The long taboo topic of the end of capitalism seems to be in fashion recently a consequence of the deepening economic crisis that shows no signs of going away. In fact there's even a website now www.endofcapitalism.com. This isn't the first time economists have declared that capitalism was on its last legs. Many, in fact, saw the Great Depression as symptomatic of its impending failure. British parliamentarian John Strachey was clearly the most articulate in his 1933 The Coming Struggle for Power. Moreover he makes some surprisingly prophetic predictions regarding the future of post-industrial capitalism.
I find interesting parallels between Strachey's analysis and those of Monthly Review authors Paul Sweezy (who first articulated "stagnation theory" in the 1960s) and Fred Magdoff and Michael Yates in 2009. All four are strikingly non-judgmental in their approach. There is no castigation of criminal banksters, sleazy corporate lobbyists or crooked politicians. Instead they quietly point out that neither the Great Depression nor our current economic crisis is the fault of any particular individuals or groups. They argue that there are natural laws of capitalist economics, just as there are natural laws of physics - that fundamental flaws mean that no capitalist economic system can continue indefinitely.
From a somewhat different perspective Alex Knight, who edits www.endofcapitalism.com, promotes End of Capitalism Theory. This argues that capitalism is breaking down owing to ecological and social limits to the continual growth that's essential for a capitalist economy to continue.
Strachey's Crystal Ball
As he writes in 1933, Strachey is of the definite opinion that the Great Depression is symptomatic that capitalism has reached its final stage of monopoly capitalism. It isn't quite dead yet, but clearly dying. He quotes from Lenin (who had nearly 50 more years experience with capitalist boom and bust cycles than Marx did) about "monopolistic" capitalism being the last stage of capitalism when begins to "decay." Lenin (and Strachey) describe specific political/economic transformations that characterize end stage capitalize (owing to a predictable decline in profits and growth). I find it uncanny that they describe our current economic predicament so perfectly:
The monopolistic corporations that control finance capital (the commercial and investment banks) essentially merge with the monopolistic corporations that control production and manufacturing (which they have done, due to massive buy-outs and takeovers and interlocking boards)
There is increasing focus on exporting capital (which is what happens when a company shuts down a factory in the U.S. and re-opens it in southeast Asia)
National governments, which are essentially controlled by their monopolies, are constantly in conflict with one another over who will control the resources, markets and cheap labor of the Third World.
Why Capitalism Didn't Fold in 1933 - Stagnation Theory
Obviously Strachey was wrong in predicting capitalism's imminent demise. According to Marxist economist and founding editor of the Monthly Review Paul Sweezy, the massive "financialization" of the US economy served as an eighty year life support system to keep capitalism going a little longer. In 1966 Sweezy and economist Paul Baran first set out what they describe as "stagnation theory" in their book Monopoly Capital. According to Sweezy (and many others), it was only the massive economic boost of World War II military spending that saved capitalism in the thirties and forties. There was a brief post war boom in the fifties and sixties, as consumers rushed to buy goods that were unavailable during the war. When the sixties ended, stagnation set in again, accompanied by a marked slowing of profits and growth. Neither declined to 1930s levels, according to Sweezy, thanks to the "financialization" of the American economy.
In their 2009 book The ABCs of the Economic Crisis Magdoff and Yates describe "financialization" as the process of creating profits without actually producing a product or service. In the US this process injected massive amounts of money (the nice word is credit, but it's really debt) into the economy in three ways: massive government spending and indebtedness (to private financial interests), a massive increase in consumer indebtedness and an explosion of the financial industry itself.
From 1980 to the 2008 crash, the banking, insurance and investment industries became the largest growth sector of the US economy. Beyond financing unprecedented levels of consumer, business and government debt, they also engaged in massive outright speculation. In addition to commodities and derivatives trading, there was also an epidemic of leveraged buy-outs of productive sector companies with borrowed money, which were then loaded with more debt and sold at a profit. Former Wall Street economist Michael Hudson points out that the takeover of health care by private insurance companies was part of this massive ballooning of the financial sector.
As Sweezy describes, the enormous "wealth" created by the financial sector helped to drive the "real" or productive economy. However he also warns as far back as 1982 that it's basically a Ponzi scheme. That when the economy inevitably ceases to grow, this speculative bubble will burst, resulting in a collapse as bad or worse than the Great Depression.
The Current Economic Crisis
Political economists Fred Magdoff and Michael Yates elaborate on Sweezy's analysis in The ABCs of the Economic Crisis. They point out that stagnation continued during the 1980s and 1990s, despite the life support provided by "financialization." GDP growth dropped from 4.4 to 3.3 percent in the 1970s, with a further decline to 3.1 percent in the eighties and nineties, and to 2.2 percent in 2000.
They use the example of the auto industry to describe why stagnation is inevitable under end stage monopoly capitalism. Immediately after World War II, consumers bought a lot of cars and trucks, which were unavailable between 1941 and 1945. However by 1970 all Americans who wanted cars or trucks had them, and the world's poorer nations didn't have a mass market large enough to take the excess of cars being produced. Obviously the same was true of other durable goods (refrigerators, washing machines, dishwashers, vacuum cleaners, etc)