The crisis of Western economic power

In this chapter we examine the crisis of Western economic leadership within the structural development of global capitalism. It was suggested in Chapter 3 that the crisis of Western financial capitalism indicates not the end of capitalism as an historically specific mode of power that accelerates yet (periodically) destroys human productivity, but its reorganization and reconstitution in a totalizing form through the state form of transnational capital – that is, through an intensification of global economic integration in which finance plays an increasing role in the generation of value. In this respect, at least, expectations of radical change in the wake of the global financial crisis have been disappointed – not just by the relative ease with which central banks have restabilized economies through unprecedented injections of liquidity (reflating asset bubbles in the equity markets while transferring private corporate debt to the public), but by the failure of Western voters to question the hegemonic discourse of fiscal consolidation (austerity) propagated by corporate media. On the one hand there is wilful delusion among a naïve Western public that current equity values are sustainable – as Chang (2014) argues, these record asset values do not reflect economic fundamentals and are only being sustained by the abnormally high levels of liquidity created by quantitative easing, which can only be withdrawn at the risk of accelerating deflation. On the other hand, there is self-delusion on the left about returning to ‘stable’ capitalism, indicating a lack of insight into the fundamental contradictions of commodity capitalism that presuppose cycles of accumulation and deleveraging as profit rates rise or decline, and as structural inefficiencies in neoliberal corporate capitalism intensify. On the moderate left, argues Heinrich, ‘there still exists the belief that, with the “correct” economic policies, full employment can be conjured up; “unchained” capitalism must simply be properly regulated again’ (Heinrich 2007: 1). On the radical left, however, there is a widespread and unjustified belief that we are heading for a ‘final crisis’ – ‘as if it were ever the purpose of capitalism to spread full employment and welfare among the people. Crisis and unemployment are in no way a sign of capitalist decline; they are capitalist normality’ (ibid., emphasis added).