Is Capitalism Terminally Ill?

Today (June 15th) the Toronto Star broke news that the NDP was planning to drop the term “socialism” from its party’s platform. This was a mere formality of what had been in existence for decades: the party hasn’t been “socialist” in any shape or form for a very long time.

On the very same day, new data emerged from the Certified General Accountants Association reporting record levels of household debt for Canadians – a total of $1.5 trillion, which means if the debt was spread evenly among all Canadians, a family of two would owe an estimated $176,461, including mortgage costs.

Also, on this same day, the Harper government moved to end the strike of Air Canada’s 3,800 predominately female ticket agents by introducing back-to-work legislation. The workers, who are CAW members, are fighting efforts by Air Canada to gut their pension plan.

What do these portents add up to?

On one hand, the forces that might replace capitalism with some form of socialism appear to have thrown in the towel at the exact time capitalism is failing working people miserably. Meanwhile, capital is in the driver’s seat, clearly with the upper hand, able to force workers to give over more and more concessions while they remain mired in debt.

But a deeper question is this: Is capitalism in terminal decline? Does it have cancer and is its demise inevitable?

On the face of it, that seems like an absurdity. After all, for capitalists, things couldn’t be better. Corporate profits and executive pay are going gangbusters. There are few if any impediments for the business sector to getting whatever it wants, whether it’s free trade deals, a free hand to bust unions, gut workplace and environmental laws, and pressure governments to do their bidding, whether it’s bailing them out or never holding them to account.

Meanwhile, the twin bogeymen of “socialism” and “communism” that instilled such fear in the capitalist classes during the 20th century are dead. No one is threatening capital’s private control over the economic levers from that quarter.

So how can one suggest that capitalism is terminally ill? Especially since people have been predicting its demise since Adam Smith’s day.

I am not suggesting it’s going anywhere anytime soon.

What I am saying is that evidence is mounting that capitalism is failing the vast majority of people. It is failing to provide working people with jobs, a decent standard of living, security and stability. The Great Recession grinds on with job growth either anemic or even falling, wages are declining, personal and government debts are climbing, food and gasoline prices are soaring, and the income gap continues to worsen. With the exception of a handful of countries, Europe is an economic disaster zone, the US economy is flailing, and Japan’s economy is in deep trouble. The middle classes and unionized working classes are going the way of the dodo.  And governments are about to make matters worse by imposing austerity measures and laying off millions of public servants around the world.

So where is this bound to end?

Indicators are that this will lead to chaos. The Arab spring might be caused by people throwing off the yoke of dictatorships, but the uprisings are being driven by economic factors too. The Arab world has far too many young, unemployed people facing bleak economic prospects. In Europe, in countries like Greece, Spain and the UK, unemployed youths have taken to the streets, and anarchist groups are seeing an uptick in popularity. Mexico, which has descended to the status of a failed state, is riven by drug war violence that has as its root cause the failures of the legitimate economy to provide good jobs to Mexican workers. Chinese migrant workers are increasingly clashing with police over their plight.

Even if the forces of socialism fail to re-emerge, capitalism is facing a period of unrelenting instability. As larger portions of the world’s population are driven into penury, you will see greater social unrest, more violence, more social problems, more despair. And that’s entirely because too many desperate people, unable to make ends meet, unable to find jobs, will turn to increasingly desperate measures – either via protests and acts of rebellion, or entering the underground economy of organized crime – in order to seek alternatives to the current order.

In the past, when capitalists have faced rebellion, they have either embraced fascistic parties and authoritarian measures to launch crack downs, or they’ve made concessions – allowed wages to rise and workers to garner more rights. But in an era of globalization and free trade, the ability of capital to give workers higher wages is limited. And cracking down on dissent and becoming more authoritarian, has its limits too, as Syria and Egypt and Libya demonstrate.

Capitalism might not be overthrown, but it will likely be facing a period where its very foundations are undermined because it continues to exclude too many people from the opportunities they want and deserve.



  • We are becoming a global village. First Capital; then Labour; lastly the referee (government). The globalization of Labour will develop through wage harmonization and depletion of new labour markets. Led out of southern India or some such; not the previously organized pools of labour that are most subject to right wing rhetoric and fixation on localized entitlements.

  • Ratcheting down expectations i a culture war is what will save capitalism.

    I have questions that the future of the capitalist economy will be determined. It will not end, the question is how will it change.

    1) At what point will the cultural straps come off the packaging , i.e. how deep is the veneer (seems as though it is coming off in some nation states, but they are but peripheral, need the core to start taking up the challenge to actually existing capitalism.) So how far will the working population endure decline before a massively organized response. (Polanyi double movement type of thinking)

    2) Given the resource imbalances in terms of political capacity, seems as though the interests in preserving power for current forms of capital accumulation have altered the democratic structures and a move to the right has occurred in a majority of the core. hence the current feelings of democratic failure (especially in the USA). (our own election was an example where money, in my opinion, was a huge factor in winning the election- massive ad campaigns before election, creation of hot button election issues- it was a hugely choreographed election win by the right).

    The question is – How far will this push to the right, bring about the promised targets of austerity- or will these powers change course and make a Keynesian or other turn. How fast will these different changes occur and how far will austerity go. (very much linked to 1 above)

    3) Potentially everybody is just heading for the exits and nobody actually cares whether it survives, as survival itself is now a matter of living in a bunker or some other fantastical dystopia (Potentially Zizek is right that the blurring of reality and fantasy is taking us back to the future) i.e. the economy is out of control and beyond a needed regulation and again the reset button is the only solution.

    I guess my ultimate question for the future of capitalism, can an orderly transformation into a sustainable social and environmental based economy be had within its mutational boundaries?

    Capitalism is currently pretty sick- but my last question is, hasn’t it always been?


    @Roy- about the only reality of global village is global accumulation for capital. The other two, without massive expansion in regulation will never occur- i.e. read number 3 above.

  • Paul,

    Thank you for your objection to my prediction. I have deliberately placed regulation as trailing globalization of Labour. Labour was able to organize in response to the rise of Capitalism once, and that was before the internet. We are social animals, and will use the new social networking tools to rise again. By commenting on blog sites, for instance….

  • Roy, let me add on to my comment at you. I hope that we can grow to reach out to such far away goals that you speak of, and I have been volunteering with Labourstart an international labour service, to do help exactly that for the last 2 years.

  • “In the past, when capitalists have faced rebellion, they have either embraced fascistic parties…” Wasn’t the “Harper Government” just given a majority?

  • “We are social animals, and will use the new social networking tools to rise again. By commenting on blog sites, for instance….”

    Yep that is the ticket!?!?!?!?!?!?!?!?!?!?! Wha?

  • John W. Warnock

    Has anyone in Canada noticed that in the PIGGS it is social democratic governments, either with a majority or in a coalition government, that are imposing the draconian policies on the vast majority? No one on the NDP left in Canada seems to want to admit this reality. So if the crisis finally comes to Canada, would the NDP government act any differently? They didn’t in Saskatchewan after 1991. But that seems to be everyone’s hope.

  • It is a bit difficult to persuade many that indeed it is these governments to blame for a poorly put together monetary union, without the necessary political union. The core economies of the EU have not done so bad and given these and a host of other issues has resulted in the weaker of the EU nations to be held at gun point with its populations and forced moves to austerity. Roubini makes a good case here as to why this European experiment could not withstand the shocks of the financial crisis. It is kind of like expecting 6 nuclear plants built 30 years ago on a major faultline, located 200 km from the most populated city in the world to withstand a 9.0 magnitude earthquake and follow up tsunami. Do you blame the government or do you blame the designers?

  • Governments have the power of credit creation! They have the power to cancel the debts. You guys need to go read about early american history and dealing with defaults. The truth is people today are just spineless and the media whips up the public mind. As we have seen privately media has been disaster for informing the public.

    We have our modern capitalist pravda.

  • @tito, sure it is pretty easy to create and cancel- however the economic culture is very far from that space. If it were closer, then I would say sure that is an option on the radar. In fact without much in the sky as sustainable solutions, debt and its cultural concretization could become a whole lot more creative in the future. It shows the most promise- spend spend and spend but it has got to be on investment that can actually boost or expand productivity as it must go hand in hand with employment creation and increasing the quality and quantity of output. Smart debt! It has got to be ultra smart debt- i.e. very targeted investment- public or private- depending on your political make-up.

  • Is the whole argument, Is Capitalism Terminally Ill, a straw-man? Maybe I am confused as to what ‘capitalism’ is? Looking here at home and throughout the west, I see conservative nanny states (as defined by Dean Baker), not honest capitalist ones.

    If the definition of capitalism is the current bastardised form we practice, then yes it is terminally ill. Lets all hope it passes away before destroying its hosts.

  • No true Scotsman . . .
    Capitalism has never existed in “honest” form and probably cannot. We have to analyze actually existing capitalism.
    The thing about capitalism is that it bases the economy on the selfish actions of powerful people. Those who believe in “honest” capitalism imagine that there is some way in which powerful, selfish people can be persuaded to play their selfishness “by the rules”, making money exclusively by doing productive things rather than through deceit, coercion, fraud and other forms of cheating. They can’t. It’s easier and faster to make money by insider trading and bribing government officials to furnish subsidies than by investing in productive endeavours, so that part of the “market” economy devoted to such things will always grow relative to the rest until it causes crashes bad enough to force some kind of restart.

    Really, what we’re seeing right now is actually just a return to the norm of capitalism as it existed through most of its history–when labour has little political leverage, what you get is the “iron law of wages”, in which wages always tend (are successfully pushed) towards the basic minimum required for subsistence. This kind of capitalism was always very crisis-prone and it still is. It’s a collective action problem–for each individual capitalist, and in a way for the capitalist class as a whole, it makes sense to push wages down, keeping more surplus for profits. But if they all do it for very long, consumption/demand goes away. Crisis!

  • Among the “cheating” I forgot to mention the huge category of exploiting externalities. It’s been calculated that the entire appearance of economic growth for decades and more is an artifact of the exploitation of externalities in the form of failing to account for the costs of environmental destruction. Account for that and the economy may have actually been shrinking long before the big recession.

  • @purple

    Capitalism is a contradiction, the “Growth” comes from nature. The growth is a mathematical concept divorced from reality. Capitalism downloads risks (health, illness) onto the environment and population to increase “profits” (i.e. an imaginary number representing political control over earths resources).

    Capitalism is a legal structure overlayed on top of natural world. Money is a creature of law, that’s all it is a rule based on numbers.

    Problem is capitalist economies are not tracking with reality (not taking it into account) everyone exists in a specialized bubble in capitalist society which they think is going to last forever and the general ignorance and apathy of the population (i.e. get as much money as you can as fast as you can) is pretty much the reigning ideology today among the youth.

  • Eh, I dunno, Tito. That first paragraph sounds pretty much like slogans to me. I don’t exactly disagree, but I do think what you say there masks as much reality as it expresses.
    Sure, primary inputs all ultimately come from “nature”, but that doesn’t mean all economies are alike in what they get out of a given input, or even how destructively they get their hands on that input. Technological change does make a difference, economic structures do make a difference even within a given broad economic system like “capitalism”, social norms do make differences.

  • “Has anyone in Canada noticed that in the PIGGS it is social democratic governments, either with a majority or in a coalition government, that are imposing the draconian policies on the vast majority?”

    Some of us noticed that tendency in social democracy well over a decade ago. Now as then it was trussed up as pragmatic policy in the light of new realities. Back then it was heart breaking; now it is just soul crushing.

    “Is the whole argument, Is Capitalism Terminally Ill, a straw-man? Maybe I am confused as to what ‘capitalism’ is? Looking here at home and throughout the west, I see conservative nanny states (as defined by Dean Baker), not honest capitalist ones.”

    Cool there has never been a real socialist economy either (as defined by Travis Fast). Want to do the time warp dance or try for an honest conversation?

    “Capitalism is a legal structure overlayed on top of natural world.”

    How fun! Try this: humans come from nature, therefore the institutions humans produce are natural and as such nature is stupid.

  • “How fun! Try this: humans come from nature, therefore the institutions humans produce are natural and as such nature is stupid.”

    No you are an ignorant anti-intelllectual screw ball. The wage system is a legal construct, the way property functions in our particular society is a legal construct. The only say you have over the distribution of wealth is how much money you have outside of violence/disobedience/revolution.

    The wage and legal property structure is a social relationship.

    There’s no law of nature dictating human societies “must be so”.

  • @Tito

    Well you got two things right:

    “The wage and legal property structure is a social relationship.

    There’s no law of nature dictating human societies “must be so”.

    Never said there was. It was your rigid binary of natural and an unnatural; or now as you have it between the “natural” and the “social” which gave birth to my “anti-intellectual” non sequitur.

    Let us take Marx’s clear formulation that the essence of being human is to engage is what is ultimately a social creative process of production. His argument is not that capitalism is unnatural but that private property is a barrier to the realization of the full creative capacity humanity. Socialism is also a property structure which underwrites a series of social relations. Does this make socialism unnatural? Your distinction between the natural and the unnatural does not add any information and confuses the matter.

    Now if you want to continue with sterile dichotomies like nature vs nurture; the social vs the natural, the object vs the subject be my guest it is your intellectual life.

    Me I am gonna go practice my screw ball.

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