A Failed Economy


Amandla: Early in 2009 you published your book The Great Financial Crisis (coauthored with Fred Magdoff).  Could you reflect now almost a year later on what made the current recession more severe than previous recessions?  Why has it been compared to the Great Depression and what type of recovery are we likely to see?  Can we say that the bailouts and the other emergency measures undertaken by the USA and other countries were successful?

JBF: As a general rule, if an economic crisis is extremely severe, as in the present downturn, we can say that long-term forces are at work, going beyond what are considered the normal, short-term fluctuations associated with the business cycle.  What then are the long-term forces operating in this case?  This was the question at the center of our book The Great Financial Crisis.  I think we can talk of three, possibly four: the concentration and centralization of production (or monopolization), secular economic slowdown (or stagnation), and dependence on financial bubbles (or financialization).  Globalization is another, even longer-term, factor, indistinguishable from the expansion of capitalism itself.

The growing monopolization of production and the rising income and wealth disparities that go with it has been building up since the early twentieth century.  It became more acute in many ways in the late twentieth century, generating problems of overaccumulation — a condition in which capital ceases to invest in new productive capacity due to a lowering of expected profits on new investment.  This leads to a tendency to what Frederick Engels, as early as 1885 called a “chronic state of stagnation in all dominant branches of industry” (quoted in 1892 English Preface to The Condition of the Working Class in  England).  Hence, the real growth rate of the world economy as a whole (despite the rapid growth of China and parts of Asia) has slowed down drastically since the 1960s.  In the United States, the economic growth rate (adjusted for inflation) was lower in the 1970s than in the 1960s, lower in the 1980s and 1990s than in the 1970s, lower in 2000-07 than in the 1990s, and has since dropped like a lead balloon.  We are now experiencing a quasi-recovery, but the long-term problem of an economy of slow growth or stagnation persists.  This is the case despite the enormous government subsidization of the economy through militarism and imperialism and other means.

The issue of stagnation arose in the 1930s, during the Great Depression, which was also brought on by a major financial crisis (the 1929 Stock Market Crash).  In this period too there were a lot of questions about the role of monopoly in generating stagnation.  The 1930s saw the publication of John Maynard Keynes’s The General Theory of Employment, Interest and Money, which emphasized the tendency toward underemployment equilibrium.  Keynes himself was worried about the role of speculation.  All of this has a lot in common with today, so that Paul Krugman has written of “the return of depression economics.”  But our discussion of long-term forces above suggests that a lot has changed as well.  As Hyman Minsky stated, we live in a period of Big Government and Big Banks.  The real danger today is not so much a deep depression, as economic stagnation (long-term slow growth) plus financialization/financial instabilty.

Financialization emerged primarily in the 1980s and 1990s (although the roots go back as far as the late 1960s) as a way in which capital sought to preserve and expand its surplus despite the slowdown of the real economy.  It became a means by which the income/output was lifted up and stimulated, through the expansion of credit-debt and the resulting asset price inflation, without actually overcoming the underlying stagnation.  We thus saw the emergence of one financial bubble after another, facilitated by the central banks (i.e. the state), operating as lenders of last resort and rushing in with liquidity in response to frequent credit crunches.

Historically, such bubbles have normally occurred at the peak of the business cycle.  But beginning in the 1980s, especially, they seemed to feed on stagnation, or the slowdown of the economy, generating a continual trend toward financialization.  This therefore constituted a new reality.  For critics on the left who were most consistent in sounding the alarm — Hyman Minsky, and Harry Magdoff and Paul Sweezy — this was an unsustainable situation.  Minsky pointed to some of the dangers with his financial instability hypothesis.  But it was Magdoff and Sweezy who I think deserve the greater credit for emphasizing the “symbiotic relation” between stagnation and financialization.  As John Cassidy, economic journalist for The New Yorker recently put it in his new book How Markets Fail, “Sweezy said [financialization] reflected an increasingly desperate effort to head off economic stagnation.  With wages growing slowly, if at all, and with investment opportunities insufficient to soak up all the profits corporations were generating, the issuance of debt and the incessant creation of new objects of financial speculation were necessary to keep the system growing.  ‘Is the casino society a significant drag on economic growth?’ Sweezy asked in a 1987 article with Harry Magdoff.  ‘Again absolutely not.  What growth the economy has experienced in recent years, apart from that attributable to an unprecedented peacetime military build-up, has been almost entirely due to the financial explosion.'”

The problem, however, as Sweezy and Magdoff also emphasized, was that financialization in the context of stagnation tended to run up against its own inherent limits, as evident in frequent bursting of financial bubbles.  Sooner or later a really big bubble was likely to burst (insofar as the central banks were instrumental in keeping financialization going up until then though their lender of last resort function).  Then a Humpty Dumpty economy might emerge, difficult to put back together again.  Things seemed for a moment to be coming to a head with the bursting of the New Economy bubble in 2000.  But what followed was what was dubbed the “Great Bubble Transfer” and the system came to depend on the housing bubble as its new prop.  When the much bigger housing bubble too popped, taking with it the whole basis of consumer credit and endangering the banks, the implosion of the financial system led to real-world consequences.  The reality of the underlying stagnation within production came to the fore.  The official unemployment rate (U3) in the United States has now risen to over 10 percent in the United States, with what is being called the “underemployment rate” (U6, including “discouraged” and other “marginally attached” workers and part-time workers wanting full time employment) rising to over 17 percent.

Since the long-term forces that we have been discussing — monopolization, stagnation, and financialization — were not simply confined to the United States and other developed economies, but had become, in a sense, globalized, the contagion spread very rapidly worldwide.  The severity of the problem — the Great Financial Crisis, leading into what has been called a “Second Great Contraction” — meant that there was no alternative for the powers that be in the major capitalist states but to bail out the major banks to the tune of previously unimaginable amounts (tens of trillions of dollars) in capital infusions, debt guarantees, and subsidies, in an attempt to get not only finance as such, but the whole long-term, speculative financialization process, going again, with the hope of reigniting the capitalist economy.  Yet, this prepares the way for future, possibly worse, crises — if the current rescue strategy actually works.

In response to the question on where this is leading, it is of course difficult to answer.  The extent of liquidity added to the global financial markets is without precedent, and the consequences for price stability and much else will be vast, though they do not lend themselves to short-term prediction.  But I think we can say something meaningful about the long-run trend, which is prone to stagnation and heavily dependent on financial bubbles and military spending.  Barring the appearance of a major new source of stimulus (central bankers cannot lower interest rates already at or near zero, and a new wave of “quantitative easing” — printing money — could itself lead to a panic), the most likely outcome therefore is a continuation of the current stagnation-financialization trap.  The capitalist economy within the center of the system will again grow but very slowly, aborting short of full employment, and will remain dependent on financial speculation and the piling up of credit-debt to keep it going at all.  This is the dilemma of what we have called in The Great Financial Crisis “monopoly-finance capital.”

Amandla: What will be the lasting impact of the crisis especially in relation to the capacity of the US economy to sustain consumption and the level of demand for goods and services necessary to keep the global economy growing?

JBF: I think that the most remarkable fact about the present very severe economic contraction is that nothing much has changed in terms of the major parameters associated with the economy.  Deepening stagnation is now so clearly evident that even orthodox economics in its cocoon can’t ignore it.  Few believe in the efficient market hypothesis, which presented finance as inherently rational, any more.  It is understood that financialization is unstable and capable of bringing down the whole economy.  Neoliberalism, the notion of a self-regulating market, has taken some big hits.  But, with all of that, things are going on pretty much as before — not only are there no real changes in the way that the system is functioning, but the leading capitalist states and their central banks seem to think they have no alternative but to reestablish the financialization regime.  This is the dilemma of monopoly-finance capital.  There is no alternative within the system, all attempts at system change are decried by the vested interests.  The likelihood is that the present contradictions of the capitalist economy will therefore simply get worse.  This is a failed economy, judged from the standpoint of the rational use of resources and the meeting of human needs.

A world economy that is dependent on a high level of U.S. consumption to keep it going is in a perilous situation.  The United States is itself a demand-constrained economy.  It is true that consumption has been a very high proportion of total demand.  But this has had very weak bases, since it has been dependent on the massive growth of consumer indebtedness.  Real wages in 2007 were at the same level as four decades earlier.  Income of working-class families since the 1970s has been heavily dependent for increases on the growth of the number of workers per family and on hours worked.  We are now facing a situation, with the housing implosion and high unemployment, of a financial crisis rooted in the destruction of household finances.  At the same time, real wages are stagnant or declining.  Consumption dropped in the third quarter (even in the context of a so-called recovery).  Demand in the United States has been heavily dependent on high military spending and on financial bubbles.  But the weaknesses of this political-economic strategy are now becoming evident.  With the United States now experiencing double-digit unemployment and expected to have much elevated unemployment for years to come, consumption will likely continue to be weak and investment is likely to adjust downward as well.  In the second quarter of 2009 non-financial corporations were hoarding nearly a trillion dollars in cash, which they were neither investing, due to the poor investment climate, nor using right then for speculation, given their worries about financial weaknesses.  This hoarding of cash obviously lowers the rate of growth of the economy.  Insofar as “animal spirits” have returned in the most recent quarter, this previously hoarded cash found its way not into investment but pure speculation in securities and commodities — with one result being a rise in the price of oil and gasoline, with further distressing effects on U.S. household finances.

Amandla: Many major countries have undertaken huge borrowings to try and spend their way out of the recession.  What will be the long-term impact of the bailouts and the ‘counter-cyclical measures’ be?  How long can it be sustained and can we expect major attacks on social spending and on wages, as the United States and other countries try and deal with the budget deficits that have increased quite dramatically during the crisis?

JBF: Keynes taught that deficit spending is not necessarily a bad thing from the standpoint of the economy.  In fact, large deficit spending is exactly what has to be done in a crisis.  If jobs are created, income generated, and the economy expands, along with tax revenue, then the increased borrowing can easily be handled in the larger economy that results.  But this does not mean that there are not major issues and dangers associated with deficit financing.
One issue of course is what are the deficits being spent on.  In the case of the United States there has been a huge increase in deficit spending already this decade to finance the wars in Iraq and Afghanistan.  In the context of the current crisis most of the borrowing is not related to job creation but to salvaging the financial system.  So the population has gotten little direct benefit from the borrowing.  This is especially significant because, as Marx noted in volume 1 of Capital (chapter 31, “The Genesis of the Industrial Capitalist”) “the only part of the so-called national wealth that actually enters into the collective possession of a modern nation is — the national debt.”  The debt has to be paid (with interest) therefore by the general population, even though the major government spending goes into the hands of military contractors, is used to salvage banks, bail out and otherwise subsidize corporate capital, etc. — while the interest paid on the debt goes to the holders of the debt, i.e., wealthy.  For the moment with near zero interest rates, the burden of interest on the newly created debt is manageable.  But given the magnitudes involved, any increase in interest rates will have dramatic consequences for public finance.  If the economy continues to stagnate, as is the most likely case today, then debt service mounts quickly relative to GDP.  In the neoliberal era the existence of government deficits is used as an excuse to cut back government spending that benefits the working class and the poor, and to redistribute wealth, income, and government services toward the rich.  This often results in a decimation of social welfare spending.  James K. Galbraith has called this, in the title to his most recent book, The Predator State.

There is no doubt that high deficits put monopoly-finance capital in a double bind.  It can’t live without them right now, and it can’t easily live with them.  In the United States (as elsewhere) the federal government has expanded its borrowing rapidly to stave off financial crisis, and it had little choice.  But the current federal deficits are tied to a whole era of easy liquidity and the printing of masses of dollars, creating conditions that are fiscally and financially unstable, perhaps presaging another financial disaster, enveloping the state itself.  The current weakness of the dollar is a reflection of these and other fears on the part of nations holding large dollar balances and currency speculators.  Of course the worst debt problems are likely to emerge in the periphery of the world economy.

Amandla: If our analysis that the financial crisis is part of a larger crisis of overaccumulation is correct, what can the elites do to overcome this?  Is it likely that we could see a shift towards green investment, and could the adoption of an alternative energy system i.e. in renewables lead to a new growth path?

JBF: I don’t think that either dominant class forces or what we might call the ruling power elite have a very good understanding of the economic contradictions they are facing.  Orthodox economic theory has been almost useless in this respect: not only not anticipating the crisis, but also not able to understand it once it had occurred.  (A recent article in the Wall Street Journal discusses the search for a “new paradigm” and attributes the whole problem to a “leverage cycle.”)  The dominant strategy is simply to resurrect the financial system and to go on basically as before.  In some ways, this is rational, since there is no other answer at present for the system.  All real solutions to the problem of overaccumlation lead away from the for-profit system and toward socialism.  For those at the top, this is of course unacceptable.  The object for members of the capitalist class is not to promote the national economy, but enhance their own riches, quite apart from what happens to the rest of society.

When I hear the view, prevalent among progressives these days, that maybe investments in alternative energy or other green sectors will provide the accumulation necessary to spur the capitalist economy, I sometimes think I am living on another planet.  The view here seems to be a kind of Schumpeterian notion that supply-side innovations are what spur investment and economic growth.  Certainly, if there was a new epoch-making innovation (such as the steam engine, the railroad, or the automobile), which would change the entire economic geography, it might lift the whole economy, and create whole new markets and opportunities for capital-absorbing investment.  But this does not appear to be the case right now.  Investment in alternative energy of various kinds exists but it is nowhere on the scale necessary to generate rapid economic growth.  Right now we have a gargantuan automobile-petroleum complex that is geared to fossil fuels.  There are enormous vested interests in the existing energy infrastructure and the profits obtained in this area frequently hit the stratosphere.  Alternative energies, however rational from a green perspective, simply can’t compete on the current basis, except in relatively marginal, niche markets, and with government support.  The only thing that would change this would be a huge increase in fossil fuel prices through the imposition of carbon taxes of one sort or another (perhaps with the dividends be redistributed to the population, as James Hansen proposes).  There is no sign right now that this is going to happen.  And if it were to happen it would not come from those at the top but would have to be pushed from below.

It is true that massive public investment in public transportation, the overhaul of the entire energy-gluttonous automobile fleet of the United States and other countries (the U.S. cash-for-clunkers program was just a tiny start), active promotion of solar energy, insulating homes, changing the entire urban and transportation system, and so on could create new areas of economic demand.  But there are reasons, related to the workings of the system, why there is a great deal of resistance to this, despite the fact that it is obviously necessary to save the planet — since the one thing we know now about averting catastrophic climate change is that the fossil fuels have to stay in the ground.  Profits and accumulation stand in the way.  Witness the debacle in Copenhagen over climate change agreements.  The kind of massive ecological revolution we need to deal with the climate problem would take us in the direction of socialism and popular mobilization, involving transformations in our whole way of life.  It requires planned public investment, not anarchic private investment.  It is therefore blocked from above at every turn.

I should mention, of course, that, where genuine ecologicalproblems are concerned, the main issue is not promoting economic growth.  From a radical ecological perspective the issue is sustainability, which is inconsistent with the promotion of a perpetual growth machine — alternative energy notwithstanding.

Amandla: Can China and perhaps other so-called emerging countries pull the global economy out of crisis?  Has the crisis significantly eroded US hegemony at a global level?

JBF: It is true that rapid growth in China tends to lift the growth of the overall world economy.  But the Chinese economy is not able at present to serve as an engine for the world economy: either in terms of its size, or the internal structure of Chinese capitalism.  As the present crisis has shown, the Chinese economy has its own internal contradictions.  Export-oriented economies are dependent for growth on export markets, which right now are to be found in the rich economies.  But these are mired in stagnation and conditions of financial meltdown, so export markets are now weak and China is confronting enormous overcapacity.  The most visible Chinese stimulation of the global economy has come from the stockpiling of imported basic materials, but absent a very strong recovery of the export market this spending will come to an end.  It is true that the Chinese government has devoted massive sums to stimulating its economy in the crisis, particularly through the development of public infrastructure.  But this doesn’t change the fact that its development right now is dependent on sales abroad.  Its economy is split between an immense, relatively developed, industrial export sector and a vast peasant economy.  Domestic demand is undeveloped.  This is of course tied to the fact that China is a low wage economy, with a huge agricultural sector.  For China to shift to autocentric growth is a huge task not possible by means of a further extension of capitalist social relations, with its necessary polarizing consequences.  The level of unrest in China over its very uneven development, and widening inequalities, is rising rapidly.

It would be wrong to assume that the rebound of some emerging economies is a sign that all is well.  The World Bank warned about a week ago that they are concerned about asset price bubbles in Asia, particularly in real estate in China, Hong Kong, Singapore, and elsewhere. In Hong Kong luxury flats are now selling at prices in excess of $55 million, or over $9,000 a square foot (“Fears of a New Asset Bubble as Cash Pours In,” Wall Street Journal, November 4, 2009).  The real estate bubble in Asia, which is fed by money all over the world looking for safe havens and quick returns, is feeding an economic frenzy divorced from fundamentals.

With respect to U.S. hegemony over the world economy, there is no doubt that it is further compromised as a result of the present crisis and that U.S. economic power continues to decline; the dollar is facing long-term weakness.  But this seems to be a fairly long-term process.  We shouldn’t expect any sudden change in this respect.  There is no significant rival to the United States as a world power at present.  Nor is there any bloc that can challenge it.  U.S. power is a function of the U.S. empire, which is rooted in its control over major world regions, particularly the Middle East, its global military reach, with bases in more than 70 countries and troops in more than 100, and, above all, its leadership over what Samir Amin calls the triad, of the United States, Europe, and Japan.  The United States rules the world as a sheriff backed up by a posse.  As a long as this relationship holds, especially the triad under the leadership of the United States (which is what is really meant when reference is made to U.S. world leadership), Washington will remain largely in command of global events.  In recent wars NATO, representing the triad, has substituted itself for the United Nations, as a supposed legitimate world authority.  What the U.S.-led triad can’t control is what happens in particular regions, which could ultimately undermine U.S. hegemony.  It is for this reason that the United States spends, according to official numbers, about as much on the military as the rest of the world put together, accounting as well for two thirds of arms exports.  From an economic standpoint, we could say that the triad led by the United States is responsible for maintaining the interests of the monopolies (or oligopolies) of capital, which control the world.  The growth of production in emerging countries does not translate easily into increased power in this system of global control dominated by giant corporations located in the triad.  This is because of the imperial rents that the giant corporations and the leading capitalist states are able to impose, based on monopolistic control of finance, technology, world military power, communications, information, etc.

China, the most frequently cited rival to U.S. hegemony, is nowhere near being able to challenge the United States in this respect, and has no such ambitions.  It is searching right now for a world without hegemony.  But, for the United States and the triad, this is off the table.  Nor does the history of capitalism support such an idea.  World accumulation is therefore likely to continue to be governed by imperial needs, preventing any real global shift, unless it be a revolutionary one.

We should remember that hegemonic transitions have never been peaceful affairs.  In fact, historically, this has given rise to a series of world wars.  Such conflicts begin with surrogate, regional wars over geopolitical positioning.  Washington gives every indication that it is playing this game currently, and it is not going to allow its imperial power to ebb.  It is the particular responsibility of the U.S. population to struggle against this imperialist upsurge.

We should also remind ourselves that there are two different assessments of world transition even within world-system theory.  Arrighi in his Adam Smith in Beijing presents the view that current global instability is to be traced to a hegemonic transition, whereby power is shifting from the United States to China.  Wallerstein argues, much more realistically in my view, that we are in the midst of a transition not from one hegemony to another, but from capitalism to some other mode of production — or failing such a transition to the demise of civilization as we know it.  Hence, the momentous nature of the struggle of our time.

Amandla: Will China and especially oil-producing countries shift their investments out of the US and the dollar and what are the short and medium term prospects for the dollar?

JBF: The fate of the dollar is one of the great uncertainties of the world economy.  The dollar is currently weakening, and that seems to be a long-run trend, but the aim of the U.S. authorities is to achieve for it a “soft landing.”  An article by C. Fred Bergsten in the latest issue of Foreign Affairs, which is published by the Council on Foreign Relations (called by its critics the “imperial brain trust”) argues that a lowering in the value of the dollar (without a panic over a sharp decline, i.e. a “soft landing”) is exactly what the United States needs to get out of this crisis, stabilize, and to reassert its power.  The massive printing of dollars in the context of the crisis has added to a huge, worldwide dollar overhang.  But economies are so tied into this system, with the dollar as their main source of foreign exchange, and no obvious rival (the closest being the Euro), that there is no obvious way to break out of it.  China is trying to convert the renminbi into a regional currency, and there is evidence of quiet cooperation with Japan to establish an Asian currency area.  But this is a long, uphill climb, one that shall face fierce U.S. opposition at every turn.  Still, uncertainty about the dollar has led of late to flights into other currencies, gold, real estate, etc.  A world dollar crisis is conceivable; there is no assurance of a “soft landing.”  The one thing that is certain is that the dollar is the hegemonic imperial currency.  So its fate is tied to that of U.S. imperialism.

Amandla: Have there been any significant reforms that have been introduced that make capitalism less vulnerable to the build up of speculative bubbles?  Do we see any prospect for the regulation of the financial system?

JBF: I think it is clear now more than ever that no real, effective financial regulations will be introduced.  No doubt some minor changes will be made.  But the dominant emphasis is to restore finance and the whole process of financialization as before.  As I have already pointed out, there is no alternative for monopoly-finance capital.  Since it is clear that financialization spurs economic growth, in the face of persistent stagnation tendencies, the tendency of capital and of the state is to try to keep the game going as long as possible.  And indeed, if a credit crisis or a major financial crisis threatens, central banks are virtually forced to remove any regulations in order to allow the financial balloon to inflate, so regulations that are imposed are removed when a crunch arises.  Financial deregulation was not a cause but a consequence of financial instability, which, however, led to an even bigger financial collapse in the end.

Today, after the Lehman Brothers crash, the principle of “too big to fail” with respect to large banks is fully enshrined.  But one only has to look at the massive financial concentration that has occurred in the United States (partly as a result of the crisis) to see the fateful consequences of this.  According to Henry Kaufman, perhaps the most insightful mainstream observer over the decades, of what he calls the “financial oligarchy” in the United States, the ten largest financial institutions in the United States in 1990 accounted for 10 percent of all financial assets.  Today they account for 50 percent of all financial assets.  The top 20 financial institutions, meanwhile, account for 70 percent of all financial assets, up from 12 percent in 1990.  Under these circumstances “too big to fail” comes to represent a government responsibility to intervene to bail out the entire financial system, if need be.  Whether these financial institutions have engaged in reckless risk and speculative mania is quite beside the point.  What conservatives call “moral hazard” — a lack of “moral restraint” on the part of financial institutions, provided that they know that their losses will be socialized — now applies more than ever.  And even if the government wanted to regulate financialization, no one knows how, given the proliferation of complex financial instruments, which hardly anyone understood.  What is called in economic circles “transparency” is completely missing from the monopoly-finance capital system.

Right now New York University economist Nouriel Roubini says that low interest rates are feeding a monster bubble, with financial speculation again soaring, even as the unemployment grows massively.  This is taken seriously in a way, but no one in authority knows what to do.  There is a lot of talk in economics about creating measures for determining when an asset bubble is occurring, and when it should be “pricked” to prevent it from growing further and leading to a massive bubble that bursts with disastrous effect.  Such “pricking” of bubbles is, however, almost impossible to effect in a capitalist economy.  If Greenspan, as is commonly suggested, had deliberately tried to prick the housing bubble, he would have been seen on Wall Street and by the vested interests as criminally insane, rather than as a failed seer, as he is viewed today.

Amandla: The world economy has shed many jobs and workers have had to pay a high price for this crisis.  It is said that this trend is still going to continue.  What impact will this have in terms of the class struggle worldwide?

JBF: The class struggle worldwide is the great unknown.  Right now in the context of the biggest crisis since the Great Depression, we are still seeing a very uneven class struggle, waged largely from above, in a manner that has characterized the whole neoliberal era.  In Europe and elsewhere resistance from the bottom has grown.  But, in the United States, the labor unions remain for the most part dormant or subservient.  There has been no big upsurge of revolt.  Outrage over the bailout has come more from the right than the left and so has been aimed principally at the government itself, and only secondarily at banks/corporations (focusing there mainly on those who walked off with big bonuses).  These are signs of the incoherent anger of a suddenly dispossesed class of small property holders — petit bourgeoisie — terrified by the drop in value of their homes and the wipeout of their (relatively small) investment portfolios.  We know from the experience of Germany in the 1920s and 1930s that there are dangers in this phenomenon.  In the United States, the election of the Obama administration has nonetheless been a stabilizing factor for the system, defusing any possible left-popular response from the much larger working class, a response that might raise fundamental questions.  This is so even though the administration has been more deeply intertwined with financial capital than the Bush administration ever was, witness Obama’s economic advisers, who have in common their past affiliation with Goldman Sachs.

The lack of a strong class struggle from below at this point may not be very indicative.  There are a lot of small revolts going on (more than we know about), and it takes time for these to coalesce in a society as atomized as U.S. society is right now.  The Stock Market Crash of 1929 ushered in the Great Depression in the 1930s, but the Great Revolt from Below, as it was called (see David Milton, The Politics of U.S. Labor) occurred only in 1934, after unemployment had bottomed out in 1933.  While the situation is different from the 1930s for a whole host of reasons (particularly as there is no strong Communist movement as there was in the United States in the 1930s), we can expect the class struggle from below, if it indeed revives, to come with a lag.  Real struggle takes time to organize.  I think that this principle applies everywhere to differing degrees: that the class struggle from below will be the work of years, not days.  When it comes it will take the establishment by surprise, and one hopes by storm.

The most militant, revolutionary resistance and leadership in the real struggle for socialism, the only possible alternative to the present order, is, of course, to be found in the global South, where the struggle is against class (and race and gender oppression) magnified by the struggle against imperialism.  The class struggle from below is today a global struggle.  Marx’s famous absolute general law of capitalist accumulation, the polarization of wealth and poverty made possible by the creation of a global reserve army and global exploitation, means that the greatest hope of humankind is the contagion of revolt.  What is needed in this oppressive, irrational, destructive world is the rise of humanity, not as a mere idea, but as a material force.  Already we see courageous struggles for a socialism for the 21st century emerging in Latin America (in the ALBA countries) and in Asia (witness Nepal).

The aim of such a revolutionary worldwide struggle (as Engels said in his 1845 “Speeches in Elberfeld”) is “to create for all people such a condition that everyone can freely develop his human nature and live in a human relationship with his neighbors, and has no need to fear any violent shattering of his condition. . . .  Far from wishing to destroy human life with all of its requirements and needs, we wish on the contrary really to bring it into being.”  Today, this choice between a violent shattering of the human condition and the bringing into being of human life with all its requirements and needs is before us more than ever — on a planetary scale.

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