In the period from 1948 to 1973-74, we witnessed a fireworks display of industrial and technological innovation the like of which has never been seen. Yet the very successes of the capitalist system are now turning into their opposite. At this time of writing, there are officially 22 million unemployed in the advanced capitalist economies of the OECD alone, even without considering the hundreds of millions of unemployed and under-employed in Africa, Asia and Latin America. Moreover, this is not the temporary cyclical unemployment of the past. It is a chronic ulcer gnawing at the bowels of society. Like some dreadful epidemic, it strikes down even sections of society which believed themselves safe in the past.
Despite all the advances of science and technology, society finds itself at the mercy of forces it cannot control. At the beginning of the 21st century people look to the future with growing anxiety. In place of the old certainty there is uncertainty. The general malaise affects first and foremost the ruling class and its strategists, who are increasingly aware that their system is in serious difficulties. The crisis of the system finds its reflection in a crisis of ideology, reflected in the political parties, official churches, morality, science and even what passes nowadays for philosophy.
Private ownership and the nation state are the two straitjackets that hamper and restrict the development of society. From an objective point of view, the conditions for world socialism have existed for decades. However, the decisive factor that permitted capitalism partially to overcome its fundamental contradictions was the development of world trade. After 1945 the domination of the world by the United States, dictated by the need to stave off revolution in Europe and Japan and contain the Soviet Bloc, gave them the opportunity, through the Bretton Woods agreement and GATT, to compel the other capitalist powers to lower tariffs and remove other obstacles to the free flow of trade.
This was in complete contrast with the economic chaos of the inter-war period when the intensification of national rivalries expressed itself through competitive devaluation and trade wars that led to the strangling of the productive forces within the narrow confines of private ownership and the nation state. As a consequence of this, the period between the Wars was one of crisis, revolutions and counter-revolutions, culminating in the new imperialist slaughter of 1939-45.
In the post-war period, capitalism partially succeeded in overcoming the fundamental crisis of their system through the integration of world trade, creating a largely unified world market. This provided the basic premise for the massive upswing of the economy in the period of 1948-73, which in turn led to increased living standards, at least for a sizable section of the population of the advanced capitalist countries. Thus, a dying man can, at times, experience a sudden access of energy, which appears to presage a complete recovery, but in reality is only the prelude to a new and fatal relapse.
Periods such as this are not only possible, but inevitable, even in an epoch of capitalist decline, if the existing social order is not overthrown. However, the massive fireworks display of economic growth, amounting to many trillions of dollars over a period of four decades, has in no way changed the nature of capitalism or obliterated the contradictions within it. The long period of economic upswing from 1948 to 1973 is over. Full employment, rising living standards and the welfare state are things of the past. In place of growth we now face economic stagnation, recession and a crisis of the productive forces.
The owners of capital are no longer interested in investing in productive activity. The late Akio Morita, who was chairman of Sony Corporation, repeatedly warned in the 1980s of the mortal danger to the capitalist system of the trend away from productive industry towards services. Since 1950, the USA has lost over half its manufacturing jobs, while three quarters of all jobs are oriented to the service sector. A similar trend exists in Britain, now relegated to a third rate capitalist power. In an article in the Director (February 1988), Morita stated:
“What I would like to suggest is that this trend, far from being the matured progression of a maturing economy and something to be encouraged, is destructive. For in the long run an economy that has lost its manufacturing base has lost its vital centre. A service-based economy has no engine to drive it. Thus, complacency about moving from manufacturing to a haven of hi-tech services, where workers sit at computers and exchange information all day, is entirely misplaced.
”This is because it is only manufacturing that creates something new, which takes raw materials and fashions them into products that are of more value than the raw materials they are made from. It would seem obvious that the service elements of an economy are subsidiary and dependent upon manufacturing.”
Instead of creating jobs and increasing the wealth of society, the big monopolies are dedicating huge resources to speculating in the money markets, organising predatory takeovers, and other kinds of parasitic activity. Morita pointed out that “Businessmen have become fascinated with the foreign exchange game. They have discovered it can bring quick returns without the need to invest in a productive enterprise. Even some industrial concerns have gone over to the FX Empire. The people who spend their lives hunched over a monitor displaying the latest exchange transactions live in a world all their own. They have no allegiances. They do not make any products. They do not create any new ideas. They trade US $200 billion each day in London, New York and Tokyo. That is a lot of poker chips, significantly more than the value of the actual goods bought and sold in a day. ”That is a lot of water to be sloshing around in the engine room,” Morita wrote.
Morita compared the situation of world capitalism to playing poker on a sinking ship, and concluded: “It is a heady game, full of excitement, but wins and losses at the poker table don’t obscure the frightening fact that the ship is sinking and no one realises it.”
Since Morita wrote these lines, the situation has got worse. The gigantic world market in “derivatives” has now reached the staggering total of US$ 25 trillion and is completely out of control. This amounts to gambling on a colossal scale. It makes the South Sea Bubble look like a mere trifle. This shows the fundamental unsoundness of world capitalism, which could end up in a new 1929-style financial crash.