Karl Marx exposed the peculiar dynamics
of capitalism, or what he called the
bourgeois mode of production. He foresaw
that capitalism had built within it the
seeds of its own destruction. He knew
that reigning ideologies (think
neoliberalism, the free market) were
created to serve the interests of the
elites, and in particular the economic
elites, since the class which had the
means of material production at its
disposal has control at the same time
over the means of mental production, and
the ruling ideas are nothing more than
the ideal expression of the dominant
material relationships, the relationships
which make one class the ruling one. He
saw that there would come a day when
capitalism would exhaust its potential
and collapse. He did not know when that
day would come. Marx, as Megan Desai
wrote, was an astronomer of history not
an astrologer. Marx was keenly aware of
capitalism's ability to innovate and
adapt, but he also knew that capitalist
expansion was not eternally sustainable
and as we witnessed the denoument of
capitalism and the disintegration of
globalism, Karl Marx is vindicated as
capitalism's most prescient and
important critic. In a preface to the
contribution to the critique of
political economy, Marx wrote, “No social
order ever disappears before all the
productive forces for which there is
room in it have been developed, and the
new, higher relations of production never
appear before the material conditions of
their existence
have matured in the womb of the
framework of the old society itself.
Therefore, mankind always sets itself
only such tasks as it can solve, since
looking at the matter more closely we
always find that the task itself arises
only when the material conditions
necessary for its solution already
exist already exist or at least are in
the process of formation." Socialism, in
other words, would not be possible until
capitalism had exhausted its potential
for further development. That the end is
coming is hard now to dispute, although
we would be foolish to predict when this
would happen, and for this reason we are
called to study Marx very closely. The
final stages of capitalism, Marx wrote,
would be marked by developments that are
intimately familiar to us. Unable to
expand and generate profits at past
levels, the capitalist system would begin
to consume the structures that sustained it
It would prey upon, in the name of
austerity, the working class and the poor,
driving them ever deeper into debt and
poverty, and diminishing the capacity of
the state to serve the needs of ordinary
citizens. It would, as it has, increasingly
relocate jobs, including both
manufacturing and professional positions,
to countries with cheap pools of labour.
Industries would mechanize the
workplaces. This would trigger an
economic assault on not only the
working class but the middle class—the
bulwark of a capitalist system—that
would be disguised by the imposition of
massive personal debt, as incomes declined
or remained stagnant. Politics would, in
the late stages of capitalism, become
utterly subordinate to economics, leading
to political parties hollowed out of any
real political content and
abjectly subservient to the dictates
and money of global capital. But as Marx
warned, there is a limit to an economy
built on scaffolding of debt and
expansion. There comes a moment, Marx knew,
when there would be no new markets
available and no new pools of people who
could take on more debt, and this is what
happened with the subprime mortgage crisis.
Once the banks cannot conjure up new
subprime borrowers, the scheme falls
apart, and the system crashes. Capitalist
oligarchs meanwhile hoard huge sums of
wealth: 18 trillion dollars stashed in
overseas tax havens exacted as tribute
from those they dominate in debt and
impoverish. Capitalism would, in the end,
Marx said, turn on the so-called free
market, along with the values and
traditions it claims to defend. It would,
in its final stages, pillage the systems
and structures that make capitalism
possible. It would resort, as it caused
widespread suffering, to harsher forms of
repression. It would attempt, in a frantic
last stand, to maintain its profits by
looting and pillaging state institutions,
contradicting its own stated nature.
Marx warned that in the later stages of
capitalism huge corporations would
exercise a monopoly on global markets.
The need of a constantly expanding
market for its product chases the
bourgeoisie over the entire surface of
the globe, he wrote. It must nestle
everywhere, settle everywhere, establish
connections everywhere. These
corporations, whether in the banking
sector, the agriculture and food
industries, the arms industries, the
communications industries, use their
power by seizing the mechanisms of state
to prevent anyone from challenging their
monopoly. They fix prices to maximize
profit, and they push through trade deals
(think of the TPP and CAFTA) to further
weaken the nation-states’ ability to
impede exploitation by imposing
environmental regulations or monitoring
and controlling working conditions.
In the end these corporate monoliths
obliterate free market capitalism itself.
A May 22nd (2015) editorial in The New York
Times gives us a window into what Marx
said would characterize the late stage
of capitalism. I quote from The Times:
As of this week Citicorp, JP Morgan Chase,
Barclays, and Royal Bank of Scotland are
felons, having pleaded guilty on
Wednesday to criminal charges of
conspiring to rig the value of the
world's currencies. According to the
Justice Department, the lengthy and
lucrative conspiracy enabled the banks to
pad their profits without regard to
fairness, the law, or the public good. The
Times goes on: The banks will pay fines
totaling about nine billion dollars,
assessed by the Justice Department as
well as state, federal and foreign
regulators. That seems like a sweet deal
for a scam that lasted for at least five
years from the end of 2007 to the
beginning of 2013 during which the
bank's revenue from foreign exchange was
some 85 billion dollars. The final stages
of what we call capitalism Marx
understood is not capitalism at all.
Corporations gobble down government
expenditures, in essence taxpayer money,
like pigs at a trough. The arms industry--
with its official $612 billion defense
authorization bill, which ignores
numerous other military expenditures
tucked away in other budgets, raising our
real expenditures on national security
to over a trillion dollars a year--has
gotten the government
this year to commit to spending
348 billion dollars
over the next decade to modernize our
nuclear weapons and build 12 new
Ohio-class nuclear submarines estimated
at 8 billion dollars apiece. Exactly
how these two massive arms programs are
supposed to address what we are told is
the greatest threat of our time--the war
on terror--is a mystery. After all, as far
as I know, ISIS does not own a rowboat.
We spent a hundred billion dollars or we
spend a hundred billion dollars a year
on intelligence. It's a black figure, so
we don't know. We're guessing... and
surveillance. And 70% of that
money goes to private contractors,
corporations like Bose Allen Hamilton,
which gets 99% of its revenue from the
US government, and on top of this of
course we are the largest exporter of
arms in the world. The fossil fuel
industry swallows up 5.3
trillion dollars a year in worldwide
hidden costs to keep burning fossil
fuels, according to the IMF. This money,
the IMF noted, is in addition to the 492
billion dollars in direct subsidies
offered by governments around the world
through write-offs, writedowns and land
use loopholes. In a sane world these
subsidies would be invested to free us
from the deadly effects of carbon
emissions caused by fossil fuels, but we
do not live in a sane world. Bloomberg
News in the 2013 article Why Should
Taxpayers Give Big Banks $83 Billion
a Year? reported that economists
had determined that government subsidies
lower the big banks' borrowing costs by
about 0.8%. Multiplied by
the total liabilities of the ten largest
US banks by assets, the report said, it
amounts to a taxpayer subsidy of $83
billion a year. I quote from the
Bloomberg
article: The top five banks: JP Morgan,
Bank of America, Citicorp, Wells Fargo and
Goldman Sachs, the report read,
account for $64 billion
of the total subsidy, an amount
roughly equal to their typical annual
profits. In other, words the banks
occupying the commanding heights of the
US financial industry, with almost nine
trillion dollars in assets, more than
half the size of the US economy, would
just about break even in the absence of
corporate welfare. In large part the
profits they report are essentially
transfers from taxpayers to their
shareholders. End quote. Government
expenditure accounts for 41%
of GDP. Corporate capitalists
intend to seize this money. Hence the
privatization of whole parts of the
military, the push to privatize Social
Security, the contracting of corporations,
as I mentioned before, to collect
intelligence for our 16 intelligence
agencies, the privatization of prisons,
and schools, and our disastrous for-profit
health care system. None of these
seizures of basic services make these
services more efficient, nor do they
reduce the costs, but that is not the
point. It is about feeding off the
carcass of the state, and it ensures the
disintegration of the structures that
sustain capitalism itself. All of this
Marx got. Marx illuminated these
contradictions within capitalism.
He understood that the idea of capitalism--
free trade, free markets, individualism,
innovation, self development--work only in
the utopian mind of a true believer such
as Alan Greenspan, never in reality.
The hoarding of wealth by a tiny capitalist
elite, Marx foresaw, along with the
exploitation of workers, meant that the
masses could no longer buy the products
that propelled capitalism forward. Wealth
increasingly becomes concentrated in the
hands
of a tiny elite and this is how the
world's riches 1% are now on track this
year to have more than half of the
world's wealth. The assault on the
working class has been going on for
several decades. Salaries have declined
or remained stagnant since the 1970s,
manufacturing has been shipped overseas
where workers in countries like China or
Bangladesh earn 22 cents an hour.
The working poor, forced to compete with the
labor of those who are little better
than serfs in the global marketplace
proliferate across the American
landscape, struggling to live at a
subsistence level. Industries, such as
construction, which once provided well
paying, unionized jobs, are now the domain
of the non-unionized, often undocumented
workers, and corporations import foreign
engineers and software specialists to do
professional work at one-third of the
normal salary on H1B, L1, and other work
visas. All these workers are bereft of
the rights of citizens. The capitalists
respond to the collapse of their
domestic economies, which they engineered,
by becoming global loan sharks and
speculators. They lend money at
exorbitant interest rates to the working
class, to the poor, even if they know that
money can never be repaid because then
they can sell it in bundled debts, credit
default swaps, bonds and stocks back to
us through our pension funds, to cities,
to investment firms, and to institutions.
This late form of capitalism is built on
what Marx called fictitious capital and
it leads, as Marx knew, to the
vaporization of money. Once subprime
borrowers began to default, as these big
banks and investment firms knew was
inevitable, the global crash of 2008 took
place. The government bailed out the
banks largely by printing money, but left
the poor and the working class, the
victims, with crippling personal debt.
Austerity became policy. The victims of
financial fraud paid for the fraud
and what saved us from a full-blown
depression was, in a tactic Marx would
have found ironic, massive state
intervention in the economy, including
the nationalization of huge corporations
such as AIG and General Motors. What we
saw in 2008 was the enactment of a
welfare state for the rich, a kind of
state socialism for the financial elites,
and Marx predicted it all, but with this
comes an increased and volatile cycle of
boom and bust, bringing the system closer
to disintegration and collapse. And we
have undergone two major stock market
crashes, and the implosion of real estate
prices in just the first decade of the
21st century. The corporations that own
the media have worked overtime to sell a
bewildered public the fiction that we
are enjoying a recovery. Employment
figures, through a variety of gimmicks,
including erasing those who are unemployed
for over a year from unemployment rolls,
are lie, as is nearly every other
financial indicator pumped out for
public consumption. We live, rather, in the
twilight stages of global capitalism
which may be surprisingly more resilient
than we expect, but which is ultimately
terminal. Marx knew that once the market
mechanism becomes the sole determining
factor for the fate of a nation, as well
as the natural world, both will be
demolished. No one knows when this will
happen, but that it will happen, perhaps
within our lifetime, seems certain.
"The old is dying. The new struggles to be
born, and in the interregnum there are
many morbid symptoms," Antonio Gramsci
wrote. What comes next is up to us.
Thank you.
