The changing global dynamics of capitalism

Capitalism has always been a global system. The development of global trade and colonialism from the 15th century and the rise of capitalism in Western Europe was one intertwined process. The gold and Silver from Latin America, the sugar and tobacco from the Caribbean and, as Marx writes, slavery conditioned the development of capitalism:

“Direct slavery is just as much the pivot of bourgeois industry as machinery, credit, etc. Without slavery, you have no cotton; without cotton, you have no industry. It is slavery that gave the colonies their value; it is the colonies that created world trade, and it is world trade that is the precondition of large-scale industry.”1

Hence, the subsequent development and spread of capitalism has been a global dynamic. The face of global capitalism, however, has been very different from region to region because of their different role in the accumulation of capital. Already at the time of Marx, this division was visible:

“[t]he profound hypocrisy and inherent barbarism of bourgeois civilisation lies unveiled before our eyes, turning from its home, where it assumes respectable forms, to the colonies, where it goes naked”2

The division of the world became more and more pronounced during the 20th century. However, the industrialization of the global South in recent decades is not only a new division of labor, but signals a significant change in the dynamics of global capitalism itself. This is also reflected on the political level with the decline of US hegemony and the rise of China in the world system. For the first time in the long history of capitalism, a peripheral state is becoming the crank in the capitalist system of production. This phenomenon signifies that capitalism is entering its final stage.

In the following pages, I will outline of the history and mechanics of capitalism’s global dynamics from early industrial capitalism to the globalized capitalism of today. Finally, I will give an assessment of the implications of the recent change in dynamics for the future of the capitalist system.

The necessity to expand

English capitalism experienced its first crisis in the 1840s. Consumption could not keep up with production. In order to maximize profits, capital needs to expand production, introduce new technologies, and provide the market with an ever-increasing number of goods. Liberal economists have always assumed a balance between production and consumption. In 1803, J.B. Say presented the thesis that production – by way of wages and profits – always creates a purchasing power that corresponds to the total price of all goods produced.3 History and practical experience, however, show that (with the exception of extreme situations caused by war or natural catastrophe) markets are always dependent on what the buyers have.

At first glance, Say’s thesis seems logical. Let us take the production of a profitable company as an example: the share of the total price of all goods on the market that has been spent on raw materials, auxiliary materials, machines, factories, etc., can secure significant purchasing power for the finished goods before they even are finished. Wages paid and profits made by suppliers create demand. The workers producing the goods can have their share of the finished product. All this seems indeed to guarantee a balance between production and purchasing power. The problem, however, is the profits of the capitalist class. They are not available before all goods are sold, which affects purchasing power.

Purchasing power is therefore always a step behind supply. There is no balance. This is confirmed by the simple fact that you can always get goods for your money but not always money for your goods.

Purchasing power is also limited by the exploitation necessary for capitalist growth. On the one hand, the capitalist needs to keep wages as low as possible to make the biggest profit possible. On the other hand, wages make up a significant part of the purchasing power that is required to make profit. In other words, the capitalist form of accumulation has a tendency to destroy its own market. If capitalists increase wages, their profits decrease; if they decrease wages, their markets decrease. In both cases, capitalists become hesitant to invest, not because they cannot produce, but because they do not know if what they produce can be sold.4 Marx stated that the ultimate cause of capitalist crisis is overproduction. Not in terms of what people need or want, but in terms of what can be profitably sold:

“Overproduction is specifically conditioned by the general law of the production of capital: to produce to the limit set by the productive forces, that is to say, to exploit the maximum amount of labour with the given amount of capital, without any consideration for the actual limits of the market or the needs backed by the ability to pay.”5

In volume three of Capital Marx emphases the fundamental contradiction of the capitalist mode of production:

“The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit.”6

These structural problems in capitalism came to the surface in England during the first half of the 19th century. Capitalists could not meet the workers’ demands for higher wages and better working conditions if they wanted to keep their profit rates intact. At that time workers’ wages in England covered the bare essentials of survival.7 It was the hungry 1840ties. The recurring problem of stagnant consumption vis-à-vis an ever-expanding production caused profit rates to fall.

One of the ways in which a capitalist country can solve the problem of overproduction is to sell as much as possible on the world market. Marx writes:

“the more capitalistic production develops, the more it is forced to produce on a scale which has nothing to do with the immediate demand but depends on the constant expansion of the world market”8

A positive trade balance is crucial for a healthy capitalist national economy, since the export surplus provides the purchasing power needed to keep domestic supply and demand in balance. 9

A centrifugal process

Marx and Engels saw capitalism’s development as a centrifugal process. In 1848 in The Communist Manifesto, they describes this early tendency to globalization thus:

“The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere. … The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilization. The cheap prices of its commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilization into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.”10

They did not foresee that this process would, with equal speed, divide the world into a highly developed imperialist center on the one hand, and an exploited and underdeveloped periphery on the other. Indeed when Marx wrote The Communist Manifesto in 1848, he saw colonialism as a progressive phenomenon.

The first phase of industrialization ended in England around 1830, when industrialization had barely started in the countries of continental Europe and in the USA. The European countries and the US, however, never turned into a periphery. English capital helped them to become developed capitalist countries themselves. So far, Marx’s predictions were correct. At about 1880, the industrial development of both Germany and the USA had surpassed that of England. Marx believed that a similar process was awaiting the colonies of Asia and Africa. Once England had erased the traditional social structures and introduced capitalism, the colonies would undergo a rapid development echoing that of the motherland. About England’s role in India, Marx wrote:

“England has to fulfill a double mission in India: one destructive, the other regenerating – the annihilation of old Asiatic society, and the laying of the material foundations of Western society in Asia. … I know that the English millocracy intend to endow India with railways with the exclusive view of extracting at diminished expenses the cotton and other raw materials for their manufactures. But when you have once introduced machinery into the locomotion of a country, which possesses iron and coals, you are unable to withhold it from its fabrication. You cannot maintain a net of railways over an immense country without introducing all those industrial processes necessary to meet the immediate and current wants of railway locomotion, and out of which there must grow the application of machinery to those branches of industry not immediately connected with railways. The railway-system will therefore become, in India, truly the forerunner of modern industry.”11

Marx concluded that:

“The country that is more developed industrially only shows, to the less developed, the image of its own future.”12

According to this view, the opening of new markets in Africa and Asia, and the export of capital to the Americas promised to temporarily postpone capitalism’s imminent breakdown. However, the relief wouldn’t last long. The eventual result of such an expansion of capitalism would only be more accumulation and a new, even worse, crisis of overproduction. Friedrich Engels made the following prediction regarding capitalism’s development:

“Even in quite barbarous lands the bourgeoisie is advancing. …They intend to shape the whole world according to their standard; and, on a considerable portion of the earth’s surface, they will succeed. We are no friends of the bourgeoisie. That is common knowledge. …We cannot forbear an ironical smile when we observe the terrible earnestness, the pathetic enthusiasm with which the bourgeois strive to achieve their aims. …They are so shortsighted as to fancy that through their triumph the world will assume its final configuration. Yet nothing is more clear than that they are everywhere preparing the way for us, for the democrats and the Communists; than that they will at most win a few years of troubled enjoyment, only to be then immediately overthrown. … So just fight bravely on, most gracious masters of capital! We need you for the present; here and there we even need you as rulers. You have to clear the vestiges of the Middle Ages and of absolute monarchy out of our path; you have to annihilate patriarchalism; you have to carry out centralisation; you have to convert the more or less propertyless classes into genuine proletarians, into recruits for us; by your factories and your commercial relationships you must create for us the basis of the material means which the proletariat needs for the attainment of freedom. In recompense whereof you shall be allowed to rule for a short time. You shall be allowed to dictate your laws, to bask in the rays of the majesty you have created, to spread your banquets in the halls of kings, and to take the beautiful princess to wife – but do not forget that ‘The hangman stands at the door!’ (Heinrich Heine, ‘Ritter Olaf’).” 13

The polarization of the world system

As we know, the hangman’s face is always well hidden. The predictions of Engels proved false. Not because his analysis of capitalism at that point of time was wrong: the capitalist system, as it functioned until the middle of the nineteenth century was indeed on its way to run out of steam. It was hit by regular crises of ever-increasing depth. Simultaneously, the strength and resistance of the proletariat grew. The “specter of communism” materialized with the Paris Commune of 1871. The bourgeoisie was terribly afraid of widespread revolution. What Marx and Engels did not foresee was that the proletariat’s struggle in Europe and North America for better living conditions would, when combined with the spoils from colonialism initiate new forms and dynamics of imperialist accumulation that revitalized global capitalism. Jawaharlal Nehru, India’s first prime minister described this in 1933:

“It is said that capitalism managed to prolong its life to our day because of a factor which perhaps Marx did not fully consider. This was the exploitation of colonial empires by the industrial countries of the West. This gave fresh life and prosperity to it, at the expense, of course, of the poor countries so exploited.”14

Colonialism was not just a centrifugal phenomenon; it was also a polarizing one. The division of the world into rich and poor countries, into center and periphery, enabled capitalism’s growth and longevity.

The late Marx seems to acknowledge that India was not going to be the mirror reflection of England he envisioned in 1853.15 In a letter to N.F. Danielson, dated February 19, 1881, Marx wrote:

“In India serious complications, if not a general outbreak, is in store for the British government. What the English take from them annually in the form of rent, dividends for railways useless to the Hindus; pensions for military and civil service men, for Afghanistan and other wars, etc., etc. – what they take from them without any equivalent and quite apart from what they appropriate to themselves annually within India, speaking only of the value of the commodities the Indians have gratuitously and annually to send over to England – it amounts to more than the total sum of income of the sixty millions of agricultural and industrial labourers of India! This is a bleeding process, with a vengeance! The famine years are pressing each other and in dimensions till now not yet suspected in Europe!” 16)

It turned out that the dynamic unfolding of the capitalist world system was not a homogenizing but a polarizing process. For the next approximate 150 years, instead of a centrifugal development of capitalism, there was a system which polarized center and periphery. One could define imperialism as a necessary expansion of the capitalist mode of production based on its inherent contradictions. This implies a value transfer that polarizes the system. The periphery secured the profit-rate through a continuation of primitive accumulation and super-exploitation of the working force. The center experienced a rising wage level which secured the realization of profit through an expanding market.

The division of labor and unequal development

For the next century, the periphery primarily became a supplier of raw materials and tropical farming products to the center based on unequal exchange with industrial products from the center. Unequal exchange and unequal development had the same basis, namely the international wage variation. The value which was transferred by means of unequal exchange from the poor part of the world to the rich part resulted in a low and a high rate of consumption, respectively. In 1975, the consumption power in the city of Copenhagen with one million people was higher than the consumption power of Tanzania with 50 million people.

Foreign capital invested in the exploited countries because of the geological conditions, the climatic conditions, or the cheap labor power, was mainly based on exports to the world market, i.e. rich imperialist countries. Arghiri Emmanuel describes how investments in the imperialist countries lead to development, and how investments in the exploited countries leads to dependency:

“Why is it that European capital in the United States and Australia, and United States capital in Canada, have benefitted these countries by developing their economies, whereas in the Third World they have played a harmful role by forming enclaves? An enclave merely means a foreign investment that refuses to participate in the country’s process of expanded reproduction….The Société Générale de Belgique installed the Union Minière in the Congo and Canadian Petrofina in Canada. The former exploits copper miners, the latter oil wells. When the investment has reached its maximum potential, Canada Petrofina uses its profits to establish a refinery: for this purpose it even increases its capital…Then the company interests itself in the distribution of oil products and buys a network of selling points.. Next, it sets up a petrochemical industry, followed by a works to produce tank cars; and, after that, what? Perhaps a chain of department stores…In contrast to all this, the Union Minière du Katanga, once its program for equipping its copper mines is completed, ceases to expand and pays its dividends in money. It becomes an enclave. Why?…The simple fact is that in Canada the high standard of living of the people, resulting from the high wage level, constitutes a market for all sorts of products, whereas wages and standard of living in the Congo are such that there is nothing there to interest any fairly largescale capitalist – nothing except the extraction of minerals or the production of certain raw materials for export that have inevitably to be sought where they are to be found”. 17

This was a self-intensifying process. Through unequal exchange and the export of the majority of profits to the imperialist countries, the exploited countries were deprived of the conditions for a dynamic capitalist development. The more limited the investments are, the higher the rate of unemployment and the higher the pressure on wages. This in turn means a further reduction of the market and thus a reduced possibility of attracting capital.

On the other hand, high wage levels mean a comparatively high rate of consumption and thus a large market with considerable purchasing power in the imperialist countries. This attracts capital, and a development of the productive forces follows.

This author discussed with Emmanuel in the mid 70ties the subject of why capital did not move more industrial production to the third World. His answer was that this is partly due to a practical limitation on control and management, logistic and security, partly the need for a working class capable of the job (at that time China was not part of the world market), and partly political barriers introduced by states and the resistance from the labor movement in the North.

The dependency theory

This dynamic led the dependency theorists of the 1970s to the conclusion that Third World industrialization was impossible within the imperialist system. They believed that Third World countries would continue to supply raw materials, tropical agricultural products, and simple, labor-intensive industrial goods; their economies would remain dependent and constitute the periphery of the capitalist world system. Only de-linking from the imperialist world system could change that logic. Dependency theory did not foresee the massive industrialization of the periphery that we have witnessed in the last thirty years, because in the world of the 1970ties a domestic market had to be developed before industrialization was possible. Dependency theory underestimated the development the productive forces that made the globalization of the production process itself possible: new forms of communication, transportation and management facilitated the industrialization of the Global South primarily with the aim of exporting to the North. Furthermore, no one at the time could imagine the collapse of the Soviet Union or the integration of China into the capitalist world market. It seemed unthinkable that only a few decades later, 80 percent of the world’s industrial proletariat would live and work in the Global South and that the Global North would be rapidly deindustrialized. Finally, they did not foresee the effect of neoliberalism on the formation of the world market. All these changes decoupled the connection between the expansion of a national home market and industrialization.

In the 1970s, dependency theory showed how the development of the periphery – or, more precisely, the lack of it – was dependent on the core countries. Today, in a world with globalized production, the core countries have become dependent on production in the periphery. To speak of producer economies and consumer economies (connected via global chains of production) does more accurately describe current global economic relationships than the terminology formerly used by dependency theorists.18 Today, the proletariat in the South does not play a peripheral but a very central role in the capitalist world system. The global South is not dependent on the North. Rather, it is the other way round.

The change of dynamics

The turn towards neoliberal globalization was a response to the pressure from liberation movements and from the struggles of nationalist regimes in the global South and trade unions in the North, culminating in the so-called “oil-crisis” in 1973. The foundation for this transformation was partly developments in the productive forces: computers and cell phones, internet and emails enhanced instant communication regardless of distance. The development of the standard container and the infrastructure to handle it changed transport logistics completely. New management-regimes like “just in time production” could coordinate production in global chains. As well, political neoliberalism implemented new laws that facilitated the global movement of capital and goods without tax and custom tariffs, the privatization of former public services, the weakening of trade unions, and the establishment of new global institutions, governmental systems and military strategies to back up the transformation. All of this made neoliberal globalization possible. The neoliberal system made it possible to produce in low wage countries and still keep control in the center. It was a transformation of historical dimensions. The integration of China and Eastern Europe into the international division of labor provided hundreds of millions of new proletarians within two decades from the late 80ties, as industrial production was moved from the center in search of higher profits. This gave capitalism a new golden age from the end of the 70ties until the financial crisis in 2007.

The industrialization of the South was certainly not introduced to create a more equal world. The export-oriented industrialization of the Global South and global chains of production brought new forms of unequal exchange. These are more intricate than swapping raw materials for industrial products, which characterized unequal exchange until the end of the 1980s. The global chains of production make it possible to transfer value from workers in the South to corporations and consumers in the North through labor arbitrage and the formation of world prices. The theory of unequal exchange is not only a critique of liberal trade theory but also of those theories upholding the neoliberal market. It is able to describe the transformation of value into price in the new global division of labor.19)

Therefore, the result of neoliberal globalization is, on the one hand, a continuing transfer of value and thereby a tendency to continued polarization while, on the other hand we have witnessed an unprecedented development of productive forces in the global South which have in some way turned the table. The emergence of China as a global economic power was an unintended side effect of the craving to exploit the Chinese proletariat.

It may seem that the prophesy in the Communist Manifesto that England “creates a world after its own image”is finally under way. However, the “image” of industrialization in the South is not a simple reflection of the industrialization of England, but a distorted mirror image. The industrialization of the South is not – (at least up until now )- based on a home market, as was the case in the center, but part of a new global division of labor in which the South is becoming the factory of the world, based on low wage labor. Most of the industrial production is exported. China is the world-leading exporter. Around 50 per cent of Chinas industrial production are exported and consumed in the center.20)

The imperialist system has up until recently been a system of centralization of the surplus on the world scale, thereby creating a center-periphery structure. The development of the productive forces in the global South is in process to reconfigure the world system into a more multipolar system, both economically and politically. Certainly, this is not to be a universally relative prosperous capitalism as in North-Western Europe and North America, This prosperity needs to have been fed by the exploitation of a periphery. Neither China, India, Indonesia nor Brazil has a periphery substantial enough to feed the development of welfare capitalism, and ecologically the world cannot sustain such a world system. The development of the productive forces in the global South will accelerate the crises of global capitalism. It is simply running out of a periphery, which has been a necessary condition for the transfusion of value that has kept accumulation ongoing for the last two hundred years. Global capitalism will be haunted by crises generated by the contradiction between the need to expand production and the inability of the demand it creates to consume goods. Profits will decline and accumulation will come to a halt. With increasingly globalized production and consumption patterns, there is less possibility to resolve crises by extending capitalist relations into previously peripheral economic zones. As already, Marx pointed out:

(crises will) “…become more frequent and more violent, if only because, as the mass of production, and consequently the need for extended markets, grows, the world market becomes more and more contracted, fewer and fewer [new] markets remain available for exploitation, since every preceding crisis has subjected to world trade a market hitherto unconquered or only superficially exploited.”21

To argue that a rising wage level in the South will secure the continuation of capitalism as a global system and that China is simply replacing the United States as the hegemonic power overlooks the fundamental contradiction in capitalist accumulation. You cannot have it both ways: a low wage level that fosters profit on one hand and a flourishing market that ensures profit is realized through sales on the other hand. Capitalist China will face the same contradiction which Europe and North America solved by imperialist exploitation, but it does not have a substantial periphery to get out of this bind. China will not stop the disintegration of the capitalist system as a whole. The development of the productive forces of China, Vietnam, India, and other economies in the global South reflects a shift in dynamics within that system, one that will shape humanity’s shared future. However, these countries can only try to secure their place in a future world-system through a transition to socialism.

On devious roads, for more than a hundred years, capitalism is approaching a dead end. We may now see the realization of Engels’ prophesies from the mid-nineteenth century. The “Hangman” does not have to wait so much longer, and Engels’s words in a letter to Karl Kautsky in 1894 specifies the circumstances:

“It is again the wonderful irony of history: China alone is still to be conquered for capitalist production, and in so doing at long last the latter makes its own existence at home impossible.”22

What are the force behind the changing dynamic?

We tend to forget that like other systems in history, capitalism had a beginning and will have an end. Until recently, it seemed hard to imagine that neoliberal globalization would come to an end. However, the presidency of Donald Trump and declining US hegemony, Brexit, the erosion of the EU and the rise of right-wing populism have changed the political landscape dramatically. The industrialization of the South begins to backfire and creates new political problems for capitalism in the South and the North. Politics is changing the dynamics of capitalism. The inner logic of capitalism is governed by the dialectical relationship between the economic laws that govern the accumulation and the class struggle that the social consequences of these laws produce. We can describe capitalism as an economic model of accumulation with different elements and variables. We can even express these in mathematical formulae. However, capitalism is not a perpetual motion machine, and the mathematical equations do not add up. The system has internal contradiction. For the model to work (and for profit to be generated) it has to secure the proper political and social conditions through constant class struggle.

There isn’t necessarily a direct correlation between what is good for the economy and what is possible politically. This would be a linear and deterministic understanding of history. Economic structures always affect class struggle, and class struggle always affects economic structures. At the level of states, individual nations vie for dominance. Imperialist countries compete with the countries of the periphery and with one another. There is a permanent struggle for hegemony. The world market and the world of states interact to shape the dynamic of capital accumulation on a world scale. The parties involved either try to optimize the economic system to serve their interests – or they try to modify it or even destroy it. The dialectical process between the laws of capital and their political consequences is the engine that drives the system. History never stops and the world always changes – but in ruptures, not along a linear path.

The Political Crisis of Neoliberalism

Throughout the 1980s and 90s, neoliberalism created profits for capital and cheap goods for the working classes in the Global North. It was supported by the traditional parties and labor unions of the working class. Tony Blair and New Labour set an example for social democratic parties all across Europe. There was broad political consensus in North America, Western Europe, and Japan, expressed in institutions and agreements such as the EU, G-meetings, the WTO, NAFTA, and so on. Neoliberalism’s progress came to a sudden end with the financial crisis of 2007. Not only was its momentum gone, it also faced resistance in the form of nationalist movements in the Global North.

Three decades of outsourcing and privatization eventually affected wages and the welfare state in the Global North. The initial victims of the crisis were the least flexible workers in industrial production. But soon part of the middle class felt the effects as well. In the US and Europe right-wing populist parties seized the opportunity with nostalgic appeals to an era of national sovereignty where none of the fatal consequences of neoliberalism could ever have occurred: the outsourcing of jobs, the deterioration of living standards, the dismantling of the welfare state, and the arrival of ‘too many’ foreigners.

This has put a lot of pressure on the parliamentary system. When grievances are expressed within this system that the ruling parties have no answer to – for example, to re-establish national control over the economy– it, too, hits a crisis with uncertain outcomes. The traditional parties of all stripes – conservative, liberal, as well as social democratic – are desperately looking for possibilities to bridge the gap between the demands of neoliberalism and the rise of nationalism. So far, they have not been very successful. The Brexit referendum and Donald Trump’s astonishing victory demonstrate just how deep the neoliberal crisis has become.

We must be clear on national right-wing populism: it does not challenge capitalism, but it throws capital into confusion. America first, says Donald Trump. Britain first, say the advocates of Brexit. France first, says Marine Le Pen. Russia first, says Vladimir Putin. With so much emphasis on national sovereignty, we might indeed see a return to state-driven imperialism. In the past 40 years, true to the tenets of neoliberalism, markets forces and global governance have mainly driven imperialism. In the near future, single states might vie for imperialist dominance again. A return to state-driven imperialism would certainly weaken their role in international relations. State-driven imperialism is also a much less effective and much riskier form of imperialism. It will be very difficult for right-wing populists to recreate the nation state of old. Industry will not return to the Global North. Tariff barriers will only raise prices on the domestic market. The revival of Keynesian welfare capitalism in Europe is an impossibility. But the longing for it alone creates a problem for neoliberalism. In the US, Trump’s strategy combines economic protectionism with military might. It is a very risky project. Trump cannot undo the effects of neoliberalism. Apple electronics, Nike shoes, and Levi’s jeans will never be produced in the US again as long as US wages are ten times those of China. Tariff barriers can at best throw sand in the gears of the global chains of production, but the effects will be minimal.

The global situation is complex and unstable. Economic power lies with globalized production and a financial sector whose legitimacy is under fire. The political order is threatened. The leadership of the Triad shows signs of disintegration. Trump has weakened both the G-meetings and NATO by his America first agenda. Russia is eager to be a global player again, and China has become both an economic and political heavyweight. Meanwhile, the new proletarians of the Global South become increasingly aware of their own power. The regimes of the region that proved unable to translate political independence into economic sovereignty have lost popular support and rely increasingly on authoritarian measures to stay in power.

A Triple Crisis

It seems that we are on the way to a triple crisis: economic, ecological, and political. Economic, because the working classes of the Global South will demand higher wages while capitalism is running out of new peripheries. The falling profit rate in productive capital will slow down investment and therefore accumulation.

Ecological, because any trustworthy scientific study tells us that we are heading toward catastrophe in the form of natural disasters, droughts, and shrinking harvests. The North has moved much of its industrial production to the South, but no one will escape the ecological and climatic consequences.

Political, because the crisis leaves the main political actors in the North confused. Both capital and the working class are divided in their attempts to save the system. There are factions of capital that want to continue with neoliberal globalization and change everything to keep everything the same. There are Palaeo-conservatives fractions who want to return to a nation-based accumulation of capital, authoritarian rule, and warfare in order to secure the lion’s share of the global spoils. Finally, there are those factions that have given up on production altogether and focus exclusively on financial speculation. Among the working classes, there are winners and losers of globalization. Unsurprisingly, their reactions to the crisis differ, and there is strong polarization between nation-based and class-based responses. All three aspects of the crisis are tightly linked and pose a serious threat to the capitalist system.

The coming years will be nothing short of dramatic. We are at the threshold of decisive struggles. The capitalist-imperialist offensive we have witnessed over the past 30 years is running out of steam. The objective conditions for radical change are excellent. The problem is the subjective forces. It is up to us to change that factor. We may have been too optimistic in the 1970ties; I believe that we are far too defensive and pessimistic to day.

The development of the productive forces in the Global South places the working class in a central position: if the workers of the Global South break the global chains of production, it is the core countries of the world capitalist system that will scream. The industrialization of the global South has also created a much stronger foundation for the development of socialist society than was the case in the struggle for national liberation in the post-World War II period.

We in the global North must support the struggle in the South, and make sure that the North is no safe “hinterland” for Imperialism. That means struggle against right wing national and social chauvinism and racism. Struggle against imperialist political and military intervention. We will be called national traitors; we will be a minority, but an important minority.

The good news is that in a structural crisis the “agent” plays a decisive role. A new world order will emerge from fiery struggles between progressive and reactionary forces. The stakes are high. Will the system self-destruct in an ecological or nuclear catastrophe, bringing down the whole world with it? Will it revamp itself in the form of a global apartheid system? Or will it yield to strong anti-capitalist and antiimperialist movements?

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Say, Jean-­Baptiste (1803), A Treatise on Political Economy. Philadelphia 1855: Lippincott, Grambo & Co., econlib.org


  1. Marx, K. (1847) Page 167. 

  2. Marx, K. (1853) Page 222. 

  3. Say, J-B, (1803), Page 138. 

  4. Emmanuel, A, (1984). Page 217-218. 

  5. Marx, K, 1863). Page 535.  

  6. Marx, K. (1963b) Page 615.  

  7. Hobsbawm (1957): 76-78. 

  8. Marx, K, (1861) Page 101. 

  9. It is only in a capitalist economy that a surplus of export on the trade balance is desirable. In a more rational socialist economy, this is of cause not the case: The Chinese population would prefer to consume the enormous amount goods exported to the US instead of bonds and foreign currency in the Chinese National Bank.  

  10. Marx, K & Engels, F (1848), Page 105.  

  11. Marx, K, (1853) Page 220. 

  12. Marx, K, (1867), Page 6.  

  13. Engels, F, (1848) Page 527-28.  

  14. Nehru (1934), Page 548. 

  15. Patnaik, Prabhat (2017)  

  16. Marx, K. (1881 

  17. Emmanuel, Arghiri (1972), Page 376-7.  

  18. I first saw these terms used in Kerswell (2011) Page 343. Consumer society is a term familiar to us, but we have failed to understand that it is dependent on a producer society. 

  19.  Lauesen and Cope (2015 

  20. Horn, John, Singer, Vivien, and Woetzel, Jonathan (2010 

  21. Marx. K, (1847b) Page 228. 

  22. Engels, Frederick (1894). Page 346.  

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