Neoliberalism: evidence of capitalism's decline?

[CAleftist]

If the interests of capital and labor are fundamentally opposed, yet simultaneously, capital is dependent on labor for its power, how can the capitalist assault on labor be compatible with continued capitalist growth?

Look at neoliberalism, for example. It is the path of pursuit of global financial profits at the expense of labor unions, real wages, funding for education, health care, infrastructure, and everything else that the working class has won from battles with capitalists-all of that has been destroyed or is in the process of being destroyed.

Furthermore, since the end of the post-war expansion of the American economy in the early 1970s, the stagnation and decline of real wages, and the liberalization of trade barriers and financial institutions, investment in productive capital has fallen, while investment in fictitious capital has grown. Consequently, capitalism is subjected to more and more crisis by the extremely unstable nature of the global financial system.

Which brings us back to my initial question: is the capitalist assault on the living standards of workers everywhere, further evidence of crisis? The more capital smashes labor, the worse off capital actually is, because they need demand to keep the capitalist economy growing. At the same time, capitalists are increasing production (supply) because cutting supply would shrink growth, which is crucial to a capitalist economy.

Keynesian solutions won't work (they didn't in the past anyway, it was the mass destruction of surplus value in WWII and the mobilization of war resources for the Cold War that created the pent-up demand that expanded the capitalist economy). Cutting supply won't work, as stated before. That leaves capitalists with the contradiction of squelching demand while increasing supply through over-production.

Any thoughts here? Am I on the right track?

[RedMarxist]

From What I've read/studied, it is so true that in order for the Capitalist to continue to basically oppress the worker, he must keep the worker's real wages up to a certain height, or else they won't be complacent anymore, as we have seen during the Great Depression and our Great Recession.

So it says something about the state of Capitalism when the businesses that must keep the worker complacent to keep them slaving away at the factory start attacking real wages and unions etc.

The first things to go in an economic crisis are A) Schooling(very important to train the next generation for slaving away just as the last generation had at the factories) and B)Healthcare(very important too to keep the worker's family and him/herself healthy)

As has been clearly seen since 2008, as living conditions and other key conditions continue to spiral downwards out of control, the people revolt. Either in the form of the Square movement in Greece or the London Riots in Britain.

With the stock market going to shit and the economies of many nations worldwide, especially European nations, going down the toilet I don't see how Capitalists can keep going.

After awhile people will say "screw this, down with the system." and down it will go.

A major reason why people turned to the Communist movement in the 30's was because of the Great Depression. And so people come back once more for round 2 of Socialist revolution. In my opinion, 'True Democracy', as its been called, is the future Dictatorship of the Proletariat.


Bare in mind I'm still in High School so feel free to disregard my advice. But just keep in mind that the threat of Capitalism stretches to the schools as well. We are forced to learn/urged to join FBLA(Future Business Leaders of America). not to say it is necessarily bad, but in my opinion it encourages the increasingly illegitimate Capitalist system. It practically says "come stupid, unquestioning students, join us in raping Planet Earth and abusing your fellow man as you embark on a journey of making money over human need."

[Tommy4ever]

Neoliberalism was the solution to the last major crisis in capitalism that occured from the beginning of the 1970s. At the time the rate of profit had started to noticeably decline, the old heavy industries were barely profitable, were inefficient and impossible to reform in favour of capital (with labour too heavily intrenched in a powerful position). Moreover, by this stage western industry was facing competition from emerging economies which treated their workers like shit.

The most viable solution that involved the maintaining of the capitalist system was to greatly strengthen capital at the expense of labour. The labour movement was crushed, the old heavy industries (with their stable jobs for life, need of skilled labour and clear social contract) were replaced with industries that often required much less of their workers and that strange phenomenon of constant high unemployment became normal practise (when unemployment passed 1 million under Heath it was seen as a national crisis in Britain). Real wages were pushed down and kept down by the weak labour movement, reserve army of unemployed and (perhaps luckily) the absence of an opposition ideology as socialism died in the view of the public at the end of the 80s. So the portion of surplus value increased, capitalists were now making more than healthy profits again and investments grew massively fuelling an economic boom.

All fine and well if you wanted to restore economic growth. But there is a blatant problem here. If you hold down real wages and shift wealth to the capitalist class, then who is going to provide the demand for your goods? The answer was simple - they don't need to actually earn more money, they just need to have more money. The availability of credit greatly expanded as both public and government debt started to accumulate to worrying levels. But whilst the good times were rolling none of that seemed to matter. The economy was growing and most people's lives (in the west) were improving as new technologies came in and many people were able to afford goods they couldn't before thanks to cheap credit.

As masters of hindsight we know how that strategy ended in failure. As our economies became increasingly saddled with cheap credit (a problem made worse by ultra low interest rates in America from 2001 and China flooding markets with money for investment) money was lent out to people who could never realistically repay it. As those people started to default there was a total panic that spread throughout the entire capitalist system. Since 2008 global finance has essentially been experiencing a gargauntuan ''oh fuck'' moment as it realises the extent of the problem caused by decades of neoliberal economics.

But never let a good crisis go by, now is the perfect moment for neoliberalism to kill two birds with one stone. Not only has the right decided to solve the whole 'economy based on debt' thing, they also wish to strike even more severe blows against labour and the remains of the welfare state. Their solution to this crisis seems to be to further empower capital in relation to labour. But I wonder how they plan on fostering demand whilst clamping down on people's incomes?

More debt perhaps?

[CAleftist]

Neoliberalism was the solution to the last major crisis in capitalism that occured from the beginning of the 1970s. At the time the rate of profit had started to noticeably decline, the old heavy industries were barely profitable, were inefficient and impossible to reform in favour of capital (with labour too heavily intrenched in a powerful position). Moreover, by this stage western industry was facing competition from emerging economies which treated their workers like shit.

The most viable solution that involved the maintaining of the capitalist system was to greatly strengthen capital at the expense of labour. The labour movement was crushed, the old heavy industries (with their stable jobs for life, need of skilled labour and clear social contract) were replaced with industries that often required much less of their workers and that strange phenomenon of constant high unemployment became normal practise (when unemployment passed 1 million under Heath it was seen as a national crisis in Britain). Real wages were pushed down and kept down by the weak labour movement, reserve army of unemployed and (perhaps luckily) the absence of an opposition ideology as socialism died in the view of the public at the end of the 80s. So the portion of surplus value increased, capitalists were now making more than healthy profits again and investments grew massively fuelling an economic boom.

All fine and well if you wanted to restore economic growth. But there is a blatant problem here. If you hold down real wages and shift wealth to the capitalist class, then who is going to provide the demand for your goods? The answer was simple - they don't need to actually earn more money, they just need to have more money. The availability of credit greatly expanded as both public and government debt started to accumulate to worrying levels. But whilst the good times were rolling none of that seemed to matter. The economy was growing and most people's lives (in the west) were improving as new technologies came in and many people were able to afford goods they couldn't before thanks to cheap credit.

As masters of hindsight we know how that strategy ended in failure. As our economies became increasingly saddled with cheap credit (a problem made worse by ultra low interest rates in America from 2001 and China flooding markets with money for investment) money was lent out to people who could never realistically repay it. As those people started to default there was a total panic that spread throughout the entire capitalist system. Since 2008 global finance has essentially been experiencing a gargauntuan ''oh fuck'' moment as it realises the extent of the problem caused by decades of neoliberal economics.

But never let a good crisis go by, now is the perfect moment for neoliberalism to kill two birds with one stone. Not only has the right decided to solve the whole 'economy based on debt' thing, they also wish to strike even more severe blows against labour and the remains of the welfare state. Their solution to this crisis seems to be to further empower capital in relation to labour. But I wonder how they plan on fostering demand whilst clamping down on people's incomes?

More debt perhaps?

In addition to all of this, the whole history of capitalism has been towards innovation in the financial sector. In order to have a global capitalist economy that is efficient in realizing rates of return on investment, you have to have a financial sector that has no barriers.

Of course, the consequence here is that investment in the financial sector becomes more profitable than investment in industry-because, as you said, the rate of profit for industrial investment had been declining. Thus, as the financial sector becomes more powerful and more interconnected, it also becomes more unstable. As easy access to credit increases due to low interest rates, the inevitable result is a huge boom or "bubble"-and when that boom ends, the financial sector, which holds all that fictitious capital that was created during the bubble, is frozen. Since the financial sector is global in reach, everything stops.

The state, therefore, has to bail out the financial sector to save capitalism-but that exacerbates the sovereign debt crisis. So the state's solution to the debt crisis is austerity, as it has always been-but the problem here is that the working class has been facing decades of repressed real wages, while the capitalist class has gotten a much, much larger share of income than in the past. So the working class won't accept austerity.

There really is no way out for the capitalists.

[Kiev Communard]

If the interests of capital and labor are fundamentally opposed, yet simultaneously, capital is dependent on labor for its power, how can the capitalist assault on labor be compatible with continued capitalist growth?

That is actually an excellent question, and I believe you are indeed on a right track here. Capitalism is really gripped by the contradiction between the need to avoid profit squeeze and the fall in effective demand resulting from the capitalists' cost-cutting measures. Therefore it may be said that the modern stage of capitalist development is characteristic of its precipitous decline. Still, let us not be too optimistic, as the narrative of capitalism's imminent fall was preached before, yet capitalism is still around. It is the coordinated activities of millions of revolutionary proletarians that would bring it down, not the fall in profit rate per se.

[tom1992]

Neoliberalism is dying, just look at my country and the world...

My country was one of the first neoliberal countries (if not the first), of course this was "thanks" to Pinochet´s horrible dictatorship.

Top 10 most unequal countries
The most unequal one of the OCDE
10% poverty, but the way they measure poverty is pathetic...Someone that earns minimum wage is not considered poor.
Massive debt to banks to study and cure illneses.
Expensive healthcare.
3 pharmacies control the remedies.
3rd highest military expenditure of the ocde in relation to the gdp
2nd most unequal country in the PISA evaluation.

A study made by a conservative think thank showed that 60% of the population lives with an avarage wage of Angola.

Many consider my country to be the experiment of neoliberalism, it worked, but for the rich. Big companies pay nearly no tax, a big part of the national resources are in hands of foreign companies.
We have the "sistema binominal", which is a very antidemocratic election system.

People are fighting for a new constitution and for to nationalize natural resources such as copper (part of it is natioanlized but a big part if of the rich).

[CAleftist]

That is actually an excellent question, and I believe you are indeed on a right track here. Capitalism is really gripped by the contradiction between the need to avoid profit squeeze and the fall in effective demand resulting from the capitalists' cost-cutting measures. Therefore it may be said that the modern stage of capitalist development is characteristic of its precipitous decline. Still, let us not be too optimistic, as the narrative of capitalism's imminent fall was preached before, yet capitalism is still around. It is the coordinated activities of millions of revolutionary proletarians that would bring it down, not the fall in profit rate per se.

Right. It could be very well be that the bourgeoisie, in desperation, turns to the most reactionary political movements to "save" capitalism.

[Dumb]

It's important to bear in mind the issue of relative deprivation (I might have the term wrong, but you probably can see what I'm getting at). It's much easier to decrease wages by 25% across the board over 25 years, for example, than it is to make that same cut all in one fell swoop.

If US capital is too greedy and decides to cut too much too soon, then we'll see workers get angry. If capital plays its cards right, though, and takes its time, workers will just come to accept their new circumstances little by little as time passes.

[CAleftist]

It's important to bear in mind the issue of relative deprivation (I might have the term wrong, but you probably can see what I'm getting at). It's much easier to decrease wages by 25% across the board over 25 years, for example, than it is to make that same cut all in one fell swoop.

If US capital is too greedy and decides to cut too much too soon, then we'll see workers get angry. If capital plays its cards right, though, and takes its time, workers will just come to accept their new circumstances little by little as time passes.

Capital is in a squeeze here. They have produced too much surplus value. They can't afford workers to have higher wages, yet at the same time, lower wages mean that demand is driven down.

[Thirsty Crow]

Right. It could be very well be that the bourgeoisie, in desperation, turns to the most reactionary political movements to "save" capitalism.
What could those movements be?
This is not a rhetorical question. In fact, I've been thinking for myself about this for a while.

Is there a way out save for the combination of massive capital destruction (war) and a kind of a writing off of parts of the debt (some global financial deal taking care of the debt pressure)?