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The End of Capitalism?: Part 2B. Social Limits And The Crisis

By Alex Knight

29 July, 2010
End of Capitalism

The following exchange between Michael Carriere and Alex Knight occurred via email, July 2010. Alex Knight was questioned about the End of Capitalism Theory, which states that the global capitalist system is breaking down due to ecological and social limits to growth and that a paradigm shift toward a non-capitalist future is underway.

This is the third part of a four-part interview. This part is a continuation of Alex’s response to the second question. Click here for Part 2A. Scroll to the bottom for links to the other sections.

Part 2B. Social Limits and the Crisis

MC: Capitalism has faced many moments of crisis over time. Is there something different about the present crisis? What makes the end of capitalism a possibility now?

AK: As I described in the last section, the current crisis can be understood as resulting from a massive collision between capitalism’s relentless need for growth and the world’s limits in capacity to sustain that growth. These limits to growth are both ecological and social. In this section I’ll discuss the concept of social limits to growth.

The Extraordinary Power of Social Movements

Social limits to growth function alongside the ecological limits but are drawn from a different source. By social limits we mean the inability, or unwillingness, of human communities, and humankind as a whole, to support the expansion of capitalism. This broadly includes all forms of resistance to capitalism, a resistance that has arguably been increasing around the world through innumerable forms of alternative lifestyles, refusal to cooperate, protest, and outright rebellion.

As a disclaimer it’s important to recognize that not all resistance is progressive. There are right-wing, fundamentalist, and undemocratic forces that also resist capitalism, for example the Taliban, or North Korea. These are not our allies. They do not share progressive values, we cannot condone their attacks on women, or on freedom more generally, and I don’t see anything to be gained by working with them. However it is important to recognize how these forces are aligned against capitalism, in addition to being aware of the danger they present to our own hopes and dreams.

Progressive resistance, on the other hand, has always taken its strength from grassroots social movements. Silvia Federici writes about the immense and varied peasant movements in medieval Europe that fought for religious and sexual freedom, challenging both feudal lords and emerging capitalist elites. I like to think of these rebels as my European ancestors – they were just commoners but they rose up to fight for a better world. This is the nature of social movements. Ordinary folks, daring to pursue their deepest aspirations, interests and dreams, join together with others who share those desires, and thereby create something extraordinary. The magic exists in the joining-together. Isolated individuals lack the power to accomplish what a group can achieve.

We can appreciate this extraordinary power if we look at how social movements have transformed our lives. A century ago, millions of American workers joined the labor movement and won the 8-hour day, Social Security, and workplace safety. Regular folks carried forward the Civil Rights Movement and broke Southern segregation. The feminist and LGBT movements have transformed the way gender and sexuality are viewed all over the world. It’s hard to overstate how dramatically these and other social movements have improved society. While capitalism has invented ways to co-opt social movements and redirect them into outlets that do not challenge the system on a deep level (like the “non-profit industrial complex”), movements have remained alive and vibrant by empowering people to reach towards a different world.

Have social movements limited capitalist oppression recently? To answer this we need to learn the story of the Global Justice Movement.

Demonstrators tear down a section of security fence in the Mexican resort city of Cancun to confront the World Trade Organization’s Fifth Ministerial summit on Sept. 10, 2003.

The Global Justice Movement

David Graeber, anarchist anthropologist, wrote a remarkable essay called “The Shock of Victory” in which he looks at this movement that suddenly flared up at the turn of the millennium and seemed to disappear just as quickly. Although most Americans may not remember the Global Justice Movement, and those who participated in it may feel demoralized by the fact that capitalism still exists, Graeber points out that many of the movement’s ambitious goals were accomplished.

A decade ago, capitalism was pursuing a strategy to transform the entire world into a single marketplace. It claimed this “globalization” would benefit everyone because everyone would get to share in the spoils of growth. What it really wanted was to extract maximum profit from the cheap labor of the “Global South,” by moving industry and jobs out of high-wage areas like the US, while imposing privatization and debt on the poor countries of the world. This strategy was called “neoliberalism,” because it aimed to eliminate all barriers to trade, such as worker protections or environmental regulations. Multinational corporations would have a bonanza. Like previous rounds of enclosure, the damage these policies would have on poor communities and on the planet was disregarded.

Starting from directly affected communities in places like Mexico, Brazil, India, South Korea and Africa, an enormous network of farmers, workers and educators connected with progressives and anti-capitalists in North America and Europe. They didn’t have a single leader or organization, but they came together as a Global Justice Movement to coordinate efforts and stop the spread of neoliberalism. The movement became visible to the world when it manifested at the 1999 World Trade Organization (WTO) protests in Seattle, where steelworkers, indigenous people, environmentalists, and students literally shut down the trade negotiations with creative civil disobedience.

Along with the WTO, the other main institutions responsible for pushing global neoliberalism were the International Monetary Fund (IMF) and the World Bank. The GJM moved to confront all three. “Free trade” agreements such as the hemisphere-wide Free Trade Area of the Americas (FTAA) were also challenged. Through creative protest and non-violent direct action, the movement called into question the dominant story around “free trade” and pointed towards a new world of global cooperation. And to their own surprise, they were incredibly successful.

According to David Graeber, Global South governments (like India and Brazil) were emboldened by the worldwide protest and refused to compromise on the North’s (European and American) unfair agricultural subsidies. As a result the WTO’s negotiations have totally broken down. The FTAA never came into existence at all. It was stopped in its tracks. The IMF and World Bank saw their reputations tarnished after their policies led to the meltdown of the Argentinean economy in 2002, and they are no longer welcome in some parts of the world. This is especially true in Latin America, where the political landscape has completely turned around in the last 10-15 years.

In the 1990s, most of the continent was still under the heel of military dictatorships and authoritarian states, but since then a wave of leftist governments has been swept into power by unprecedented social movements opposed to neoliberalism and U.S. imperialism. For example, in 2005 Bolivia elected their first-ever indigenous president, Evo Morales, who came directly out of the social movement that successfully stopped water privatization in Bolivia. Morales has become a spokesperson for many:

“If you want to save planet Earth, to save life and humanity, we have a duty to put an end to the capitalist system. If we do not put an end to the capitalist system, it’s impossible to imagine that there will be equality and justice on this planet Earth. This is why I believe that it is important to put an end to the exploitation of human beings, and to put an end to the pillage of natural resources; to put an end to destructive wars for raw materials and the market; to the plundering of energy, especially fossil fuels; excessive consumption of goods and the accumulation of waste.”

We can’t ignore the many difficulties facing Latin America or the Global South as a whole. The situation is still extremely dire, with over a billion people living on the brink of starvation and without access to clean water, and with the U.S. expanding military bases in places like Colombia. And of course leftist governments have their own problems and need to be held accountable just as rightist ones. Regardless, the Global Justice Movement demonstrated that by joining together across borders, opposing injustice and working towards a new world, victories can be achieved. Even victories as dramatic as discrediting the major institutions promoting neoliberal capitalism and the political transformation of an entire continent.

The GJM vanished almost as quickly as it appeared, but as David Graeber points out, this was partially because it met many of its goals so rapidly. With the widespread repudiation of the neoliberal doctrine, the Global Justice Movement provides an inspiring lesson that social movements can and do place limits on capitalism.

Social Limits and the Crisis

Social movements in many countries have been amplified by the economic crisis. Greece has seen massive rebellions in the past 2 years to stop the government from imposing austerity measures like cutting social services. In Iceland, a country not known for its political radicalism, huge protests in response to the country’s bankruptcy brought the government down and led to the election of the world’s first openly lesbian prime minister. In Nigeria there is an armed rebellion aimed at stopping oil companies from destroying the ecosystem and exporting their profits from the region. Off the coast of Somalia, pirates have plagued international shipping, and grabbed headlines last November when they hijacked an oil tanker headed for the US.

It’s clear that anger is building towards a capitalist system that is failing to meet people’s needs. But let’s dig deeper and ask: What role did social limits play in causing the economic crisis?

Perhaps the most instructive case is that of China and its rising labor movement. Supposedly a “communist” country, China has become a capitalist haven producing an absurd quantity of goods for the global market due to its very low (sweatshop) wages. The profit extracted from Chinese workers has done wonders to sustain capitalism over the last two decades. For this reason, the organization and rebellion of Chinese workers threatens not just the Chinese government, but the global capitalist system as a whole.

This explanation may require a bit of historical context. During the 1960s-early ‘70s, the capitalist order was challenged by a high tide of protest and rebellion – from Africa shaking off its colonial masters, to the end of Southern segregation in the US, to the struggle against the US genocide in Vietnam, to the new upsurges of the feminist, queer and ecology movements. This movement activity was pronounced a problem of an “excess of democracy” by the Trilateral Commission, a ruling class institution composed of bankers and corporate elites from the US, Europe and Japan. One of the strategies used to escape this crisis (along with increased repression and co-optation of social movements), was to relocate industrial production out of places like the US, where wages were seen as too high, to places like China, where wages were minimal.

Obviously this cheap labor generated more profit in production. But it also created a problem in terms of consumption, because US wages began to decline as all those unionized industrial jobs left the country. As explained by Professor Richard Wolff in his video “Capitalism Hits the Fan,” in order to make up for this income difference and keep consumption growing, starting in the 1970s US workers were given access to an immense pool of credit, in the form of credit cards, home mortgages and financial schemes like 401(k)s. Cheap available credit allowed the US to consume more and more junk, even as wages declined. It kept its position as the world’s strip mall.

Meanwhile, China became the world’s factory, pumping out cheap products for the global market, especially for the United States. As Americans flocked to Wal-Marts for their low prices, the Chinese government was flooded with trillions of US dollars. So far, they have dutifully recycled those dollars back into US Treasury bonds, thus keeping the American economy afloat. If they didn’t invest in the US, their main trading partner would be crippled by its trade debt, which grows daily.

The US-China relationship became core to the global economy. Each behemoth kept the other afloat – one producing like crazy by exploiting its workers near exhaustion, the other consuming like crazy by sailing on a sea of cheap credit. The damage to the planet’s ecosystem was atrocious, but immense profits were made and by the 1990s the market was soaring and “the end of history” was proclaimed. It seemed all opposition to capitalism had been vanquished.

There are numerous weak points in this international division of labor. One that has not been fully appreciated is the severe turmoil in China due to the growing strength of a new militant labor movement. This movement aims to put an end to sweatshop conditions where many toil for 12+ hours a day in dangerous, polluted factories. Organizing outside the Communist Party’s official unions, Chinese workers have initiated a series of crippling strikes that repeatedly shut down factories, among other forms of rebellion. The government has been forced to accept workers’ demands for wage increases, so the Chinese average real wage has risen by 300% between 1990 and 2005 [PDF], with half of that increase between 2000 and 2005.

Workers in green uniforms stage a sit-in protest at the main entrance of the Mitsumi Electric Co factory in Tianjin on Thursday, July 1, 2010. China Daily

Although the Chinese economy continues to grow, increased wages mean a falling rate of profit for companies operating in China, whether American, Japanese, European or otherwise. Wage increases also mean increased consumption within China, and therefore less cheap exports. When Chinese workers can afford the cars and electronics they’re producing, Americans can’t demand the same low prices.

Can we draw a direct connection between Chinese wage gains and the drying up of cheap credit in the US market of 2007-8? I humbly submit this question to the reader, as I haven’t done enough research on the relationship between the two trends. But I’ll say this about the big picture: If Chinese workers continue to break free from totalitarian control and win dignity in their jobs, the loss of China as the sweatshop of the world imperils trade arrangements that have carried global capitalist growth for decades.

If we study any country in the world, we’ll find people resisting capitalism any way they can. In the fields & factories, slums & schools, homes and prisons, the desire to be free cannot be extinguished, only held back and diverted. As humanity gains awareness of its own power and begins to act for its own interest rather than the interest of profit, the system’s tenuous grip on the world can easily falter, and a new world appears just over the horizon.

With the ecological limits encroaching on one side, and the social limits looming on the other, economic growth is under increasing strain in between. It’s as if the system cannot breathe. Like the sorcerer’s apprentice, it’s too busy putting out the fires of multiplying crises, which continue to spawn and grow. The policy makers, market gurus and technocratic apologists scramble to regain control, but they are disoriented in a new arena. Circumstances have changed. They cannot come to agreement on what to do, and instead quarrel amongst themselves over diverging interests. As social and ecological forces combine and put new stresses on the system, capitalism is smothered and chokes.

Considering the ecological limits and social limits to growth side-by-side, the only conclusion I can make is that the end of capitalism is not only a possibility, but an inevitability. Neither the planet nor the world’s population appear able to support this system much longer, and something’s got to give. It may be years or even a couple decades before we can look back and say for sure that a paradigm shift has occurred and that we are living in a different, non-capitalist era. But the End of Capitalism Theory dares us to question how long a system that lives on economic growth can continue to function in a world of such profound and permanent limits.


Alex Knight is a proponent of the End of Capitalism Theory, which states that the global capitalist system is breaking down due to ecological and social limits to growth and that a paradigm shift toward a non-capitalist future is underway. He is working on a book titled “The End of Capitalism” and seeks a publisher. Since 2007 he has edited the website endofcapitalism.com. He has a degree in electrical engineering and a Master’s in political science, both from Lehigh University. He lives in Philadelphia, where he is a teacher and organizer. He can be reached at [email protected]

Michael Carriere is an assistant professor at the Milwaukee School of Engineering, where he teaches courses on American history, public policy, political science, and urban design. He is currently working on a book, with David Schalliol, titled “The Death and (After) Life of Great American Cities: Twenty-First Century Urbanism and the Culture of Crisis.” He holds a Ph.D. in American history from the University of Chicago.

Click the links below for more of the interview:

1. The current financial crisis is clearly a moment of peril for both individuals and the broader system of capitalism. But would it also make sense to see it as a moment of opportunity?

2. Capitalism has faced many moments of crisis over time. Is there something different about the present crisis? What makes the end of capitalism a possibility now?

A. Capitalism and Ecological Limits

B. Social Limits and the Crisis

3. Moving forward, how would you ideally envision a post-capitalist world? And if capitalism manages to survive (as it has in the past), is there still room for real change?

From the author:

I've been frustrated for some time at the chasm that seems to separate the "green" side of things, including the peak oil "movement", which too often lacks an appreciation for the injustice of capitalist society, and the "red" side of things, where movements are pushing for justice but too often lack an understanding of ecological limits. I've been trying to bridge this gap as much as possible. As Murray Bookchin would say, we can't create an ecological society unless we create an equitable society, so the two have to go hand in hand.

Part 1 of the interview

The End of Capitalism?: – Part 1. Crisis And Opportunity
By Alex Knight

Part II

The End Of Capitalism? Part 2A. Capitalism And Ecological Limits
By Alex Knight

Part III

The End of Capitalism?: Part 2B. Social Limits And The Crisis
By Alex Knight