, Moscow is facing a resurgence of the problems encountered by Gorbachev and his predecessors. The military will dominate the Russian economy for years to come. Even after a settlement in the current war, the Kremlin will have to rebuild its military stockpiles, maintain the arms race and retrain the army. The military-industrial complex will continue to drain investment, human resources and civilian sector capabilities."

As for the Israeli bourgeoisie, it faces a similar dynamic. The wars in Gaza, the West Bank and Lebanon have had a phenomenal impact on the Israeli state's deficit. Before the war began, the Ministry of Finance projected a deficit of 1.1% of GDP in 2024; it is now estimated at 8%. Israel's security budget is the second highest in the world. The wars have had a dramatic impact on economic activity in the south and north of the country. The loss of Palestinian workers in certain sectors and the impact of conscription have had adverse consequences. The credit rating of Israeli capitalism has fallen for the first time in its history. All this has increased its dependence on US support.

The idea that Israel and the United States will ethnically cleanse Gaza and build a Mediterranean resort is as illusory as it is revolting. To clear the rubble would require 100 lorries working 24 hours a day for 21 years. There are at least 14,000 bodies still under the rubble and 7,500 tonnes of unexploded ordnance. Military barbarism, economic chaos and the rise to power of populist factions of the bourgeoisie are creating an unprecedented level of instability in the capitalist system.

2. The agony of a world dominated by capitalist relations

When Stalinism collapsed in 1989, after more than 40 years of the return of the crisis that had begun in the mid-1960s, the ICC pointed out that the contradictions and manifestations of the decadence of moribund capitalism, which had marked the history of this decadence, had not only not disappeared with time, but had persisted. Indeed, they had accumulated and deepened to culminate in the phase of decomposition, which crowns and completes three quarters of a century of agony for a capitalist mode of production condemned by history.

With regard to the crisis of state capitalism expressed by the collapse of the USSR, our organisation then highlighted:

• that the collapse of Stalinist state capitalism demonstrated the impotence of state capitalist measures to permanently bypass the laws of the market and demonstrated the powerlessness of the world bourgeoisie in the face of the crisis of overproduction;
• that the absence of perspective unleashed within the ruling class, and especially within its political apparatus, a growing tendency towards indiscipline and every man for himself;
• that the bankruptcy of Stalinism, after that of the Third World, heralded the bankruptcy of capitalism in its most developed poles.

The ICC also analysed that, in the chaotic context of this new historical phase and in a capitalist world profoundly altered by the effects of decadence, the disappearance of the blocs offered an opportunity to maintain the profitability of capital and to prolong the survival of capitalism through "globalisation": the extension of capitalist exploitation and capitalist social relations to the furthest corners of the planet, hitherto inaccessible due to the existence of the imperialist blocs.[6] These same conditions enabled China's rapid rise.[7] However, we have pointed out that “globalisation” was only an interlude allowing the capitalist system to relatively preserve its economy from the effects of decomposition. The worsening of the real state of the economy, the weakening of the dynamics of globalisation undermined the realisation of expanded accumulation, while the weight of military spending and the impasse of overproduction shattered the scaffolding of global finance based on staggering debt. The 2008 crisis, the most serious since 1929, marked a turning point in the history of the capitalist mode of production's descent into its historical crisis. It confirmed that the capitalist system finds itself even more completely locked into a situation where (due to the exhaustion of the last extra-capitalist markets) the universal hegemony of capitalist class relations makes the realisation of expanded accumulation increasingly difficult.[8]

In these conditions of deadlock and social decomposition, the phenomena already existing in decadence take on a new quality, due to the bourgeoisie's inability to offer any perspective other than “resisting, step by step, but without hope of success, the advance of the crisis. That is why the current situation of open crisis presents itself in radically different terms from the previous crisis of the same type, that of the 1930s”[9]. After 2008, the closure of the “opportunities” of globalisation and the increasingly obvious inability of capitalism to overcome its crisis of overproduction resulted in the explosion of every man for himself, not only in relations between capitalist nations, but also within each nation, while the effects of decomposition took on a new and powerfully destructive scale for the capitalist economy in the early 2020s. They are accelerating and striking at the heart of capitalism as the combined effects of the economic crisis, war and the climate crisis interact and multiply their impact, destabilising the economy and its productive infrastructure. “While each of the factors fuelling this ‘whirlwind’ effect of decomposition represents in itself a serious risk of collapse for states, their combined effects far exceed the simple sum of each of them taken in isolation.” Among the various factors contributing to the whirlwind effect, war is accelerating the worsening of the crisis.

2.1. Decomposition fuels the headlong rush into militarism

This “epochal change” is bringing about the return of high-intensity warfare. It thereby:

• fuels the shockwave of military conflicts on the global economy (Ukraine, Middle East, Red Sea); the prospect of major conflicts (Taiwan) or “regional” conflicts (India/Pakistan, Morocco/Algeria) exposes the economy to incalculable and unpredictable disruptions; war weakens and exhausts national economies (Russia, Ukraine, Israel);
• produces remarkable unanimity among the different factions of each bourgeoisie in each national capital around the world to prioritise increased military spending: during Trump's first term, within NATO, three countries (including only one European country, Greece) out of around thirty allocated 2% of GDP to defence; today, only eight countries, including seven European countries, have not reached this target. Since the NATO summit in June 2025, the plan is to allocate 5% of GDP to defence, including 3.5% to the purchase of military equipment. To achieve this, all states are committed to strengthening the war economy and adapting their means of production, which involves rebuilding strategic food and military (ammunition) stocks and making a considerable effort to accelerate military production (e.g. the transition of this entire industry to three 8-hour shifts in France in order to achieve major reductions in production times – for example, it has been halved for Caesar cannons). This also involves seeking to standardise military equipment among allies to enable industry to increase its capacity, and relocating military production capacity (gunpowder in France) within their territory for those where this can be done.

As industrial power is the basis of military power, each national capital is attempting to reindustrialise, which essentially involves:

• investment in key sectors of military power, such as robotisation, digitalisation and AI. For example, the US has begun repatriating the production of latest-generation semiconductors to its own soil in order to guarantee its monopoly;
• the integration of other aspects that are essential to the growth of these sectors: efforts to train a skilled workforce and adapt education (which has been a victim of cost-cutting), and the ability to produce abundant and inexpensive electricity;
• artificially keeping alive strategic sectors such as steel (with overcapacity of 25-30% worldwide and up to 60% in France) through state intervention, which irrationally reinforces overproduction.

Even on a strategic level, however, reindustrialisation comes up against the very causes of deindustrialisation: insufficient profitability, which led to the disappearance or relocation of industries, and the burden of debt, which has skyrocketed since 2020 and restricts the room for manoeuvre of each national capital.

The surge in unproductive spending is weighing heavily on national capital and driving inflation.

Furthermore, the general rise of every man for himself and warlike tensions against the backdrop of US-China rivalry:

• is intensifying competition between nations and leading to a global reorganisation of industrial production along imperialist fault lines. The impossibility of decoupling the US and Chinese economies has given way to the ‘risk reduction’ that the United States wants to impose on its allies. This dynamic is accompanied by a trend towards the cartelisation of supply chains for strategic materials or products with a view to ‘securing’ them, which are then used as a means of pressure and blackmail to gain a position of strength. This is particularly the case for rare metals and minerals, given the difficulty of accessing them on a large scale to operate entire value chains – more than half of their refining is under Chinese control – as well as energy sources;
• disrupts global trade through export restrictions and public subsidies to industries deemed vital to national security and sovereignty (this affects 12.7% of G20 countries' imports and 10% globally);
• is driving increased use of digital technologies and additive manufacturing, enabling companies to move their production closer to the point of sale in order to accelerate the pace of supply chain reorientation and reduce the appeal of locating production in China;
• is profoundly changing and destabilising the domestic conditions of national production for each national capital: as summarised by Defence Minister Lecornu for France, for example, regarding the grey area of hybrid warfare that powers are constantly waging: “without being at war, it is no longer possible to say that we are at peace”; "Cyber attacks are on the rise and target a huge number of companies, public institutions and even local authorities. The armed forces are deploying capabilities to identify, thwart and resist these attacks within the state, but every business leader, every administrative manager and every local elected representative must also protect their organisation against this threat, which affects everyone.”; “Technological leaps, the militarisation of space and digital technology, information warfare and the exploitation of economic weaknesses enable competitors to devise and implement new threats that can have extremely serious consequences. One of the risks facing France today is that of being defeated without being invaded.”
• leads to a general increase in prices (of between two and six hundred percent), as well as a change in the conditions under which they are set; the lowest cost is no longer the only criterion; added to this are the prices of “scarcity” and “security" as well as the financial capacity of the highest bidder.

2.2 Decomposition aggravates the crisis of state capitalism in the central countries

In all the central parts of capitalism, the state, guarantor of the interests of national capital, is the central actor in the economy: in a profoundly changed and changing economic, social and imperialist environment, its intervention remains predominant. However, the seriousness of capitalism's impasse, as well as the necessities of building a war economy, are fuelling clashes within each national bourgeoisie, in a context where each national capital is deeply weakened:

• by the weight of debt, which severely restricts the ability of states to invest and reduces the room for manoeuvre of each national capital to support the national economy;
• by the disappearance of cooperation between powers to deal with the contradictions and (predictable) convulsions of a system still threatened by financial crises.

Faced with the challenges of “national sovereignty” and the chaotic effects of decomposition, particularly its repercussions on the economy; and faced also with the issue of accumulated debt (exceeding or representing several times GNP), the balance of state budgets and the balance of payments (mostly in deficit) take on a new crucial importance for each national capital. With its resilience in the face of its rivals at stake, this represents a new vulnerability and fragility within the context of the worsening of decomposition. The question of budgetary balance arises, as each national economy becomes increasingly locked into the inherent contradictions of the difficulty of accumulating capital, while cheating the law of value has reached historically unprecedented levels since the pandemic.

Debt – or rather its scale – divides the bourgeois factions: in the United States, for the adoption of the budget, Trump demanded an unlimited increase in the government debt ceiling, a proposal that was ultimately rejected, including with the support of some Republicans. In Germany, the issue of special off-budget funds and the need, defended by part of the bourgeoisie, to abandon the “debt brake” (enshrined in the Constitution), seen as a “brake on the future”, was a key cause of the implosion of the governing coalition. In China, the Communist Party is bringing the financial sector back into line, calling on it to serve the economy more effectively and contribute more to national wealth.

The tendency for the ruling class to lose control of its political game due to the effects of decomposition on the bourgeoisie and society, and the resulting instability and chaos, are affecting the coherence, long-term vision and continuity of the defence of the overall interests of national capital:

• the political crisis in France is preventing the adoption of a budget; divisions between bourgeois factions in Germany are affecting the EU's ability to prepare for the economic consequences of Trump's arrival in power;
• the coming to power of irresponsible populist factions (with programmes that are unrealistic for national capital) is weakening the economy and the measures imposed by capitalism since 1945 to prevent the uncontrolled spread of the economic crisis. Trump is coming to power with a plan that is diametrically opposed to the policy previously pursued by the US government, aimed at promoting cryptocurrencies and wholesale financial deregulation.

The clique around Trump wants to locate these crypto projects in the United States and make digital assets and other innovations a crucial instrument for “making America more powerful than ever.” Speculative products par excellence (which Trump hopes will be a lucrative source of income), backed by major US tech stocks or the dollar and traded on the stock market through new products, cryptocurrencies, used as an alternative means of payment, can only compete with and weaken the currencies issued and guaranteed by central banks. Due to their inherent volatility (their solidity is equal to that of the company that issues them – far from that of a central bank), by escaping the banking system and without a supervisory mechanism, the widespread use of cryptocurrencies can only affect the financial stability of the capitalist system, weakening the control exercised by countries over exchange rates and the money supply.

Trump's arrival in power and his aggressive economic policy are another factor dividing and destabilising each bourgeoisie in terms of the policy and course of action to be taken to deal with it (see the tensions with Canada and Trudeau's resignation, and also the divisions within the EU). The measures proposed by populism only increase the chaos and uncertainty.

More generally, the tendency to lose sight of the general interests of capital is becoming more pronounced, due to deep divisions within the ruling class over how to manage the economic crisis; a bourgeoisie fragmented by conflicts that go beyond simple competitive relations, where factions are fighting for their survival in the face of the insoluble dilemmas and contradictions facing each national capital, and where each option will generate its share of losers. These conflicts are leading to an increasingly clear trend towards the domination of the state by clans and cliques primarily motivated by the defence of their own interests, where the obsession with controlling their position involves sidelining any potential rivals. They fill decision-making bodies with loyalists, even openly challenging the principles of state functioning, such as the separation of powers, the independence of the judiciary and election results. This trend is particularly marked with the arrival of populism in power: Trump, for example, arrived with a staff of 4,000 loyalists selected to thoroughly clean up the “deep state”, and the management of the state took on a distinctly oligarchic character, with tech giants such as Musk and Zuckerberg, among others, financing and supporting Trump with the clear intention of taking advantage of the situation.

In the long run, this can only result in incompetence, mismanagement and a decline in the sense of responsibility and, ultimately, a decline in economic efficiency and effectiveness, not to mention the inevitable conflicts and upheavals resulting from the desire to retain power at all costs through violence and coups, which can only ultimately weaken national capital, as illustrated by Trump's call to march on the Capitol at the end of his first term, Bolsonaro's coup attempt in Brazil, and that of President Yoon Suk-yeol in South Korea in December 2024.

"If Western state capitalism has been able to survive its Stalinist rival, it is in the same way that a more robust organism resists the same disease for longer. (...) Capitalism today exhibits tendencies similar to those that caused the demise of Stalinist state capitalism. As for Chinese state capitalism, marked by Stalinist backwardness despite the hybridisation of its economy with the private sector, and riddled with numerous tensions within the ruling class, the hardening of the state apparatus is a sign of weakness and a promise of future instability.”

2.3. The impasse of overproduction is becoming increasingly relentless

“The picture presented by the capitalist system confirms Rosa Luxemburg's predictions: capitalism will not experience a purely economic collapse but will sink into chaos and convulsions:

• “the almost complete absence of extra-capitalist markets is now changing the conditions under which the main capitalist states must achieve expanded accumulation: increasingly, this can only be achieved, as a condition of their own survival, to the direct detriment of rivals of the same rank, by weakening their economies. The ICC's prediction in the 1970s of a capitalist world that can only survive by reducing itself to a small number of powers still capable of achieving a minimum level of accumulation is increasingly coming true. – As an expression of this impasse, due in particular to the growing weight of unproductive military spending, inflation will remain a permanent disruptive factor for economic stability.”;
• for these reasons, the entire capitalist system remains highly exposed to the occurrence of large-scale financial crises and currency destabilisation.

The level of overproduction combined with the anarchy inherent in capitalist production, as well as the repercussions of imperialist conflicts and the increasing destruction of ecosystems, are profoundly destabilising capitalist production and increasingly exposing society to risk. The occurrence of shocks that jeopardise the ability to continue production, leading to shortages and supply chain disruptions, bring incalculable social and economic consequences. Further, as is already the case for certain commodities in some areas – agriculture, pharmaceuticals and other segments of production – it is becoming apparent that the deepening of decomposition means the cessation of the production of such commodities because their continuance is not sufficiently profitable. Thus, overproduction and the resulting difficulty in accumulating wealth paradoxically lead to shortages.

Overproduction is also evident in the serious crisis in the agricultural sector, which has given rise to peasant revolts worldwide, including in the central countries. Weighed down by the crisis (rising energy and input costs), which has been exacerbated in Europe by the historic decline in production due to the climate and the historic increase in epizootic diseases leading to mass slaughter of livestock, many farms are doomed to disappear (e.g. in France, where 84,000 full-time equivalent jobs are expected to be lost by 2050 and 200,000 farms – half of the total! – are expected to disappear). In response, governments (particularly in the EU) are pushing for increased industrialisation of animal and plant production, accompanied by the abandonment of any ‘green’ objectives. This intensification of agricultural productivism, which global capitalism is rushing headlong into (and which is a major cause of environmental destruction), encourages the development of zoonoses, such as the one incubating in the United States, which could potentially have consequences similar to those of the Spanish flu of 1918.

Finally, the introduction of AI into production is an attempt by capitalism to increase global GDP growth and reverse the general decline in labour productivity over the last two decades: "Automation will affect a growing proportion of the workforce. Over the past two decades, it has mainly replaced medium-skilled occupations such as machine operators, metalworkers and clerical workers. Automation will now affect high-income occupations such as doctors, lawyers, engineers and university professors. Although new jobs will be created, there will be a mismatch between the jobs lost and the newly created jobs. This mismatch could prolong the period of unemployment for many workers...”[10] “Automation could eliminate 9% of existing jobs and radically change about a third of them over the next 15 to 20 years.”.[11] Forty per cent of hours worked could disappear in central countries. This “fourth industrial revolution”, yet another attempt to temporarily escape the contradictions of overproduction, reduces the size of the solvent market, while the rise in the organic composition of capital, which corresponds to its generalisation, calls for even greater accumulation. Ultimately, AI can only further reinforce the impasse.

Furthermore, the rise of AI, which consumes large amounts of water to cool infrastructure sometimes located in arid areas (!) and electricity (consumption will increase tenfold in the United States by 2026), has enormous environmental repercussions. It stimulates the consumption of fossil fuels, as in the case of the United States, which plans to increase drilling by 18%, or China, where it depends on coal. AI is also expected to cause shortages in certain regions of the United States!

The capitalist economy is therefore increasingly marked by uncertainty, destabilisation and chaos, the fragility and weakening of the system, and the endless growth of its crisis. The disappearance of international coordination to deal with the crisis and the retreat into national isolation also express capitalism's inability to produce new engines capable of reviving the global economy, whereas the United States in the 1980s and China after 2008 were still able to play this role. Due to the general weakening of the capitalist system, all states are sinking into crisis: the absence of sufficient extra-capitalist markets is now changing the conditions under which the main capitalist states must achieve expanded accumulation: increasingly, this can only be achieved, as a condition of their own survival, at the direct expense of rivals of the same rank by weakening their economies.

ICC

 

[1]. See, for example, The Internationalist Communist Tendency, “Refining the concept of Decadence” on the ICT website.

[2]. “UN Global Trade Update”, December 2024, on the UN Trade and Development website.

[3]. “Why Trump’s trade war will cause chaos”, Financial Times, 19.11.2024

[4]. “China’s real economic crisis”, Foreign Affairs, August 2024.

[5]. The Future of European Competitiveness, “Part a. Forward”, Publications Office of the European Union, 2025.

[6]. See “This crisis is going to be the most serious in the whole period of decadence”, International Review nº172, 2024, pp. 39-40.

[7]. Ibid. p.40.

[8]. Ibid. pp. 40-41.

[9] “Theses on Decomposition”, International Review 107

[10]. “Le monde en 2040 selon la CIA”, a book by Laurent Barucq, p. 102

[11]. Ibid.