Capitalism in crisis: US President Joe Biden (pictured during his inaugural address, above) may be far from Donald Trump ideologically, but both leaders’ parties are imprisoned in a neoliberal capitalist mode of thought, argues the author. (Tasos Katopodis/Getty/AFP & Bettmann)
The disconnect between the capitalist system and the economic realities plaguing the US is now nearing completion. On the ground, the accumulated problems of US capitalism undermine its empire and challenge its very future.
Meanwhile, the ever-deepening inequalities of wealth and income conjure up images of ancient Egypt’s pharaohs. Three economic crashes opening the new century (2000, 2008 and 2020) have shaken the system; so have the two wars America lost against very poor countries in the Middle East: Afghanistan and Iraq.
The worst public health crisis in a century during the pandemic has further exposed how unprepared US capitalism was and is, thereby imposing massive new human and financial costs lasting into the future.
A government that serves US capitalism borrowed trillions and enabled trillions more of new debt (corporate and household) that was used to fight long, losing wars and shore up a faltering economy. Now, after two terrible years of Covid plus an economic crash, with three-million fewer jobs in 2022 than before Covid, a sharp inflation looms. Aided partly by profit-driven US capitalists who moved their operations to China, that country is now in a position to challenge US capitalism globally.
Above the troubled ground sit two old political parties, the Republicans and the Democrats, which are formed by and stuck in the old political economy before all these problems accumulated into crises. From 1820 to 1970, US capitalism experienced cycles, but these cycles were securely anchored in a long-term upward trend. Real wages rose every decade, at least for white workers. Recessionary downturns only interrupted the long trend up (and even then not for long).
Republicans and Democrats rarely went beyond the routine rituals of orderly contests over who deserved the credit for economic growth and who deserved the blame for the interruptions during recessions.
The US’s last big shift leftward occurred after the economic collapse of the Great Depression. (Tasos Katopodis/Getty/AFP & Bettmann)
The one big exception: the 1930s Great Depression, which shook US capitalism to its core. Mobilised and led by militant unions (CIO), socialist parties, and a communist party, the US working class shifted sharply to the left. This shift won a New Deal from the administration of President Franklin D Roosevelt.
That deal taxed corporations and the rich significantly more. It then poured much of those funds into the new social security system, unemployment compensation and a massive federal jobs programme. Because of the New Deal, Roosevelt was re-elected three times, and was the most popular president in US history. US corporations and those they enriched felt seriously threatened during this period.
The GOP reacted strongly. Once FDR died and World War II ended, it took the lead to undo the New Deal by splitting the coalition from the Democratic Party and coalition partners from one another.
Anti-communism, McCarthyism, and the Cold War were the weapons of choice for the Republicans. They succeeded partly because the Democrats offered weak opposition. Postwar Democrats were largely complicit in destroying most of what the New Deal had achieved (with the help, ironically, of many of the Democrats’ own prewar efforts).
After 1945, the White House, Congress, and state and local governments resumed orderly political contests between the GOP and the Democratic Party. Both endorsed a musical chairs rotation of public authority personnel between them (until this system was undone by Donald Trump in 2020).
The old, established leaders of both parties still do not grasp that this orderly rotation is now over. Unable to critically evaluate US capitalism, these leaders missed the signs leading up to the accumulation of problems that now overwhelms them.
The Bushes, Clintons, President Joe Biden and their ilk want the old political system to persist. After all, for them this system did well. But now their disconnect from the capitalist reality that ultimately controls them threatens to render them ineffective, out of their element. Because they dare not criticise that reality, its increasing difficulties and resulting mass disaffection are beyond their reach.
Mass disaffection provokes escapism and scapegoating. The GOP eagerly validates many of them (anti-immigration, white supremacy, quasi-fascism, culture wars and anti-leftism) to enlarge its voter base. The Democrats try to fight the extreme forms of escapism and scapegoating (as in “basket of deplorables”) without offering any real alternative to it.
The socialism represented by politicians such as Bernie Sanders and Alexandria Ocasio-Cortez is so soft-pedalled by them that, given mainstream media biases, it only marginally hovers at the edges of the national political conversation.
What people increasingly need is protection from a beleaguered capitalist system itself, from its intrinsic instability, intrinsic inequalities of wealth and income, devastating ecological damages and profit fetishism. But the GOP and the Democratic Party have long ago lost the ability to see or contend with any of that. They keep repeating neoliberal ideology (and its reframing of a US empire as “globalisation”) so often that they actually believe and are thereby imprisoned within the system.
Thus, a peculiar political theatre of disconnectedness has emerged. The leaders cannot see what most of us can. They see “the big issues” as not being about capitalism. Yet what they do see and the solutions they propose will in fact be their response as capitalism’s crisis deepens.
Under Trump, the Republican Party has moved toward fascism. His GOP has used and will continue to use government to enforce capitalism as it totters by, extinguishing what remains of unions, crushing the left and militarising media and culture, as other dictators have: Adolf Hitler in Germany from 1933 and Benito Mussolini in Italy from 1922.
Like them, Trump has used hyperpatriotic nationalism mixed with racial superiority to justify his actions. That is the real meaning behind Trump’s campaign slogans and his audiences’ cheers of “Make America Great Again.” How far down the German and Italian fascist paths Trump and others like him will go depends on circumstances.
Capitalism’s crisis exists neither for Biden or the Democrats, just as it does not for Trump and the GOP. The Democratic establishment defines itself against Trump. It is not about to go down the fascist road. It proposes to “protect democracy” from what Trump represents.
That difference will frame many electoral campaigns in 2022 and 2024; it already does. The Democrats will “protect democracy” by “returning to the pre-pandemic normal”. The Democratic Party’s version of “Make America Great Again” is a resurrected post-World War II political economy, complete with US global dominance based securely on a fast-growing US capitalism.
Both the Republican and Democratic establishments warn their megadonors and the public that allowing the other to take political power will disrupt civil society and prevent America from becoming great again. The GOP screams that antifa and the Black Lives Matter movement will destroy white America and will result in a civil war.
The Democrats counter that Trump and 6 January-type “insurgents” will dissolve social peace inside the US, provoke counteractions and lead to civil conflict. Social peace, each side insists, requires political war to defeat the other side. Neither side glimpses the absurd contradiction of its claims.
Which way US politics will go depends less on the two parties or their disconnected rhetoric. What matters far more are the actualities of US capitalism as the US empire continues to decline and US capitalism’s accumulated problems worsen.
Today’s inflation offers an example of this. As a further slap in the face of the US working class who have dealt with two years of economic crash plus the health catastrophe of Covid, inflation and the rising interest rates aimed to stop it will ultimately shake capitalism and shape politics.
How many angry working families will now sympathise with a politician who offers big changes versus a politician who offers to “stay the course”? Business wants inflation stopped. The responsive Fed will thus resort to quantitative tightening and raising interest rates. Biden will applaud the Fed. Those actions can and likely will threaten jobs. So Biden must choose between the electoral risks of inflation versus those of job deterioration.
That is the risky dead-end “choice” that the problems of capitalism will dump on Biden. And if 2022 proves to be the year when capitalism’s crisis breaks into the open, will most Americans tilt toward Trump fascism or the “democracy protection” offered by the Democrats to protect themselves from capitalism’s crisis?
Hitler’s and Mussolini’s fascist solutions to crises in their nations’ capitalisms did not end well. Yet today’s leading US capitalists seem not to know or care about historical precedents. They continue to perform their disconnected politics comfortably, oblivious to the imploding capitalism and the resulting damage to Americans. In that, they resemble the upper classes in Russia (up to 1917), in Germany (up to 1933) and in Italy (up to 1922). The most important questions thus become whether or not and how soon a new left can emerge that targets capitalism per se, proposes an alternative system, and charts a transition to this alternative system.
This article was produced by Economy for All, a project of the Independent Media Institute
Richard D Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York.