Book review: Wolfgang Streeck’s How Will Capitalism End? – a grim economic forecast

We are headed for a new Dark Age of dictatorships and warlords, says political economist Wolfgang Streeck, as globalisation causes capitalism to implode.

Richard Fuld Jr, chief executive of Lehman Brothers, is surrounded by protesters leaving a hearing at the US House Oversight and Government Reform Committee in Washington DC, in October, 2008, after the bank’s collapse and the ensuing global financial crisis. Alex Wong / Getty Images.
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Capitalism as we know it is irrevocably in its death throes, argues German sociologist Wolfgang Streeck, which on its own is not a novel thesis. In our age of regular financial crashes and bursting bubbles, illiberal movements and borderless wars, even Nobel Prize winners and mainstream thinkers – I think of Joseph Stiglitz, among others – say that the post-war free market regime is broken, and that the superglue we’re using to stick it together won’t hold for much longer.

Yet Streeck’s analysis of why neo-liberalism is imploding – and this time unable to reinvent itself – is a fresh take, if not necessarily a light read for the layman. Though Marxism has for some time now been out of vogue, his post-Marxist analysis of the political economy of globalisation, one augmented by the work of many contemporaries, rings remarkably timely. Perhaps it’s time to dust off the Marx and Engels after a quarter of a century on the book shelves.

After all, contemporary social scientists failed miserably to predict such dramatic phenomena as Donald Trump’s victory in the United States presidential election, the Euro crisis, the rise of ISIL or the viability of right-wing populists across Europe.

But if Streeck's on the mark, that's no grounds for celebration. Particularly unnerving about his analysis in How Will Capitalism End?: Essays on a Failing System, and unlike some of his ilk – such as the American sociologist Immanuel Wallerstein or, for that matter, even Marx himself – Streeck has little faith that, at least in the near future, anything vaguely benevolent will follow the disaster that is looming. On the contrary, capitalism's end will be ugly, and we're only just now getting a taste of how ugly.

As far as Streeck is concerned, capitalism is an inherently unstable, dysfunctional economic model that has survived for more than 200 years lurching from one systemic crisis to another. Yet, until now, it has always managed to regroup and repackage itself, often ingeniously, staving off demise through complex metamorphoses.

“The history of modern capitalism,” argues Streeck, “can be written as a succession of crises that capitalism has survived only at the price of deep transformations of its economic and social institutions, saving it from bankruptcy in unforeseeable and often unintended ways.” Marx and Keynes, Weber and Luxemburg, all foretold its death with different explanations, but they underappreciated capitalism’s resourcefulness.

But this time, argues Streeck with conviction, capitalism’s at the end of its own tether – really. There’s no longer enough of its spoils or the soothing ointment of liberal democracy to go around.

The symptoms of contemporary capitalism’s dire crisis – stagnation, debt, and inequality – are not new but they’re more acute now than ever before, and mutually reinforcing as they beget one another. The persistent decline in economic growth worldwide has only accelerated since the 2008 financial crisis, the vast gap between the few haves and the many have-nots now greater than at any time in the 20th century.

Graphs and charts show us that sky-high indebtedness in leading industrial states has governments, households and financial firms trapped in a vicious cycle in which their economies, shackled by debt, cannot recover. Greece is not alone, but rather one example among many.

And, finally, there’s the vast inequality in income and wealth that has only grown wider and wider in the post-Cold War decades. It’s not one of these symptoms that will shake capitalism to its foundations, but rather a combination of them and other afflictions: “death by a thousand cuts”, writes Streeck, refusing to be pinned down on exactly how capitalism will finally meet its maker.

In the past, at least since the end of the high-growth phase of the initial post-war decades, capitalism was able to repair itself, at least well enough to survive another decade. Take the global inflation of the 1970s or the explosion of public debt in the 1980s. Democracy and material accumulation were part of the formula legitimising capitalism. Workers, for example, could go on strike, even if, in the end, they were forced to settle for scraps. But they had democratic rights that they exercised, which gave them the illusion of participation in a system that gave them neither real power nor a voice, but rather TVs and comfortable sofas.

The main differences between the crises of the post-war past and that of today’s form of capitalism, namely globalisation, is, on the one hand, that globalisation is not compatible with democracy and, on the other, that economic inequality is so extreme that for many, the material goodies have run out. Globalisation’s modus operandi, which exacerbates economic stagnation, indebtedness and inequality, is an act of desperation, the flailing about of a dying system that can no longer afford to allow the likes of trade unions and voters even a semblance of control.

In our discourses, argues Streeck, globalisation is treated as a natural evolutionary process, unstoppable by political means. The “there-is-no-alternative” of its logic – which tramples the rationale of liberal democracy – which it is claimed, is too slow, too conservative and too inflexible to keep up with the breakneck, digital speed of the interplay of global markets.

In the age of globalisation, argues Streeck, states are located in markets, rather than markets in states. The logic of markets define everything, most critically in the political realm where nothing is spared on their behalf – ever lower taxes, ever less regulation, ever more leverage over workers – all in the name of “the demands of international markets”.

The sector prized most highly in our globalised world is the financial sector, which was elevated by the US from the national to the international level.

“The financial industry effectively escaped democratic control everywhere except, perhaps, the United States,” argues Streeck. However, there “it became the most important source of growth, tax revenue, and campaign contributions”.

The financial sector became a constituency in itself. Yet as a global phenomenon, it is one that the voters in their little nation states don’t – or appear not to have – have a say on.

Globalisation’s “decoupling of democracy from political economy,” argues Streeck, “made the democratic process run dry while setting capitalism free to a new, market-driven, non-egalitarian growth method”.

Any power that trade unions might once have had is gone. Globalisation provides big business with unlimited access to the world’s cheapest labour – workers from anywhere in the world, for example, to the periphery where wages are lowest and those workers remain unseen. Unlike seamless global capital, the workers of the world are dispersed across the globe and are divided by language and ethnicity.

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.

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.

“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.”

He cites as evidence the way the Greek leftist party Syriza buckled under pressure from the global financial institutions to accept austerity measures from which the country cannot recover.

Rather, a chaotic, violent interregnum will force the super-wealthy to fend for themselves, having given up any pretence to care about the social good or democracy, while the masses strike out blindly in anger. Oligarchs and populists, from both the left and the right, will rule the roost, riding discontent and further destabilizing “the post-war capitalist way of life without even a hint as to how stability might be restored”. Streeck sees the coming of an ungovernable Dark Age with rich opportunities for warlords and dictators.

This is a grim dystopia, even for a post-Marxist. Of course, we’ve heard before from leftist thinkers that the sky is falling on our heads, only to wake up to a new day and a new form of capitalism. Like Marx, Streeck is stronger in his critique of capitalism than in his vision for what might follow it.

But, make no mistake, the interregnum is upon us and there is no progressive alternative in sight. Italian Marxist Antonio Gramsci’s famous remark in the 1920s is just as valid today: “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.”

One of those morbid symptoms’ names is Donald Trump.

Paul Hockenos also writes for The New York Times, Newsweek and Foreign Policy. He is based in Berlin.