The decline of Capitalism

Summary

In this interview, sociologist Emmanuel Wallerstein discusses the global capitalist system and predicts its downfall within 30 years due to internal contradictions and increasing costs. He argues that capitalism, driven by the endless accumulation of capital, has reached its limits, creating a chaotic, unsustainable system. Wallerstein explains the rising cost of labor, inputs, and taxes, highlighting their impact on economic stability. He foresees two possible future systems: one exploitative, maintaining current hierarchies, or a more democratic, egalitarian alternative, with the outcome uncertain and dependent on collective action and social movements.

Takeaways

• 🌍 Capitalism is in a structural crisis and may not survive the next 30 years, according to sociologist Emmanuel Wallerstein.
• 🌀 All systems, including capitalism, have lifespans due to internal contradictions that eventually lead to chaos and collapse.
• 💰 Capitalism’s primary goal is endless accumulation of capital, but rising costs (personnel, inputs, and taxes) over the past 500 years have reached a critical point, limiting profit potential.
• 📉 Economic expansion periods are followed by stagnation, creating a 'ratchet effect' where costs rise two steps and fall one, but overall increase steadily over time.
• ⚠️ The financial system has become increasingly reliant on speculation rather than production, leading to multiple financial bubbles since the 1970s, with the most recent being the 2008 crisis.
• 🔮 The future of capitalism is uncertain, and Wallerstein argues that society will eventually choose between a more egalitarian, democratic system or another hierarchical, exploitative one.
• 💡 The debt crisis in Africa, Latin America, and Eastern Europe in the 70s and 80s played a major role in marginalizing these regions, exacerbating global inequalities.
• ⚔️ The U.S. military is the strongest globally but increasingly unusable for political influence, with the U.S. in a state of long-term decline since the 1970s.
• 🔄 Wallerstein sees the current moment as a bifurcation point where collective action, particularly from social movements, will determine the direction of global systemic transformation.
• 🛠️ Social movements should focus on both minimizing short-term pain and planning for long-term systemic transformation, balancing immediate needs with the broader goal of a more just system.

Q & A

Who is Emmanuel Wallerstein, and what is his contribution to economic theory?

Emmanuel Wallerstein was a professor of sociology at Yale University and is known for developing the World-Systems Theory, which analyzes the global economy over the last 500 years. His work has been recognized and debated internationally.

Why does Wallerstein believe that global capitalism will not survive the next 30 years?

Wallerstein argues that all systems, including capitalism, have internal contradictions that eventually move them far from equilibrium. For capitalism, rising costs in labor, inputs, and taxation have made it increasingly difficult for capitalists to accumulate profit, leading to a chaotic situation that he predicts will cause the system to collapse.

What is the main objective of the capitalist system, according to Wallerstein?

According to Wallerstein, the main objective of capitalism is the endless accumulation of capital, achieved through profit generation. However, he argues that this process is becoming unsustainable due to rising costs.

What does Wallerstein mean by the system reaching 'asymptotes'?

Wallerstein describes 'asymptotes' as the point at which the increasing costs of labor, inputs, and taxation reach a critical level. When costs get too close to their limits, the system begins to oscillate and becomes chaotic, signaling its impending collapse.

What role does financial speculation play in the current capitalist crisis?

In periods of stagnation, when production becomes less profitable, money is made through financial speculation. However, Wallerstein argues that this is unsustainable as it leads to indebtedness and bubbles, which eventually burst, as seen in the 2007-2008 financial crisis.

What are the two possible alternatives for the future of the global system, according to Wallerstein?

Wallerstein outlines two alternatives: one is a new hierarchical, exploitative system that maintains the privileges of the current elite, potentially even worse than capitalism. The other is a relatively democratic and egalitarian system, which the world has never experienced.

How does Wallerstein view the role of social movements in shaping the future of the world system?

Wallerstein believes that social movements play a crucial role in shaping the future system. They must understand the current global situation and push for a transformation toward a more democratic and egalitarian society. Their collective actions will influence which path the world takes.

Why does Wallerstein argue that the U.S. military, despite its strength, is 'unusable'?

Wallerstein argues that while the U.S. has the strongest military in the world, it cannot effectively use it because modern conflicts cannot be won solely through military force. The U.S. lacks the necessary troop numbers and public support for extended conflicts, making the military's strength largely symbolic.

What impact did the debt crisis of the 1970s and 1980s have on Africa, according to Wallerstein?

The debt crisis had a devastating impact on African nations. Following a sharp rise in oil prices, many non-oil-producing countries, including most African states, faced declining national income and increased borrowing. The resulting debt was difficult to repay, leading to economic hardship and structural adjustment programs.

What is the relationship between financial crises and the decline of U.S. global power, according to Wallerstein?

Wallerstein argues that the U.S. has been in decline since the 1970s, and its attempt to reverse this through military intervention has backfired, particularly in Iraq and Afghanistan. The financial crisis of 2007-2008 further accelerated the decline, highlighting the unsustainability of U.S. economic and military power.