The current financial and economic crisis and the prospects for the socialist movement

Abstract

Drawing on the social structure of accumulation theory, this article presents a case that the crisis that began in 2008 is not just a financial crisis or a recession. This crisis is a structural crisis of capitalism, of the type that arose in the 1930s and again in the 1970s. This implies that major economic restructuring is required to overcome stagnation of the economy. The article considers several possible forms of restructuring, including the construction of fascist, corporatist, or social-democratic capitalism, as well as the possibility of a transition to socialism.

Keywords:

• social structure of accumulation
• economic crisis
• financial crisis
• structural crisis
• socialism

Notes

¹ In SSA theory, the set of institutions that make up the specific institutional form of capitalism in a particular place and time is referred to as a social structure of accumulation.

² For a full account of this theory of capitalist expansion and crisis, see McDonough, Reich and Kotz (2010).

³ While the neoliberal model was adopted at the global level and in many countries such as the US and UK, some countries have followed the neoliberal model only partially or not at all. For a discussion of this feature of neoliberalism, see Kotz and McDonough (2010).

⁴ For a detailed account of the forces that led to the financial aspect of the current crisis, see Crotty (2009).

⁵ Rising exports can be an alternative means of resolving the realization problem for some countries, but of course all countries cannot run an export surplus. It does not appear that rising exports represent a feasible means to solve the realization problem for U.S. capitalism in the near future. The competitive position of the US economy has deteriorated significantly during the neoliberal era, producing very large import surpluses. The loss of competitive position, together with the large size of the US economy, render a resolution of the realization problem for the U.S. through exports highly unlikely for the foreseeable future.

⁶ US President Barack Obama often cites as justification for advocating various state programs the need for the USA to maintain superiority over every other country in the battle of competition.

⁷ The broader measure of federal spending, which includes transfer payments, declined relative to GDP after the end of World War II to 14.7% of GDP in 1948, after which it reversed and followed an increasing trend, reaching 19.1% of GDP in 1968 (U.S. Bureau of Economic Analysis 2011, Tables 1.1.5 and 3.2).

⁸ Some argue that global economic integration has largely eliminated the tendency for the interests of capital to lead to war pressures. This author is far from convinced of this view – a view that has been offered before in capitalist history, including on the eve of World War I.