How Will Capitalism End?

Wolfgang Streeck

There is a widespread sense today that capitalism is in critical condition, more so than at any time since the end of the Second World War. [1] Looking back, the crash of 2008 was only the latest in a long sequence of political and economic disorders that began with the end of postwar prosperity in the mid-1970s. Successive crises have proved to be ever more severe, spreading more widely and rapidly through an increasingly interconnected global economy. Global inflation in the 1970s was followed by rising public debt in the 1980s, and fiscal consolidation in the 1990s was accompanied by a steep increase in private-sector indebtedness. [2] For four decades now, disequilibrium has more or less been the normal condition of the ‘advanced’ industrial world, at both the national and the global levels. In fact, with time, the crises of postwar oecd capitalism have become so pervasive that they have increasingly been perceived as more than just economic in nature, resulting in a rediscovery of the older notion of a capitalist society—of capitalism as a social order and way of life, vitally dependent on the uninterrupted progress of private capital accumulation.

Crisis symptoms are many, but prominent among them are three long-term trends in the trajectories of rich, highly industrialized—or better, increasingly deindustrialized—capitalist countries. The first is a persistent decline in the rate of economic growth, recently aggravated by the events of 2008 (Figure 1, below). The second, associated with the first, is an equally persistent rise in overall indebtedness in leading capitalist states, where governments, private households and non-financial as well as financial firms have, over forty years, continued to pile up financial obligations (for the us, see Figure 2, below). Third, economic inequality, of both income and wealth, has been on the ascent for several decades now (Figure 3, below), alongside rising debt and declining growth.