World Capitalism, a Basket Case: A Layman’s View

The ultimate breakdown of capitalism has become a spectator sport on the Left, most present-day observers happy enough (realistic enough?) to point out nonterminal contradictions as, in both Europe and America, individuals and parties inclined or devoted to socialism have been drawn or pressured to the Center—for me, a sign of the moral bankruptcy of the times, as false consciousness over the long-term has been politically-structurally driven into the psyche of the general populace, and especially working people (is it still meaningful to speak of a working class in America when now unionization is heading into single digits?). Class for so long has given way to fragmentation of the stratum and atomization of the individual, both incumbent on capitalism if it is to retain an objective structure of stratification and the power, coalesced at the top, that goes with it. The picture is grim, systemically ugly, a Donald Trump personifying a society diverted by war and consumerism, and, given the contradictions (yes, these still count) papered over, largely free to operate on its present course, which represents a historical straight-line projection from at least the end of the Civil War until now. Thus, no surprises: market penetration and financial-commercial expansion, accompanied by the use or suggestion of military force, as the base line for the industrialization and railroad development that brought the 19th century to a close, serving notice on the 20th that monopolism, wealth concentration, and labor suppression constituted the DNA already of what would be the more advanced stage of capitalism—the stage being an arbitrary designation given the continuity of development, ideological as well as political and economic.

Contradictions? These are implicit by every indicator in the treatment of labor, immigrants, and the poor, whether Midwestern farmers, miners, or blacks still chained to the cotton fields: most obvious, the policy of under-consumption, or if you will, the deliberate cheapening of labor, not done by a gathering of upper groups, as conspiracy theory might have it, but via the functional imperative of the system, because capitalism, particularly in the period of what Marx would refer to, the English enclosure movement in mind, as that of primitive accumulation, both for the straightforward purposes of capital accumulation and the far-reaching objective process of disciplining the labor force and underlying population to acquiescence in the principles, practices, and conditions of the system. No fool would work to exhaustion for a pittance, or later become brainwashed into acceptance of harsh conditions still unrewarded, unless the systemic walls of force closed in on her/him. When a system was rooted in contradiction at the outset, the element of repression cannot be avoided (and in the dominant ideology, was not) if the fissures breaking apart the social order were to be sewed up. In the 19th century, the Gatling gun showcased the force ready at hand, while in the 20th century, by subtler means, using both carrot-and-stick, subtler only in the sense that shooting down workers while still present had to share place with seeming concessions offered by government and business, defined the ultimate societal context in which labor was degraded and subordinated in the political economy and body politic.

These two, body politic and political economy, were joined together, more, were inseparable, as part of the overall systemic tightening in which the interpenetration of government and business had ensured, certainly by World War II, a solidified Capitalist State, at the expense of its working people and increasingly even its middle classes. The bulk of society therefore would be admitted into the polity on condition of good behavior, yet fully marginalized in practice as given pro forma rights of citizenship while decision-making lay in the hands exclusively of upper groups which transmitted downward policies, ideology, values. The concentration of wealth and power, intensified through time (even during the New Deal, despite movement toward greater balance between capital and labor, the National Recovery Administration provided the stimulus for greater monopolization), makes a mockery of any pretense of democracy. A brief moment of prideful affirmation, after more than three decades into the new century, was the organizing drives of the CIO and UAW, which even a sympathetic administration placed at arm’s length and howls of communism were raised in corporate circles. By the 1950s, the crackdown on labor was coming from all directions, expanded to include dissent per se, all enveloped in a veritable crusade of anticommunism, which became code for anything or anyone daring to question capitalism, the wars it chose to fight, a foreign policy of aggressive counterrevolution, and the militarization of the total system and its values.

CP readers and contributors old enough to have lived through the decade know the harshness of the ideological-political-academic climate first hand, e.g., friends who lost their college posts, workers expelled from their unions, society awash in loyalty oaths and investigations, all of which had become normalized under Cold War reputed exigencies—in reality, a pretext for domestic repression as well as morbid fear of advancing communism. Why then the contrived alarm and prevalence of repression? After World War II, much of the remainder of the world, but not the US, in rubble, American capitalism saw the opportunity to assume the leadership of world capitalism and make capitalism itself the foundation of the world economy. Waging the Cold War was both rational (part of America’s counterrevolutionary effort to prevent socialism in Europe, Asia, and Latin America) and irrational (exaggerating the threat posed by Russia, the result of which was to shift the American political spectrum sharply and permanently rightward and all that represented to this day, such as massive surveillance of the American people—a wish of the 1950s made true under Barack Obama and advances in technology). When I say “rational,” I mean of course from the standpoint of American capitalism, which thrives on war, repression, and conformity, a true rendering of national purpose as measured by societal historical development and the thinking of leadership—yet by any other name (and speaking truth to power) wholly irrational. As for “irrational” proper, I mean the inflation of fear to the point of domestic hysteria and overreaction in foreign policy. In a way, distinctions here are meaningless, the US crossing the line in both directions whenever advantage suits. To policy makers, overreaction is never that but the deliberate employment of force perceived as needed.

Thus by the early 1950s America wanted to be first and fast out of the gate, postwar recovery being still a slow process in Europe and Asia, with other capitalist systems beholden to America a principal goal. Perhaps ironically, dismantling the British Empire took precedence over the de-Nazification of Germany, as meanwhile the Cold War directed against the Soviet Union was the ideal framework for moving quickly to define the global framework according to American interests. One might say that ruling groups were in ecstasy whether or not they showed it. By inculcating fear and suspicion into American society, in that way encouraging confidence in and submission to the leadership structure including its industrial and military components, the necessary mental-set appropriate to opposing supposed Russian world conquest had been created. Only we adventitiously or conveniently got it wrong. It was the US, not Russia, that was on the path to and fully gearing up for global hegemony, America’s social base at home enlisted in the cause. Sound too schematic? If one takes the second half of the 20th century, this becomes crisis time, put up or shut up, if US capitalism is to absorb its contradictions; for by this point its systemic maturity made for less resilience and specifically military solutions to political-economic problems came front and center. To hark back, war, repression, conformity, these made America the ideal leader of the world capitalist community, yet a place which had already been “earned” since World War I, when capitalizing on worldwide destruction, social discontent, and war weariness, the US was free to develop its industrial and financial strength as others recuperated and reconstructed.

Capitalism, whether at a youthful or late stage, has historically proven itself poorly equipped to serve its people or overcome the gyrations of the business cycle. Under-consumption is one if not the chief contradiction, war-provoking political-structural tendencies another, overreach, as in attempting to superintend the whole of globalization including control of the world’s banking and financial systems a third. The system is more fragile than its disciples, leaders, and generals care to admit, hence, almost as a reflex action, the built-in tendency to repression, America an exemplar in this regard, now soft-glove, out-of-sight, when affordable (the militarization of local police a counter-indication), more 19th century when not, as new challenges to domestic order emerge. We are seeing this today with the phobic response to immigration. Yet fragile or not, power is always the recommended antidote for self-doubt. America’s military budget dwarfs all others, singly or combined, as perhaps signifying an anterior guilt for bringing about havoc to capitalism as a system in its own goal of world domination. When I say, then, world capitalism as basket case, it is the US amputating its limbs through a singular reading of globalization and antisocialism, an attempt beyond outsourcing and forcing market penetration on favorable terms to pursue a policy of divide-and-conquer, even against its fellow allies, as witness the negotiations of the Trans-Pacific Partnership which gives American corporations a privileged sanctuary among the signatories.

America has a virulent case of solipsism, particularly in its practice of capitalism. It hides behind the world capitalist community, gnawing at the vitals of its partners and colleagues, tying them up in military alliances, seeking one-on-one trade advantages, the while playing good citizen to that world community. As for socialism, implacable hostility unless the opportunity presents for modal change—but even then persistence of the spirit of anticommunism to perpetuate tensions and fears to keep the alliance systems and trade agreements intact and ensure social obedience at home. China and Russia, deep-down, remain demonized despite America’s heavy investment in each; hypocrisy goes a long way in international economics. The US has already neutralized and/or co-opted the ideological energies of both nations, paving the way for still further investment. Has capitalism transcended its contradictions, leaving Marx and Marxists far behind? Proponents of capitalism, don’t hold your breath. The present market turmoil is a case in point, although the patient will no doubt recover. My view however is more long-term.

Pivotal here is the role of the people in providing the groundwork for American capitalism. In spite of its manifest failure to provide for their needs, they are hardly in revolt, if sporadically they once were. Marcuse writing in Reason and Revolution speaks of capitalism’s power to absorb its negativity; if I may, in paraphrase, I’d say, capitalism’s power to absorb the spirit of its working people through the promotion of false consciousness (today an exquisite balance between consumerism and deftly administered force). The semi-fascist complexion of large numbers is the values’ destination of capitalism in its drive to secure perfect hierarchy. And apropos of that I must take issue with fellow Leftists who use the 1% as a designation of ruling-class power. That is absurd and misleading however well-intentioned. America’s class-system is tighter, more concentrated, more powerful than we suspect. The current population is close to 300,000,000. 1% of that is 3,000,000, large, diffuse, unwieldy, nowhere near constituting a ruling class. One-tenth of 1%, 300,000, equally preposterous when it comes to holding and wielding real power. Some writers speak of 80 families as possessing wealth the equivalent of a significant portion of those below. We don’t have to play numbers games, but 10,000-25,000 is a charitable estimate, which in a population of 300,000,000 makes for a frighteningly small upper group residing atop the structural hierarchy as though dancing on the head of a pin. But they’re no angels. Whatever the exact number, and it probably changes frequently within what structurally are carefully imposed limits, we see a salient contradiction of capitalism looming: that between a numerically small elite and political-economic-social democracy. Democracy and ruling groups, democracy and the gross mal-distribution of wealth, democracy and policy making secretive in nature (especially on issues of war and peace), do not and never will mix.

This contradiction, the disconnection of power inhering in capitalist social structure, is worthy of inclusion with those named above. But while I’m at it, here is a further one that Marx did not treat: we speak of structural contradiction, not or seldom moral contradiction, which leads to a more inclusive indictment of capitalism—specifically that between profit, which is central to capitalism, and the debasement of the human personality. Actually, Marx comes close, with alienation and commodity fetishism, but it also appears in the mechanics of capitalist volatility as the cold-blooded pursuit of gain, laced with fear, of investors. In a way, the market makes us all investors, not human beings, as though chained to a roulette table seeking impersonal gain to match a depersonalized life. Add to that another contradiction under capitalism, that between productive and nonproductive purposes of society, at their interstices exploitation, the hardship of people laboring under the shadow of potential abundance.

We blame China for the current market imbroglio, which is actually wrong on both counts, not a confused mess or China’s exclusive doing. America sits astride world capitalism. It has for some time, beginning say with Bretton Woods, the Marshall Plan, the IMF, projected its own goals on the global economy (Gabriel and Joyce Kolko wrote repeatedly on this) as it pushed harder over the ensuing decades to establish its position of world dominance. It’s there, and therefore bears a high degree of responsibility for the troubles facing individual capitalist states and those under the pressures it created long in the making to become so. But my title is a misnomer, for it is America rather than the world that is the basket case. Towering military strength is gained through sucking up the societal resources that could instead provide its people a better life and at the same time lead to a sense of international comity and friendship, rather than war and destruction. Chalk up another score for contradiction, whether structural or moral or both. I leave the discussion of market behavior to the excellent writings of other CP contributors; my interest lies in the historical continuity of America’s quest for hegemony. That record leaves little hope America will seize the initiative to realize its own democratization.

My New York Times Comment attached to Wednesday’s late afternoon market report, Eavis-Gough-Jolly, “U.S. Markets Close Up Higher,” (Aug. 26), follows, same date:

The long climb upward, the economic crisis situation less caused by China’s policies than by a world capitalist system unable or unwilling to modify its speculative demiurge. This is systemic, blame to go around for all. So hopefully no tears from investors, hedge fund operators, merger-inclined ceo’s–you guys contributed to bringing this on, scaring hell out of pension-holders and others looking to a secure future. We as a society demonize Li and esp. Putin; why not start demonizing RISK and risk-takers? Even capitalism, although one can sometimes wonder, can have a productive side. This should be encouraged instead of the manufacture of paper wealth. When we get back to 18,000 more deserving people will be able to sleep at night.

Norman Pollack Ph.D. Harvard, Guggenheim Fellow, early writings on American Populism as a radical movement, prof., activist.. His interests are social theory and the structural analysis of capitalism and fascism. He can be reached at