There are other American weaknesses too. There are very high military and health expenditures—both more than double those of any other country. These achieve very poor outcomes in terms of military interventions abroad and in terms of mortality and longevity statistics at home. Yet they are still regarded by politicians as being near-sacrosanct, as is the credo of no new taxes. Thus their draining of economic resources and their increasing of the public debt are likely to continue, adding further burdens on the country. These weaknesses in all four sources of social power might bring America down. We cannot know for sure. Americans remain highly inventive and hardworking. Their industries remain mostly dynamic. They might be able to put their ideological, financial, military and political houses back together again. If they don’t, then when the dollar loses its reserve currency status, Americans will be less able to borrow and their military will decline unless they are willing to pay much higher taxes—which seems unlikely. US hegemony will end sooner or later in this coming half-century, and the end might not be graceful.
But that need not cause a systemic crisis of capitalism. The successor to American hegemony is unlikely to be another single hegemonic power—not China, not India, not any other individual state. Their growth rates are stratospheric now but they will inevitably decline toward more normal levels once they reach a more mature level of industrialism and postindustrialism. They will also have crises of their own to surmount. No country will be as powerful in the future as the United States has recently been. Human society will be in uncharted waters, moving toward more multipower politics and to a coordinated basket of reserve currencies. This has been the normal state of affairs in human history and it has not served the world economy too badly. It was accompanied in the first half of the 20th century by devastating war, but there are now reasons to believe that inter-state war is a thing of the past—especially when Americans lose their enthusiasm for war.
But that list of countries who have so far escaped lightly does reinforce the sense that economic power is shifting from the old West to the successfully developing countries of the Rest of the world, including most of Asia. The likeliest scenario in the medium term is a sharing of economic power between the United States, the European Union, and the four BRICs (Brazil, Russia, India and China)–but amid world peace. Since the BRICs’ economies—and especially those of Russia and China—contain more state regulation than most Western countries—and especially the United States—the capitalism of the medium term is likely to be more statist.
THE EXHAUSTION OF CAPITALIST MARKETS?
Here I shift to the long term. So far I have been skeptical of notions that capitalism has general “laws of motion” that lead regularly to systemic crises. I have depicted major crises of the past and present less as singular and systemic than as cascades of distinct causal chains, both economic and noneconomic, piling unexpectedly on top of each other, sometimes rather contingently. So far crises have also struck unevenly across the world and they have been responsive to shifts in geoeconomic and geopolitical power. Previous crises have not really signaled world-system weaknesses. Instead they have indicated geographical shifts in power within global capitalism and within global geopolitics.
But in this book neither Immanuel Wallerstein nor Randall Collins draws on previous or present crises when envisaging the possible end of capitalism across the globe. Rather they identify secular tendencies of capitalist development which they believe may doom it in the future. They argue that there are finite limits to capitalism’s ability to sustain profit and employment. They firstly cite the geographic limits of planet Earth’s markets. They note that capitalist growth is steadily filling up planet Earth. They also note that capitalists in the advanced countries solved the problem of low-growth phases by exporting manufacturing to places where cheaper, less-regulated labor yielded them greater profit. This is what some have called the “spatial fix” to capitalist crisis. Jobs were moved from the American North to the American South, then to Latin America, then China, then Vietnam, and the process will continue into Africa and central Asia. Collins is especially worried by what he sees as the export of middle-class intellectual labor to other countries of the world. So what happens when all these regions are absorbed and capitalist markets fill up the Earth?
Wallerstein suggests that it takes about thirty years from the entry of major investment in a rural country to get workers sufficiently organized to force wages up and capital out. So when the Earth has filled up, labor costs will be high everywhere and profits will fall. Capitalists will try nonetheless to reduce wages but they will now be dealing with a globally organized working class. It will resist, producing a global crisis of capitalism. This scenario will take a while yet. Only a part of the enormous populations of India and China have as yet been absorbed into a minimally regulated industrial or postindustrial economy. That will take more than thirty years. Moreover, the process hasn’t yet begun in Africa or central Asia so that such a fill-up may take up until the end of the 21st century, especially since population growth is projected to continue until near the end of the century and it will be biggest in the poorest countries.
However, I find this model of an earth reaching the limits of economic markets difficult to understand. If there is no cheap labor left, capitalists can no longer reap superprofits from this source, but the higher productivity of labor and increased consumer demand in newly developed countries might compensate for this and produce a reformed capitalism on a global scale, with more equality and social citizenship rights for all. This would not mean the end of capitalism but rather a better capitalism in which the whole planet would enjoy the kinds of rights enjoyed by workers in the post-World War II West. After all, in that period the vast bulk of the wealth of the advanced countries was created through trade and production among themselves, not with the rest of the world (oil excluded). The boom of the postwar period came mainly as a result of a high productivity/high consumer demand economy of the advanced countries themselves. It did not mainly depend on highly exploited Southern labor. Why should this not be so in the future, but for the whole world?
Moreover, new markets need not be restricted by geography. They can also be created by cultivating new needs. Capitalism has grown adept at persuading families that they need two cars, bigger and bigger houses, more and more electronic devices. Whoever dreamt of this fifty years ago? What will our grandchildren consume fifty years from now? We cannot begin to envisage their consumer fads, but we can be sure there will be some. Markets are not fixed by territory. Planet Earth can be filled and yet new markets can be created. That, of course, depends on what some have called the “technological fix” and it is more or less what Joseph Schumpeter called “creative destruction,” which he identified as being the core of capitalist dynamism—entrepreneurs pour money into technological innovation which results in the creation of new industries and the destruction of old ones. The Great Depression in the United States was partially caused by the stagnation of the major traditional industries, while the new emerging industries, though vibrant, were not yet big enough to absorb the surplus capital and labor of the period. That was achieved in World War II and the aftermath, which then suddenly released enormous consumer demand held back by wartime sacrifices.