Neoliberal Globalization and the Crisis of Liberal Democracy

Cliff DuRand
Center for Global Justice
Saturday, October 19, 2019


Neoliberalism is a class project of capital to capture the state, protecting it from democratic demands of the popular classes.  The elitist polyarchic political system known as liberal democracy is well suited for this.  However, the precarity neoliberalism generates has produced a crisis of legitimacy for the elite.  It also yields a thirst for alternatives, many of which are rooted in the idea of commons.  The absolute capitalism that neoliberalism represents heightens crises of the system, among them the crisis of overaccumulation.  Neoliberal states are not able to provide a fix for this, as they have in the past.  Nor, with the globalization of capitalism, are there transnational institutions able to fix structural crises that could save the system.   Does this portend the end of capitalism?

[published in Socialism and Democracy special issue "Seattle plus 20" ]


Introduction:  Neoliberalism as Absolute Capitalism     

Since the mid 1970s neoliberalism has become the dominant public ideology in much of the capitalist world.  Championed first in Britain by Margaret Thatcher and then in the US by Ronald Reagan, it was then spread around the globe by the IMF and World Bank through structural adjustment programs.  These involved cutting government social programs, privatization of public goods, deregulation of the market, and opening the country to free trade.  This was seen as downsizing the role of the state, opening the economy to market forces. 

Neoliberalism was a turn away from the welfare state that had existed in many countries.  The rationale for this was the claim that social benefits and regulations were a burden on the economy that hampered growth.  Free markets were said to better raise living standards for all sectors of a society.  “A rising tide lifts all boats” became the legitimating slogan. 

The historical record of the decades since the advent of neoliberal policies shows that the rate of economic growth has slowed compared with the prior period of welfare capitalism and the inequality within countries as well as between countries widened.  Neoliberalism ushered in secular stagnation  and greater inequalities.  Neoliberalism failed to live up to its promises. 

Nevertheless the ideology has continued as the dominant public discourse and guide to policy.  How has this been possible?  Basically the answer lies in the fact that neoliberalism is a class project of capital. [Harvey 2005]  It has been promoted in the interest of capital in order to claim an ever expanding portion of the social surplus against the interest of the popular classes.  It was through class struggles by the popular classes that benefits and protection had been won through the state.  Organized workers and social movements had exercised associational power over capital to create the welfare state.  With the eclipse (and sometimes repression) of social movements and weakening of unions in the 1970s, the balance of power tipped decisively in favor of capital.  No longer were popular classes able to mount countervailing power to that of capital, allowing it to dominate the state in its favor.   Neoliberalism spells the end of popular sovereignty. 

We can now see that neoliberalism arises in the absence of popular forces able to restrain capital.  Neoliberalism is the default position of capitalism when unrestrained by popular struggle.  It is what John Bellamy Foster calls absolute capitalism. [Foster 2019]  It is 100% capitalism, unbridled by popular forces. 

While proclaiming the supremacy of the market, in fact neoliberalism is not independent of the state.  It does not mean the disappearance of the state or even its weakening.  This is the dirty secret of neoliberalism, often overlooked by its critics.  True, the state is weakened in its ability to promote and protect the interests of the popular classes.  But capital still needs a strong state to promote and protect its interests.  The market is not self-regulating, as Milton Friedman discovered to his surprise in the 2007-2008 financial crisis.  It was then that the state stepped in to save capitalism from its excesses, bailing out the banks by shifting their bad debt onto the backs of taxpayers. 

What this illustrates is the marriage of the state and corporate capital.  The state becomes the instrument of private capital, setting the rules of the market in its favor and protecting it in the event of market failure.  This is an inversion of the role of the state as conceived in democratic theory.  The state is subordinated to the market rather than the people.  As Karl Polanyi put it in The Great Transformation, with neoliberalism social relations are to be embedded in the economy rather than embedding the economy in social relations.   The people are to serve the market rather than the other way around. 

Neoliberalism is hostile to unions.  The association of workers to collectively represent their interests is seen as an impediment to the market – the market in labor as a commodity.  Curiously the association of investors in the form of corporations is allowed even though capital is also a commodity.  Free association of capital is OK but free association by labor is not.  The latter is seen as distorting markets, which should be kept free of the collective action of people. 

Neoliberalism is profoundly undemocratic to the point of being anti-democratic.  The logic of neoliberalism excludes the economic interests of people from the political sphere.  The neoliberal state represents the interests of capital, not the citizens.  The citizens are to be kept fragmented as individuals acting in their own self interest through market exchanges.  What is ignored is that separated individuals are powerless in the market in their exchanges with corporate capital, whether they be workers or consumers. 

Indeed, under neoliberalism there is a strange transformation of citizenship.  This is illustrated in the notorious Supreme Court decision in the Citizens United case.  The petitioner in the case was actually not an association of citizens but of investors representing their capital.  More accurately they ought to have been called Capital United.  What was established by the court decision was the political rights of capital.  In effect, corporations acquired some of the rights of citizenship while flesh and blood citizens were disadvantaged in the political sphere.  This is but one of the many ways capitalism has enchained democracy, seeking to impede the popular will.  The hard truth is that what Noam Chomsky has called “really existing capitalist democracy: RECD, pronounced as ‘wrecked.’ ” is anything but democratic. 



The U.S. prides itself on being a democracy – a political system which is offered as a model to the world.  It is a representative system based on free, multiparty elections and universal franchise.  It is by this means that the will of the electorate is determined which the elected representatives are to carry out in their name.  That is the official orthodoxy. 

In reality, typically it is the interests of economically significant groups, not the general public, that gets represented.  The failure of representationism was documented in a recent study by political scientists Benjamin I. Page and Martin Gilens.  Comparing public opinion on some 1,779 policy issues as measured in polls with what elected representatives actually enacted, they found a statistically insignificant correlation.  However, there was a strong correlation with what elites and organized business groups wanted.  Representative democracy turns out to not be very democratic. 

Why is this?  A clue lies in the fact that the will of everyday people sometimes does get represented when it is organized in popular social movements, just not through the electoral process.  It is elites that are organized, while the electorate is normally disaggregated.  This enables elites to manage political processes at numerous points.  They are generally able to dominate public discourse, shape the selection of candidates by political parties they control, influence elected officials through lobbying and campaign contributions, not to mention the reality that public policy must protect the major economic interests that the economy depends on.  Such realities are familiar to us all.    

Some political scientists refer to the US political system as a polyarchy rather than by the term ‘democracy.’  As described by Joseph Schumpeter, “Democracy means only the people have the opportunity of accepting or refusing the men who are to rule them.”  As defined by Robert Dahl, polyarchy is simply the selection in multiparty elections of leaders from among competing elites.  Between elections the governing elite rules, largely insulated from the popular will.  It is at best a kind of low intensity democracy. 

A little history.  Concern with elite control in American political life goes back to its beginning.  It can be seen in James Madison’s fear of a democracy of the common man.  Living in a society already divided into propertied classes and those with little or no property, the chief architect of our constitution sought to fashion political institutions 1) through which the interests of the ruling class could be protected and 2) that would not allow the multitude to prevail where that might injure the rights of others, particularly the property rights of the wealthy.  Let me quote from his Federalist Paper #10:

Democracies have ever been…incompatible with…rights of property….  The interest in a majority…must be prevented…[because it would threaten] the unequal distribution of property.  Those who hold and those who are without property have ever formed distinct interests in society…and divide them into different classes.    

The Founding Fathers who gathered in Philadelphia in 1787 were moved by what one delegate called “the excess of democracy” represented in the demands of indebted and heavily taxed yeoman farmers and mechanics.  Another complained that things had become “too democratic.”  And so this gathering of merchants, slave owners and manufacturers resolved “to create a more perfect union.”  Indeed, the Constitutional Convention amounted to a conspiracy of the propertied classes to create a system of federal government strong enough to protect them from those in the popular classes, and yet weak enough not to itself be a danger to their interests.  The Constitution was the founding document of our polyarchy.

The Constitution framed not a democracy but the removal of a supposedly sovereign people from government.  Madison congratulated himself and his co-conspirators for their success in removing the people from the councils of government, ensuring that it would remain in the hands of those whom he deemed better qualified.

A managed polyarchy is the ideal form of rule under neoliberalism.  The World Bank recognized this in its 1977 report.  In discussing the political conditions optimal for implementing neoliberal “structural adjustment reforms” it looked to “macroeconomic management by an insulated technocratic elite.”  That is a nonpolitical elite schooled in neoliberal economics that is protected from popular protest when social supports for people’s well being are withdrawn and turned over to the market.  The elite needs to be impervious to the inevitable “IMF riots” as the state shifts from its liberal role as promotor of social reproduction to its neoliberal role as promoter of capitalist reproduction. 

Such an “insulated elite” was achieved in Chile in 1973 through a brutal military coup.   This led to the first societal wide neoliberal experiment as General Pinochet reversed the popular mild socialist policies of President Salvador Allende, with economic guidance from Milton Friedman and James Buchanan.  Elsewhere in Latin America neoliberalism was imposed on indebted countries through IMF structural adjustment programs.  But in some countries, such as Mexico, ruling sectors of the political elite eagerly embraced neoliberalism either because they saw it as a way to enrich themselves or because of their US education in neoliberal economics.  In the case of the political elite in the US, they had long identified the national interest with that of corporate capital and the polyarchic political system enabled them to push through a neoliberal fix to the ailing economy in the 1970s.    

Civil society is the site of most social reproduction: family, education, sociality, commons.  Most social reproduction comes through voluntary association within civil society.  Sometimes the state is called in to support and protect, e.g. social benefits, labor protections, unemployment benefits.  Under neoliberalism these are seen as impediments to market forces.  Capital calls on the state to be its promoter instead.  Capital aims to swallow all of civil society. 


The Crisis of Liberal Democracy

This change in the role of the state portends a crisis of legitimacy.  The legitimacy of the liberal state rested on the fact that while supporting capital, it also provided some social benefits to the population.  Liberal democracy retained popular support as long as it delivered the goods.  The rising living standards of the post WWII decades gave the populace confidence in their leaders.  In national capitalism, the interests of the subject population was tied to that of capital.  There was an element of truth to the claim that “what’s good for General Motors, is good for America” (i.e. the U.S.).  But as corporations transnationalized that link was weakened and at the same time the protections by the state were withdrawn.  Neoliberal globalization spelled a crisis of liberal democracy. 

During the golden age of capitalism working people were organized in unions and able to exercise their associational power politically in what was still a national economy.  Capital was able to respond because it had monopoly pricing.  As a result, there developed a kind of “labor aristocracy” in the countries of the global North.  Large numbers of the working class, particularly those who were white, were able to rise into what was called “the middle class” even with only a high school educational level.  With that economic mobility they tended to think of themselves as separate from and above the working class. The neoliberal offensive against unions beginning in the 1970s further weakened their associational power as capital promoted the flexibilization of labor.  With the growth of such measures as part time work, casualization, and temporary employment worker’s lives became increasingly precarious. [1]

At the same time, corporations found their profit rate dwindling and felt burdened by having to share too much of the surplus value with their employees.  In addition there was a crisis of overaccumulation, i.e. there was too much capital that could not find opportunities for profitable investment in the domestic economy.  A solution to these problems was to invest abroad in off-shore production, moving jobs to lower wage areas of the global South.  At first these were the less skilled jobs, but over time jobs requiring more skill and education also became part of global production chains.  This globalization of capital was actively promoted by the neoliberal state.   

Faced with a state no longer on their side, powerless and insecure workers lost faith in the political system that had once offered some protection.  The effective monopolization of electoral space by two political parties both wedded to neoliberal globalization, left no alternative for working people.  The established parties, no longer able to represent voter’s economic interests, sought to appeal to them with identity politics – wooing minorities, women, different sexual identities, whites.   

Had they been listening, the political establishment was put on notice of the widespread dissatisfaction with its neoliberal globalization project as early as November 1999 with the protests against the WTO.  A broad intersectional movement burst into public view as environmentalists, trade unionists, human rights activists, farmers, animal rights groups, consumer advocates, and religious figures all joined in the Battle in Seattle.  These were groups that had been long organizing in their own silos.  It was the power play by transnational capital to consolidate its dominance that galvanized civil society to join together.  This was not the first warning, nor would it be the last harbinger of the legitimacy crisis that was building from below.  And that there were protestors in Seattle from some 100 countries showed that it would be a worldwide crisis. 

The popular anger with the political elite’s abandonment of them grew silently until in 2016 some candidates finally connected with it.  In the presidential election anti-elite anger ran strong.  The Democratic party Establishment barely prevented an avowed socialist from becoming their candidate, even though it meant electoral defeat. The Republican party Establishment was not able to manage the nominating process and ended up running a dissident candidate, who as President was soon able to capture the party leaders.[2]  Polyarchic liberal democracy had become difficult to manage.  Still, President Trump has been able to double down on an extreme neoliberal agenda – to the harm of his core constituency.   

All of this has served to further weaken the ideological hegemony of capital.  Polls show a decline in belief that capitalism is the best system and an increase in those who believe in socialism, whatever that may be.  While the elite continues to promote “free trade,” popular sentiment has turned against it as a threat to their economic well being.  Similarly on other key neoliberal issues such as privatization of education or health care, opinion has turned against market based systems in favor of public provision of such benefits. 

The proposal for Medicare for All is a call to make health care a commons.  That is, it is a call to make health care a universal right supported as a public good.  It would amount to a de-privatization of health care, currently available through private insurance companies.  The principle of Medicare for All would not necessarily change the delivery of health care.  It would just change how it is paid for.  Opponents claim most people want to keep their present health care and imply that means they want to keep their present health insurer.  But actually that is not the same thing.  An insurance company is not the provider, it only pays the provider.  The providers of health care are doctors, nurses, hospitals, etc.  They are not socialized under Medicare for All (as they are under Britain’s National Health Services).  Medicare for All would simply make health care services available to everyone regardless of ability to pay.  It would make it a collective benefit available to everyone – a true commons. 

Similarly, the proposal for tuition free public universities and colleges is a call to bring higher education into an educational commons, just as elementary and secondary education has long been a commons governed at the local level.  The latter public goods have been under pressure to privatize in recent years, making them profit centers of corporations.  At the same time, tax payer support has been reduced for higher education in state after state, resulting in rising tuition for students and their growing indebtedness.  The effort to bring higher education into a commons seeks to reverse this and make education available to all – a true commons. 

Since its inception the internet has been a commons in the sense that it is available to everyone.  In some places it has been made a public good by providing free wi-fi.  However, corporate interests have sought to gain privileged access by abolishing net neutrality – a step toward privatization.  In a capitalist society, protection of commons is always a struggle. 

In many places citizens are reclaiming the urban commons as they assert the right to the city against developers and real estate interests.  [Harvey 2012]  New Yorkers resisted Amazon and many small town communities have successfully battled Walmart.  Gentrification and tourism have also become frequent points of struggle.

We are coming to appreciate the value of many of the commons we have taken for granted.  Preeminent among them is planet earth.  Global warming has forced us to realize the failure to manage the human impact on the global ecosystem by allowing private corporations to discharge CO2 into the atmosphere, oblivious to the consequences.  In addition toxins, plastics and all sorts of waste have been discharged into the earth and its air and water, turning the environment into a garbage dump.  As with any commons, proper governance is required for sustainability.

Everywhere commons are under attack by neoliberalism.  The corporate form of capitalism is a powerful behemoth seeking to enclose or abuse commons in a veritable tsunami of privatizations.  And generally political elites have facilitated this in the name of economic growth.  

Key to the successful operation of a polyarchic system is the disorganization of the subordinate classes.  Elites then can aggregate them under their leadership.  This is what electoral campaigns are about.  Elites compete with one another to see who can do this most successfully.  But when elites fail to manage the process sufficiently, then space opens up for alternative leadership to contest.  This is what happened in 2016 in the US.  But as long as the populace remains disorganized, they remain massified and powerless, easily manipulated by a new elite.  A genuinely democratic development – popular democracy – depends on self organized social movements from within civil society. 

The fatal flaw of liberal democracy was that it removed the people from government, just as Madison had intended.  As a result, governmental provision of public goods, even when won by popular struggle, tended toward the bureaucratic to be administered by professionals.  This has been at the heart of the conservative critique of social programs.  To be democratic, social programs must be social.  They must be rooted in civil society. 

In polyarchy elites rule not only from above, but also by extending downward into civil society, achieving hegemony.  This is what Gramsci called the extended state.  This includes building institutions in civil society that are consonant with elite rule.  But beyond that it also includes penetrating into the very subjectivities of the subordinate population.  This is the ideological dimension of hegemony that sustains consensual domination.  The ideological fabric of domination is unraveling.  As we have seen, the legitimacy of liberal democracy is questioned.  So too is the belief in capitalism as a desirable or even viable social order.  Many recoil in horror at the inhumanity of a system that treats everything as a commodity and values profit above all else. 

The image of the human being embraced by neoliberalism is that of a purely self-interested man, seeking to maximize his own material benefit, unrestrained by morality or concern for others.  This homo oeconomicus is a theoretical construct assumed by economists in their theorizing.  But the disturbing fact is that absolute capitalism is making this image into a reality.  We see it personified in Donald Trump, a nearly perfect neoliberal man.  And we recoil from it in horror, realizing it is a personality disorder.  We learn from that by way of a negative example to better appreciate what it is to be human.  This offers us an opportunity to purge our inner Trump. [Klein 2017]        

One of the central ideas that has kept us enthralled to capitalism is that of individual freedom.  It has long been a pillar of the system and is appealed to in order to justify deregulation and privatization.  Privatization of public education is said to give parents freedom of choice.  Private health insurance is said to free us from government control.  Removal of environmental and safety and consumer regulations are said to “get government off our backs,” thereby increasing individual freedoms.  Then there is the consumer freedoms of the supermarket.  Anti-union right to work laws free workers from an obligation to support collective bargaining, even though this amounts to a right to work for less.  It is as if we are freer when we are on our own, disconnected from any human collectivity.  That is the fragmented world neoliberalism is pushing us toward. 

Positively freedom is having resources to do.  It is being able to act as you choose because you have the means to do so.  Many of the “resources to do” we provide for each other collectively.  We “have” them not in the sense they are private property.  We “have resources to do” in commons.  Through our commons we augment our freedoms.  Our cultural commons enable me to perform music, write poetry, paint a picture, write a book.  Our environmental commons enable me to feel awe and the beauty of nature.  Our health commons enable me to live a long and healthy life. 

We flourish not through free markets, but through those resources we provide for each other.  In the markets of capitalism inequalities are pervasive.  The wealthy, those with more resources, are able to dominate others.  They are the ones with greater freedom in a “free” market.  As an individual consumer I am powerless against the corporations that supply commodities; I am not free.  As an individual worker without the means to produce, I am powerless against employers; I am not free.  As an individual on my own land, I am powerless against the mining company that wants to strip its minerals; I am not free.  But in association with a community that protects resources in common, we increase our freedoms.   

As the neoliberal agenda is being pushed through, destroying one by one our public goods, we are better able to appreciate their value.  There are resources beneficial to our well being that are best provided in common.  Public education is such a common.  So too is health care, and the internet, and a healthy physical environment.  When well managed in a democratic way, commons contribute to human flourishing and nurture citizenship.  Neoliberalism seeks to enclose all these commons, commodifying them so as to realize a profit from selling what should be ours by right. 

It will take the popular democracy of social movements to preserve and expand the commons.  That is a challenge we are waking up to as we are faced with their loss to the neoliberal juggernaut. 

With liberal democracy in crisis, the elite is finding it difficult to manage the system in defense of neoliberalism.  They resort to such practices as voter suppression, gerrymandering, packing the courts with Right wing judges, and blocking Congressional votes on popular legislation. The corporate media plays into this by failing to inform the public about social issues, instead focusing on the antics and demagoguery of an authoritarian President, thereby further distracting the public.  Ideologues of neoliberalism who believe the market should reign supreme, even trumping the democratic popular will, seek to devise barriers to expression of that popular will.  Nobel winning economist James M. Buchanan even advocated Constitutional principles that would ensure the market could not be overruled by government.  [MacLean 2018]  Following James Madison, democracy must be prevented.         

The End of Neoliberalism 

In 2008 we experienced a major financial crisis that nearly brought down the capitalist system.  The federal government stepped in to save the banks from their reckless gambling, transferring bad debt to the tax payer, basically socializing the debt.  We are still living with the consequences of that crisis over a decade later.  Many economists foresee another such crisis in our future.  Will there be a fix for it next time? 

The history of capitalism in our lifetime has been the story of crises.  In 1929 we saw the collapse of the stock market, ushering in a decade long Great Depression.  Then the federal government stepped in with a New Deal to protect people from the savagery of the market and restored a functioning capitalism with WWII industrial planning and massive government spending.  It was government that saved capitalism from itself. 

A period of prosperity followed WWII with the expansion of consumerism and massive private capital investments in suburbia and public investments in the interstate highway system and military armament.  For a time these absorbed surplus capital.  But prosperity contributed to a continuing underlying contradiction of capitalism: the crisis of overaccumulation.  The logic of capitalism leads to accumulation, endless accumulation.  The surplus value created in production needs to be realized in the circulation (sale) of commodities and then reinvested to create additional surplus.  Capitalism is a process of self-accumulation of capital.  The problem is that periodically so much capital has accumulated that there are insufficient places to invest it profitably.  This is a crisis of overaccumulation. 

In order to restore the conditions for profitable investment a fix needs to be found.  The state has been crucial in these fixes.  By restoring the accumulation process the stage is set for a future overaccumulation crisis that will require a new fix.  [Harvey]

The post war era of prosperity, often called the Golden Age of capitalism, eventually led to a crisis of overaccumulation by the 1970s.  Profit rates had declined to the point investment was discouraged by the market.  Unionized labor had been able to win a share (in the form of wages and benefits) of rising productivity to the point that employers felt it had become a squeeze on their profits. The fix for that was found in globalization.  By off-shoring production corporations were able to access low wage labor in the global South while also putting pressure on their domestic workers to give back some of their hard won gains.  Unions were weakened and profits were restored.  Transnational corporations set up global supply chains, locating portions of productive operations wherever labor was cheapest and most compliant.  Corporations were able to sell cheaply produced commodities in the higher priced markets of the global North.  It was a perfect fix for capitalism that had been facilitated by the state.   

It was neoliberal policies that guided this globalization.  Corporate capital gained the support of the state in opening up markets through IMF structural adjustment reforms and later free trade agreements like NAFTA.  The World Trade Organization (WTO) was created to enforce rule based trade that established neoliberal principles unaccountable to any public.  An investor-state dispute settlement mechanism (ISDS) enabled foreign corporations to sue a state for governmental actions that resulted in lost profits (present and possible future profits) no matter whether those actions were in protection of public health or safety or the environment.  Such suits are not heard in national courts, but by a panel of experts (usually corporate lawyers and trade specialists) which can impose unlimited penalties that are not subject to appeal.  ISDS is a surrender of national sovereignty to a transnational corporate judicial system.[3]

Through such mechanisms capital was able to transnationalize, free from state restrictions no matter how popular, yet benefiting from state support.  This then increased profits and added further to accumulation.  The global South underwent an industrialization while the global North deindustrialized.  By 2011 74% of the world’s industrial workers were in the South.  [Foster 2011]

At the same time there was a financialization of capital.  Where investment in production yielded insufficient return, it increasingly went into financing debt.  Mortgages generate a stream of interest payments.  This makes it look like money has generated more money.  In fact, interest paid comes from the income of homeowners whose labor has created the value they receive in wages.  Beginning in the 1990s banks began to invest in bundles of mortgage securities, called derivatives.  It was this speculative bubble that burst in 2008. 

Economists call those revenues received from the use of property without producing new value rents.  We are all familiar with the rents a landlord receives from a tenant for the use of his property.  Similarly, the interest a bank receives from a loan is a rent from the use of the principle.  It should be emphasized that rents do not represent new value, but rather a claim on a portion of the stream of value that had been produced elsewhere.  The renter of an apartment pays his rent from wages he received from his productive labor.  It is a transfer of value but does not add to the total value in existence.  It is misleading to include rents in the GDP, as is standard practice.   This also applies to all financial transactions.  As Marx wrote in Capital Vol. 3:  “all this paper actually represents nothing more than accumulated claims, or legal title, to future production.”  Thus the financialization of capital represents a removal of value from the consumption fund into the pockets of capital.   

Financialization diverts investment away from production into speculation that makes some wealthier by taking from those less well off while giving the appearance of contributing to economic growth.  Financialization of capital does not add to the wealth of a nation nor expand it, but only increases its unequal distribution.  [Hudson 2015]  That is, it is a form of secondary exploitation through which more of the surplus value is transferred from those who produce it to the accumulation of capital held by those at the top.  The Matthew principle that governs free markets:  ‘For unto every one that hath shall be given, and he shall have abundance; but from him that hath not shall be taken even that which he hath.’

Thus, globalization and financialization both add to a new overaccumulation crisis. 

What is the next fix available to capital?  One possible solution comes from the climate change crisis.  This is going to require massive investment in green energy in order to reduce use of fossil fuels.  Such investments can absorb gigantic amounts of surplus capital that will add to the nation’s wealth, while hopefully sparing us from the worse consequences of climate change. 

But there are two problems with this Green New Deal.  First, it brings political opposition from the fossil fuels industry since it would result in a massive devaluation of their assets.  If they had to leave fossil fuels in the ground, either due to legal limits or market forces, their stock prices would plummet.  Stranded assets could bankrupt even major corporations, with widespread consequences throughout the economy.  No doubt, they would demand the state bail them out.  Does any state have the ability to pay reparations to fossil fuel corporations? 

A second problem is where would the investment needed to develop a green energy system come from?  True, there is sufficient capital around for such investments.  But it is in private hands that have little incentive to put it into alternative energy sources since the benefits would accrue to society as a whole and not be able to be captured by private capital, at least in the short run.  Major infrastructure investments have to be made by the state.  But it is precisely neoliberalism that has stripped the state of the capacity for such investments as well as the political will to do so. 

All of this calls into question the possibility of a Green New Deal being a fix for the crisis of overaccumulation.  Let us hope it can at least mitigate the effects of climate change and call into question the ecologically unsustainable dogmas of endless growth and consumerism.  That will take a major social movement.     

Finally, there is the problem of the manageability of global capitalism.  We have seen that in the era of national capitalism the state has been able to step in to save capitalism when it faced major crises.  But now with global capitalism, there is no governing body with the ability to do that.  Markets are not self-governing.  There is no global authority with the capacity to save global capitalism from its next existential crisis.  The US state was able to do that in 2008.  But does it have the resources to do it again if need be?  Given the crisis of liberal democracy, could the state even muster up the will to try?  There is no longer a power able to manage the contradictions of global capitalism.  The end of capitalism may be on the historical horizon. 


What is to be Done?

We do not know how capitalism will end. [Streeck 2016]  As has been said, it is easier to imagine the end of civilization than the end of capitalism.  In spite of our failure of imagination, the contradictions of global capitalism make it unsustainable in the long run. 

One implication of this is that capitalism will not end as the result of our struggle against it.  As inevitable and as necessary as our struggle against capitalism is, we will not be the agent of its demise.  But our struggle is needed to prepare us “to found society anew.”  It is in that struggle that we find the vision of a more humane alternative and can begin to build the institutions for that order. 

Confronted with the harsh realities of absolute capitalism, we are waking up to how it has corroded the social contract.  There is a growing awareness of what we owe to one another.  A society is not just a collection of individuals.  It is a we, a common enterprise in which we take care of one another and through which we can all flourish.   

In the case of the U.S., coming out of the trauma of the Great Depression and the collective struggle of WWII, the nation had developed a sense of we-ness.  In spite of deep class, racial and gender divisions, there had emerged an expanded sense of togetherness that was reflected in F.D. R.’s Economic Bill of Rights.  Pushing the limits of what was possible within a capitalist society, what has been called a second bill of rights looked to government for protection from the vicissitudes of the economy, asserting the right to a job with a living wage, freedom from domination by monopolies, right to a decent home, health care and a good education, as well as protection in old age, sickness, accident and unemployment.  [Sunstein 2004]

Nevertheless, the post war economic prosperity and the Cold War undermined such a faith in government, unleashing an individualistic American Dream of mobility and security.  The constitutive principles of society were gradually eroded, eventually making possible the ideological hegemony of neoliberalism.  By the time of the new millennium, social critics spoke of a country that had lost its way.  [Herbert 2014]   We have lost our way because we have been led astray by neoliberal elites.  It will take collective struggle to find our way out of this malaise.  [Aronson 2017)] 

In the above I have pointed to our rediscovery of the idea of commons.  Historically capitalism got its start by enclosing commons that had long sustained communities, whether in rural England or indigenous North America.  The privatization and commodification of land provided the original accumulation that jump started capitalism.  That accumulation by dispossession is a continuing feature of capitalism today. 

One might then imagine the undoing of capitalism as a reversal of that process.  [DuRand 2016]  The building of modern day commons brings resources that nurture humans under social control for the benefit of all.  That is, forming commons amounts to a socialization of those resources.  This brings resources under the collective control of a community or a state.  A commons can be built when we common together at some level of association, whether that be locally, nationally, or globally.  Thus it presupposes associations in which we identify with a larger collectivity.  That identification represents a socialization of the individual that makes him/her “fit to found society anew.”      

The problem is that money never sleeps.  Capital always seeks to grow.  And that expansion threatens our commons no matter how popular they are.  Capital is always looking for ways to privatize commons, converting them into commodities from which profits can be realized.  To protect them we have to always be able to struggle against the predatory impulses of capital.  Often popular struggles have found security for their commons in protection by the state.  However, in the present neoliberal era, the state has been turned into an instrument of capital rather than the people.  It takes the organized associational power of popular classes to keep capital restrained as long as it remains in control of the basic productive resources of society. 

We can speak of Medicare for All, free higher education as well as social security as socialist.  As commons they are socialized institutions.  That is not the same as socialism as a system, that is, an integrated system of socialized institutions encompassing all those resources needed for human flourishing, including social ownership of the basic means of production.  As long as capitalism survives we cannot build such a system.  But we can build socialist institutions in the nooks and crannies of society.  And they will always have to be defended against efforts of capital to enclose them.  It is precisely that struggle that educates us to face the challenge ahead with the collapse of capitalism.  That is where human agency lies.     





Anatole Anton, “Public Goods as Commonstock: Notes on the Receding Commons” in Not for Sale: In Defense of Public Goods, Anatole Anton, Milton Fisk & Nancy Holmstrom, eds. (Westview Press, 2000), pp. 4-40.

Ronald Aronson, We: Reviving Social Hope  (University of Chicago Press, 2017).

Peter Bachrach, The Theory of Democratic Elitism: A Critique (Little Brown, 1967).

David Bollier & Silke Helfrich, eds. The Wealth of the Commons: A World Beyond Market and State (Levellers Press, 2012).

Cliff DuRand, “The Possibility of Democratic Politics in a Globalized State” in Recreating Democracy in a Globalized State, Cliff DuRand & Steve Martinot, eds. (Clarity Press, 2012), pp. 195-215.

Cliff DuRand, “Contradictions of Global Capitalism” in Perspectives on Global Development and Technology, Jerry Harris, ed. (Brill, 2014), pp. 36-42.

Cliff DuRand, ed., Moving Beyond Capitalism (Routledge, 2016).

John Bellamy Foster, “The Global Reserve Army of Labor and the New Imperialism”, Monthly Review 63,6 (Nov. 2011), pp. 1-31.

John Bellamy Foster, “Absolute Capitalism” Monthly Review 71,1 (May 2019), pp. 1-13.

Martin Gilens and Benjamin I. Page, “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens”     Vol. 12, No. 3 (2014) pp. 564-581.   This study has been expanded into a book Democracy in America? (University of Chicago Press, 2018). 

David Graeber, The Democracy Project: A History, A Crisis, A Movement (Spiegel & Grau, 2013).

Jerry Harris, Global Capitalism and the Crisis of Democracy (Clarity Press, 2016).

David Harvey, A Brief History of Neoliberalism (Oxford University Press, 2005).

David Harvey, Rebel Cities: From the Right to the City to the Urban Revolution (Verso, 2012).

Chris Hedges, Death of the Liberal Class (Nation Books, 2010).  

Bob Herbert, Losing Our Way: An Intimate Portrait of a Troubled America (Random House, 2014)

Michael Hudson, Killing the Host: How Financial Parasites and Debt Destroy the Global Economy (ISLET, 2015).

Naomi Klein, NO is Not Enough: Resisting Trump’s Shock Politics and Winning the World We Need (Haymarket Books, 2017).

Nancy MacLean, Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America (Penguin 2018).

Karl Polanyi, The Great Transformation (Beacon Press, 1957).

William I. Robinson, Promoting Polyarchy: Globalization, US Intervention and Hegemony (Cambridge University Press, 1996).

William I. Robinson, Global Capitalism and the Crisis of Humanity (Cambridge University Press, 2014).

Joseph Schumpeter, Capitalism, Socialism and Democracy (Harper and Row, 1975).

Wolfgang Streeck, How Will Capitalism End? (Verso, 2016).

Cass R. Sunstein, The Second Bill of Rights: FDR’s Unfinished Revolution and Why We Need It More Than Ever (Basic Books, 2004)

Sheldon S. Wolin, Democracy Inc.: Managed Democracy and the Specter of Inverted Totalitarianism (Princeton University Press, 2008).

World Bank, World Development Report 1997: The State in a Changing World (Oxford University Press, 1997) pp. 152. 



[1] Some observers speak of a “new precariat” as if it were a new class.  In fact, precarity has always been a reality for workers under capitalism, although class solidarity was able to reduce it significantly.  

[2] Just as in the U.S., so too in Brazil where a popular progressive candidate was blocked from running, an extreme neoliberal authoritarian was able to win in 2018.  Similar moves to the Right are seen in Europe.  By contrast, in Mexico a progressive anti Establishment candidate won in a landslide in 2018.  There are lessons in this for those who still have hopes for liberal democracy.

[3] The TransPacific Partnership (TPP) sought to extend the ISDS regime to most global trade.  [DuRand 2014]