How Will Capitalism End?: Essays on a Failing System
a book by Wolfgang Streeck
(our site's book review)
We are headed for a new Dark Age of dictatorships and warlords, says political economist Wolfgang Streeck, as globalisation causes capitalism to implode.
The Amazon blurb says that: The provocative political thinker asks if it will be with a bang or a whimper
After years of ill health, capitalism is now in a critical condition. Growth has given way to stagnation; inequality is leading to instability; and confidence in the money economy has all but evaporated.
We are at capitalism's deathbed, giving it last rites, nervous because there is no definite replacement in sight—now what? Streeck predicts that the system will suffer a lingering death
In How Will Capitalism End?: Essays on a Failing System, the acclaimed analyst of contemporary politics and economics Wolfgang Streeck argues that the world is about to change. The marriage between democracy and capitalism, ill-suited partners brought together in the shadow of World War Two, is coming to an end. The regulatory institutions that once restrained the financial sector’s excesses have collapsed and, after the final victory of capitalism at the end of the Cold War, there is no political agency capable of rolling back the liberalization of the markets.
Ours has become a world defined by declining growth, oligarchic rule, a shrinking public sphere, institutional corruption and international anarchy, and no cure to these ills is at hand.
Capitalism is in big trouble. Streeck predicts that the system will suffer a lingering death, and yet there is no reasonable replacement waiting in the wings to run out and save the day
George Monbiot has a book called Out of the Wreckage: A New Politics for an Age of Crisis, which offers an incomplete replacement story for the terminally ill story called neoliberalism. Incomplete, yes, but it is a good start. See the following for other great ideas:
- Creating Alternative Futures: The End of Economics
- Post-Capitalist Society
- The Politics of the Solar Age: Alternatives to Economics
- Four Futures: Life After Capitalism (Jacobin)
- Ecological economics
“This collection (How Will Capitalism End?) will be at the centre of social research for years to come.”—Times Higher Education (“Books of the Year 2016”)
"What gives Streeck’s analysis extra force is that he comes from the very establishment he now attacks. He has played many key roles: joint head of Germany’s top social science institute, an adviser in the late 90s to Gerhard Schröder’s government, one of Europe’s most eminent theorists of capitalism. . . . He sees the support for Brexit and Trump as stemming from the same source. “You have a growing group of all people, who, under the impact of neoliberal internationalisation, have become increasingly excluded from the mainstream of their society."—Aditya Chakrabortty for the Guardian
“As the economic gloom deepens to the pitch black night of geopolitical crisis, in the economics departments of the world there can still be heard the confident chuckle: ‘but capitalism always survives.’ How Will Capitalism End?: Essays on a Failing System is an extended riff on the possibility of the mainstream economists being wrong. Streeck synthesises the various strands of left crisis theory into a convincing proposal.”—Guardian (“Best Books of 2016”)
“Democratic capitalism is in bad shape. The crisis of 2007–09 and subsequent election of Donald Trump demonstrate that. In this book, German sociologist Streeck argues that capitalism is doomed, as many have before. But he does not believe it will be replaced by something better. Instead a new Dark Ages lies ahead.”—Financial Times (“Best Books of 2016”)
The crisis of 2007–09 and subsequent election of Donald Trump demonstrate that democratic capitalism is in bad shape—we're stuck with respecting Trump's authoritah!
“Streeck’s title question—though never answered—opens a window onto the conflict between capitalism and democracy in the neoliberal era. That such a conflict exists is no surprise in Brazil, and still hidden to many in the United States, but a rude and inescapable shock to those who grew up with the comfortable illusions and utopian hopes of post-war Europe.”—James Galbraith, author of The End of Normal
“Neoliberalism continues to delimit political choice across the globe yet it is clear that the doctrine is in severe crisis. In Wolfgang Streeck’s powerful new book How Will Capitalism End?: Essays on a Failing System, Streeck demonstrates that the maladies afflicting the world—from secular stagnation to rising violent instability—herald not just the decline of neoliberalism, but what may prove to be the terminal phase of global capitalism.”—Paul Mason, author of Postcapitalism
“The most interesting person around today on the subject of the relationship between democracy and capitalism.”—Christopher Bickerton, University of Cambridge
“At the heart our era’s deepening crisis there lies a touching faith that capitalism, free markets and democracy go hand in hand. Wolfgang Streeck’s new book deconstructs this myth, exposing the deeply illiberal, irrational, anti-humanist tendencies of contemporary capitalism.”—Yanis Varoufakis, author of And the Weak Suffer What They Must?
Streek shows capitalism, free markets and democracy do NOT go hand in hand—when corporatocracy prevails, democracy takes it on the chin
“An important and stimulating book. It is especially interesting in the light of fashionable preoccupations with secular stagnation, the march of robots and the lamentable performance of most leading economies since the onset of the financial crisis.”—William Keegan, author of Mr Osborne’s Economic Experiment
“The most interesting person on the most urgent subject of our times.”—Aditya Chakrabortty, Guardian
“Streeck writes devastatingly and cogently … How Will Capitalism End?: Essays on a Failing System provides not so much a … forecast as a warning.”—Martin Wolf, Financial Times
Streeck writes devastatingly, providing a warning no less ominous than the swinging banjo in the movie Deliverance
“Offers a powerful prognosis that predicts that the system will suffer a lingering death rather than go out with a bang … there are so many startling formulations of great analytic power in this book that it merits wide circulation in these troubled times.”—Morning Star
“Streeck has become one of Europe’s most sophisticated and pessimistic left-wing Euroskeptics …[his] criticism of the eurozone is powerful.”—Jamie Martin, Bookforum
“Not one to embrace the ‘voluntaristic illusions’ of ‘we the people,’ Streeck sees such fantasies as part of a deeper structural crisis … Neoliberalism, in fragmenting workers and consumers into desperately precarious personal brands, has made mass organization effectively impossible, while traditional political channels have been systematically choked off. Capitalism, therefore, won’t be overthrown. It will kill itself through its own power to overcome the restraints that bind it.”—Greg Afinogenov, n+1
Capitalism is now running amok like Frankenstein's monster, having overcome the regulatory restraints that used to bind it
Among the common people, there is concern that politics can no longer make a difference except to find new ways to screw them over
Owners of capital after WWII feared that democratic majorities would abolish private property, while workers expected capitalist elites to finance a return to authoritarian rule in defense of their elitist privileges. These fears were forgotten for a few decades. Today, however, doubts about the compatibility of capitalism with democracy have returned—especially since we keep seeing rights erode (free speech, free assembly, privacy, etc.). Among the common people, there is concern that politics can no longer make a difference except to find new ways to screw them over (while lying about it with a straight face). See Screwed: The Undeclared War Against the Middle Class—And What We Can Do about It.
Increase in after-tax income by income group from 1979 to 2007
Our citizens are valuing democracy less than they used to
Streeck also identifies three long-term trends: increasing debt, decreasing growth, and finally, increasing income and wealth inequality. The lowest income groups are so far beyond screwed they couldn't catch a bus back to screwed.
As anyone can see from the above 'Increase in after-tax income by income group' chart, the lowest income groups are so far beyond screwed they couldn't catch a bus back to screwed
Unless American citizens start defecating money, the debt has put us all in deep doo-doo
Streeck's point is that as an economic system, capitalism requires constant checks from a strong democracy and labor force, to save it from itself and ensure that the money it produces is distributed to society in ways that, at least minimally, benefit a broad enough swath of people to ensure stability and continued consumption of goods and services by consumers.
He points to numerous corrections along the way that have kept capitalism from self destruction, but he also notes that our current iteration has, in essence, destroyed or weakened the necessary restrictions on careless progress. “Capitalism . . . was always a fragile and improbable order and for its survival depends on ongoing repair work. Today, however, too many frailties have become simultaneously acute while too many remedies have been exhausted or destroyed.”
Streeck points to the dismantling of labor unions and the hijacking of democracy by the wealthy elite as the two forces that historically slowed unregulated growth and the redistribution of wealth upward.
Streek bewails the hijacking of democracy by the wealthy elite and the greedy redistribution of wealth upward: the rich got huge raises as the nonrich got dealt a raw hand
Streek discusses the response of regular citizens to pressures on them as “coping, hoping, doping and shopping”. Streeck sounds the alarm about predatory tax-evaders and tax-avoiders in the oligarchy, greedy souls who send their wealth offshore, out of sight of the IRS. There are those who judge that it isn't capitalism but rather democracy that is in imminent danger. Predatory capitalism is the threat, not capitalism itself, they say. However, since the predatory kind is the kind that causes most of the trouble, perhaps those asserting such mitigations are making a weak—or even disingenuous—point.
There is a worldwide increase in authoritarianism that is more alarming, some would say. One major precipitator of this authoritarianism is the U.S. running around the planet terrorizing Islamics until they turn would-be capitalists into hardliner nationalists and religious extremists. And the response to U.S.'s fraudulent War on Terror is—of course—to create more and more terrorists. U.S. Predator drone strikes alone are a virtual terrorist factory. All this occured due to the U.S. coup in Iran decades ago and Dubya Bush's idiotic attacks of Iraq and Afghanistan after 9/11.
The response to U.S.'s fraudulent War on Terror is—of course—to create more and more terrorists: U.S.'s military has become a terrorist factory: kill 1, create 10 more
The fall of Rome—is the U.S. next?
Streeck says “Before capitalism will go to hell, it will for the foreseeable future hang in limbo, dead or about to die from an overdose of itself but still very much around, as nobody will have the power to move its decaying body out of the way.” The death of capitalism won't happen overnight. It will be more like the centuries-long rotting away of the Roman empire. A bigger stink, a longer stink, but a stink to be sure. Congresspeople—that are supposed to guard our democracy and the restraints put on capitalism to keep it from wrecking the environment and the futures of our citizens—collude with the democracy destruction and enjoy corporatocracy-deposited bribes put into offshore banks. U.S. neocons' imperialism and warmongering is out of control yet the Congress tasked with stopping such abuses is mute—something smells rotten in Washington! The game is rigged. Bailouts? The biggest companies got help, and bonuses, while the little guy got the finger.
U.S. neocons' imperialism and warmongering is out of control yet the Congress tasked with stopping such abuses is mute—something smells rotten in Washington! The game is rigged. Bailouts? The biggest companies got help while the little guy got the finger.
Here's Obama after he gave the biggest companies a trillion dollar bailout, while the little guys he gave the finger—the game is rigged!
He pays special attention to the financialization of wealth, which allows the wealthy to make money off of money (think of it as money squared $²), and creates — in essence — two economies: the one in which most of us are mired, and an international economy at the very highest level, run by the elites for the benefit of the elites. To see how financialization works, look at derivatives trading. They are mostly futures contracts on interest rates, foreign currencies, Treasury bonds, and the like—in 2006 they'd reached a level of $1,200 trillion, or $1.2 quadrillion, a year. By comparison, US GDP in 2006 was $12.456 trillion. (By 2007-2008 the financial crisis screamed out the crying need for better financial regulation) See Financialization.
Share of financial sector in US gross domestic product 1860 to 2006
A capitalist system that feeds on growth and that is built to extract and concentrate economic wealth, unless there are political and social regulations or laws that intercede (as in years past) is a runaway fire that must eventually burn itself out, especially because this diversion of wealth away from the 99% takes money out of the pockets of consumers and locks wealth up in various offshore banks that serve no one other than the banks and the wealthy 1%. This is no way to run a democracy or a capitalist system or a nation.
This type of corrupt, shortsighted greed—diverting wealth away from the 99%—tends to be self-limiting as the greedy hogs eventually overturn the feeding trough in their feeding frenzy
A system built to extract and concentrate economic wealth is bound to end in fire and flames. (The derivatives trading that screwed over millions of U.S. citizens in 2007-2008 allowed the sick situation of we take the risks and they get the profits, and their extreme irresponsibility was rewarded while we citizens got spanked. These are flames that burned the innocent but spared the guilty.) The key question here is: will we act to protect capitalism from itself, and redirect wealth into our communities as we put reasonable regulations on the financialization of wealth, or will we simply wait to see what new economic system emerges from the ashes once the flames subside?
Capitalism that merely redirects wealth away from the 99 percent takes money out of the pockets of consumers and locks wealth up in offshore banks that serve no one other than the banks and the wealthy 1%
Countering financialization calls for a multi-faceted agenda that:
- Restores policy control over financial markets
- Challenges the neoliberal economic policy paradigm encouraged by financialization
- Makes corporations responsive to interests of stakeholders other than just financial markets
- Reforms the political process so as to diminish the influence of corporations and wealthy elites
Streeck does not actually forecast how capitalism will end, just that it must surely end – when “democratic states have been turned into debt collecting agencies for a global oligarchy of investors.”
The Founders created the strong middle class to prevent the moneyed and powerful from controlling government. It worked pretty well until the shadow government took over the government. See:
- The Shadow Government
- Shadow Elite: How the World's New Power Brokers Undermine Democracy, Government, and the Free Market
- Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right
- When Corporations Rule the World
- The Dark Side: The Inside Story of How the War on Terror Turned Into a War on American Ideals
- The Shock Doctrine: The Rise of Disaster Capitalism
- Democracy—an American Delusion
- Freedom of the Press—an American Delusion
Our nation's actions are making the Founders turn over in their graves
"As the New Deal regulations were slowly dismantled, the financial sector growth accelerated along with risks and speculation. The employment and total sales of the finance industry grew from 10% of GDP in 1970 to 20% by 2010. The emphasis was no longer on making things - it was making money from money.
At the same time the manufacturing industry fell from 30% of GDP in 1950 to 10% in 2010. The finance industry swelled as the rest of the economy weakened. The disproportionate growth of finance diverted income from labor to capital. Wall Street profits rose from less than 10% in 1982 to 40% of all corporate profits by 2003.
The growth of financialization also begs another important question. If innovation is the key strategy that will keep America in the race and its position as global leader, how can it happen without financial support? I can see where basic research and R&D are nebulous terms for shareholders that are hard to forecast as a financial return. But if these functions are not properly funded, how will we be able to compete with the rest of the world like we did in the twentieth century?" (Source: Wall Street And The Financialization Of The Economy, Mike Collins, Forbes)
Streeck believes that global capitalism will ultimately implode, a result of its own dysfunction rather than from pushing or rebellions from below. In other words, capitalism is its own worst enemy.
But that’s little consolation. Although the “three horsemen of the apocalypse” – flat growth, mountains of debt, grotesque inequality – generate other disorders, such as oligarchic rule, the plundering of the public domain, corruption and global chaos, they don’t herald the coming of a better system, as Marxists have long envisioned. In Viktor Vasnetsov's dramatic painting, Four Horsemen of the Apocalypse, Death, Famine, War, and Conquest are a symbolic prophecy of the post-Christ history of the Roman Empire, or a divine apocalypse which harbingers the Last Judgment involving the four seals of Revelation or a prophecy of a future Tribulation. One wonders why Streeck didn't add the fourth horse, which could be kleptocracy, war profiteering, or abandonment of austerity policies (austerity measures are supposed to be used by governments that find it difficult to pay their debts—except our Congress shows no ability to act responsibly).
Four Horsemen of the Apocalypse – Death, Famine, War, and Conquest are a symbolic prophecy of the subsequent history of the Roman Empire, or a divine apocalypse which harbingers the Last Judgment
The 4 horsemen don’t herald the coming of a better system, by any means, according to the author. Not by a long shot, argues Streeck, as there’s no successor to our disintegrating capitalist system in sight, certainly not socialism. The progressive visions of social democracy or democratic socialism are simply no match for the disorder and reactionary currents that globalisation’s collapse enables. Besides, with the U.S. supporting a big military, many wars, and welfare for the rich, it cannot support a jump to socialism, and we can rest assured that the rich oligarchs would never stand for a "pay cut." We are being rolled by the elites—they are shaking us down. See Requiem for the American Dream: The 10 Principles of Concentration of Wealth & Power.
The rich are shaking down the nonrich—we are being rolled
The rich are pulling a reverse Robin Hood scam on the nonrich
“There is no such thing as a global socialist movement,” says Streeck, “comparable to the socialisms of the nineteenth and early-twentieth centuries [which] so successfully confronted capitalism in national power struggles.” (Source: Book review: Wolfgang Streeck’s How Will Capitalism End? – a grim economic forecast, Paul Hockenos, the National)
Before you run out and sign up with the socialists, read this: Bernie Is Not a Socialist and America Is Not Capitalist
"It is only when the elites are frightened by the specter of mass revolt and violence in the streets that threatens to take power completely away from them that they relinquish at least some of their control and redistribute at least some of the wealth."—Mano Singham, reviewing Requiem for the American Dream. This means that it's hopeless to think of government as a solution—an entity that wishes to give to you. It is a taker, and right now we are giving a lot and the rich are taking a lot, and if we roll over and play dead, it can only get worse.
The elites want us to be cash cows to milk, but we can resist—it says so in the Constitution. If you love our country, resist the fascists, the demagogues, the kleptocracy maintainers, and the authoritarians
IF WE DO NOT organize and just keep on truckin' with business as usual, here is what we can expect: There is an old saying that life's a poop sandwich except that they don't actually furnish any bread. But we heard a new version of it on The Middle (© ABC) the other day: In the immortal words of Mike Heck, We're all born with a crap sandwich. Some people get a big one. Others get a small one. You eat your way through it and then you're dead.
We can clearly see what we can expect from the "they" who we think are looking out for us. Oh, we'll get the crap sandwich all right, but there simply won't be any bread, however, there will be crap painted to look like bread, cheese and pickles
It's not just that "Every promise made by the proponents of neoliberalism is a lie." The very idea that we expect Big Daddies to furnish us anything is flawed. It was obvious from the start that they—in spite of rosy rhetoric to the contrary—are only interested in what they can take from us. This progressive "getting" idea needs re-examination in the cold light of realism. Mike Heck expects he'll at least get bread with his crap. But after reading Chomsky's incredibly insightful book (Requiem for the American Dream), we can clearly see now what we can expect from the "they" who we think are looking out for us. Oh, we'll get the crap sandwich all right, but there simply won't be any bread. Heck was too optimistic.