Will the young generation experience the end of capitalism? RIP Immanuel Wallerstein

Immanuel Wallerstein died a few weeks ago. I don’t know if you ever heard of him, but his explanation of what it means to live in the current capitalist system was for me the most convincing I’ve heard.

A new world of never-ending growth and prosperity

Capitalism. It is a system that seems robust and invincible, not because it is never in crisis, but because crises seem to reinforce it. Wallerstein, however, did never really settle for that view of history. He assumed that social systems (such as the Roman Empire or the Mayans) have lives.

Yes. Lives. Just like in nature. Just like successful biological systems, social systems have a period in which they arise and grow because they are successful. After that, they have a stable period in which they overcome every setback. But there is always a time when an organism can no longer respond well to the challenges it faces. A moment when the basic mechanism that has always operated the system is not the right answer to a new challenge. Just think of 'survival of the fittest', a term from Darwin's theory of evolution and often used to say that capitalism is the natural state of society.

That comparison is actually based on a misunderstanding about what survival of the fittest actually means. Survival of the fittest does not mean that the strongest wins, it means that those who can best adapt to the current circumstances have the most chances of surviving. 

According to Immanuel Wallerstein, already since the 1970s, we have arrived at the point where capitalism has reached its peak and is slowly but surely losing its grip on the situation.

  1. It is becoming increasingly difficult for capitalists to make a profit from productive economic activity. The costs of production have gone up and there isn't enough demand, which makes it difficult for capitalists to generate adequate profits. Yes, I know, you might not say that if you see the profit figures of companies, but an increasingly larger part of that profit is speculation. It comes from financial operations, which, moreover, increasingly need to be supported with hundreds of billions of support from governments in order not to collapse.
  2. It is increasingly difficult to make a profit from productive activities because the deeper penetration of the market into more and more corners of the world ensures that the local population has entered the labor market almost everywhere. And over time this leads to higher wage demands. For example, companies that went to China 20 years ago for cheap workers have already re-directed their production to Ethiopia or Bangladesh. Higher wage costs = higher costs for capitalists.
  3. Moreover, it is becoming increasingly difficult for capitalists to evade the costs of destroying nature. It has always been the population that bore the costs. For decades, companies were able to ignore their responsibilities. And even if measures are insufficient to address the problem, new environmental standards create costs that didn't exist before. Those costs can only go up. Environmental standards will only become stricter. Who will pay for these extra costs? Yes, companies can pass on those expenses to their customers, but there will come a time when that will result in less and less interest in their products. Would you fly as much as your ticket costs 400 instead of 40 dollars?

But even if the standards or target values would not change, the economic damage that climate warming is now already causing will only increase. It is remarkable that Immanuel Wallerstein stated that the downturn would last 60 to 80 years and that this end date corresponds to the climate action deadline that climate experts from the UN put forward: 2050. 

So profit will certainly not give the answer to the challenges we face. And capitalism only works if policymakers and central banks believe that we have transformed into a new world of never-ending growth and prosperity.

If a system fails, something new must replace it

There have always been many people against capitalism because it manages to create unprecedented amounts of wealth and yet exploits so many people extremely hard. The big difference since the 70s is that as the decline continues, capital accumulation becomes less interesting for the elite. As it becomes more difficult to make stably high profits, profit is also an increasingly less efficient way of gaining power.

Chaos: apparently random and unpredictable phenomenon, or the behavior of a complex system, where tiny changes in the starting conditions can lead to very large changes over time. - source 

Since the 1970s we have experienced various economic and financial crises, the geopolitical balance is lost and climate warming is an increasingly urgent problem that is not being addressed seriously.

Let's look at what happened in just a few weeks:

  • Yemen's Houthi rebels, who are involved in an extremely violent and dirty war of hunger with Saudi Arabia, have claimed responsibility for drone strikes on two Saudi Aramco oil facilities.
  • In a dark corner of the financial system, the American central bank was forced to grant emergency loans to banks. Banks' profit machines are organized in such a way that they have to be able to borrow billions every night in the very short term. If that money is not available, they can go bankrupt very quickly.
  • From September 20-27, there was a global climate strike. This all started about a year ago when a Swedish girl was so stubborn that she no longer wants to continue her normal life because we are rapidly destroying our own environment.
  • At Amazon, the staff demand that the company stops cooperating with oil companies.

And this is the real beauty of Immanuel Wallerstein's legacy. The conclusion of his theory is that whoever lives now not only witnesses history but also plays an active role in it. The ordinary mortal now has more impact on the world than at any time in the last 500 years.

If a system fails, something new must replace it. Nobody knows what that looks like. It is entirely dependent on who manages to organize something new that can provide a good answer to the challenges we face.

The smartest part of the elite has already realized that capital accumulation will no longer help them to expand their power and is already looking for something else. 

At the same time, different movements from all corners of society worldwide want to express themselves. They spread like a dry fire and campaigning for another world. With trial and error and fierce counter-reactions, but more resilient than anyone could have imagined 20 years ago.

Greta Thunberg calls her Asperger syndrome a superpower. That doesn’t only apply to her. It is a sign of this era. Such as the "butterfly effect". A butterfly that spreads its wings can cause a storm on the other side of the world. There is no guarantee of success, but we have more opportunities than dozens of generations have ever had!

#economy #capitalism #people #politics 

More info about Immanuel Wallerstein you can find here

Photo 1 by Koushik Chowdavarapu on Unsplash
Photo 2  by Arie Wubben on Unsplash