Tag Archive for Paul Krugman

After State Monopoly Capitalism

Zoltan Zigedy

Few review articles are as satisfying as the recent Paul Krugman examination of Robert Reich’s new book, Saving Capitalism: For the Many, Not the Few, in the New York Review of Books (December 17, 2015). To begin with, it was gratifying to find the stark candor behind the title of Reich’s book. “Saving capitalism” assuredly implies that capitalism is on the ropes—in danger of expiring—an implication that I both believe and welcome.

Robert Reich, Paul Krugman, and another colleague, Joseph Stiglitz share lofty accomplishments in academic economics and constitute the intellectual triumvirate informing the non-Marxist left in the US. Although they do not agree on everything, they share a core set of beliefs in the viability of capitalism and its need to reform. It is unusual to see Krugman and Reich suggesting such blatant urgency.

The felt urgency turns on the dramatic increase of economic inequality in major capitalist countries, particularly the US. Krugman stresses that inequality was an issue that Reich and he “were already taking seriously” twenty-five years ago. That may be, but I think it’s fair to say that neither was taking the growth of inequality seriously as a structural feature of capitalism until the important work of Thomas Piketty two years ago.

Krugman takes us on an intellectual journey, outlining in clear, non-technical terms how he, Reich, and other non-Marxist economists modified their understanding of the causes of inequality growth (not simply inequality, but its growth) over the last several decades. Where Krugman arrives is nothing short of amazing: he, no doubt unwittingly, describes an evolved capitalism resembling the capitalism that Marxists described well over half of a century ago.

Decades ago, liberal, mainstream economists believed that rising inequality in the US sprang from a poor match between technological requirements and workers’ skill sets—what Krugman calls “skill-based technological change” (SBTC). Education was seen as the great leveler, restoring wealth and income to those falling behind. But with the correlation between levels of education and compensation broken today, all reject SBTC as an adequate explanation and the key to arresting the growth of inequality. The growth of debt-laden college graduates working in call centers surely shatters that illusion. Or as Krugman smartly puts it: “…hedge fund managers and high school teachers have similar levels of formal training.”

But economists fell back on another technological example: robots and other productivity-enhancing devices replacing workers. But Krugman makes short shrift of this explanation:

…if we were experiencing a robot-driven technological revolution, why did productivity growth seem to be slowing, not accelerating?

…if it were getting easier to replace robots with machines, we should have seen a rise in business investment as corporations raced to take advantage of the new opportunities; we didn’t and in fact corporations have increasingly been parking their profits in banks or using them to buy back stocks.

Krugman thus dismisses a technological explanation for the growth of inequality.

Instead he urges that we consider the centerpiece of Reich’s study: monopoly power.

It is the concentration of economic power in the hands of fewer corporate players that accounts for growing economic inequality, according to Krugman and Reich: “…it’s obvious to the naked eye that our economy consists much more of monopolies and oligopolists than it does of the atomistic, price-taking competitors economists often envision.”

So why did it take Reich and Krugman so long to arrive at this juncture, a place that Lenin visited over a hundred years ago? Marxist writers like Paul Baran and Paul Sweezy devoted an entire influential book to monopoly capitalism nearly fifty years ago.

Krugman apologetically– “an intellectual and a policy error”–attributes the mainstream economic neglect of monopoly to an influential paper written by Milton Friedman in 1953 that emphatically dismissed the effects of monopoly power on significant economic behavior.

Thus, non-Marxist economists and their political allies have scorned the concept of monopoly power until recently, a concept that Marxists have made a centerpiece of their analyses for most of the twentieth century. What is “obvious to the naked eye…” now informs the theories embraced by our left-leaning reformers.

But Krugman and Reich reveal another crucial linkage—that between economic power (monopoly power) and political power (“And this ties the issue of market power to political power”). They see monopoly power as sustained, protected, and expanded by political actors. At the same time, they see political actors as selected, nourished, and guided by monopoly power. This creates a troubling conundrum for those seeking to reform capitalism. Reich’s conclusion, in Krugman’s words:

Rising wealth at the top buys growing political influence via campaign contributions, lobbying, and the rewards of the revolving door. Political influence in turn is used to rewrite the rules of the game—antitrust laws, deregulation, changes in contract law, union-busting—in a way that reinforces income concentration. The result is a sort of spiral, a vicious circle of oligarchy.

Putting aside the clashing metaphors of circles and spirals, this statement reasonably captures the mechanism behind the socio-economic formation Marxists call State Monopoly Capitalism.  For Marxists, concentration necessarily begets monopoly capitalism, which subsequently completely fuses with the state, creating a mutually reinforcing synthesis. The state rules in the interest of monopoly capitalism while policing the economic terrain to maximize the viability and success of monopoly capital.

Monopoly capital legitimizes the state and selects and imposes its overseers. Nothing demonstrates the intimacy more than the crisis bailouts of mega-corporations (“too big to fail”) and the increasing establishment of international governing bodies and trade agreements. Nothing demonstrates monopoly capital’s political dominance more than the decisive role of mega-corporate money in the two-party political process.

With the recognition of the vital link of monopoly capital and the state, Krugman and Reich reach an understanding on a parallel with those Marxist theorists who characterized the post-World War II era as one of state monopoly capitalism. While some features of that characterization were and are sometimes disputed (see, for example, Politico-Economic Problems of Capitalism, Y. Varga, 1968), most Marxists would enthusiastically welcome the two economists to their camp on this important issue.

But unlike Marxists, who see the overthrow of capitalism as the final answer to the wedding of monopoly power to political power, Krugman, Reich and their liberal and social democratic colleagues are left with the conundrum that follows inescapably from their conclusions about the source of inequality. The economic reforms that they envision to retard the growth of inequality are altogether blocked by the massive political power stacked against them. And that political power is stacked against reform because political power is the purchase of monopoly power. In other words, their findings confirm that monopoly has the political process locked up and that lock will ensure that monopoly will continue to grow along with inequality.

Krugman clearly recognizes this conundrum and casts serious doubts over Reich’s wistful glance back at the past and faith that a New Deal-like solution will magically emerge from the amorphous “populism” of candidates from both parties (he mentions Ted Cruz!).

Of course, Krugman is right in dismissing Reich’s nostalgic answer, but he can offer no alternative.

We conclude that the growth of inequality will only be stopped when the program of saving capitalism is put aside for a program that vigorously challenges the capitalist system. We hope that Krugman and Reich will draw the same conclusion in the future.

Editorial, Monthly Review Volume 64, Number 3 (July-August 2012)

mr-064-03

Monthly Review Volume 64, Number 3 (July-August 2012)

As the economies of Europe, North America, and Japan continue to stagnate orthodox economics has revealed itself to be bankrupt, unable to explain what is happening much less what to do about it. It was not the failure to see the “Crisis of 2008” coming that represents the economics profession’s biggest failure, Paul Krugman declared in a recent talk, but what came after: “the profession’s descent into uninformed quarreling,” coupled with its reversion to Say’s Law (the notion that supply creates its own demand)—the disproof of which was the main achievement of the Keynesian revolution. As a result, many among the more orthodox members of the economics profession have “now regressed 75 years” (“Economics in the Crisis,” March 5, 2012, http://krugman.blogs.nytimes.com). In another recent criticism of economic theory and policy, Michael Spence of New York University’s Stern School of Business suggests that the persistent failure to deal with growing inequality points to the possibility of “prolonged stagnation” (“Why Do Economies Stop Growing?,” Japan Times, May 28, 2012).

Yet neither Krugman nor Spence, nor any other prominent orthodox analyst, has sought to engage in a genuine overhaul of received economics on the level of what Keynes accomplished in the 1930s. Indeed, no such scientific revolution appears possible within mainstream economics today, which is characterized not by its realism but its irrealism—serving now an entirely ideological function. Here one is reminded of Paul Sweezy’s observation nearly fifty years ago: “Bourgeois economics, I fear, has irrevocably committed itself to what Marx called ‘the bad conscience and evil intent of apologetic.’ If I am right, Keynes may turn out to be its last great representative” (Sweezy, “Keynesian Economics: The First Quarter Century,” in Modern Capitalism and Other Essays [New York: Monthly Review Press, 1972], 88; originally published in 1963).

But if capitalist economics has proven itself incapable of rationally responding to the current malaise, two questions nonetheless remain to be answered: What is the general nature of the present crisis? And what does this tells us about the direction in which a critical political economy of capitalism should proceed? Noam Chomsky has offered a concise assessment of the current economic situation in an interview with Laura Flanders for Counterpunch:

Flanders: Let’s start with the big picture. How do you describe the situation we’re in, historically?

Chomsky: There is either a crisis or a return to the norm of stagnation. One view is the norm is stagnation and occasionally you get out of it. The other is that the norm is growth and occasionally you get into stagnation. You can debate that but it’s a period of close to global stagnation. In the major…capitalist economies, Europe and the US, it’s low growth and stagnation and a very sharp income differentiation, a shift—a striking shift—from production to financialization. The US and Europe are committing suicide in different ways. In Europe its austerity in the midst of recession and that’s guaranteed to be a disaster…. In the US, it’s essentially off-shoring production and financialization and getting rid of superfluous population through incarceration (“Talking With Chomsky,” Counterpunch, April 30, 2012, http://counterpunch.org).

Viewing the global economic problem in these realistic terms, the issue becomes: Why is stagnation the norm of advanced capitalism, and how have financialization, offshoring (the global labor arbitrage), and the national security state—internal as well as external—emerged as structural forces in this context? Further, how is all of this rooted in the historical process of capital accumulation that governs the system’s laws of motion? Our answer, in the briefest possible terms, is that these developments can all be traced to the rise of monopoly capital—today monopoly-finance capital—together with the interrelated conditions of industrial maturity in the center economies and imperial rent extracted from the periphery. We are now witnessing the development of the most exploitative and destructive patterns of resource utilization in all of history, undermining the productive structure of the capitalist economy and generating massive quantities of waste, which the population is systematically compelled to pay for, while billions suffer and the planet is rapidly being reduced to a condition no longer conducive to human habitation. At the global level we see the capture of more and more of the value generated in the periphery by the center economies of the imperialist system, undermining the possibility of truly sustainable development in the world at large. In what has become an increasingly retrograde system, hundreds of millions of people are simply designated as superfluous, literally of no account.

The intellectual default of modern economics is deep-seated. More than forty years ago, when it was already clear that the so-called “golden” Keynesian age would be short-lived, the question arose: After Keynes, what? (See Sweezy’s article cited above.) By that time the few among those officially certified as “economists” capable of pursuing economics with a critical perspective—that is, as a meaningful social science—were already marginalized. The “profession” as a whole had long since disappeared down the road of the “bad conscience and evil intent of apologetic.”  In the intervening decades its leading lights have justified every attack on the provision for social needs in the poorest parts of the world (a process euphemistically known as “restructuring”), and have eagerly participated in the looting of the former Soviet Union while mocking the resulting death and devastation. In the advanced capitalist countries the economics profession has sought to justify every step down the path to today’s obscene inequality and mass unemployment. Such fraudulent theories have naturally proven worse than useless in avoiding the disastrous consequences of the actions they advocated and justified, and their entire ideological structure now lies in ruins. Theology today is, in comparison, more realistic and far more honest.

Yet, despite this record of ignominious failure, the gatekeepers of the media and the academy still strive to ensure that the now quarrelsome and incoherent voices of yesterday’s “free market” economists alone are heard. Our task then should be to defy this ruling irrealist view in order to expand the space for reality-based political economy—of necessity socialist in inspiration—opening up new possibilities for critical analyses and social change. We are, in a sense, just now coming out of the Dark Ages of economics. We have every reason to hope that many in the new generation, faced with the growing destructiveness of our age, will cast the prevailing orthodoxy aside and turn once again to the confrontation of reality with reason. Unfortunately, time is short.

http://monthlyreview.org/2012/07/01/mr-064-03-2012-07

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
ways.

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.