Endless Spiral of Crises and Stagnation
My response to Din Deng's article, Proletarian Revolution In The Global North Is Impossible, elaborating on the dominance of monopoly-finance capital in the West
To start off, I wholeheartedly endorse this essay’s assessment – that proletarian revolution in the Global North is a prospect that demands sober reflection given the significant lack of material means of production in many European countries and sections of North America. The Western or ‘Northern’ Left needs to seriously consider what coming to power, either through parliamentarism or revolution, would require them to do as far as economic restructuring is concerned. What I hope to contribute to this discussion is to provide a short history of how we got here and then argue that any social democratic effort to continue propping up financial capitalism – even with more egalitarian redistribution and labour rights – is ultimately futile. Capitalism is doomed to stagnation because of the tendencies inherent in the economic system. Any hope for renewed economic prosperity in the West will be short-lived.
From the Golden Age of Capitalism to Financialization
At the height of working-class power in the West in the 1960s, capitalism was hit by a crisis of overproduction while undergoing a fall in profits and a rise in inflation, resulting from organised labour actions since the end of the Second World War. Social democratic governments in the West, instead of taking the side of the workers, capitulated to the threats of the capitalist class and began to repress labour. The crises of capitalism still nonetheless intensified with the oil shocks and stagflation throughout the 1970s.
As the forces of neoliberalism began to consolidate, it emerged victorious by the 1980s with the election of Margaret Thatcher and Ronald Reagan. The US and UK would introduce a new form of capitalism driven by finance. The deregulation of the banking sector and crippled industrial sector paved the way for finance to now play a central role in capitalist reproduction. More mobile capital meant that Western firms could outsource production, beginning the long-running trend of deindustrialisation and the rise of the service economy.
Monopoly-Finance Capitalism and Stagnation
It would be incorrect to say that finance capital did not have a prominent role in capitalism before the 1970s, but now it would take centre stage with the rise of monopoly-finance capital. The previous stage of monopoly capitalism, characterised by giant firms that could set prices, was already destined for endless crisis and stagnation due to tendencies inherent in capitalism – overproduction and underconsumption. Aside from military spending, finance was seen as the other way out of capitalism’s death spiral. But it is becoming increasingly clear that finance offers no solution, just a temporary drug high with severe withdrawals. Theorists of monopoly capital, Paul Baran and Paul Sweezy, knew back in the 1960s that: the normal state of monopoly capitalism is stagnation.
Though still more heavily centred in the US and UK, the current explosion of finance capital in the North typifies this trend. The dominance of finance is why much of North America and Western Europe have been growing on average below 1 or 2 per cent since the start of the 21st century. Monopoly finance capitalism – best exemplified in the real estate and speculation bubble across the ‘developed’ world leading up to the 2007-8 Global Financial Crisis – has no ability to restore growth or bring about mass prosperity, just the further concentration of wealth at the very top.
Where could we go from here?
The answer being socialism is likely obvious to this audience, but what would that mean concretely? I’d like to draw your attention to the start of this article where social democratic governments failed to overturn capitalism even as labour’s strength was reaching new heights in the 1960s. A compromise between labour and capital is not tenable, especially when capital’s back is to the wall. The working class – however you may choose to define it – needs to be in the front seat if any confrontation with monopoly-finance capital is going to be viable.
In addition to the essay’s call to cancel the Global South’s debt and shut down exploitative supply chains, I would like to suggest the Global North pay fairer prices for Southern commodities in any re-established trade relations. Dating back to the New International Economic Order brought forth by the Non-Aligned Movement in 1974, developing countries, particularly primary product producers, have demanded more equitable prices for their goods. This raising of prices would go a long way in rectifying the previously unequal relations of exchange under global capitalism. More than that, this would allow Global South countries to further develop productive capacities on their own terms. Liberated Global North states could transfer technology – for far below its use-value – in exchange for relieving developing countries of its ‘burden’ to produce essential goods for Northern countries. A new global arrangement would have to be designed for societies such that each would have some level of self-reliance and technological capacity while maintaining a healthy mutual interdependence with others.
For the full Din Deng article and other responses: https://www.dindeng.com/revolution-in-north-en/