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The End of Capitalism? Part 2B. Social Limits and the Crisis

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"If you want to save planet Earth, to save life and humanity, we have a duty to put an end to the capitalist system. If we do not put an end to the capitalist system, it's impossible to imagine that there will be equality and justice on this planet Earth. This is why I believe that it is important to put an end to the exploitation of human beings, and to put an end to the pillage of natural resources; to put an end to destructive wars for raw materials and the market; to the plundering of energy, especially fossil fuels; excessive consumption of goods and the accumulation of waste."

We can't ignore the many difficulties facing Latin America or the Global South as a whole. The situation is still extremely dire, with over a billion people living on the brink of starvation and without access to clean water, and with the U.S. expanding military bases in places like Colombia. And of course leftist governments have their own problems and need to be held accountable just as rightist ones. Regardless, the Global Justice Movement demonstrated that by joining together across borders, opposing injustice and working towards a new world, victories can be achieved. Even victories as dramatic as discrediting the major institutions promoting neoliberal capitalism and the political transformation of an entire continent.

The GJM vanished almost as quickly as it appeared, but as David Graeber points out, this was partially because it met many of its goals so rapidly. With the widespread repudiation of the neoliberal doctrine, the Global Justice Movement provides an inspiring lesson that social movements can and do place limits on capitalism.

Social Limits and the Crisis

Social movements in many countries have been amplified by the economic crisis. Greece has seen massive rebellions in the past 2 years to stop the government from imposing austerity measures like cutting social services. In Iceland, a country not known for its political radicalism, huge protests in response to the country's bankruptcy brought the government down and led to the election of the world's first openly lesbian prime minister. In Nigeria there is an armed rebellion aimed at stopping oil companies from destroying the ecosystem and exporting their profits from the region. Off the coast of Somalia, pirates have plagued international shipping, and grabbed headlines last November when they hijacked an oil tanker headed for the US.

It's clear that anger is building towards a capitalist system that is failing to meet people's needs. But let's dig deeper and ask: What role did social limits play in causing the economic crisis?

Perhaps the most instructive case is that of China and its rising labor movement. Supposedly a "communist" country, China has become a capitalist haven producing an absurd quantity of goods for the global market due to its very low (sweatshop) wages. The profit extracted from Chinese workers has done wonders to sustain capitalism over the last two decades. For this reason, the organization and rebellion of Chinese workers threatens not just the Chinese government, but the global capitalist system as a whole.

This explanation may require a bit of historical context. During the 1960s-early "70s, the capitalist order was challenged by a high tide of protest and rebellion from Africa shaking off its colonial masters, to the end of Southern segregation in the US, to the struggle against the US genocide in Vietnam, to the new upsurges of the feminist, queer and ecology movements. This movement activity was pronounced a problem of an "excess of democracy" by the Trilateral Commission, a ruling class institution composed of bankers and corporate elites from the US, Europe and Japan. One of the strategies used to escape this crisis (along with increased repression and co-optation of social movements), was to relocate industrial production out of places like the US, where wages were seen as too high, to places like China, where wages were minimal.

Obviously this cheap labor generated more profit in production. But it also created a problem in terms of consumption, because US wages began to decline as all those unionized industrial jobs left the country. As explained by Professor Richard Wolff in his video "Capitalism Hits the Fan," in order to make up for this income difference and keep consumption growing, starting in the 1970s US workers were given access to an immense pool of credit, in the form of credit cards, home mortgages and financial schemes like 401(k)s. Cheap available credit allowed the US to consume more and more junk, even as wages declined. It kept its position as the world's strip mall.

Meanwhile, China became the world's factory, pumping out cheap products for the global market, especially for the United States. As Americans flocked to Wal-Marts for their low prices, the Chinese government was flooded with trillions of US dollars. So far, they have dutifully recycled those dollars back into US Treasury bonds, thus keeping the American economy afloat. If they didn't invest in the US, their main trading partner would be crippled by its trade debt, which grows daily.

The US-China relationship became core to the global economy. Each behemoth kept the other afloat one producing like crazy by exploiting its workers near exhaustion, the other consuming like crazy by sailing on a sea of cheap credit. The damage to the planet's ecosystem was atrocious, but immense profits were made and by the 1990s the market was soaring and "the end of history" was proclaimed. It seemed all opposition to capitalism had been vanquished.

There are numerous weak points in this international division of labor. One that has not been fully appreciated is the severe turmoil in China due to the growing strength of a new militant labor movement. This movement aims to put an end to sweatshop conditions where many toil for 12+ hours a day in dangerous, polluted factories. Organizing outside the Communist Party's official unions, Chinese workers have initiated a series of crippling strikes that repeatedly shut down factories, among other forms of rebellion. The government has been forced to accept workers' demands for wage increases, so the Chinese average real wage has risen by 300% between 1990 and 2005 [PDF], with half of that increase between 2000 and 2005.

Although the Chinese economy continues to grow, increased wages mean a falling rate of profit for companies operating in China, whether American, Japanese, European or otherwise. Wage increases also mean increased consumption within China, and therefore less cheap exports. When Chinese workers can afford the cars and electronics they're producing, Americans can't demand the same low prices.

Can we draw a direct connection between Chinese wage gains and the drying up of cheap credit in the US market of 2007-8? I humbly submit this question to the reader, as I haven't done enough research on the relationship between the two trends. But I'll say this about the big picture: If Chinese workers continue to break free from totalitarian control and win dignity in their jobs, the loss of China as the sweatshop of the world imperils trade arrangements that have carried global capitalist growth for decades.

If we study any country in the world, we'll find people resisting capitalism any way they can. In the fields & factories, slums & schools, homes and prisons, the desire to be free cannot be extinguished, only held back and diverted. As humanity gains awareness of its own power and begins to act for its own interest rather than the interest of profit, the system's tenuous grip on the world can easily falter, and a new world appears just over the horizon.

With the ecological limits encroaching on one side, and the social limits looming on the other, economic growth is under increasing strain in between. It's as if the system cannot breathe. Like the sorcerer's apprentice, it's too busy putting out the fires of multiplying crises, which continue to spawn and grow. The policy makers, market gurus and technocratic apologists scramble to regain control, but they are disoriented in a new arena. Circumstances have changed. They cannot come to agreement on what to do, and instead quarrel amongst themselves over diverging interests. As social and ecological forces combine and put new stresses on the system, capitalism is smothered and chokes.

Considering the ecological limits and social limits to growth side-by-side, the only conclusion I can make is that the end of capitalism is not only a possibility, but an inevitability. Neither the planet nor the world's population appear able to support this system much longer, and something's got to give. It may be years or even a couple decades before we can look back and say for sure that a paradigm shift has occurred and that we are living in a different, non-capitalist era. But the End of Capitalism Theory dares us to question how long a system that lives on economic growth can continue to function in a world of such profound and permanent limits.

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Alex Knight is a proponent of the End of Capitalism Theory, which states that the global capitalist system is breaking down due to ecological and social limits to growth and that a paradigm shift toward a non-capitalist future is underway. He is (more...)
 
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