First, there remain issues of systemic risk and the balance of finance with other economic sectors. Second, capitalist profitability often depends on externalizing the costs of its activities—human and ecological as well as financial. Issues like pollution or unemployment in volatile markets demand the attention of governments or other social institutions. There is a deficit of institutions to do this work; social development has lagged behind economic growth where capitalist growth is newly rapid, and neoliberalism has weakened the institutional capacities of Western countries and even created challenges for political legitimacy. Third, capitalism is vulnerable not only to “intra-economic” or institutional factors, but also to external issues like climate change or war. There are questions about the extent to which capitalism—that historically unparalleled machine for producing economic growth—is up against environmental limits to growth and potential geopolitical conflicts exacerbated by unequal growth.
In each of these areas, dealing with the threats to capitalism may transform it, not cause its collapse. Together, they may bring about a world in which capitalism remains enormously important and potentially recovers some of its vitality, but is no longer able to organize and dominate a world-system to the degree it has through recent history.
WHY NOT COLLAPSE?
The idea of capitalism simply collapsing—as, say, the Soviet Union collapsed—is a bit misleading. This implies suddenness, a transition over just a few years from existing to not existing. The Soviet Union could cease to exist almost overnight because it was a particular institutional structure—a state—and its legal form could be dissolved. But capitalism is not strictly analogous.
As a state, the U.S.S.R. was a kind of corporation, and it was in the first instance this corporation that dissolved. But of course the dissolution of this legal-political structure also brought wide-reaching changes in other relations of power and practical activity. Still, many institutions that had been knit together through the Soviet state continued to exist with varying degrees of change in its absence. The city of Moscow had a legal and institutional status in the Soviet Union and a not completely dissimilar one in the successor Russian federation and republic. Gazprom changed more. Its creation in 1989 restructured the legal status and operating organization of the preexisting Russian gas industry. After the dissolution of the U.S.S.R., Gazprom was privatized in 1992 and has since operated as a joint-stock company. It was subjected to asset-stripping in the 1990s, then partially reintegrated and brought under state control in the first decade of the 2000s. In similar fashion one could trace a long list of partial continuities and partial transformations.
Nonetheless, Derluguian’s account of how the U.S.S.R. could be treated as stable and obviously enduring almost to the moment it reached its end is instructive. It is a mistake to view the future only in terms of linear projections without considering possible sharp discontinuities. Derluguian reminds us of how pressures can build up to make a system both hard to sustain and vulnerable to small actions and events that have large consequences because of the unstable integration of the whole. He reminds us also that even a large structure that has come to be taken for granted as providing the basic context and conditions for the rest of life can be much more mutable than its surface continuity suggests. But we should recognize that the Soviet Union was not equivalent to socialism and thereby somehow directly analogous to capitalism. It was something more particular and of a different order.
This is so whether we treat capitalism as a set of practices that can be undertaken by capitalists anywhere, or as an economic system that knits together enterprises, markets, investments, and labor throughout the world. Capitalism is a historical formation, grounded, as Michael Mann would say, in a set of power networks. It has existed for the last 400 years primarily in the form of the modern world-system that Immanuel Wallerstein has analyzed. This is a hierarchical and unequally integrated organization in which the primary units are nation-states and economic actors are crucially dependent on relations with and conditions provided by political power.
To be sure, the idea of a nation-state is in a sense aspirational; the suturing of sociocultural identity to governmental institutions is never perfect; economic integration can itself advance national integration and certainly economic actors also influence government. Yet even if partially a fiction, the nation-state is a crucial formal unit for participation in global affairs, reproduced in political isomorphism. Most international organizations are literally that—structured by nationally organized participation. And states organized in this way provide crucial underpinnings to capitalism. They provide the legal and monetary bases for both firms and markets. They manage, or provide settings for the management of interdependence among different firms, industries, and sectors. By organizing structures of cultural and social belonging, however imperfectly, and sometimes by regulating markets, they organize workforces, consumer markets, and trust. The term “nation-state” may be only shorthand for “efforts to organize politics and sociocultural belonging in terms of nation-states”, but the era of capitalism and the era of nation-states have been one and the same. There is no “real” capitalism, no matter how global, that isn’t conditioned by this political-economic and sociocultural organization. The import of this is that existing capitalist prosperity and sustainability depend on nation-states and institutional affordances they have provided. These must be renewed or replaced. Yet for forty years the OECD countries have turned away from this task. Instead they have hollowed out the “welfare state” institutions of the past, reducing costs and pursuing immediate competitiveness but neglecting the long-term well-being and security of their populations and the collective investment that enables future economic participation.
That said, most of the old capitalist countries of Europe or European settlement are not at the point of immediate collapse. Britain’s National Health Service still works, though costs are rising and threaten national budgets. The United States has actually, very belatedly, improved health provision (particularly addressing the large number of people who do not get health benefits from their jobs). And so forth. There has been great erosion. National budgets are in deficit and do not allow for easy rebuilding. But it is not necessarily too late to get houses in order. A wakeup call comes from those European economies that face such dire fiscal crises that they can only cut support for their citizens—precisely at a moment when they need it urgently. Spain, Portugal, Ireland, Italy, Greece, and Cyprus have teetered on the brink and others may. But this threatens the European Union more than capitalism as such.
Capitalism could swing further and further out of equilibrium. This might represent the irreversible “bifurcation” of a quasi-natural system (as Wallerstein has it, following Prigogine); or the failures of regulation, corporate strategy and investor prudence in chaotic capital markets; or indeed simply weak institutional coordination among dispersed and differently interested actors. It could represent a failure to distribute wealth widely enough to create demand for enhanced productivity, one possible consequence of the decline in job creation Collins envisages (though the political consequences of unemployment may be more immediate). Whatever the underlying dynamics, loss of a stable equilibrium increases the costs of trying to hold capitalism together, heightens political strains, and produces social tensions. This kind of disequilibrium is one way of interpreting what crises mean, and the greater the disequilibrium the more difficult and expensive the action required to restore equilibrium.