The long taboo topic of the end of capitalism seems to be in fashion recently – a consequence of the deepening economic crisis that shows no signs of going away. In fact there’s even a website now www.endofcapitalism.com. I distinctly recall talk of the federal government “nationalizing” Wall Street when the major banks came to the taxpayers in 2008 to bail them out. There has been so much secrecy about exactly how much TARP money we have doled out (is it $5 or $10 trillion?), as well as exactly where the money disappears to. I’m not sure if we have “nationalized” or “partially nationalized” any of the corporations that we agreed to finance. Is it possible to “nationalize” corporate CEOs? Because it’s my sense most of the money has gone into private pockets.

This isn’t the first time economists have declared that capitalism was on its last legs. Many, in fact, saw the Great Depression as symptomatic of its impending failure. British parliamentarian John Strachey was clearly the most articulate in his 1933 The Coming Struggle for Power. Moreover he makes some surprisingly prophetic predictions regarding the future of post-industrial capitalism. I find interesting parallels between Strachey’s analysis and those of Paul Swezey (who first articulated “stagnation theory” in the 1960s) and Fred Magdoff and Michael Yates in 2009. All four are strikingly non-judgmental in their approach. There is no castigation of criminal banksters, sleazy corporate lobbyists or crooked politicians.

Instead they quietly point out that neither Great Depression nor our current economic crisis is the fault of any particular individuals or groups. Basing their observations on the premise that there are natural laws of capitalist economics, just as there a natural laws of physics, they argue that our current economic difficulties are caused by fundamental flaws in capitalistic economic systems.

From a somewhat different perspective Alex Knight, who edits www.endofcapitalism.com, promotes End of Capitalism Theory. This argues that capitalism is breaking down owing to ecological and social limits to the continual growth that’s essential for a capitalist economy to continue to operate.

How Capitalism Developed

Of the five, Strachey has always been my favorite. As a long serving Member of Parliament, he has a knack for bringing complex concepts down to the level of ordinary men and women who lack formal training in economic or political theory. In fact my favourite part of The Coming Struggle for Power is where he carefully traces the transition all human economies underwent from feudalism to mercantilism (large scale trading) and from mercantilism to capitalism. He emphasizes this transformation was extremely violent, citing the Rebellion of 1640 (during which Charles I was executed) and the Revolution of 1688 (in which James II was overthrown). Strachey goes on to describe the violence that accompanied the Enclosure Act one hundred years later, which denied farmers the ability to continue subsistence farming by throwing them off their communal lands. Finally he stresses that neither the French Revolution nor the American Revolution was really about political freedom or equality. That the primary purpose, and effect, of both wars was to end old feudal relationships that interfered with the right of the new capitalist class to freely produce, buy and sell things.

Strachey’s Crystal Ball

As he writes in 1933, Strachey is of the definite opinion that the Great Depression is symptomatic that capitalism has reached its final stage of monopoly capitalism. It isn’t quite dead yet, but clearly dying. He quotes from Lenin (who had nearly 50 more years experience with capitalist boom and bust cycles than Marx did) about “monopolistic” capitalism being the last stage of capitalism – when begins to “decay.” Lenin (and Strachey) describe specific political/economic transformations that characterize end stage capitalize. (owing to an inevitable decline in profits and growth). I find it uncanny that they describe our current economic predicament so perfectly:

1. The monopolistic corporations that control finance capital (the commercial and investment banks) essentially merge with the monopolistic corporations that control production and manufacturing (which they have done, due to massive buy outs and takeovers and interlocking boards)
2. There is increasing focus on exporting capital (which is what happens when a company shuts down a factory in the U.S. and re-opens it in southeast Asia)
3. National governments, which are essentially controlled by their monopolies, are constantly in conflict with one another over who will control the resources, markets and cheap labor of the Third World.

The fact remains that Strachey was mistaken in predicting capitalism’s imminent demise. Capitalism didn’t die in the 1930s. According to Sweezy, Magdoff and Yates, the massive “financialization” of the US economy served as an 80 year life support system to keep it going a little longer. Unfortunately this strategy no longer seems to be working that well. So what do we do now?

To be continued