Immanuel Wallerstein - Does Capitalism Have a Future?

The second theme concerned the Old Left movements, which were attacked everywhere for failing to fulfill their promises (the second step) when they came to power. The militants said in effect that, since you haven’t changed the world, we must rethink a failed strategy and replace you with new movements. For many, it was the Chinese Cultural Revolution that served as a model—with their call to purge the “capitalist roaders” in the very top positions of the party and government.

The third theme concerned what might be called the forgotten peoples—those oppressed because of their race, their gender, their ethnicity, their sexuality, their otherness in all its possible guises. The Old Left movements had all been hierarchical movements, insisting that only one movement in any country could be “the” revolutionary movement, and that this movement had to give priority to a particular type of struggle—the class struggle in the industrialized countries (the North), the national struggle in the rest of the world (the South).

The logic of their position was that any “group” that sought to pursue an autonomous strategy was undermining the priority struggle and therefore was objectively counter-revolutionary. All such groups had to be organized within the hierarchical party structure and be subordinate to its topdown tactical decisions.

The 1968 militants insisted that the demands for equal treatment by all of these groups could no longer be deferred to some putative future time after the main struggle was “won.” These demands were urgent and the oppression they were combating was as important as that of the alleged priority group in the present. The forgotten peoples included prominently women, socially defined minorities (racial, ethnic, religious), persons of multiple sexual tendencies, and persons who gave priority to ecological issues or peace struggles. There is no end to the list of forgotten peoples, which has expanded and become more militant ever since. At the time, the Black Panthers in the United States were a very prominent example of this kind of group.

The world-revolution of 1968 (actually it occurred over a period going from 1966 to 1970) did not lead to a political transformation of the world-system. Indeed, in most countries, the movement was successfully repressed, and many of its participants abandoned their youthful enthusiasms as the years went by. But it did leave a lasting legacy. The ability of centrist liberals to insist that their version of the geoculture was the only legitimate one was destroyed in the process. Exponents of truly conservative and truly radical ideologies resumed their autonomous existence, and began to pursue autonomous organizational and political strategies.

The consequence of this cultural-political change for the operation of the modern world-system was enormous. Having entered into a critical situation in terms of the ability of capitalists to pursue the endless accumulation of capital, the political stability of the modern world-system was no longer guaranteed by the overwhelming strength of centrist liberalism with its assurances of an ever-better future for everyone, provided only one patiently submitted to the wise actions of the persons with the specialized capacity to bring about this ever-better future, eventually.

The world-revolution of 1968 was an enormous political success. The world-revolution of 1968 was an enormous political failure. It seemed to spread and flourish across the globe, yet by the mid-1970s seemed to be extinguished almost everywhere. What had been accomplished by this wild brushfire? Actually, quite a bit. Centrist liberalism had been dethroned as the governing ideology of the world-system, the de facto only legitimate ideology. It was now reduced to being simply one alternative among others. In addition, the Old Left movements were destroyed as mobilizers of any kind of fundamental change. Still, the immediate triumphalism of the revolutionaries of 1968, liberated from any subordination to centrist liberalism, proved shallow and unsustainable.

The world right was equally liberated from any attachment to centrist liberalism. It took advantage of the world economic stagnation and the collapse of the Old Left movements (and their governments) to launch a counteroffensive, which we call neoliberal (actually quite conservative) globalization. The prime objectives were to reverse all the gains of the lower strata during the Kondratieff A-period. The world right sought to reduce all the major costs of production, to destroy the welfare state in all its versions, and to slow down the decline of US power in the world-system. The onward march of the world right seemed to culminate in 1989. The ending of Soviet control over its east-central European satellite states, and the dismantling of the Soviet Union itself in 1991, led to a sudden new triumphalism of the world right.

The offensive of the world right was a great success. The offensive of the world right was a great failure. With the onset of the world economic stagnation in the 1970s (the Kondratieff B-phase), large capitalist producers did shift significant amount of productive activity to new zones, which did seem to “develop” significantly. But however beneficial this was to the local middle strata in these countries, whose numbers now expanded considerably, the amount of capital accumulation, seen at a global level, was not all that impressive and did not begin to match what these corporate producers had been able to accumulate during the 1945–1970 period.

To maintain a level of massive appropriation of world surplus value, capitalists had to turn to obtaining it in the financial sector—what has come to be called the “financialization” of the world-system. As suggested previously, such financialization has been a cyclically recurring feature of the modern world-system for 500 years.

What was sustaining the accumulation of capital since the 1970s was the turning from seeking profits via productive efficiency to seeking profits via financial manipulations, more correctly called speculation. The key mechanism of speculation is encouraging consumption via indebtedness. (This is of course what has happened in every Kondratieff B-phase.) What was different this time has been its scale and the ingenuity of the new financial instruments used to pursue speculative activity. The biggest A-phase expansion in the history of the capitalist world-economy has been followed by the biggest speculative mania.

It is not hard to follow the successive targets of indebtedness, each producing a bubble and each finally collapsing. The first big one was the OPEC-induced large oil price rises in 1973 and 1979. The OPEC price rise was sponsored not by the radical members of OPEC but by Saudi Arabia and Iran (of the Shah), the two closest allies of the United States among the OPEC members. There has long been reason to believe that the United States encouraged their moves.

In any case, the financial consequences of the oil price rises were clear. A great deal of money flowed into the coffers of the OPEC countries. This had a double negative effect on non-oil-exporting states in the South and the socialist bloc. They had to pay more for the needed oil and all products made with oil, and their export income was reduced because of the recession in North America and western Europe. The balance of payments difficulties of these countries were leading to popular unrest.

The OPEC countries could not utilize immediately all of the increased income and deposited the rest in Western banks. The banks sent emissaries to the countries of the South and the socialist bloc to offer them loans to alleviate the balance of payments difficulties, which almost all of them readily accepted. These countries found it difficult, however, to keep up with repayments to the banks, eventually causing the so-called debt crisis. It was publicly signaled by Mexico’s default in 1982. Actually, however, it really started with Poland’s near default in 1980. The austerity measures that the Polish government put into effect in order to make debt payments were the trigger for Solidarność.