High frequency capitalist crises

Image: Jeffry Surianto


Abrupt changes in the course of capitalist politics only occur in times of social and economic crisis

The economic cycles of the capitalist economy predict periods of ecstasy and times of failure, so it should come as no surprise that economic crises recur in global capitalism. What is not normal within these economic cycles is the increasing frequency of crises generated by the financial sector of capitalism, detached from the production and distribution of products. At the beginning of the XNUMXst century, crises generated by the financialization of the economy have been increasingly frequent and have caused widespread instability in world capitalism.

One of the main causes of the increase in the frequency of financial crises in current capitalism is the advance of financial innovation in the financial market, seeking greater returns in the short term. Another cause is the increased weight of the financial market in the global economy. The reorganization of large companies aiming at a greater distribution of dividends causes a lower rate of investment in production and reduces the potential labor productivity of the economy. With productivity not constantly growing at a moderate pace, capitalism finds itself in repeated low-growth crises.

The unpredictability and weight of the financial market on the economy reduce investment and lead to a drop in economic growth. In addition, the artificial increases in commodities, via speculation in the prices of derivatives, and increases in rents, due to real estate bubbles also caused by the financial market, generate financial inflation, disconnected from the aggregate demand of the economy and the exchange rate.

To compensate for the brake caused by the financialization of production, the central economies expand their search for territories to be explored, either through the exploration of new fields of natural resources, or through the conquest of new local consumer markets. On the periphery of the system, financialization requires greater super-exploitation of labor to maintain an increasing level of increased returns on investments by capitalist firms.

The advance of imperialism in the center and the super-exploitation of labor in the periphery tend to cause greater diplomatic tensions between the central countries, increasing the frequency of economic and, ultimately, even military disputes. In the periphery, the social crisis caused by the constant economic crisis leads to political radicalization, which within the dominant ideology of capitalism, ends up leading to the rise of neo-fascist governments in these peripheral countries, mainly in Latin America and Asia.

In this way, financial innovation and the increased weight of the financial market in the real economy lead to a global state of more conflicts between central countries and more exploitative and violent governments in the peripheries. Only the resumption of the logic of the productive economy over the financial economy and the advancement of class consciousness among workers can curb this increase in the frequency of financial crises, the occurrence of wars and the rise of neo-fascist governments.

The left's immediate task is to fight the financial market's rage, opposing the productive industrial development models and the neoliberal financier model. It is evident that such a contradiction does not exist in the national elites, which leaves the mass parties of the left with the task of carrying out such a confrontation. However, such sudden changes in the course of capitalist politics only occur in times of social and economic crisis. And according to the current prevailing political ideology in Brazil, the probability of a radical left government coming to power is much lower than the election of another neo-fascist government.

*Bruno Machado is an engineer.

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