Tag Archive for monopoly

The Chronic Crisis, with Worse to Come?

Article from the excellent political economy blogger Zoltan Zigedy


Looking back on the ten years following the 1929 stock market crash, Marxist economist and Science and Society co-editor, Vladimir D. Kazakevich, wrote of the “chronic crisis” that persisted throughout the nineteen thirties in the US (“The War and American Finance,” Science and Society, Spring 1940). Kazakevich drew attention to the stagnation that lasted over the decade, noting that after World War One, the United States became the most dominant economy in the world. Yet “[a]s the most powerful capitalist country, the United States developed particularly glaring financial weaknesses, attributable, for the most part, precisely to its foremost place in a capitalist world torn by economic contradiction and frustration.”
Kazakevich, a good Marxist instead of a born-again Keynesian, reflected on the collapse of growth of the capital goods sector through the New Deal decade: “These figures show how enormously capitalist activity had shrunk in the thirties as compared to the twenties. Most of the Federal expenditures of the New Deal period were directed towards sustaining the demand for consumers’ goods rather than for capital or producers’ goods… Although widely advocated, ‘priming of the pump’ from the end of consumers’ goods alone, has proved a complete failure as an economic measure for resuscitation of the capitalist organization harassed by a chronic crisis.”
Economic commentators today are increasingly nervous about a similar slump in capital goods accompanying our own “chronic crisis.” Because the growth of capital spending (and capital equipment spending) is running well below its long-term average of 8% (growing just 3% in 2013), the average age of industrial machinery and equipment in the US has surpassed 10 years, the highest average age since 1938 when Kazakevich was painting his dire picture! (The Wall Street Journal, 9-3-14) Thus, the slug-like motion of the US economy during the last seven years mimics in an important way the stagnation following the great crash initiating the Great Depression.
While capital spending may not now play quite the decisive role it played in the US economy during the 1930s, it remains a strong indicator of the hesitancy of managers to expand the productive core of the economy. They fail to see prospects for profit expansion in the extensive growth or retooling of the manufacturing sector. Of course that does not mean that managers are not seeking profits or investors are not seeking a return on investment. Managers have plowed more cash into mergers and acquisitions during the first half of 2014 than any time since 1999. That also is typically a part of capitalist restructuring after a severe crash. This rationalizing of capitalist production serves and has served to restore the growth of profit following a capitalist misadventure.
In the wake of the crash of 2007-2008 the US economy experienced a dramatic jump in labor productivity (in the absence of capital investment, this necessarily came largely from an increase in the rate of exploitation). Massive layoffs, plant closings, and weak union leadership combined wage stagnation with extreme speed up of a shrunken labor force. Profits ensued. And consequently the previously depressed rate of profit resumed its growth.
Unfortunately for the prospects of capitalism, the growth of productivity has petered out: its past 5-year average is only slightly more than half of the 20-year average, with productivity actually falling 1.7% in the first quarter of 2014. So this road to profit recovery and growth is seemingly closed.
Of course if the past productivity gains had been shared with the working class, capitalism likely would have experienced an increase in revenues (folks would have purchased more goods and services) and a rosier earnings outlook. But that did not happen. Adjusted for inflation, the cumulative growth of median household income has dropped precipitously since the crash, settling at the level of 1990. Consequently, corporate revenue growth peaked in the third quarter of 2011 and has shrunk ever since.
Thus, three signal measures promising profit-rate increases– capital investment, labor productivity, and revenue increases– are failing the US economy.
Not surprisingly, reported corporate profit growth has suffered. From its peak in the last quarter of 2009 (over 10%), it has receded steadily.
Profits, Profits, Profits!
It is important to emphasize that it is profits that fuel the capitalist system. While it seems an obvious point, it is the starting point of the Marxist theory of crisis. The capitalist system only appears healthy when the capitalist both holds capital and expects a return. He or she dreads two things: idle capital (capital with no prospect of return) and a stagnant or declining rate of return. Consequently, capitalism generates systemic growth if and only if capital is abundant, investment opportunities are rife, and the rate of profit is sufficiently enticing.
But this law of capitalist accumulation contains the seeds of capitalist crisis. As noted above, the growth of the rate of profit has been declining for some time. At the same time, the accumulation of capital is expanding faster than the overall US economy. The relative mass of profits– measured by US corporate profits as a percentage of GDP– reached unprecedented levels in the second quarter of 2014 (a level of profit/GDP only approached twice since 1947: immediately before the crash and in 1950). In other words, despite the fall in the rate of profit, the profit-generating capitalist engine is producing potential new capital faster than wealth is being produced. Three conclusions follow: capital is winning the class war, growth is lagging, and the mass of capital is growing relative to the size of the economy while the profit rate is declining.
And new capital must seek a home, a place to go to accumulate more capital.
Combine the profit-generated capital with the unprecedented cash held by corporations and the availability of cheap credit (nearly non-existent interest rates) and the capitalist class is faced with a daunting task of finding investment opportunities for a vast pool of capital.
If this sounds familiar, it is. Before the crash, many economic commentators noted that the investment world was awash in cash searching for opportunities. I wrote in April of 2007 (Tabloid Political Economy: The Coming DepressionMarxism-Leninism Today, April 5, 2007) that “Despite being awash in capital, financial power searches for investment opportunities to no avail. Economic theorists have been puzzled by the low returns available, even for high-risk or long-term investment. Under normal circumstances, risk and patience earn a premium in investment, but not today. Instead, the enormous pool of wealth concentrated in fewer hands can only lure borrowers at modest rates. There is simply too much accumulated wealth pursuing too few investment opportunities.”
It is this paradox of accumulation– two much capital, too few opportunities– that collapses the already stressed rate of profit and courts structural crisis (or deepening crisis, in our case). It is this paradox of accumulation that drives capital-gorged investors to pursue riskier and more ephemeral schemes.
Once again a vast pool of capital chases diminishing investment opportunities. Once again, as in the prelude to the crash, yields have shrunk, leading investors into riskier and more speculative investments. Pension funds and hedge funds are moving toward more arcane and less safe bets, hoping that return will outweigh the danger. As Richard Barley perceptively observes in the Wall Street Journal (August 11, 2014):
…there is a dearth of high quality securities. Yet there is still a global glut of capital seeking a home… All this creates incentives for financial engineering. In credit derivatives markets, there are signs investors are delving into esoteric structures. Citigroup reports a “large increase” in trading of products that slice and dice exposure to defaults in credit-default-swap indexes… Precrisis, low yields and seemingly benign market conditions led to the creation of instruments that ultimately few understood. The longer the reach for yield persists, the greater the chance that investors revisit the unhappy past.
For some time, the elusive “reach for yield” has driven a re-vitalized junk-bond market. In the five years after the crash, four of the ten fastest-growing bond funds held substantial quantities of low rated debt, according to WSJ analysts. They note that this “…development underscores the intense demand for investment returns since the 2008 crisis.”
But the flow of cash to the high yield market depressed yields to levels unseen since late 2007. They are rising again as investors sense that global economic turmoil and low yields signal danger.
The mania for mergers and acquisitions has also swung into dangerous, risky territory. Despite Federal guidelines urging the limitation of leverage to six times gross earnings by banks financing acquisitions, forty percent of private-equity takeovers in 2014 have exceeded the 6X rule. This rate is fast approaching the pre-crisis level of 2007.
The Wealth Effect
A seemingly robust stock market and a relatively stable US debt market join to create the illusion of a healthy, prosperous economy. They have, to great effect, masked the serious cracks in US capitalism.
The long anticipated Federal Reserve retreat from QE (Quantitative Easing: the purchase of US and other debt by the Fed) has not brought the disaster that many in the punditry and on Wall Street feared. Seldom noted, however, is the fact that the Peoples Republic of China has escalated its purchase of US treasuries nearly dollar for dollar against the Federal Reserve’s retreat.
The “stellar” performance of equities is another matter. One moderately alarming sign is the steady march of equity price-to-earnings ratios to a territory greater than the long-term average and to a level equal to or above that of 2006-2007. Of course this alone does not explain the market’s performance.
A puzzling aspect of equity price expansion is the historically low market activity in the post-crash period. What, then, has jacked up stock prices?
Part of the answer lies in corporate repurchases of shares, a practice that elevates the market price by taking stocks off the table. The Wall Street Journal (9-16-14) reports that $338.2 billion of equities were bought back by corporations in the first half of 2014, the most since 2007. The same report noted that corporations in the second quarter of 2014 spent “31% of their cash flow on buybacks.”
Corporations are hoarding cash and amassing debt at unprecedented levels (thanks to low interest rates, corporate bond issuance may approach $1.5 trillion this year, having grown geometrically over the last twenty years). Thus, corporate activity has shifted away from investing in future growth and toward mergers and acquisitions and stock buybacks, activities that bolster share inflation without creating underlying value.
Take Apple, for example. Sitting on vast quantities of cash, Apple nonetheless sold $12 billion worth of corporate bonds this year. At the same time, Apple repurchased $32.9 billion in Apple stocks, effectively driving up the price of those shares remaining in the market place.
Does this really create wealth? Or is it a ruse to keep the party going?
Interestingly, it’s not just the jaundiced Marxist eye that peers through the fog to see rocky shoals ahead. Rob Buckland, a CITIGROUP analyst, perceives the US economy as entering “phase three,” the phase preceding a marked downturn. Business Insider(August 15, 2014) summarizes Buckland’s phase three as follows:
Phase 3: This is the tricky part. Stocks are still flying high, but credit spreads are widening as investors become increasingly unwilling to finance further risk. Corporate CEOs have now experienced a lengthy period of gains and become risk-happy. (And we’d note that central banks are already talking about tightening credit by raising interest rates.) Bubbles can form in Phase 3, Buckland says, as the high-flying stock market ignores the early warning signs of the deteriorating credit market….(http://www.businessinsider.com/citi-economy-phase-3-where-bubbles-form-prior-to-crash-2014-8#ixzz3DcJqF9tH)
It is against this backdrop that worries are surfacing among investors. Some bearish hedge fund managers are investing anxiously in credit-default swaps and retreating from high risk. Discounting the distractions and illusions fostered by the monopoly media, serious students see the intractable crisis in Europe, the slowdown of the emerging market economies, the recent setbacks to Abe-nomics in Japan, and the loss of momentum in the economy of the Peoples Republic of China as adding to the contradictions lurking under the surface of the US economy.
Vladimir Kazakevich expressed fears in his 1940 article cited above that “…powerful interests on both sides of the Atlantic are likely to regard a war economy as an immediate solution for the chronic crisis…” Certainly his fears were well grounded. Militarism did prove able to “solve” the contradictions of global depression, at the enormous, unprecedented human cost of World War Two.
One cannot but wonder today if a similar logic is operating in the minds of US and NATO leaders who seem determined to stir hatred and belligerency. The newly emerged ISIS demons seem almost too perfect of a foe — almost a caricature of evil that may well bring an unprecedented level of US military might back to the Middle East. The “limited” US air campaign has already cost over a billion dollars, a nasty piece of military “pump priming” for the US economy.
And bear-baiting– poking Russia with threats, sanctions, and military engagement– is the new obsession of NATO, even at great economic cost to a prostrate Europe. The actions contemplated by militarists would push the risk level back to some of the worst days of the Cold War.
Is it now more and more apparent that only the “specter” of socialism can offer an answer to the chronic global crisis of capitalism and its attendants, xenophobia and war mongering?
Zoltan Zigedy

Understanding the crisis

Understanding the crisis

A response to the review by NC of The Failure of Capitalist Production by Andrew Kliman in the January issue of Socialist Voice.

Understanding the crisis is the key to addressing the political challenges we are facing today. A clear understanding of the forces behind the crisis and the contradictions that exploded in 2007 will help communists and class-conscious trade unionists to evolve the correct strategies and tactics for building class solidarity and consciousness, for pushing forward our class interests and the interests of humanity and the planet as a whole.

There are many great thinkers and activists who bring up to date and develop classic Marxist concepts to explain current events: the journal Monthly Review, the author of the book reviewed in January, Andrew Kliman, Michael Hudson, Samir Amin and researchers at RMF (Research on Money and Finance), to name but a few.

They may differ on some points in emphasis or on others in more fundamental understanding. But the aim should not be to choose one view over another and stick blindly to that view: it should be a concrete analysis of a concrete situation. And this is being achieved by using our collective knowledge and experience, combined with the most developed and coherent analysis of the system, placing it firmly in the historical trajectory of this country.

In short, it is to take the best critiques of the capitalist system today and add our experience to them.

Academics and professional economists (no offence intended) have a tendency to exaggerate differences in order to differentiate themselves from other thinkers. While they may lead the way in developing theories and providing the research that others can use, they cannot be relied on exclusively in explaining events, especially the present crisis. It is not about saying Kliman is right and Monthly Review is wrong but rather, in the best tradition of Marxism, taking the best features of the most advanced scientific thought to explain the world around us, and using this to help us change the world.


1. Financialisation of the accumulation process

The review seems to counterpose Kliman’s view of the declining rate of profit and the destruction of capital (or failure to destroy sufficient capital) to financialisation theory (in particular Monthly Review writers) in explaining the crisis and to suggest that it is either one or the other.

The reviewer writes: “The thesis presented in the book stands out in a number of ways from many contemporary radical interpretations (notably the financialised-underconsumptionist thesis advanced by the influential Monthly Review, which melds together a particular Marxian/post-Keynesian viewpoint and that of the Marxist political geographer David Harvey).”

I do not agree that either financialisation or insufficient destruction of capital is the root cause of the crisis. The system itself is the root cause, and both financialisation and insufficient destruction of capital in previous recessions are essential features of monopoly capitalism. Accepting both is not necessarily a contradiction when one understands them as features of monopoly capitalism in its current state.

Kliman’s calculations of the declining rate of profit for the system as a whole, I suggest, do not necessarily contradict the evidence that after-tax profits and wealth have been concentrating and monopolising, leading to an abundance of capital in fewer hands that required investment in financial innovations and that blew up speculative bubbles to avoid global stagnation.

The failure to destroy capital en masse since the Second World War has driven capital to these financial avenues as other, more productive avenues are shut off by over-production and the cheapening of production.

My understanding, for what it is worth, is that the financialisation of the accumulation process (finance as the main avenue for investment of excess capital and source of profit and growth within the system today) is a product of the very crisis Kliman explains so well. It is a result, not a cause, of the generally stagnating economy. It has been a systemic response to divert after-tax profits (and after what capital can be reinvested in the monopolies that finance controls) to financial or (in the case of property bubbles) finance-led investment avenues.

Financialisation was not a misled policy choice but rather a solution to the problem of excess capital in the system, which, without a massive destruction of capital, had no home to go to.

Take GE Capital, Pfizer International Bank or the Volkswagen Bank as examples. These are the banking arms of global manufacturing monopolies. They were not set up as a policy choice by those companies to divert their capital to finance and away from manufacturing: they were set up because even after tax (what little they pay), bonuses and reinvestment, global monopolies still had masses of capital to invest, and financial products offered an avenue.

But financialisation, or the failure to destroy enough capital, do not by themselves explain the crisis; because what drove them as processes?

To try to find this out it might be worth while looking at more of the dominant features and how they connect to financialisation and the declining rate of profit in order to better understand the crisis and the establishment’s response.


2. The monopolisation of power

Wealth, income and control are all features of power, and power is being monopolised and concentrated in fewer and fewer hands globally. Power over productive relations that mould the shape of society, human relations and indeed the environment are increasingly centralised in the hands of the big monopolies and their biggest shareholders.

Even during this recession, global wealth increased, from $195 trillion in 2010 to $231 trillion in 2011, with the top 1 per cent—those with more than $712,000—accounting for 44 per cent of that $231 trillion and the top 10 per cent owning 84 per cent, while the bottom 50 per cent have barely 1 per cent.

Recent research found that of 43,060 transnational corporations analysed, a little over 730 entities control 80 per cent of these corporations, and a mere 147 control more than 40 per cent. Of these 147 controlling entities, 75 per cent are financial institutions.

This is how monopolised and uncompetitive production is. The automobile industry is dominated by about six companies, semiconductors by about twelve, music production about four; there are about ten big pharmaceutical companies, three soft drinks companies, and only two major commercial aviation companies.

And, as described above, these are then controlled by a few—often the same—large shareholders. This would suggest that a willing destruction of capital (or devaluation of assets) will be unlikely, given the power possessed by this handful of people who would take the biggest hit.


3. The internationalisation of production

Hand in hand with the process of monopolisation, and driven by the same accumulation process, production has become internationalised.

The dominant form of production and exchange is not local: it is truly global. A pair of Nike shoes contains about fifty parts, which are made in dozens of different factories in half a dozen countries. The total cost of a pair of Nike runners is about $1.50; they sell for over $100.

This means that workers are pitted against each other globally in a race to the bottom, with only one winner: profit. The amount of money big monopolies can accumulate through the internationalisation of production is huge. This is what has led to an over-accumulation of capital in the system.

The increasing size of monopolies means they can control the production and distribution networks within their field, and pit one against another. Labour becomes de-skilled as workers merely complete one task rather than completing an entire commodity. And more and more is produced through this cheapening and fragmentation of the production process.

However, the drive to pursue profits and ensure a return for shareholders does not pass on price reductions to consumers, as seen in the Nike example; and as workers in the “West” are cheapened by this process, consumption and demand are weakened, resulting in a continuous state of over-production.

Supply is not driven by demand but by the creation of surplus value through the application of labour in the production process. Capital emphasises the need to get the most out of labour, increase and cheapen production. Demand often suffers as a result and rarely meets supply. The extension of debt, or credit, has been a useful tool in artificially trying to match demand to supply. However, it is like putting a plaster over a gunshot wound and cannot seriously create an equilibrium between contradictory forces.


4. The proletarianisation of peoples

One of the great myths is that “globalisation” is destroying the working class and making everyone some kind of middle class. The artificial growth of a middle class has been shown to have been merely superficial and based upon mounting debt and rising asset values. The reality is that, as the internationalisation of production has developed, and in particular the monopolisation of land, this has brought with it the proletarianisation of peoples. More and more peasants and subsistence farmers are driven off their land and forced into cities to work in factories. This also has damaging and negative consequences for the environment, in both rural and urban settings, and has led to the development of horrific slum dwellings around cities.

In addition to this, as the monopolisation of production and retail outlets has progressed, the number of small businesses has also declined globally, being replaced with megastores and transnational companies.

The number of small businesses closing during this crisis is evident. Equally, during a time of crisis, with little real avenue for investment, many companies pursue aggressive take-over strategies to reduce their competition and increase their market share. Often small businesses are absorbed by their larger competitors, again reducing the number of self-employed and increasing the wage class: workers.


5. The growing reserve army of labour

As the system expands into almost every corner of the earth, by open warfare at times, and the working class is expanded, so too is the number of global unemployed—the number of potential workers the system has at its disposal. Marx called this group of potential workers the reserve army of labour, and this has truly expanded as monopoly capitalism has grown.

The proletarianisation of peoples and the defeat of the socialist economies have greatly expanded the number of potential workers, to 2.4 billion today, approximately 65 per cent of the potential global work force.

Supply and demand in influencing the cost of labour (our wages) has an obvious and speedy impact, but the cheaper cost of maintaining a worker in southern parts of the globe is the main driving force behind this process. As production has become so internationalised, the speed at which it can seek out and move to the cheapest parts of the globe has increased. The ever-growing reserve army of cheap labour is part of a race to the bottom and of the assault on trade unions and working conditions in the West.

The retreat of social democracy is less an ideological or policy retreat than a result of the fact that its material base—strong domestic industry in the central economies—has vanished as a result of the monopolisation and internationalisation processes and with it the leverage that workers in those countries could bring to bear on political economy.


6. The pauperisation of the working class in monopoly centres

This process of imposed division and competition between workers is leading to the pauperisation of the working class in the centres of monopoly capital and the gross exploitation and abuse of workers in the South.

As major economic activities have moved away from the West, social democracy has withered. These economies have been forced to become more “open” to deal with the new speed and direction of capital in undermining the terms and conditions of employment.

While real wages have largely stagnated, debt has driven consumption. Inflating asset values, such as houses and shares, have provided a false growth in consumption by working people in the West. This has been shattered by the burst of this latest speculative bubble.

The extremely weak foundations that consumption was reliant upon have been exposed, and increasing “austerity,” to shore up finance capital, is only exacerbating the overproduction of real goods.


7. The role of debt

Credit, and its negative—debt—have always played a role in the capitalist production process. However, it is fair to say today that the role it plays now is far greater and more global in its effect on production and the usual cyclical functioning of the system.

As capital concentrated, those accumulating it could more easily direct and control production to suit their needs through investment and ownership in companies. Equally, the amassing capital required ever more investment avenues. Monopoly production killed off many “real” investment opportunities, and the processes outlined above closed off avenues in reinvestment.

For every extension of a loan, or every bet on a future price or event, debt within the system is created. Debt-based “products” became a significant source of investment and return, including the purchase of and speculation in government bonds or collateralised mortgage products.

Banks created hundreds of debt-based androids that acted as investment avenues but also as security for further loans. This side of the accumulating process (M—M, in the terms used by Marx in Capital) created capital out of itself, and with it volumes of personal, corporate and government debt in the system as debt became an asset and a source of further investment and growth.

The scale of systemic reliance upon this system of M—M growth can be seen in the unusual length of the investors’ “strike” and the negligible effect of hundreds of billions in quantitative easing. During a recession, investors are afraid, and a hoarding of capital is not unusual. However, it would normally pick up after a number of “corrective measures” and an appropriate avenue is found for it.

Today this fear is still clear to see; and reading the pages of Bloomberg or listening to many of the speeches at Davos one can see that it is not going anywhere in the near future. The scale of debt in the system means that investors don’t know how to hedge their bets, as the likelihood of default is ever present and very real. With “sure things” having totally collapsed, investors don’t know where the next Lehman Brother or Irish economy is.

Equally, any quantitative easing that has taken place has not created new jobs or oiled the wheels of production: instead it has been used by those same corporate hoarders to pay off some of their own debts.


8. Speculation and bubbles

While the processes described above have concentrated ever more capital in fewer controlling hands, growth in monopoly centres, such as the United States, Britain, and Europe, would have been negligible over the last couple of decades had it not been for speculation-led financial growth in a series of bubbles.

In the German economy, the driving engine of the economy in the European Union, growth never reached more than 4 per cent but was more often 1 or 2 per cent (and this is including finance-led growth). In Ireland, if one knocks off the 25 per cent or so of GNP attributable to the property bubble each year of the so-called Celtic Tiger, our economic growth was more of a mirage than a miracle. Even recently published reports show that the economy is still stagnant; the only small bit of growth is in foreign monopolies.

Mergers and acquisitions, commodity bubbles and futures speculation, energy and “dot-com” bubbles, sovereign debt and currency speculation, property and mortgage bubbles (and throw in some legal, and illegal, money-laundering)—these have provided the system with its major source of growth, investment, and the creation of new capital through profits.

Speculation is different from investment; it is different from the run-of-the-mill extension of credit to a business or company. In a capitalist sense, investment follows an analysis of the company or product and a belief in its ultimate success. That is to say, the investor has “bought in” to the product. Speculation is less thorough. Little analysis is done, or no thorough analysis can be done, as it may be a blind bet on a future event.

The nature of speculation leads to bubbles, as a spike or inflation of asset prices resulting from the investment of capital attracts more capital, leading to further inflation and consequently to a bubble. While this does provide an avenue for a “quick fix” for capital to invest in and get a return, providing growth in the system, it is quickly flooded with all that other capital seeking an investment opportunity. What may have begun as a spike in valuation grows into a bubble and ends with no soft landing but with an explosive burst.


A system in deep and lasting crisis

The phenomena described above are all dominant features of capitalism today, and they cannot be undone. This is the situation from which any capitalist recovery must come, or from which any transformation to socialism will be born.

These features, and the extent to which they have developed, are what make the present crisis distinctly different from previous recessions, in a number of

1. The crisis is universal. It is not confined to one area of the accumulation process. It is not merely a banking or finance crisis. It is not merely a crisis of under-consumption. It is not merely a crisis of over-production of houses or over-investment in energy.

2. The crisis is global. It is not just in one area or one hemisphere. The United States, the European Union, Japan and the global South are all affected.

3. It appears to be continuous or permanent. Rather than being a two-year or three-year “downturn” with a gradual recovery, this is now the fifth year of the crisis, and there are few signs of a recovery.

This is what makes the crisis truly systemic and structural. This is what makes this crisis different from previous ones. The result of this crisis, and any so-called solutions to this crisis, will deepen the contradictions and accentuate these features even more.

Wealth is already being concentrated even further. Production is monopolised even further, with mergers and acquisitions being used as an investment avenue for the abundance of capital in the system. Production is moving to ever-cheaper parts of the globe, reducing the cost of production to maximise profits out of a contracting customer base. The global number of unemployed is increasing, and the impoverishment of working people in the West will further reduce consumption for goods but also lead to the further indebtedness of both individuals and countries.

Without a massive destruction of capital, the stagnation and contradictions that were only superficially covered up by finance-led growth will lie exposed for some time, wreaking hardship and misery on the vast majority while benefiting only a few.

The structure of monopoly capitalism, and the proliferation of nuclear weapons, with monopoly rivalry and the control of monopolies through shares that are dominated by a few hedge funds and finance companies, may well prevent the global destruction of asset value on the scale that Kliman suggests, leaving us with the understanding that this is not a normal cyclical crisis or recession but one whose features are so accentuated, structural and systemic, and with contradictions so great, that it may well constitute a phase of capitalism in aggressive decay.