The evidence suggests that capitalism has become wholly predatory and has given up all pretense of being "socially responsible."
Are all of the socioeconomic issues confronting Europe and the United States - recession or stagnant growth, skyrocketing unemployment, lowered prospects for new job creation, a demand shortage, a widening gap between the haves and have-nots, social malaise - merely consequences of the financial crisis of 2007-08?
A strong case can be made that what we have been witnessing since then is not simply a severe financial crisis centered in the developed world but the fact that today's capitalism is simply incapable of functioning in an economic way conducive to maintaining sustainable and balanced growth.
The so-called "financialization" of the economy, so prone to financial crises and meltdowns as the late Hyman Minsky has shown, cannot be understood independent of the production processes or developments in the real economy. Advanced capitalism had been facing severe structural stresses, strains and deformations - including overproduction, trade deficits, lack of job growth and elevated public and private debt levels - for quite a few decades prior to the eruption of the financial crisis of 2007-08.
Indeed, the "financialization" wave - which many have labeled "casino capitalism" or "stock market capitalism" but which amounts essentially to the deregulation of giant financial entities capable of shaping and controlling the fate of national economies - began as a result of the structural problems associated with the postwar regime of capital accumulation, whose collapse in the mid-1970s threatened the growing expansion of capitalism. Thus, "financialization" does not spring out of the blue but emerges as an alternative model to the decay of the postwar regime of accumulation.
What is accumulation, you ask? Well, in the Marxist tradition dating back to Marx himself and to his Theories of Surplus Value, capitalist accumulation is the conversion of surplus value into capital for the purpose of producing more surplus value. Keynes disagreed on this point with Marx's contention by ignoring it completely, but if you believe in the Freudian/Lacanian analysis, that meant that he opted to repress its truism. At any rate, the accumulation of capital is projected to be an objective movement that develops on the basis of the appropriation of unpaid labor power. From a historical perspective, the scale of accumulation depends on the specific form of the expansion of capital and on the productive power of social labor. Hence, when the capitalist class faces capital expansion with a low organic composition of capital (which refers to the ratio of the value of the constant capital to variable capital), the increase of capital is actualized by the growth of absolute surplus values (i.e., by increasing the length of the working day and hence of exploitation).1
In the age of "financialization," and particularly in the austerity-driven period following the financial crisis of 2007-08, the drive to maximize profit takes the form of absolute wage suppression and other means of exploitation, including the socialization of private losses, forcing the transfer of public assets to the private sector and creating debt peonage.
With the onset of the "financialization" of the economy (a driving force behind globalization and the shaping of the current and on ongoing neoliberal project), economic growth, employment prospects and the standards of living deteriorate significantly throughout the advanced industrialized world. This is easily proven by comparing growth and unemployment rates under the era of "managed capitalism" (1945-73) versus rates of growth and unemployment under the neoliberal world order (1979-present).
In the United States, for instance, as throughout the advanced capitalist world, the impact of finance on growth has been negative2 as investment in the real economy has fallen significantly, and wages have remained stagnant since the late 1970s. The outcome has been the rise of a new Gilded Age, with renewed claims about the superiority of Darwinian capitalism. At the same time, the poor and working-class populations have come to be seen throughout the advanced capitalist world as a sort of nuisance in the galaxy the rich occupy, with attacks being launched by the rich on their wages and working conditions and the media often carrying out derogatory campaigns against working-class identity.3
As for the increase in public deficits and government debt accumulation, these developments have been largely the result of insidious tax policies favoring the rich and corporate assets, which are related to the dominance of finance capital in contemporary capitalist society. Even in today's economically troubled southern Mediterranean nations (Greece, Portugal and Spain), which have been demonized by their northern eurozone "partners" and the international media and are allegedly paying the price of their "profligacy," so-called socialist governments pursued regressive rather than progressive social policies methodically over the past three decades.4
From this perspective of political economy, the end of the social contract in Europe and the dismantling of public social benefits in the United States must be understood as a reflection of the shift in the balance of power between capital and labor rather than as the outcome of the logic of pure economics. The neoliberal counterrevolution initiated in the early 1980s by the likes of Margaret Thatcher and Ronald Reagan in the UK and the United States, respectively, constitutes a class struggle from above at the behest of finance capital and big business through the use of state power.
It is through the application of this analytic lens that we can make sense today of the Republican mania over the debt ceiling and the onslaught on benefits and public services in contemporary America. The same analysis also leads us to a sound understanding of the EU's anorexic mindset in spite of the lack of growth and the serious unemployment problem confronting the eurozone.
In sum, actually existing capitalism has given up any pretext of being a "socially responsible" socioeconomic system and caters almost solely to the needs and interests of the rich and powerful by enforcing policies that are detrimental to the rest of society. Actually existing capitalism is a system that favors passionately and defends ruthlessly the interests of the 1% over those of the rest of society. This explains why the rich, big corporations and big banks have been doing so well at a time when the ranks of the unemployed keep growing and a sizable percentage of the working population struggles to merely survive. This is not then so much a capitalist crisis as an orchestrated putsch on the part of the most powerful faction of capital attempting to roll back the course of history to the detriment of the working populations.
In this context, the economic and social crisis facing advanced capitalist societies today is manufactured by the pursuit of a ruthless class struggle by the economic elites and the national governments they control against labor for the purpose of transferring wealth from the poor and the working class to the rich, making the rich even richer and the poor poorer.
How to halt the further deterioration in the standard of living of the working people and stop the ongoing onslaught on the social state under actually existing capitalism unmistakably represents one of the biggest challenges facing progressives and the labor movement today throughout the advanced capitalist world.
1 This brief discussion on the dynamics and contradictions in the accumulation process is derived from the author’s own analysis in a book of his titled Marxist Perspectives on Imperialism: A Theoretical Analysis. New York/Westport. Conn.,/London: Praeger, 1991), p. 26-27
2 This is clearly shown in a working paper produced for the Bank for International Settlements (BIS). See Stephen Gecchetti and Enisse Kharroubi, “Reassessing the impact of finance on growth,” BIS Working Papers No. 381, July 2012.
3 See, for example, Owen Jones’ investigation of neoliberalism’s attacks on the welfare state and working class identity in Britain in Chave: The Demonization of the Working Class, Verso Books, 2nd Revised edition, 2012.
4 See C. J. Polychroniou, “The Mediterranean Conundrum Crisis in the European Periphery.” Economic and Political Weekly, Vol – XLVII, No. 21, May 26, 2012