Capitalism at an Impasse

part one

Capitalism is in a state of deep crisis. This crisis is far from being one of the ordinary crises of capitalist economy. By all evidence it is a deep system crisis of historical importance. Capitalism is at an historical impasse, argues Elif Çağlı in her article. After her booklet titled "Crises of Capitalism and Revolutionary Situation" she explains the nature of capitalism with a special emphasis on the role played by credit mechanism, referring to Marx who made a special emphasis on the role of credits in the workings of capitalist economy. While the credit mechanism helps the system overcome certain problems, it reproduces them on a greater scale. Çağlı makes the point that the credit mechanism as well as other tools used by capitalism is now quite worn out. They have almost completely lost their efficiency in overcoming great crises. Capitalism has also lost its capacity for a great scale transformation and reforms that might save it a new era of freshness and provide the broad working masses a genuine welfare.


The present system crisis of capitalism is continuing in a deeper and wider way surpassing even the period of Great Depression of 1929. This crisis also shattered the rosy pictures of the future of capitalist order drawn by bourgeois ideologues for a long time. At present period imperialist re-division wars that broke out especially in certain regions of the world exposed those liberals who claimed “period of wars are gone now, we are now entering in a period of peace”. Let alone the claim that the capitalist European Union would gradually become a United States of Europe abolishing national borders has lost its credibility, the EU is in serious difficulty to remain even as an economic union. It is now an unquestionable fact that globalisation has not abolished national borders, but, on the contrary, the heated capitalist rivalry on a global scale intensified national conflicts and frictions all along.

If we are to remember what happened in the past, periods of great depression that march on through imperialist division wars of capitalism taught serious lessons. The most important of these lessons was that capitalism could overcome its crises only at the cost of preparing more destructive ones. And the result that would be produced by this course was also evident by the very nature of things. And this could be nothing but a grave impasse that would squeeze capitalist system into corner.

As is revealed in all symptoms, capitalism is in a state of historical impasse and suffering from death agonies coming one after another, which are inevitable. The same fate that led previous social orders to the dustbin of history now lies in ambush for capitalism. Capitalist system has exhausted its progressive potentials and now the death knell sounds for it. These are the truths indicated by the process filled with enormous conflicts and dead ends capitalist world order has been driven into.

Capitalism is now trying to overcome its system crisis again, as in the past periods, by increasing war spending and thus setting the world into flames, ravaging those regions that are subject to re-division and ruining the lives of millions. In this sense, we are passing through a period of Third World War in the form of regional wars of re-division linked to one another forming a whole chain and carried out via new war stuff and techniques. But there is another fact that despite all advances of imperialist rulers of the world to master in destruction, cruelty and in deceiving the masses by deceit and intrigue, the mechanisms used by capitalism to overcome periods of great crises have now been worn out. However, to understand the contradictions that lay in the depths of capitalist mode of production is impossible for those who think that capitalist course is consisted of new technological inventions. Yet, although it still manages to draw rosy pictures from a technical point of view and blur some people’s mind, capitalist system is indeed in a great deadlock, simply because of economic stalemates caused by its inner laws of operation and deep-rooted social contradictions that trigger class wars across the world.

One of the most striking manifestations of this impasse is the credit mechanism being worn out so that it cannot serve as a remedy now, whereas it gave life to capitalism over and over again in the past. For many years capitalism have managed to keep a world of consumption based on exploitation of the working class alive by pumping credit mechanism. However the credit mechanism which is regarded as saviour has increasingly become a monster fostering new crises. But neither capitalism is able to give up credit mechanism nor credit mechanism can promise an endless life to capitalism.

Capitalist economy constantly produces social inequality and aggravates it with its contradictory character concentrating wealth on the one side and spreading poverty on the other. On the one hand capitalism creates a relative ground for plenty with its production apparatus of huge dimensions, but on the other hand what broad masses get is a growing poverty as a result of the nature of capitalist production relations. This deep contradiction is a proclamation of the fact that living conditions of millions of people throughout the world are under a heavy threat under capitalism.

Moreover, and above all, today’s level of productive forces and technology are incompatible with capitalist production relations. Capitalism escalated human exploitation, social inequality and the resulting social climate of degeneration and destruction of nature to unbearable dimensions so that our planet is nearly on the brink.

Capitalist mode of production has lost its progressive potentials once it had. This system has become rotten, degenerated and turned into a curse undermining human society. This situation is in fact obvious for those eyes that wish to see. Yet beyond this reality, there is an objective ground that would enable a progress towards a future, i.e. socialism, in which human exploitation, social repression and oppression and inequality are all wiped out of the world. Therefore, when the world working class equips itself with a revolutionary consciousness and gets organised it can bring about a great social transformation in the interests of humanity.

Although at present the working class is weak in terms of its level of preparedness for this historical action, it is obvious that there must be no room for despair. The new wave of revolt that has risen across the world and developed by involving working masses and young generations heralds the inner fermentation of the conditions of the historical working class revolution which will wipe capitalism out of the earth. Are not these realities what lead bourgeois ideologues to a deep concern over the future of capitalism?

No escape from reality

The scope and depth of the present crisis is reflected even in the news in the bourgeois media so that there is no need to indulge in figures and statistics here. The situation is self evident. Even the USA as the hegemonic power of capitalist system is struggling with successive economic convulsions. And a double-dip recession is said to be on the order of the day for Britain, another one of the prominent imperialist countries. Worries about the course of capitalism on the side of the bourgeois order can be exemplified from Turkey as well. Ali Babacan, one of the deputy prime ministers, said: “Everyone should act with utmost care in the period ahead … Nothing should be regarded as surprise. Nobody should say ‘we didn’t expect that much’. … We are passing through such a complicated period that can be compared to no other period in the last century.” Such statements prove that escape routes are being closed one after another under the pressure of enormous change and upheaval in economic and social life.

In the past the bourgeois economists invented numerous theories to conceal crises and structural problems of capitalism. They refrained from admitting crises of overproduction as systemic illness of capitalism and worked out arguments saying that crises arise from financial problems or from mismanagement of economy. However the formidable dimensions of the present crisis make it impossible to conceal great economic and social problems created by capitalism by merely employing the age-old rhetoric. Therefore today the bourgeois world is alarmed to fabricate arguments that can create new illusions about the future of capitalism.

As an example we can refer to those bubbles of lies that capitalism in fact is not today’s wild system and a conscientious capitalism to secure social justice is possible. Those people who seek to avert exposure of capitalism with its biting features in the eyes of the working masses conduct a propaganda that the problem results not from capitalism itself but from its “conscienceless” application. The statement of PepsiCo’s world CEO, Indra Nooyi, is a striking example here: “Capitalism is actually a good thing. A means enabling the abilities and qualities of people to come out. On the other hand capitalism must have a conscience. Capitalism without conscience brings disaster. What is being protested today in Wall Street is not capitalism. It’s a capitalism that has lost its conscience.” 

From an historical point of view capitalist system is now unable to give a sign of hope like all social formations that were driven to the point of exhaustion. Capitalism does not have the capacity for reform either, reform that could pacify the waves of masses taking to the streets in revolt and rage nearly all over the world. And this drives the world bourgeoisie into kind of attitudes more destructive, more brutal and more deceitful. In fact such moments point not to the strength of the ruling classes but to their historical impasse and incapacity. Like whistling in the dark to suppress one’s own fear, PepsiCo’s CEO Nooyi seeks to condole herself in the nursery rhyme that the masses revolted not against capitalism but against “a capitalism without conscience”. However it is a clear and scientific truth that there is, and can be, no capitalism other than this one which has since long been making workers and toilers across the world suffer under an incredible exploitation, poverty, repression and pain.

Another interesting tendency in the heart of the deep crisis of capitalism is the despair caused by the historical convulsion of the system on the part of some of the bourgeois ideologues. As it gets understood that it is not easy to get out of this crisis, many bourgeois ideologues and spokespersons who have never ascribed crises to capitalism have now turned into pessimistic oracles saying that the crisis will last long. For instance, famous economist Joseph Stiglitz, a Nobel Prize winner, points out in one of his reverberating articles that in the USA and EU countries everything will get worse. What he does when he says that the most optimistic estimation could be a long economic period of stagnation amounts, in fact, to admitting the bleak situation of the world capitalist system. Also Soros, a world famous money speculator, warns that the uncertainties and bad course of the global world economy will boost revolts and social conflicts on the basis of the crisis in Europe.

Many prominent economists agree that the current crisis is a global one. Indeed the current capitalist system crisis is progressing embracing the developed economies of America and Europe in a deeper way and creating a multitude of problems, particularly an unstoppable rise in unemployment. The most striking outcome of this situation is the unprecedented levels of worsening in income distribution. Moreover, in all capitalist countries budged deficit is growing in general and social spending has been cut over and over again as public resources have been allocated to saving big monopolies and banks. Even the biggest imperialist countries are in the grip of an economic stagnation and a tendency towards inflation, which scares the bourgeoisie. So those economists who had enthusiastically praised the market economy are now pedantically speaking of the necessity of state intervention into economy. In fact, state intervention which had been said to be off the agenda was already introduced when the current crisis first manifested itself through bankruptcies of big companies and banks in mighty-looking imperialist countries.

Some columnists of economy describe this situation as transition to a modern version of statist capitalism. And some others say that the only element that can lead people under conditions of crisis is the lawmakers and that this “recalls socialism”. And there are economics professors who, looking at the formidable financial crisis that grips the US economy which is the engine of capitalist system, argue that American capitalism as is has now come to an end. Such examples are accompanied by assertions that now we are in a period of transition from the financialisation of economy to a finance becoming socialistic. It must be an irony of history to frequently hear the word socialism from bourgeois ideologues and economists nowadays!

Some bourgeois writers nowadays acknowledge Marx so much that it suggests almost a class suicide in a step further of this tendency towards confession. As can be remembered from historical examples, class suicide means a desperate mood on the part of some intellectual elements of a rotten socio-economic system having lost confidence in the future of their class. Moreover, it can be added that these elements have begun to acknowledge the social cause of the oppressed classes, though with full of inconsistencies. Such symptoms indicate that there is a deep ideological crisis of the system growing.

This crisis is sensed most clearly from the approach of some of those writers and thinkers who had been advocating capitalism for years, which tells that they are now losing their faith in capitalism. Such rare situations arise in times of great revolutions that shake the world deeply as in the example of October Revolution. When we carefully interpret the present indications in the same way we can see that a similar historical era has been entered and a revolutionary situation that begins to toll the bell for capitalism is developing on a world scale.

Marx proved right

With the manifestation of aggravating structural illnesses of capitalism there is hardly a day passing without hearing Marx’s name. In bourgeois press we frequently come across with headlines such as “Marx’s spectre is haunting the world” or “Marx’s prophecies about capitalism come true.” Regardless of the intentions on the part of the bourgeois front, this situation is in fact a downright confession that Marx is a great revolutionary who analysed the workings of capitalism scientifically. With his deep analyses Marx showed that capitalism is finally condemned to death and although he is sought to be discredited by bourgeois writers and ideologues in periods of economic upturn, history never forgives! It takes its revenge in this way…

This must be the revolutionary dialectics of social life which is full of surprises. While socialism and Marxism were declared to be forever dead 20 years ago when the Soviet Union fell and the world bourgeoisie gave joyful speeches about the immortality of capitalism, the mole of history kept doing its work underground in a completely different direction. Today’s world is back to the death agonies of capitalism, with signs pointing to the rightfulness of Marxism and necessity of socialism. Marxism’s superiority which has been proved time and again despite vicious attacks on it is significant. Because Marxism is the only scientific and revolutionary world view that is able to scientifically analyse the historical adventure of humanity on this planet called earth and explain the historical conditions of genuine human emancipation.

Capitalist mode of production contains many conflicting aspects and makes its way on the basis of the contradiction between expanding production and shrinking purchasing power. Depending on the level of development of social productivity of labour, the part of total capital invested in wages becomes relatively smaller as constant capital grows. Also capitalist mode of production makes the working class, which creates the economic growth, enormously grow while it diminishes the share it takes from capitalist distribution and that part of the working class able to find a job. Capitalists try to compensate the fall in surplus value production caused by reduction in number of workers by means of intensifying the level of exploitation of workers they employ. However, even in this field, restrictive laws of capitalist economy come into play and the average profit rate exhibits a tendency to fall. Thus, with such inner contradictions capitalism crates its own impasse.

As Marx said, capitalist production constantly creates obstacles springing from its very nature and tries to make its way in constant struggle to overcome these obstacles. It can do that only at the expense of constantly regenerating the same obstacles on a greater scale. Therefore the real obstacle of capitalist production is the capital itself. There are many inner factors underlying the stalemates of capital accumulation process and they are in a dialectical interaction. For instance, underconsumption, stressed by Marx, and described by Engels as the precondition of capitalist crises, is the fundamental reason underlying the overproduction crises which capitalism is unable to avoid.

Capitalism is a chaotic system in which broad masses cannot afford even their most basic necessities while production turns into “over-production” in expectation of profit. Regardless of the level of technology in the service of capitalist mode of production, which may, for instance, enable follow-up of orders, stock control and sectional production plans, capitalism is not, and cannot be, a planned economy that produces for the need of the masses. This system is an anarchic system in which big monopolies, holding companies, multinational cartels harshly compete with each other and thus strive to undermine each other’s plans. As clearly evidenced by today’s facts, those assertions that suggest that capitalism solve the problem of overproduction and can do away with this seed of crisis are totally unfounded.

The conflict of contradictory aspects in capitalist economy and manifestation of this conflict via capitalist crises are all inevitable. Periodic crises that break out in capitalist economies which live on industrial cycles one after another are explosive and temporary solutions of these inner contradictions of capitalist mode of production. As we dealt with crises of capitalism at length elsewhere (see Elif Çağlı, Kapitalizmin Krizleri ve Devrimci Durum [Crises of Capitalism and Revolutionary Situation]) let us be content here with a striking emphasis. When capitalism overcomes an overproduction crisis and enters a new period of rise, whatever the extent of that rise, that means in fact a new overproduction crisis is in the works now. Thus, in the long term, capitalist operation exhibits a historical tendency of preparing ever more destructive crises and wearing the mechanisms bringing the system into equilibrium out more dangerously.

Those periods of great crises experienced by capitalism in the form of long waves of capitalist system reveal the operation of this tendency. The first example of these periods was the period prior to the First World War and the second one was the period that included the 1929 depression and the Second World War that followed. In the first historical example, capitalism tried to save itself from the great crisis it had been in grip of by structural transformations that it experienced on the basis of its rise to the imperialist stage from the stage of so-called free competition. But these structural transformations of capitalist system aggravated the competition of the countries that were trying to become imperialist and thus did not bring along a period of peace and tranquility. On the contrary, various countries and peoples in those countries faced the disaster of First Word War caused by the rabid competition of capitalists.

In the second great crisis capitalist system did not have an equally strong opportunity of structural transformation as in the first one. What we see in principal capitalist countries at that time was the deepening and spreading of imperialist relations and a cut-throat rivalry among capitalist countries that had already become imperialist such as USA, Japan, Britain, France and Germany. The Second World War was the product of this second great crisis and it carried capitalist destruction one step further, as if finishing what the first one had left in the half-way. In the end, capitalism overcame this great crisis by an imperialist re-division war which was much more destructive for humanity than the first one claiming the lives of millions of people.

These historical examples adequately reveal the destructive essence of the efforts of capitalism to overcome periods of great crises. Moreover, and most importantly, it points to potentials for structural transformation being ever weakened, which might be resorted to by capitalism to overcome its crises. And as the potentials for structural transformation are weakened, imperialist countries lead the world to much more violent imperialist wars on the basis of a harsher rivalry. These points that must be underlined indicate at the same time the features of current system crisis of capitalism.

At present capitalism is a global system in which countries are linked to one another within the framework of uneven, but complicated, interrelations under the hierarchy and hegemony of imperialism. In such a system the illnesses of capitalism are extremely contagious and it is inevitable that the effects of a crisis that break out somewhere easily absorb others in waves. In short, globalisation of capitalism has not brought stability and peace to the system, as argued by the bourgeoisie in its propaganda of globalism it carried on on the basis of this objective reality. On the contrary, the globalised capitalism has reached to an extreme point of maturity, that is, a climax of rottenness, in which it has become impossible to escape from crises and export the destructive effects of crises to periphery or less developed countries, thus easing the centre imperialist countries.

Let us remind, by the way, that globalisation is not a new stage of capitalism coming after imperialism. Global capitalism and the capitalist relations that rise above this background signify a quite matured, and thus dilapidated, state of imperialist capitalism itself. Now there is no chance that capitalism can overcome its system crisis by a great structural transformation, thus rising to a higher stage and getting relief, like in the past. This is what capitalism is and there will be no further and different capitalism than this.

All these truths hint destructive consequences created by the desperate struggle of capitalism to come out of the current great crisis, and this will continue. As long as our world is in the hands of capitalism it will be the stage for much more violent wars of competition, a more rampant rise of militarism and bourgeois reaction, and imperialist wars of re-division bringing incomparable destruction to humanity. But on the other hand it is a fact that capitalism is matured more than enough to the point of dilapidation and that objectively it has become more compelling for it to leave its place to a new order which is proper for the level of socialisation of productive forces. And the state of social unrest and simmering throughout the world is a reflection of this fact. But there will be no spontaneous transition from capitalist society to socialist society. This transition requires revolutionary action of the working masses across the world, an action raised to the level of writing history.

It is on the level of a definite law that capitalist mode of production is, and will be, unable to escape from overproduction crises flowing from the drive for getting more profit. And the credit system deepens the overproduction crises and heats them up by playing an accelerating role in capitalist process of production and circulation. Credits that are not repaid in crisis periods which impede the heated operation of capitalism bring capitalist finance institutions and capitalist states into a huge debt problem they cannot come out. To emphasize briefly, as capitalism develops the credit mechanism with multiply diversified credit types creates many problems as well as it solves some of the problems.

If we leave aside for a moment the formidable bills of debt the capitalist institutions and states face caused by credit mechanism, even thinking of the striking aspects of the problems created by this system which immediately affect the lives of broad masses will show the enormous importance of the matter. While capitalism creates a stock of “overproduction” in an anarchic way with its non-planned profit-driven nature without satisfying the social needs, on the other hand it leads to a serious problem of “under-consumption” by diminishing the purchasing power of the masses. This situation is an inevitable curse flowing from the inner contradiction of capitalism. And capitalism finds the remedy in creating an extra purchasing power based on indebting the masses. In this way the working class and broader working masses are driven into a huge pit of debt and at the same time they get a spending “capability” which capitalist distribution does not let them have.

It might be thought that the credit mechanism plays a positive role by creating an extra purchasing power form the standpoint of boosting consumption. But if we look at the problem from the standpoint of payments, it will be understood that credit is a problem-producing mechanism on the part of both capitalists and the working class. In trying to escape from the formidable consequences of under-consumption by massive indebting capitalism creates an inextricable problem of unpaid debts and generates new dead ends let alone drying out the source of systemic crises. Unpaid credits appear in front of capitalists in the form of inextricable crises. What this brings for the working class is reduced wages, cuts in social funds, cancelled credit cards because of lost jobs, and eventually, almost completely lost purchasing power. Besides, credit system creates many destructive consequences on the side of workers and working class families, leads them to dangerous delusions about capitalist order and prevents them from taking a fighting class attitude against capitalist order.

So, regardless of from which side you look at the problem, all appearances suggesting that capitalism has ceased to be the wild capitalism of the past thanks to the credit mechanism and provided broad masses with more attractive living conditions are fake. That the working masses can escape from poverty and deprivation imposed by capitalism on them through means such as credit is an empty dream. It is impossible for workers and toilers to live on as if a welfare society superseding capitalism has been reached under capitalism. It is absolutely impossible for the worker to get a share from social distribution as if he/she lives under socialism, while he/she continues to work as a wage slave of capitalism. On the other hand, it is downright ideological meanness to present socialism as a kind of capitalism spreading welfare to the grassroots of society thanks to the credit system and thus try to couple socialism and capitalism. Because the credit system is completely peculiar to capitalism and there will not be anything like the credit system when the means of production are stripped of their capital character.

part two