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Wallerstein, Immanuel  (2009) Where to after the capitalist crisis?. Eye on Civil Society : -.

Meantime, says leading sociologist, we must struggle against gender, class and race/ethnic inequality

First, how did we get to where we are today? Let’s retrace our steps several decades backwards.

The period 1945 to 1970 saw the height of United States power in the world-system and also the moment of the most expansive economic upturn that the capitalist world economy had ever known.

Any time the world-economy is expanding significantly, leading products which are relatively monopolized offer great profits. The problem is that all monopolies are self-liquidating, because there exists a world market into which new producers enter. When competition increases, prices and profits go down.

A necessary precondition for capitalist profit is world order. Wars offer the possibilities for some entrepreneurs to do very well, but also occasion enormous destruction of fixed capital and considerable interference with trade.

But to maintain order, the world’s leading political power must make use on occasion of its military power. And that is costly in money and lives. The home citizens’ initial pride in victory can turn to distress as they pay the increasing costs of military action, and begin to lose enthusiasm.

The period 1965-1970 witnessed both the end of the historically most expansive economic upturn, and the beginning of decline of the historically most powerful hegemonic power, the US.

At the same time, social protests during 1966-1970 marked a third downturn: the decline of the traditional movements of the world-system, the so-called Old Left.

The Old Left - essentially the Communists and the Social-Democrats, plus the national liberation movements – had risen slowly across the world-system, primarily throughout the last third of the nineteenth century and the first half of the twentieth century.

By the 1960s, the Old Left movements had achieved their historic goal of state power almost everywhere - at least on paper. Communist parties ruled one third of the world - the so-called socialist bloc.

Social democratic parties were in power, at least alternating power, in most of another third of the world - the pan-European world.

In the former colonial world, national liberation movements had come to power, and various versions of populist movements were rising in Latin America.

Today, to be sure, most analysts and militants are very critical of the performance of all these Old Left movements, and doubt that their coming to power made much difference.

Old Left movements had built their strategy on the so-called two step strategy - first take state power, then change the world. Critics charged that they had taken state power but had not at all changed the world.

From the 1980s, the world right wing movements took advantage of the world economic stagnation and the collapse of Old Left movements and governments to launch a counter-offensive, which we call neoliberal globalization. The prime objectives were to reverse all the gains of the lower strata during the earlier period.

The world right sought to reduce all the major costs of production, to destroy the welfare state in all its versions, and to slow down the decline of U.S. power in the world system. The onward march of the world right seemed to culminate in 1989. The ending of Soviet control over its East-Central European satellite states, and the dismantling of the USSR itself led to a sudden new triumphalism of the world right. One more illusion!

What in fact sustained the accumulation of capital since the 1970s was a turn from seeking profits via productive efficiency to seeking profits via financial manipulations, amore correctly called speculation. The key mechanism of speculation is encouraging
consumption via indebtedness.

After the biggest expansion in the history of the capitalist world-economy, there followed the biggest speculative mania. The bubbles moved through the whole world-system - from the national debts of the Third World countries and the socialist bloc in the 1970s, to the junk bonds of large corporations in the 1980s, to the consumer indebtedness of the
1990s to the U.S. government indebtedness of the Bush era.

The system has gone from bubble to bubble. The world is currently trying one last bubble - the bailouts of the banks and the printing of dollars.

The depression into which the world has fallen will continue now for quite a while and go quite deep. It will destroy the last small pillar of relative economic stability, the role of the US dollar as a reserve currency of safeguarding wealth.

As this happens, the main concern of every government in the world will be to avert the uprising of the unemployed workers and the middle strata whose savings and pensions disappear.

Governments are turning to protectionism and printing money as their first line of defense, as ways of dealing with popular anger. Such measures may assuage momentarily the pain of ordinary people. But they will eventually probably make the situation even worse.

We are entering a gridlock of the system, from which the world will find it extremely difficult to extract itself.

Some claim that the greatly improved relative economic position of Asian nations will allow a resurgence of capitalist enterprise, with a simple geographical shift of location. One more illusion!

The relative rise of Asia is a reality, but one that undermines further the capitalist system, by overloading the numbers of persons to whom surplus-value is distributed.

The underlying problem is that the three different kinds of costs of production – personnel, inputs and taxation – have been going up over time as a percentage of the actual prices for which products are sold.

This forces a new question - not how will the capitalist system mend itself, and renew its forward thrust? The new question is, what will replace this system? What order will be
chosen out of this chaos?

We don’t know.

So what are practical steps that we can and should take? I would put at the head of the list actions that can minimize the pain that arises from the breakdown of the existing system.

The second thing that we can do is engage in serious debate about the kind of world system we want, and the strategy of transition. The third thing we can is to construct alternative decommodified modes of production.

Through this all, we must put at the forefront of our consciousness and our action the struggle against the three fundamental inequalities of the world: gender, class, and race/ethnicity/religion. This is the hardest of all: none of us are guiltless and pure.

(Wallerstein is research professor at Yale University, author of 40 books, and former president of the International Sociological Association. He presented a longer version of this article last week as the UKZN Centre for Civil Society’s Wolpe Lecturer.)

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