A Passing Storm or a Crisis of Capitalism?

C. J. Polychroniou:

A strong case can be made that what we have been witnessing since [2007-08] is not simply a severe financial crisis centered in the developed world but the fact that today’s capitalism is simply incapable of functioning in an economic way conducive to maintaining sustainable and balanced growth.

The so-called “financialization” of the economy, so prone to financial crises and meltdowns as the late Hyman Minsky has shown, cannot be understood independent of the production processes or developments in the real economy. Advanced capitalism had been facing severe structural stresses, strains and deformations — including overproduction, trade deficits, lack of job growth and elevated public and private debt levels — for quite a few decades prior to the eruption of the financial crisis of 2007-08.

Indeed, the “financialization” wave — which many have labeled “casino capitalism” or “stock market capitalism” but which amounts essentially to the deregulation of giant financial entities capable of shaping and controlling the fate of national economies — began as a result of the structural problems associated with the postwar regime of capital accumulation, whose collapse in the mid-1970s threatened the growing expansion of capitalism. Thus, “financialization” does not spring out of the blue but emerges as an alternative model to the decay of the postwar regime of accumulation.

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