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Explaining the coming crisis of capitalism

Marxist Analysis · 2026-05-13

Core Argument

The article argues that the capitalist system is heading towards a generalised economic crisis, not primarily because of trade wars, Brexit, or political blunders, but because of the fundamental contradiction of overproduction. The central thesis is that the bourgeoisie has exhausted every mechanism for postponing crisis — credit expansion, export markets, and reinvestment — and now sits on vast hoards of uninvested capital while productive capacity lies idle. The coming slump is therefore not an accident of policy but the logical outcome of capitalism's internal limits reasserting themselves after an unusually long cycle of artificial expansion.

Theoretical Grounding

The analysis is rooted in Marx and Engels' account of crisis in the Communist Manifesto, specifically the "epidemic of overproduction" that arises when productive forces outgrow the narrow framework of bourgeois property relations. The article draws on the classical Marxist understanding that crises are not external shocks but immanent to the system: workers cannot buy back what they produce, capitalists compete to expand production regardless, and the result is recurrent gluts.

The argument also engages with Marx's later work on the tendency for the rate of profit to fall, though this is handled implicitly rather than named directly. The discussion of capacity utilisation and "dead money" points to a crisis of profitability and overaccumulation — capital that cannot find productive outlets and therefore sits idle or circulates as fictitious capital in bond markets. The article positions itself within the tradition of political economy that treats crisis as structural and inevitable, rejecting both Keynesian and liberal explanations that focus on policy errors or external shocks.

Conjunctural Relevance

Written in September 2019, the article identifies several concrete indicators of impending crisis:

  • Bond yield inversions across multiple countries, with the US 10-year/2-year spread inverting — a pattern that has preceded every post-war recession.
  • Negative-yielding debt totalling $16 trillion globally, including a Danish bank offering negative-rate mortgages, which the article describes as the system "inside out and upside down".
  • Declining capacity utilisation in the US, which has not recovered above 80% since the 2008 crash, compared to regular 85%+ levels in the 1970s.
  • Corporate "dead money" in Canada reaching $950 billion, with similar patterns in other economies, as capitalists refuse to invest in expanded production.

Geopolitically, the article situates Trump's trade war and the Hong Kong protests as precipitating factors but not root causes. It dismisses the liberal defence of the "rules-based international order" as a cover for inter-imperialist rivalry, arguing that workers should take no side in conflicts between different factions of the ruling class.

Where the Argument Continues

The article leaves several questions open, which are developed elsewhere in the IDOM corpus:

  • The political response to crisis: The article notes that socialist ideas have become popularised but does not elaborate on how the labour movement should prepare. This is taken up in articles on party building and the need for revolutionary leadership.
  • The "final crisis" question: The article explicitly rejects the idea of an automatic final crisis, but the question of how capitalism finds a way out — through war, fascism, or restructuring — is explored in depth in Against the Stream episodes on the 1930s parallels and in IDOM pieces on the Ukraine war and the energy crisis.
  • The role of the labour bureaucracy: The article mentions the "bankrupt labour bureaucracy" in passing. The critique of reformist and centrist currents as obstacles to working-class struggle is a recurring theme in IDOM's analysis of Corbynism, Sanders, and the US Democratic Party.
  • The specific dynamics of the 2020s: Written in 2019, the article could not anticipate COVID-19, which acted as both a shock and a postponement mechanism. Later IDOM articles examine how state intervention during the pandemic temporarily stabilised the system while deepening underlying contradictions.

Connections

  • Marx and Engels, Communist Manifesto: The article's theoretical backbone, especially the passage on crises of overproduction.
  • Marx, Capital Volume 3: The tendency of the rate of profit to fall and the theory of crisis are the unspoken foundation of the capacity utilisation and dead money analysis.
  • Ernest Mandel, Late Capitalism: For the periodisation of capitalist crisis and the exhaustion of expansionary mechanisms.
  • IDOM articles on the 2008 crash and its aftermath: The article is part of a series tracing the long downturn from 2008 to the present.
  • Against the Stream episodes on inter-imperialist rivalry: For the geopolitical dimension only sketched here.

Key Quotes

  1. "Low long-term yields are a symptom of the fact that the capitalists have no faith in the capitalist system. Don't bother listening to the paid propagandists of the bosses who say that the 'free market economy' is the most efficient way of allocating resources; instead, watch what the moneybags actually do with their precious hoard."

  2. "The fundamental contradiction of capitalism is that the workers are not paid the full value of their labour. Therefore, the workers cannot buy back the items they have just produced. But while the consumption power of the working class is restricted by a whole series of factors, the individual capitalists continue planning production as if there are no such limitations."

  3. "The capitalist class has utilised almost every tool at its disposal to avert another crisis. It has used up all of its escape routes and does not know what to do. It is desperately afraid of the social consequences of the 'enforced destruction of a mass of productive forces' which would lead to massive layoffs and destitution."

  4. "Theoretically speaking, there is no 'final crisis' of capitalism. They will always find a route out, one way or another. But the capitalists have no idea where this route lies, and neither do we. One thing is clear, however: whichever way out they find, it will be at the expense of the workers and the poor."

  5. "Overnight we could increase output by 20 per cent merely by utilizing the existing productive forces. We would direct these resources to the genuine needs of the people, to end the housing crisis, build environmentally sustainable transit infrastructure, schools and hospitals, etc."