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Capitalisms insoluble crisis

Marxist Analysis · 2026-05-13

Core Argument

The central thesis is that the 2008 financial crisis was not a temporary disruption but the expression of a deep-seated and insoluble crisis of capitalism. Rob Sewell argues that the system has entered a phase where no policy intervention — whether Keynesian stimulus or austerity — can restore a sustained period of growth and stability. The crisis is one of overproduction and overaccumulation, masked for a period by a historic credit bubble, but now laid bare. The ruling class is caught between mutually destructive options: further stimulus risks inflating new bubbles and destroying state balance sheets; austerity risks choking off what little growth remains and provoking social explosion. The only genuine resolution, the article insists, lies in the socialist transformation of society.

Theoretical Grounding

The analysis is rooted in the Marxist theory of crisis, specifically the understanding that capitalism is periodically convulsed by crises of overproduction — not in the sense of too many goods for absolute needs, but of too much capital and productive capacity relative to the ability to realise profit on the world market. The article draws implicitly on the tendency of the rate of profit to fall, though it does not deploy the term explicitly. Instead, it describes the phenomenon concretely: swathes of excess capacity, with capitalists able to use only 65% of productive capacity in slumps, and the world market having become "too narrow" for the productive forces.

The piece also situates itself within the Leninist and Trotskyist tradition's understanding of the epoch of capitalist decay. It rejects the notion that reformist measures — whether Keynesian pump-priming or monetarist austerity — can offer a way out, describing them as "head and tail of the same coin." The argument that capitalism can no longer afford lasting reforms and that we have entered an epoch of "counter-reforms and attacks" is a direct echo of Trotsky's analysis of the decline of capitalism and the impossibility of stable reformism in the imperialist epoch. The conclusion — "socialism or barbarism" — is a direct invocation of Rosa Luxemburg's famous formulation.

Conjunctural Relevance

The article was written in September 2010, a moment when the immediate panic of 2008 had subsided but the recovery was visibly anaemic. Sewell marshals specific data to make his case: US unemployment affecting some 30 million workers when including discouraged workers and those seeking full-time work; 44.9% of the unemployed having been jobless for 27 weeks or longer; a quarter of US homeowners in negative equity; US growth revised down from 2.4% to 1.6%; and the purchasing managers' index for UK services falling to its lowest level since the depths of the crisis.

Crucially, the article identifies the emerging geopolitical tensions that would define the following decade. It notes the clash over currency policies, with Japan devaluing the yen, China holding down the renminbi, and fears of "1930s-style devaluation" and a global trade war. This was an early warning of the competitive devaluations and protectionist pressures that would intensify through the 2010s and culminate in the US-China trade war under Trump.

The article also anticipates the austerity drive that would dominate British politics for the next decade, noting that the coalition government's cuts of 20-30% and 1.3 million job losses would "snuff out any growth." This was written just months after the formation of the Cameron-Clegg coalition and its emergency budget.

Where the Argument Continues

The article's central claim — that capitalism faces an insoluble crisis — is developed across a large body of IDOM material. Readers should consult:

  • "The permanent crisis of capitalism" (Alan Woods, 2011) — a book-length treatment of the same thesis, tracing the crisis from 2008 through the eurozone sovereign debt crisis.
  • "The law of the tendency of the rate of profit to fall" series on marxist.com — which provides the formal theoretical underpinning for the crisis analysis sketched here.
  • "Keynesianism and the crisis" and "Monetarism and the crisis" — articles that expand on the claim that both policy paradigms have failed.
  • Against the Stream episodes from 2010-2012 — which track the eurozone crisis, the Greek debt drama, and the spread of austerity across Europe, all of which confirm the article's prediction that cuts would deepen the slump.
  • "The epoch of counter-reforms" — a recurring theme in IDOM articles that develops the argument that reformism is exhausted and that the working class faces only attacks under capitalism.

Connections

The article should be read alongside:

  • Trotsky, "The Death Agony of Capitalism and the Tasks of the Fourth International" (The Transitional Programme) — for the theoretical framework of the epoch of capitalist decay and the impossibility of stable reformism.
  • Luxemburg, "The Crisis of Social Democracy" (The Junius Pamphlet) — for the "socialism or barbarism" formulation and the analysis of imperialist war as the product of capitalist crisis.
  • Mandel, "Late Capitalism" — for the theory of long waves and the structural crisis of the 1970s, which this article implicitly extends to the post-2008 period.
  • Brenner, "The Economics of Global Turbulence" — a non-Marxist but compatible account of the long downturn in profitability from the early 1970s, which provides empirical backing for the claim that the 2008 crisis was not a one-off but the latest phase of a secular crisis.
  • The Reinhart and Reinhart study cited in the article — "After the Fall" (2010) — which provides the bourgeois economic evidence that recovery from financial crises is historically slow and incomplete.

Key Quotes

  1. "The crisis of over-production, endemic to capitalism, has left behind swathes of excess-capacity. In booms the capitalists can only use 80% of productive capacity. In slumps they can barely use 65%. This shows the complete blind alley of capitalism. The world market has become too narrow and the capacity too great."

  2. "The only reason why it was able to put off this massive crisis in the past period was through speculation and the creation of the biggest credit bubble in history. Perhaps for the very last time, it was able to expand world trade through 'globalisation'. But this has now created a globalised crisis – on a scale and scope greater than the 1930s."

  3. "The strategists of capital have tried Keynesianism and Monetarism, but both have failed. They are head and tail of the same coin. This impasse has now led to the current catastrophe. Whatever they do will be wrong and shows the blind impasse of the system."

  4. "Capitalism can no longer afford lasting reforms. It is the epoch of counter-reforms and attacks. The reformists in the labour movement are blind to this. They are hoping that everything will return to 'normal'. But this is not the case. This is normality under capitalism from now on."

  5. "They may have temporarily avoided a Depression, but they have certainly not resolved the crisis of capitalism. No amount of 'liquidity' will accomplish that. Even the 'pump-priming' of Roosevelt's New Deal failed and did not prevent the slump of 1937-39. The crisis was only 'resolved' through world war, which is ruled out at the present time."

  6. "Only with the overthrow of capitalism and the abolition of private property can the crisis be resolved in the interests of the working class. Only on the basis of the socialist transformation of society can we prevent this barbarism and offer a way out from this morass."