crisis causes the end of capitalism?

["Devine, James" <jdevine@xxxxxxx>]

[was: RE: [PEN-L:21387] Re: RE: Re: Re: Re: Re: the profit rate & recession]

I wrote:
>>Hasn't he also said that consumer spending is what's been holding up the
U.S. economy? My point -- and that of Godley & Izureta, who also go beyond
surface appearances to think about the determinants of private-sector
spending -- is that this prop can't last. Similarly, England's economy is
doing well in the current world recession due to the role of consumption --
but this can't last.<<

Doug writes:
> You may be right. But I've heard this line many times before. Godley
> also said some dire things about the UK a decade ago, and the UK did
> get a big recession, but it recovered and expanded. As Wall Street
> permabear James Grant once had to concede, over the long term, the
> bulls do have a point.

of course! Capitalism -- including U.S. capitalism -- is most likely going
to recover from the current world downturn, whether it's mild as the current
Wall Street consensus says or as deep as my intuition says it will be. There
is a long-lived undercurrent in lefty economics that interprets even the
mildest recession as somehow a sign that capitalism is shuffling off this
mortal coil.[*] But capitalism isn't going to go away even due to the worst
possible crisis -- so "the bulls do have a point" -- until there's a large,
wide, and deep societal movement aiming to replace it with an alternative
social system. None dare call it socialism?

Actually, my "best case" scenario at this point is not socialism but that
the recession will lead to a revival of social democracy or U.S.-style New
Dealism. Popular discontent, along with societal movements that aren't so
large, wide, or deep, pushes capitalism to clean up its act a bit. As I
suggested in an earlier missive, social democracy is good for capitalism,
since it rationalizes the accumulation process a bit (as with Keynesian
economic policies or state investment in "human capital," infrastructure,
etc.) (Crises involve the capitalists fouling their own nest; social
democracy can prevent or moderate this.) It's never been applied at the
global level (something that seems increasingly necessary these days), but
you never know what's going to happen... Also, even though social democracy
is good for capitalism (as it used to be in Sweden), individual capitalists
don't see it that way. So looking really long term, any social-democratic or
New-Deal truce would be temporary, as capitalists seek to avoid the costs
and exploit the benefits of the truce.

The worst case scenario involves fascism, which would probably be called
something else while being very different from the fascism of the 1930s &
1940s. (I can imagine that a big environmental crisis would encourage the
worst of authoritarianisms.) Also possible are combinations, such as social
democracy for those within and of a nation and fascism for those from
outside or currently living outside the nation... (My reading of history
says that there are more similarities between social democracy and fascism
than either political ideology is willing to admit.)

[*] Marx said some things to encourage this view, but I think his point was
that crises make the latent socialization of production manifest,
encouraging people to see capitalism as a system, encouraging anti-systemic
rather than economistic movements.

Jim Devine