When America next experiences an economic downturn, it won't be like the relatively small recessions that the country used to regularly undergo before the 2008 crash. It will be a collapse of such magnitude that the global economy won't ever be able to recover, like it eventually did after the Great Depression. It will likely be the end of the growth period of capitalism, and the beginning of an unprecedented contraction that leaves civilization dramatically changed.
There are several factors behind this uniquely perilous precipice that the economy is teetering on. I'll first focus on the one that will set off the process of collapse, then examine how the other factors will exacerbate the damage.
What will start the crash: the capitalist world's concentrated and unsustainable financial system
Stalin observed that "Imperialism is the omnipotence of the monopolist trusts and syndicates, of the banks and the financial oligarchy, in the industrial countries." This quote was in the context of an essay where Stalin illustrated how imperialism creates a self-destructive problem with how modern capitalism functions; he concluded that because imperialism makes corporate power dominant over the institutions of society, people aren't able to defeat corporate power through reforms but rather through overthrowing the system.
This contradiction of imperialist capitalism, as Stalin described it, has grown more pronounced than ever. After the 2008 bailout, the big banks gained even more power over the economy than before, making them impossible to adequately regulate without breaking them up. The five biggest banks now own around half the industry, and in 2013 it was estimated that the largest 0.2 percent of banks control 69 percent of bank assets. This has happened while Wall Street and the government have become one, with the Obama and Trump administrations both going out of their way to put bank executives in high positions.
Naturally, the experience of the workers and the unemployed has gotten more filled with hardship in the last decade. Most Americans haven't recovered from the Great Recession, and global inequality has continued to rise. Debt, both within the households of struggling proletarians and within the financial system, has risen since 2008 and has so far surpassed their 2008 levels. People aren't able to make a living like they used to. The contradiction between labor and capital, as Stalin called this issue, is becoming ever more severe.
This reality, that monopolies and slowing economic growth have driven down living standards, undercuts the narrative that capitalism has recovered from the recession and is undergoing a "boom." What good is a healthy stock market when the world's economy is sitting on financial bubbles that are similar to the ones which led up to the 2008 crash? What good are low official unemployment numbers when many working people are still poor and sinking ever deeper into debt? The current "prosperity" is built on borrowed time. As Marshall Auerback wrote in his article from last year The Global Economy Is a Time Bomb Waiting To Explode:
If you thought the near-breakdown of the global economy in 2008 was enough to make global policymakers and regulators rethink their persistent accommodation of financial innovation and deregulation, think again. Regulators have continued to accommodate this complexity, rather than minimizing it. Complex financial systems beget yet more complex (and ultimately ineffective) regulation. It is better to simplify the system in order to improve the quality of the regulation and the ease of oversight (which the complexity is designed to avoid).
Unfortunately, that's not what our policymakers have done. Instead of redesigning the system, the monetary authorities have simply inserted themselves in the chain of intermediation that included an ever-evolving variety of books of business without actually considering whether there were too many weak links in the credit chain in the first place. Rather than shorten or redesign the economy's credit structures, and curb the risks accordingly, central banks instead have simply acted as the ultimate guarantors in a supply chain from money-like instruments to longer-term and riskier credit. Absent any kind of sanction for undertaking more systemically dangerous activities, our policymakers have therefore made the same mistakes that were made in the early 2000s: they are establishing perverse ongoing incentives that increase risk, punishing the timid (prudent?) with low returns. It's a classic illustration of Gresham's Law, whereby bad money drives out good.
So sometime this decade, most likely within the next two years, the economy is going to contract again, and this time there won't be a stable enough financial structure to keep it from turning into a depression. The banks, being more powerful than ever in a paradigm of neoliberalism and corporatized imperialism, have made themselves politically impune from consequences for the damage they wrought in 2008. As a result, the unsustainable system they've created is going to crash again, this time even more severely.
What will exacerbate the crash: the fall of U.S. imperialism and the decline of the dollar
It's no coincidence that the great crash of the 2020s is approaching at the same time when the American empire is in a rapid state of decline, and when global capitalism is collapsing. The United States, which is the epicenter for global imperialism, was naturally the country whose deregulatory policies triggered the last global recession. So its internal economic crises throughout the 2020s will have similar global ripple effects, ones which will be exacerbated by the worldwide decline in capitalist growth.
These falling dominos of bourgeois economic power will ultimately be offset by the collapse of the American empire, which factored into the 2008 crash and will have an even bigger impact on the next downturn. The unraveling of America's financial system, which is so concentrated and dangerous because of America's role as the core imperial country, is inseparable from the unraveling of Washington's geopolitical influence.
Having noted these connections between the capitalist world's financial, economic, and imperialist structures, it's easier to understand why the financial crash will happen around the same time as a key part of the U.S. empire's collapse: the fall of the dollar. The increasing abandonment of the dollar by world powers in the last two decades has so far provoked an anxious reaction from the empire; Washington has recently threatened to militarily attack Iran and Venezuela because of these countries' shifting away from the dollar in international trade. The increasingly heavy-handed U.S. sanctions on these and the other nations that have forsaken the dollar, which in recent years have been accompanied by trade wars and blatantly illegal military interventions, are destroying Washington's global reputation and speeding up the worldwide move away from American currency.
It's likely that at some point this decade, American currency will lose enough of its global reinforcement that this will take a severe toll on the country's economy. Chris Hedges has observed that: