The Collapse of Capitalism

“The last capitalist we hang shall be the one who sold us the rope”- Karl Marx

Capitalism refers to the economic system that is based on free markets and no or limited government intervention. Proponents of this economic system consider it to be the most efficient economic system as it improves the living standards. However, there are many economists who criticise capitalism as it can result in inequality, excessive materialism, market failure, short-termism etc. After the 2008 Global Financial Crisis, many economists were anxiously anticipating the downfall of capitalism, but it didn’t happen. Now with the world fighting the present pandemic, a very important question arises again – Will Capitalism ever end?

Karl Marx was among the first who outlined how capitalism worked but he also introduced the idea that capitalism contains the seeds of its own destruction. Many present-day economists largely agree to Marx’s views as they believe that capitalism will end eventually, like all the other economic and social systems devised by humans. However, they are of the view that it won’t happen anytime soon, and as more deeply rooted capitalism becomes in our lives, the more difficult it will be to be removed.

Karl Marx warnings about capitalism are still upheld and read. One of the guiding questions was already there in the Communist Manifesto: how can it be that poverty exists in rich countries? That is still the question today, and there is a lot of wealth, and yet it does not benefit the majority. How can that be? That’s what Marx tried to explain. A key finding from his book Das Kapital is that a few large corporations control the entire production chain of products, so capitalism always leads to a concentration of wealth. That is still true today; we are still living in a world of large corporations. What we’ve seen over the last three decades are a series of very worrying things: one is the financial crisis, which destroyed a huge amount of wealth; second is concentration of capitalism with companies such as Google having massive market shares, market shares that haven’t been seen since the late 19th century; and third, a very significant increase in inequality, with some of the people at the very top doing extraordinarily well.

The present COVID-19 pandemic is according to me another important reason that can be seen as bringing an end to capitalism. Let’s see it in this way – The pandemic begins in Asia, rips through the capital cities of Europe and wipes out at least a third of all human beings in its way. When it is all over, revolts begin, cherished institutions fall, and the entire economic system has to be reconfigured. That is a short history of the Black Death, a bubonic plague pandemic caused by the bacterium, Yersinia pestis, which spread from Mongolia to Western Europe in the 1340s. Because the economy then was based on local agriculture and crafts, ordinary life bounced back relatively quickly.

Today, capitalism faces its own plague nightmare. Though the COVID-19 virus may kill between 1 percent and 4 percent of those who catch it, it is about to have an impact on a much more complex economy than the one that existed back in the 1340s – one with a much more fragile geopolitical order, and on a society already gripped with foreboding over climate change.

We do not know what an industrial capitalism without carbon would look like because our institutions, practices and cultures are all based around fossil fuel extraction. Likewise, we do not know what globalisation would look like without a billion people living in slums, without deforestation, live animal markets and without widespread diseases of poverty in the developed world – again because these have become fundamental features of capitalism as it really exists. That is why capitalism is unlikely to survive, long term – and in the short term it can only survive by adopting features of “post-capitalism”.

Macquarie Wealth, one of most capitalist companies in the world, told investors: “Conventional capitalism is dying, or at least mutating into something closer to a version of communism.” The Macquarie analysts understood that this is not just because we suddenly need state intervention, but also because ordinary people’s priorities have moved market choices to concepts of fairness and wellbeing. Now, if the great plague of the 14th century triggered a post-feudal imagination, it is possible and desirable – that this pandemic trigger a post-capitalist imagination.