Capitalism has become unsustainable

Image: Silvia Faustino Saes


Capitalism does not allow the sustainability of human civilization on planet Earth

To empirically demonstrate the thesis contained in the title of this article, it is necessary to consider, first, the phenomenon of financialization that has been exacerbated since the 80s. This is why it does not present itself as an episodic passage in the history of capitalism, but as a decisive event. It shows that no virtuous solution has been found for the accumulation crisis engendered in the golden period of capitalism, which occurred after the end of World War II. As is known, this crisis manifested itself in the 70s through a sharp and long drop in the rate of profit. Pointing to an impasse, the following figure presents this phenomenon. And it does so by showing a growing discrepancy between global GDP and the sum of global financial assets. Why did this occur?

The profitability crisis of the 1970s, which hit the center of the system hard – but also the periphery – was never fully resolved because the main capitalist states chose to avoid a deep recession. As this would have devastating economic, social and political effects – due to the waves of bankruptcies and the very high unemployment of the workforce it would produce –, they preferred an alternative that avoided the destruction and devaluation of capital accumulated in the past. It turns out that this disruptive shock is necessary for a true restoration of the rate of profit to occur. This is how capitalism has recovered several other times in the past. But this time, no.

Fleeing from this trauma, they sought to restore profitability through a slower process of so-called neoliberal reforms, which ultimately aimed to raise the rate of exploitation in a globalized economy. It was necessary to destroy as much as possible what had been created in the past, that is, the welfare state. Broadly speaking, the states took pains not to raise or even lower real wages at the center of the system, to change labor processes, to force the suppression of protections in existing national economies at the periphery, to shift labor-intensive industries to the Asia etc. Neoliberalism reinvented anew the capitalism that had been transformed by Keynesianism and social democracy. All this, however, needed a complement.

In order to create a national and international system of financial domination and, at the same time, to set up a mechanism to stimulate global effective demand, financial markets were deregulated and an enormous expansion of credit was allowed worldwide. The result of that election was the consecutive piling up of debts which resulted in an “irrational exuberance” in capital markets in general. Now, this could not have happened without also creating a “magnificent” source of financial crises.

The progressive detachment of the amount of financial assets in relation to the magnitude of global GDP, as seen in the figure above, has not stopped growing since 1980. Now, it appears as a harbinger of the withering away of capitalism through a financial collapse of major proportions. But this is not all.

In order to demonstrate, theoretically now, the thesis summarized in the title of this article, it is necessary to start with an excerpt from a well-known thesis by Karl Marx, deposited in the Prefácio de For the critique of political economy, written in 1859. In the excerpt transcribed below, he summarizes his understanding of the process of emergence, development and withering away of modes of production in general. While historically subsisting, these modes regulate the actions of their individual and collective components, conditioning social life as a whole; they go through long progressive periods that end up, in the end, in historical impasses. Social movements then grow, producing instabilities, ruptures and transformations, in the course of which new forms of sociability are created.

“In the social production of life itself, men contract determined, necessary and independent relations of their will, relations of production which correspond to a determined stage of development of their material productive forces. The totality of these production relations forms the economic structure of society. (...) At a certain stage of their development, the material productive forces of society come into contradiction with the existing relations of production (...). From forms of development of the productive forces these relations become their fetters. Then comes an epoch of social revolution” (Karl Marx. For the critique of political economy, P. 130).

To reinterpret this passage, it is argued here first that, implicitly, Marx takes the economic system as what is currently called a complex system or a complex social system. As such, it is internally structured by certain relations of production and these determine it as a totality that has its own characteristics and that has certain tendential “laws” of development.

Such systems are not describable by any synchrony since they are characterized by existing as contradictory processes, open to the future and dependent on the way in which they evolve. As such, these totalities condition the historical way of being of the very men who are situated at their own base and who struggle within themselves to survive, seeking to meet their own needs and fulfill their deepest desires.

To say that the capitalist mode of production is a complex system is to say that it has the property of self-organization and that it permanently faces sustainability problems, both internal and environmental. Behold, complex systems in general have a certain resilience, but they also have weaknesses. They exist to survive, but they can die from internal and external causes.

What characterizes complex systems above all are the internal links that link their constituent parts together and form their structure, but they can and should also be apprehended by the external links, that is, by the ways in which these parts interact with each other. and determine its dynamism over time. It is in this way that, in a perspective of positive and vulgar scientificity, complexity is usually spoken of only with reference to the interaction dynamics of the multiple elements of the system under consideration, which are engaged in self-organization processes.

Even when this scientificity – which still sticks only to the external links between phenomena – transcends the determinism that intends to predict the future based on past facts, reductionism, that is, the characteristic method of modern science (Bacon, Descartes and Newton) that always intends to explain the whole from the parts, and the analytical norm that orders to isolate and separate the difficulties in understanding everything that seems complicated, it still does not go far enough. It is therefore necessary to say why.

Thus, it apprehends certain characteristics of complex systems, such as their feedback loops, causal non-linearities, interaction networks, but it does not adequately and sufficiently accept the property of emergence – since this cannot be explained only by the configurations engendered by the apparent interactions of the elements of the complex system. Behold, this crucial property does not result only from the dynamic interactions between the parts, but comes, fundamentally, from the evolution of the contradictions inherent to its structure in historical temporality.

As the economic system – a complex social system – in its generality is above all a system of production of things objectively or subjectively necessary for human life, it is clear that the relations of production mentioned by Marx refer to the specific way in which work is organized. socially necessary at a given historical stage. In capitalism, as is known, meeting needs is subordinated to the accumulation of abstract wealth, that is, of value. And the “value that is valued”, that is, capital is – this cannot be ignored – an insatiable automatic subject.

Crucial here is to interpret the notion of productive force in a way suited to the purposes of this article, which sees capitalism neither in its youth (XNUMXth century) nor in its maturity (first two-thirds of the XNUMXth century), but in its old age (from the last third of the XNUMXth century onwards). In a productivist reading, “productive force” would simply mean the ability to appropriate nature and, in this sense, could be summarized by the technical notion of labor productivity. Now, this reading would be quite insufficient because it takes the economic system as a technologically determined system that, in principle, lasts, if not forever, at least indefinitely.

As there is no production without appropriation – transformation and destruction – of nature, it is necessary to immediately associate the notion of productive force with the notion of sustainability. Behold, the economic system lives in the environment formed by non-human nature and, by maintaining or even prospering in its bulge, it degrades it in some way. And, in doing so, it can undermine the external conditions that support the expansive movement of the economic system. Therefore, this category contains its opposite, unsustainability. Now, this contradiction evolves with the very evolution of the mode of production, not only due to the destruction of the external conditions, necessary for the very movement of the economic system, but also due to the development of its internal contradictions, as well as all the consequences that follow from them.

The evolution of contradictions within the economic system generates conflicts, clashes between social classes, which, through growing tensions, can eventually be resolved through mass movements, agonizing revolts and even revolutions that radically change the structure of the mode of production. Thus, the central contradiction inherent in the development of society that Marx talks about can be understood as a contradiction between the forces that give sustainability to the mode of production and the relations of production, within which those forces develop. In this sense, productive force is no longer simply the productivity of work, but the capacity of the system thus constituted to sustain human life.

Here follows Murray Smith's thesis in his book invisible leviathan[I] according to which, since the beginning of the 1980s, we have been in the presence of the decline of capitalism – a process that has continued to deepen since then. Because, in that decade, it entered – as a mode of production – a structural crisis from which it has not yet emerged and will not be able to emerge unscathed. Neoliberalism, from this perspective, does not appear to be an overcoming of the systemic difficulties of capitalism, which already appeared in the 1970s, but as a last resort so that it can continue to function, even if increasingly precariously. In this case, boom and bust cycles have happened and will continue to happen, but the trend presents itself as a persistent decline. According to him – he agrees with what he says – only a resolute critical Marxism can adequately apprehend it: “Only Marx offers a necessary theoretical framework to apprehend the contradictory, irrational and increasingly dangerous trajectory of the capitalist mode of production – a set of relations social and human capabilities, societal and technological organization that, more than ever, demands to be understood in a global context that, no less than in the past, remains a prisoner of its production relations that posit the capitalist law of labor value”.

Based on this premise, Smith argues that three “Marxian” contradictions underlie this structural crisis. Knowing that a fourth will be added here, it is necessary to explain them:

The first of these is at the foundation of an overaccumulation crisis that has been hampering the very engine of globalized capitalism since the 1970s. In order to continuously increase the productivity of labor in the production of goods, capitalist competition tends to raise the ratio between the capital employed in production and the total value of that production itself - and this tends to reduce the rate of profit strongly. As this system – which is never decoupled from the State – can no longer allow crises to unrestrictedly destroy accumulated capital, thus allowing a recovery of this rate, itself as a world system began to face a permanent crisis of valuation, that is, a structural crisis originated from the “insufficient” production of surplus value.[ii]

Only neoliberalism was left; roughly speaking, this praxis socio-politics sought to create counter-trends to the fall in the rate of profit. To this end, it sought to decompose society more and more into individuals, free the movements of finance capital, transfer labor-intensive industries to the periphery, reduce workers' real wages, etc. Well, all this generated a weak recovery, mainly in the center of the system, which lasted between 1982 and 1997, approximately. As of that last date, the downward trend in the rate of profit was imposed again without robust prospects that this depressive situation could change.

The second consists of an unfolding of the contradiction between the private character of appropriation and the social character of production. As capitalism develops, the need for goods and services offered as public goods grows; behold, they are necessary to provide the infrastructure and community social protection that guarantee a certain unity to the system. Now, this provision burdens the budget of national states, which are ultimately fed by resources extracted from the productive sector of economies. Faced with the valuation crisis, they had nothing to do but fall into a privatization policy that tends to make public goods increasingly scarce. By eroding the common base of society, neoliberalism spreads poverty and nihilism, concentrates income and wealth, undermines liberal democracy, that is, certain foundations that give social and political support to capitalism itself.[iii]

The third contradiction concerns the transnationalization of production through financialization, companies operating in dozens of countries, global chains of components, digital platforms, etc. and the national character of macrosocial and macroeconomic regulation. As is known, the State is the instance of power that provides the missing unity in an environment where systemic dysfunctions frequently occur and which is permeated by antagonisms between individuals, groups and social classes. It is he, moreover, who seeks to find a solution to the problems caused by the very functioning of the mode of production. However, many problems are now being generated on a global scale, beyond the power of national states to intervene. More than that, they often find themselves constrained by powers that thrive internationally and override them.

Finally, it is necessary to mention the contradiction between the inherently predatory character of capitalist production and the demands for conservation and regeneration of the natural environment – ​​which include the reproduction of the workforce. There is a certain consensus in critical thinking that there is a growing “metabolic rupture” between commodity production through which capital is realized as such and the natural conditions of production.

Behold, the ecological conditions for the sustainability of human civilization are being eroded with unprecedented speed by a process of capital accumulation that cannot stop and, therefore, cannot fail to receive priority in each of the nations that make up this civilization. Even if international agreements are made, for example, to reduce carbon emissions, they continue to grow; behold, they grow even if the generation of this type of pollution is already at a very critical level.

By not guaranteeing the sustainability of human civilization on planet Earth, capitalism has become unsustainable. It is from this consideration that Smith arrives at his twilight thesis: “Together, these interrelated crises suggest that we have already entered the twilight era of capitalism – an era in which humanity finds the means to create a social order and economic organization. more rational or in which the progressive decay of capitalism will bring with it the destruction of human civilization”.

* Eleutério FS Prado is a full and senior professor at the Department of Economics at USP. Author, among other books, of Complexity and praxis (Pleiad).


[I] Smith, Murray EG – Invisible Leviathan – Marx's law of value in the twilight of capitalism. New York: Haymarket Books, 2018.

[ii] See Prado, Eleutério FS – The future of the world economy. In: the earth is round, June 8, 2021.

[iii] See Brown, Wendy - Explaining our morbid symptoms. In: Other words, June 30, 2021.

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