The many crises of capitalism and how we can overcome them

Understanding the nature of capitalism’s contradictions and crises is central to the question of building a socialist alternative, writes John Clarke

Efforts to pretend the global pandemic is over are colliding with the stubborn and deadly reality of its continued spread. The Russian invasion of Ukraine, against the backdrop of global rivalry, portends new, even bloodier conflicts. The escalating climate crisis brings a very unique element of disruptive destruction into play. The current “supply shocks” that triggered a global crisis cost of living crisis would seem to be a sign of things to come. There are very good reasons to conclude that the capitalist system has entered a period of crisis on several levels.

Under such conditions, the question of how fundamental the elements of capitalist crisis are becomes central. As always, there is no lack of proposals to mitigate the worst impacts of the situation. The global exploiters who gather at Davos every year have become adept enough to peddle the mythical concept of a sustainable and socially just form of capitalism. The liberal media enthusiastically advances notions of a responsible and benevolent brand of current economic system. For those on the left who accept the need for a socialist alternative to capitalism, however, the question of the nature and depth of the crises within the system is of particular importance.

There has been a long-standing debate on the left about the fundamental nature of contradictions and limits within capitalism. On the one hand, the view has been advanced that this system creates levels of economic crisis and social explosions that offer revolutionary solutions. On the other hand, it has been argued that capitalism can be better managed and significantly stabilized, so that a more gradual approach to socialist transformation will be possible.

In 1900, Rosa Luxemburg launched the debate against an emerging reformist tendency within German social democracy. She wrote her work “Réforme ou Révolution” in response to the ideas put forward by the spokesperson of this current, Eduard Bernstein. In the first paragraphs, Rosa Luxemburg immediately connects Bernstein’s ideas to her belief that crises within capitalism were diminishing and controllable. She notes that,

“According to Bernstein, a general decline of capitalism seems more and more unlikely because, on the one hand, capitalism shows a greater capacity for adaptation, and, on the other hand, capitalist production becomes more and more varied. “

Bernstein also argued that as capitalism learned to achieve higher levels of stability, the working class also improved its economic and political situation through union activity. Thus, notions of collapse and revolutionary upsurge should give way to a gradual, parliamentary political project that would gain a majority for socialism on the basis of “pure reason,” as Luxemburg puts it.

Crisis theory

Much water has flowed under the bridge since Luxemburg challenged the emerging reformist notions advanced by Bernstein. However, the disagreement over the crisis theory remains as clear and significant as ever. In the book he wrote on the occasion of the 200th anniversary of the birth of Friedrich Engels, Michael Roberts attacks those on the left who reject the law of the downward trend in the rate of profit. He argues that “it is ironic that Marx’s most important law in political economy has been overlooked, ignored or dismissed…by the majority of Marxist economists”.

The rejection of this key manifestation of the limited ability of a profit-driven system to develop the productive capacities of human society is correctly identified by Roberts as a dividing line for those who accept the revolutionary implications of Marxist theory.

It becomes clear that crisis theories are a major obstacle to gradual notions of socialist transformation. This is particularly evident in the case of the Meidner Plan, developed in 1970s Sweden as “…one of the most ambitious democratic socialist policy proposals ever seriously considered”. in a developed economy.” The backdrop to the plan was an unprecedented level or class compromise that existed in this country, even by the standards set by the prevailing conditions of a post-war international boom.

The social democracy and the trade union bureaucracy had brokered an agreement with the capitalist class that was quite remarkable. In return for relatively high wages, state policies were put in place that favored the most profitable business operations and allowed weaker competitors to go to the wall. Strengthened social benefit systems ensured that workers displaced in the process would be significantly supported as they transitioned into jobs with successful companies under this agreement.

Rudolf Meidner and his co-thinker Gösta Rehn came to see that the flaw in social compromise was an increasing concentration of wealth in the hands of the most powerful capitalist families. Their plan was to literally redeem the capitalist class. They wanted state power to embark on a gradual compulsory takeover of the biggest companies, with the boards of these institutions being gradually replaced by workers’ representatives. It was an elaborate and detailed plan that the capitalists predictably tried to prevent. There were other reasons why its implementation stalled, but one of the main ones was that the boom conditions it emerged from were coming to an end.

Meidner and his co-thinkers were certainly going further than most social democratic leaders would ever consider, but it was not to be a seizure of the means of production. It would be a state-sponsored nudge of the capitalist class, carried out over decades, in which it would be progressively excluded from its own boards of directors. To say the least, there is a good chance that capitalists will submit to such treatment, but there is also another striking element to this. The plan was developed in the context of a tightly regulated class compromise that relied on a vibrant economy and strong profits. There was no room for a major economic crisis in the company and very little room for class struggle.


In the context of the current period, gradual strategies because the transformation of capitalism and its state institutions rests on the same need for stability but in a situation, of course, deeply unstable. Far from being able to ignore the contradictions of the capitalist system and the disturbances they generate, there is an increased need to understand them and to develop strategies and approaches based on this understanding.

In 1929, Henrik Grossmantrying to deepen Marxist crisis theory after decades of relative neglect, wrote The law of accumulation and collapse of the capitalist system. He explored the contradictions and limits of capitalism and considered “the historically ephemeral character of the bourgeois mode of production”. In the first chapter, he included a quote from Karl Kautsky that lays bare the underlying assumptions of reformism with remarkable clarity. As Kautsky says,

“The prospects of socialism do not depend on the possibility or the necessity of an imminent collapse or decline of capitalism, but on the hope that we must have that the proletariat will attain sufficient strength, that the productive forces will develop sufficiently to provide abundant means for the welfare of the masses. … finally, that the necessary economic knowledge and consciousness develop in the working class to ensure a fruitful application of these productive forces by the class – these are the preconditions of socialist production.

The notion of a stable, even prosperous capitalism that produces not revolutionary crises, but the basis for orderly and progressive social transformation, has always been at odds with reality. In the current context, it is a deeply erroneous view that must be overcome. The greatest contradiction capitalism creates is a working class whose needs cannot be met within this system and who are driven to challenge and overthrow it. An appreciation of the crisis nature of capitalism is the basis of any realistic project of socialist transformation.

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