Capitalism changes with its organic crises and the way the state manages these crises. From the Long Depression (1873–1896) arose organized capitalism set in a world of inter-imperialist rivalries, from the Great Depression (1929–1939) emerged Fordism, and from Fordist capitalism’s great crisis (1967–1979) emerged globalized financial market capitalism. And in 2007 globalized financial market capitalism, sometimes described as “neoliberalism”, entered into the fourth organic crisis in the history of capitalism. The question is: is this crisis over? And, if so, has a new capitalism already arisen out of the crisis of global financial market capitalism?
At the onset of the crisis, some variant of “green capitalism” was long regarded as the most viable project. The need to prevent a global financial meltdown then to be followed by a Great Depression 2.0 necessitated multilateral coordination and statecraft and the implementation of historic stimulus programs. This was the so called “Keynesian resurgence” of the early 2000s. It was nurtured by the desire to prevent the same historic mistakes from the Great Depression, when states’ austerity policies (Hoover in the US, Brüning in Germany, etc.) depressed economies and led to a downward spiral of diminished demand, deflation, and layoffs, while the increasing misery of the masses helped pave the way for the rise of fascism and other far-right forces alongside a radicalized socialist movement that, from the perspective of the ruling classes, threatened private property as the main source of capitalist power.
Forces on the left of the political spectrum saw the Keynesian resurgence as a window of opportunity. They envisaged a Green New Deal (GND) as a coordinated effort to deal with the multiple facets of the crisis: the social and economic crisis, the climate crisis, the crisis of democracy, and the crisis of social reproduction. Based on the understanding that the capitalist market is not only unable to deal with these tremendous problems but rather is the root problem, and based also on the recognition that private for-profit capitalist enterprises shy away from capital-intensive research and development of energy-efficient, green technologies but instead evade ecological regulations through cheating and pricing in the risk of getting caught (like the German diesel scandal showed), the “Keynesian resurgence” came with a promise. The large stimulus programs could have tackled the multiple crisis at all its levels through a full-fledged and radical social reform programme and thus bring together traditional demands from the labour movement, the environmentalist and climate justice movements, the feminist movement, etc. Hence the need to bail out and thus (temporarily) nationalize the financial and automobile industry allowed for strategies of industrial conversion and green economic planning; meanwhile, the large stimulus programs enabled heavy state-led industrial policies which could jumpstart innovative green technologies and thus, as traditional Keynesians also hoped, re-dynamize the stagnant economy and de-financialize it insofar as surplus capital would no longer need to be invested speculatively in financial markets, and would no longer create dangerous speculative bubbles.
The new state interventionism sparked by the global financial crisis, however, did not bring about a turn towards a “green capitalism” by way of a Green New Deal. Instead, the ad-hoc fire-fighting measures of 2008 and 2009 gave way to a global austerity turn, shifting the costs of the crisis and its regional manifestation as the Eurozone crisis onto the working classes. The banks and auto corporations were bailed out and rescued and the ensuing public debt was invoked in order to cut public expenditures on health care, education, pensions, and public salaries. Furthermore, a new race to the bottom has started in the name of “global competitiveness”: efforts to attract investments of globally mobile capital have led the various nation-states and their centre-right and oftentimes far-right governments to roll out the red carpet for capital. Mostly centre-right and oftentimes far-right governments have cut or are cutting corporate and top income tax rates (the US, Great Britain, France, Italy, Spain, Austria, Hungary, Slovakia, Sweden, Norway, Denmark, Belgium, the Netherlands, Luxembourg, etc.), have rolled back or prevented workers’ collective bargaining rights, have deregulated labour markets on behalf of capital (France, Austria, Hungary, etc.), are enabling capital accumulation in natural reserves (Trump in the US, Bolsonaro in Brazil, etc.), privatizing public assets and/or opening other previously de-commodified sectors of the economy to profit-oriented corporations. The new state interventionism thus has supported and deepened global finance market capitalism; for instance, also in the name of “global competitiveness”, Barack Obama’s partial nationalization of the auto industry in the US led to a state-led halving of all wages for new hires. “Neoliberalism” therefore was clearly not about the minimal state but about using the state to use the crisis in order to enforce pro-capitalist measures.
Nation-states were confronted with the strongest social mobilizations and protest movements since the US and Europe’s massive strike waves of the late 1960s and early 1970s. As a result, they have been implementing their policies of deepening neoliberalism in an increasingly authoritarian fashion. The anti-democratic nature of the EU’s new economic governance (fiscal compact, etc.) are indicative of neoliberalism’s authoritarian turn. This authoritarian turn is hardened by the rise of the far right, which has emerged as a result of popular dissatisfaction. Just like in all previous organic crises of capitalism—the Long Depression, the Great Depression, and the Crisis of Fordism—the far right has also ascended in the crisis of global financial market capitalism. The fear of social decline among the working “middle classes” and small businessmen has created strong racist and classist de-solidarizations especially among upwardly oriented working professionals and has also created a backlash against achievements of the women’s movement.
The far right is a friction of the multiple crisis of global financial market capitalism, but it has no solutions or answers to the cause of the problem. The far right is caught in a dilemma: it has a “gardener state” mentality seeking to eliminate what it dislikes, but its authoritarian policies forever and ever only rip out what it considers “weeds” but never get down to the roots. The far right fights merely against the symptoms instead of the root causes of capitalism in crisis: the far right does not tackle neoliberal structural adjustment programmes (“free trade”) and the free flow of capital as well as Western wars in the Global South which are the root cause of the million-fold displacement of people and their coerced migration.
Instead, the far right attacks the symptoms of “free trade capitalism”: migrants. The far right also does not attack the tremendous wealth inequalities and unequal life opportunities that capitalism produces and that are the root cause of crime (given that the more unequal a society is, the more crime-ridden it tends to be). Instead, the far right attacks criminals and calls for tougher sentences and more police, not realizing that more state violence creates more violence in civil society, which is why it is the worst and most counter-productive way of tackling crime. Finally, the far right attacks politicians because they are said to not “represent the people” and are deemed to be “out of touch”. But instead of eliminating the root causes of the establishment of an anti-democratic power elite and seeking to establish democratic participation opportunities at all levels of society, including the economy, far-right leaders merely identify the symptom, claiming that “the ruling elites you elected no longer represent you” and then continuing to say that “everything will be fine if you just elect us”.
The far right is therefore a friction of global financial market capitalism in crisis but has no solutions to its main contradictions. On the contrary, in those countries where they rule—the US, Brazil, Hungary, Austria—they are making the root problem worse by being at the forefront of the aforementioned corporate tax cuts, labour market deregulations, and public asset privatizations. In other words, they are worsening the problems and their answers will simultaneously get worse and more barbaric as a consequence.
Still, it is the (erstwhile) defeat of the strong anti-austerity movements and the Left’s alternative Green New Deal that has created a vacuum increasingly filled by the far right. Only credible left alternatives and great social reforms at least of the kind of a Green New Deal will help prevent the rise of the far right. This is what supporters of the parties of the neoliberal centre need to understand.
At the same time, the parties of the centre are becoming more authoritarian themselves, because of the ways in which they are implementing unpopular “global competitiveness” policies on behalf of capital and the ways in which they seek to fend off the far right by adopting some of their policies. Taken together, this encourages authoritarian tendencies in economic policy, domestic security, and foreign policy. The new EU economic government plays a central role here. Post-liberal is increasingly turning into post-democratic. But does that mean we have already entered “authoritarian capitalism”?
If by “authoritarian capitalism” we seek to describe the aforementioned tendencies, then it is clear that this new phase in the history of neoliberal capitalism carries a new quality. It is still too early to speak of a new historic phase of capitalism for a number of reasons. To introduce a new phase, this authoritarian (financial market-)capitalism and the growth strategies of (internal and external) devaluation (austerity) dominant since 2010 must be viable in the long-term. They do not represent a coherent project. Economically, this beggar-thy-neighbour capitalism, the attempt to secure one’s prosperity at the expense of the neighbouring state, leads to fighting for pieces of a hardly growing cake.
Against the backdrop of over-accumulation, a wage rate falling both in the core capitalist states and the emerging market economies, the increasing appropriation of the social surplus value by the global (finance) capital owners of capital, and crisis wars and imperial conflicts in the Middle East and the West Pacific which can easily lead to relapses into deep economic crises, the present austerity strategy of trifling growth was followed for decades in North Africa and Eastern Europe. The new wave of robotization (industrialization 4.0) hinders strategies of “re-industrialization” (Obama/Trump) and high-paying jobs on a mass scale, similar to how Fordist mass production and Keynesian mass consumption integrated the popular masses and made capitalism hegemonic. In this case, the crisis was merely shifted by the governments: from the banking and industrial sector to the states and their budgets, from some states onto others, and from today to tomorrow. At the same time, popular dissatisfactions are still extremely high, making the crisis of democracy another element of instability—an instability that can lead to sudden changes, including the rise of new leftist forces from the US to the UK.
Global capitalism is thus still in a transitional phase. Following Gramsci, this could be described as a “crisis interregnum”. Authoritarian crisis capitalism with its miniscule growth is not a sustainable long-term project. Over-accumulation, growing wealth inequality, erosion of the middle class, and de-democratization prevent the hegemonic generalization of a new type of development. The material foundations for a new historical compromise are lacking.
Authoritarian capitalism? Green capitalism? Authoritarian green capitalism? Social-democratic green capitalism? Green socialism? The dissolution of the crisis interregnum is still in the future. The globe of the world remains stuck on a needlepoint, and is yet to roll down. While it currently tilts to the right, it could still go in one direction or the other. Only the centre cannot hold.
Ingar Solty is an expert on peace and security policy at the Institute for Critical and Social Analysis. This article is an updated and revised translation of a short piece published in the rubric “Der Name der Zeit” from the 1/2015 issue of LuXemburg: Gesellschaftsanalyse und linke Praxis.