Business as Usual: The Roots of the Global Financial Meltdown

Chapter 8: The Convolution of Capitalism

The Convolution of Capitalism 211 Chapter 8 The Convolution of Capitalism Gopal Balakrishnan Introduction: The Limits of Capital in a Historical Perspective What does today’s slow-motion meltdown of markets indicate about the historical viability of capitalism? Looked at in a longer-term historical perspective, the latest round of global turbulence might open up new perspectives on its outer boundaries of development. Indeed, properly understood, it brings to light an epochal shift concealed over the preceding decades of financialization. In what follows, I argue that the world’s most advanced societies have been heading to what the classical economists once called “the stationary state” of civilization, a potentially insurmountable condition of stagnation. After a quarter century of ever-greater dependency on debt and speculation, both the developed and developing worlds are entering a new historical period in which the ongoing problem of warding off the deflation of bubbles has converged with secular trends that have diminished their capacities for further development through the classical path of technological innovation. The future is often conceived in terms of the arrival of a new, dynamic phase of capitalism: the advent of this stationary state, or what has been called “grey capitalism,” points to a more uncertain future, beyond capitalism. Frederic Jameson once wrote that it was easier for contemporaries to imagine the end of the world than an end of capitalism. 212 Balakrishnan “Postmodernism” was, in his view, a cultural condition in which the experience of history, of vast multidimensional transformations in modes of life, had devolved into a linear modernization story of advancing markets , elections, and human rights. Alternate futures and unsubsumable pasts were threatened with extinction, as contemporary social experience collapsed into a static present projected back and forth in time. According to this view, contemporaries of earlier phases of capitalist society could contemplate its ultimate fate in terms of classical narratives of decline and fall, but in its late or postmodern phase, such precedents have become increasingly unpersuasive. Reflecting this wider experience of the irrelevance of the remote past, contemporary variants of social theory are no longer “historicist” in the explicit or implicit way that the classics of this tradition were. Although the term is sometimes used more narrowly, there were several variants of “historicism” in this sense. Karl Marx once held that contradictions between static property forms and dynamic forces of production erupted in periodic crises that stripped the existing order of things of its apparent naturalness. These momentary denaturalizations opened up perspectives on the origins and declines of past modes of life, highlighting the relativity and transience of one’s own. Amid the depression of the late nineteenth century, Friedrich Engels and Karl Kautsky dwelt on perceived parallels between the spread of primitive Christian communities and the rise of modern socialism. But encounters with historicity were far from being the exclusive province of the Left. From Nietzsche to Spengler and Toynbee, the experience of decadence seemed to invite comparison to comparable episodes from ancient and even nonEuropean pasts. Arguably, all such philosophies of history have long since ceased to offer any promising analogies for thinking about the future of late, or postmodern, capitalism. Assuming for the moment that capitalism actually could come to an end, as all older forms of society have, we still might lack any relevant historical analogies of how this might unfold, for the contours and transitional forms of its descent would likely bear little resemblance to the ways in which older agrarian civilizations collapsed or changed into some other form of life. In contrast to these rigidly traditional Malthusian worlds, capitalism is supposed to be able to renew itself indefinitely through crises of creative destruction. The Convolution of Capitalism 213 Nearly all commentators on today’s worldwide slump assume that another age of expansion lies somewhere in the future, despite the lack, at present, of any convincing scenarios of how this might come to pass. Crises of creative destruction are supposed to be the way in which capitalism renews itself. Is the current state of financial emergency laying the foundations for a future round of accumulation? Most commentators on today’s slump assume that a more or less long and painful restructuring eventually will release a new period of expansion based on the growth of emerging markets and new technologies. There are some reasons to be skeptical about this assumption. Hegel once remarked that for an ending or a beginning to...