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Part III: Capitalism’s Last Gasp

Capitalism’ s Last Gasp makes an urgent argument for ending corporate rule. It’s divided into four sections. The first, “The End Days,” links the 2008 global economic collapse to structural flaws inherent in global capitalism.

The second, “The Privatization of Public Services,” discusses the damaging effect of corporatization” on public education, prisons, and food production.

The third, “Medical Censorship.” looks at major human health problems stemming from the failure of federal regulatory agencies to regulate toxic chemicals and dangerous infectious organisms in American’s food, water, and environment.

The final section, “The Corporatization of Health Care,” examines at how the pharmaceutical industry is making millions of Americans sick via disease mongering. “Disease mongering” and “medicalizing” are both terms for Big Pharma’s multi-billion dollar campaign to convince Americans and their doctors that common problems of living are actually illnesses requiring treatment with expensive, often harmful medications.

The End Days

What Comes After Capitalism?

(September 19, 2010)

The long taboo topic of the end of capitalism seems to be in fashion recently, a consequence of a deepening economic crisis that shows no signs of going away. There's even an End of Capitalism website: This isn't the first time economists have declared that capitalism was on its last legs. Many, in fact, saw the Great Depression as symptomatic of its impending failure. British parliamentarian John Strachey was clearly the most articulate in his 1933 The Coming Struggle for Power. Moreover he makes some surprisingly prophetic predictions regarding the future of post-industrial capitalism.

I find interesting parallels between Strachey's analysis and those of Monthly Review authors Paul Sweezy (who first articulated ''stagnation theory'' in the 1960s) and Fred Magdoff and Michael Yates in their 2009 ABCs of the Economic Crisis. All four are strikingly non-judgmental in their approach. There is no castigation of criminal banksters, sleazy corporate lobbyists or crooked politicians. Instead they quietly point out that neither the Great Depression nor our current economic crisis is the fault of any particular individuals or groups. They argue that there are natural laws of capitalist economics, just as there are natural laws of physics - that there are inherent flaws in capitalism that prevent it from continuing indefinitely.

From a somewhat different perspective Alex Knight, who edits about End of Capitalism Theory. Knight argues that capitalism is breaking down owing to ecological and social limits to the continual growth that's essential for a capitalist economy to continue.

Strachey's Crystal Ball

As he writes in 1933, Strachey is of the definite opinion that the Great Depression is symptomatic that capitalism has reached its final stage of monopoly capitalism. It isn't quite dead yet, but clearly dying. He quotes from Lenin (who had nearly 50 more years experience than Marx with capitalist boom and bust cycles) about ''monopolistic'' capitalism being the last stage of capitalism when begins to ''decay.'' Lenin (and Strachey) describe specific political/economic transformations associated with the decline in profits and growth that characterizes end stage capitalism. I find it uncanny that they describe our current economic predicament so perfectly:

  • The monopolistic corporations that control finance capital (the commercial and investment banks) essentially merge with the monopolistic corporations that control production and manufacturing (which they have done, due to massive buy-outs and takeovers and interlocking boards).

  • There is increasing focus on exporting capital (which is what happens when a company shuts down a factory in the U.S. and re-opens it in southeast Asia).

  • National governments, which are essentially controlled by their monopolies, are constantly in conflict with one another over who will control the resources, markets, and cheap labor of the Third World.

Why Capitalism Didn't Fold in 1933 - Stagnation Theory

Obviously Strachey was wrong in predicting capitalism's imminent demise. According to Marxist economist and founding editor of the Monthly Review Paul Sweezy, the massive ''financialization'' of the US economy served as an eighty year life support system to keep capitalism going a bit longer. In 1966 Sweezy and economist Paul Baran first set out what they describe as ''stagnation theory'' in their book Monopoly Capital. According to Sweezy (and many others), it was only the massive economic boost of World War II military spending that saved capitalism in the thirties and forties. There was a brief post war boom in the fifties and sixties, as consumers rushed to buy goods that were unavailable during the war. When the sixties ended, stagnation set in again, accompanied by a marked slowing of profits and growth. Neither declined to 1930s levels, according to Sweezy, thanks to the ''financialization'' of the American economy.

In The ABCs of the Economic Crisis Magdoff and Yates describe ''financialization'' as the process of creating profits without actually producing a product or service. In the US, this process injected massive amounts of money (the nice word is credit, but it's really debt) into the economy in three ways: massive government spending and indebtedness (to private financial interests), a massive increase in consumer indebtedness, and an explosion of the financial industry itself.

From 1980 to the 2008 crash, the banking, insurance and investment industries became the largest growth sector of the US economy. Beyond financing unprecedented levels of consumer, business and government debt, they also engaged in massive outright speculation. In addition to commodities and derivatives trading, there was also an epidemic of leveraged buy-outs of productive sector companies with borrowed money, which were then loaded with more debt and sold at a profit. Former Wall Street economist Michael Hudson points out that the takeover of health care by private insurance companies was part of this massive ballooning of the financial sector.

As Sweezy describes, the enormous ''wealth'' created by the financial sector helped to drive the ''real'' or productive economy. However he also warns as far back as 1982 that it's basically a Ponzi scheme. That when the economy inevitably ceases to grow, this speculative bubble will burst, resulting in a collapse as bad or worse than the Great Depression.

The Current Economic Crisis

Political economists Fred Magdoff and Michael Yates elaborate on Sweezy's analysis in The ABCs of the Economic Crisis. They point out that stagnation continued during the 1980s and 1990s, despite the life support provided by ''financialization.'' GDP growth dropped from 4.4 to 3.3 percent in the 1970s, with a further decline to 3.1 percent in the eighties and nineties, and to 2.2 percent in 2000.

They use the example of the auto industry to describe why stagnation is inevitable under end stage monopoly capitalism. Immediately after World War II, consumers bought a lot of cars and trucks, which were unavailable between 1941 and 1945. However by 1970 all Americans who wanted cars or trucks had them, and the world's poorer nations didn't have a mass market large enough to take the excess of cars being produced. Obviously the same was true of other durable goods (refrigerators, washing machines, dishwashers, vacuum cleaners).

And as consumer buying slowed, so did profits and GDP growth. Magdoff and Yates argue that major social service cuts occurred under Reagan, Bush I, Clinton and Bush II - not because these men were more conservative than the presidents who preceded them - but because a steady downward trend in growth and profits meant the US no longer had the resources to support generous social programs enacted during the boom years of the fifties and sixties.

They also describe the significant drop in inflation adjusted wages and purchasing power that accompanied the decline in profits and growth. That to keep workers consuming, the corporate sector compensated by giving them credit cards lending them the money - at 18-20% interest - that they were no longer paying in wages.


In The Coming Struggle for Power, Strachey also writes about the important role of fascism in end stage capitalism. He explains how declining profits and growth result in reduced wages, poorer working conditions and a claw back of social welfare benefits enacted during more productive periods. This, in turn, leads to more conflict between workers and capitalists. Ensuring that production continues during a period of heavy stagnation necessitates the rise of fascism, in which the capitalists themselves organize pseudo-populist organizations which install governments which enact laws unfavorable to working people.

The Astroturf (fake grassroots) origin of the reactionary Tea Party is an excellent example of corporate elites organizing working people around a right wing political agenda harmful to their own interests (that opposes, for example minimum wage increases, an extension of unemployment benefits and regulations enforcing workplace health and safety). Paul Krugman explores the origin of the Tea Party in the April 12, 2009 New York Times ( Despite the media spin portraying early Tea Party events occurred as spontaneous popular uprisings, Krugman points out they were actually organized and paid for by Freedom Works, a group created by former Republican majority leader Richard Armey, with generous support from right wing billionaires like the Koch brothers.

Implications for the Future

Most Marxists believe there is a grave risk that when capitalism fails it will bring down civilization with it. Which is why they argue for workers to hasten its demise and prepare to replace it with some other form of social organization. As a Marxist, Strachey advocates for the end of class society and for workers to run their own government and own the companies where they work. Like Marx and Lenin, Strachey believes workers' most powerful tool is their ability to organize and bring society to a standstill by withdrawing their labor. However he also argues that the workers' ''revolution'' cannot be worked out in advance. Strachey believed this was the great historical mistake of Marx and Lenin, and ultimately the Soviet experiment. They were too prescriptive in creating an enlightened ''vanguard'' to work out all the details of the Revolution on behalf of working people. As history shows, this vanguard only served to replace the capitalist elite it overthrew (not only in the USSR, but in China, North Korea and Cuba), producing some of the most despotic totalitarian regimes in history.

In The ABCs of the Economic Crisis, Magdoff and Yates, like Strachey, propose ''socialism'' as the solution to a failed capitalist system. However they are even less prescriptive than he is regarding what this should look like and how it ought to come about. At the end their book they simply suggest that Americans come together to decide whether our current system is worth fighting for (in the Middle East and elsewhere). They then itemize some of the human costs of our current way of life:

  • increasing exploitation at work (all the lay-offs mean workers who are still on the job are doing the work of 1.5 or 2 people)

increased stress accompanied by poorer health

rising consumption that pollutes our planet, wastes gasoline, power and water, and destroys natural habitat

They also offer some alternative priorities that do seem worth fighting for: adequate food, decent housing, full employment, quality education, and old age income for everyone; true universal health care, enhanced public transportation, a commitment to a sustainable environment, progressive taxation which reverses the process of taxing the middle class and poor to enrich a wealthy elite, a non-imperialist government and labor- and environment-friendly trade.

End of Capitalism Theory

In laying out End of Capitalism Theory on his website, Alex Knight is the most specific of the doomsayers in describing what the alternative to capitalism should look like. He lists five guideposts he considers essential to bringing about real change: freedom, democracy, justice, sustainability and love. The essence of his vision lies in how he defines these terms:

  • Freedom - self-determination in which ordinary people control their own destinies instead of huge corporations and corrupt politicians. He advocates strongly for local communities to guarantee their residents access to land and food security and indicates some that have begun to do so.

Democracy - ''participatory democracy,'' in which we take back rights we should have but don't. Knight gives the example of Take Back the Land, which supports the homeless in squatting in foreclosed homes in Miami.

Justice – the elimination of systems of oppression that benefit one group, like whites, at the expense of other groups and guaranteeing everyone access to food, housing, education, health care, transportation, clean water and air, and a decent livelihood.

Sustainability – learning to meet human needs without sacrificing the ecosystem. Knight indicates this is where the most progress has been made, with the boom in organic agriculture, permaculture and the renewable energy industry.

Love - learning to value life over profit and money, and recognizing the immense emotional isolation that capitalism, a system centered in abuse and war, has imposed on all of us – as well as the emotional and social healing that must occur.

The Privatization of Public Services

The War on Public Education

(March 24, 2011)

The Crusade to Privatize Education

Given increasing school closures, teacher layoffs and attacks on teachers' bargaining rights, moves by Congress and state legislatures to cut education still further are extremely worrying. The crusade to privatize public education - by Wall Street, Congress and the Obama White House - means that schools that close as a result of budget cuts are unlikely to reopen as public schools. What's far more likely is federal arm twisting, as occurred in New Orleans following Katrina, to reopen them as privately run charter schools.

We have to be clear here: Republicans and Tea Partiers aren't trying to ram through education cuts simply to balance the budget and provide tax cuts for their wealthy supporters. They have a far more ominous agenda - namely a thirty year campaign to privatize public education, just as prisons, water, warfare, welfare and other public services are being privatized.

The Neoliberal Goal to Privatize All Public Services

Neoliberalism seeks to privatize all public services (including education, social security, water, prisons, public transportation, and welfare services) - leaving a bare bones government with a limited law enforcement and military role. Neoliberals argue that government provision of other public services is inefficient and wasteful - problems that can only be corrected by subjecting them to free market competition. However as we see in the case of prison, water, and welfare privatization, there are always windfall

profits for businesses and corporations when billions of public, taxpayer dollars are transferred to private hands.
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Smashwords Edition, License Notes iconSmashwords Edition Pamela Joan Barlow Smashwords Edition, License Notes This ebook is licensed for your personal enjoyment only. This ebook may

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