Reinflating the bubble a balance sheet of 10 years of crisis
Core Argument¶
The central thesis is that the post-2008 crisis management by global capitalism has not resolved the underlying contradictions of the system but has instead deepened them. The article claims that the policy of "re-inflating the bubble" — through quantitative easing, near-zero interest rates, and state guarantees for the banking system — has merely postponed the reckoning. Ten years on, global debt has risen from 280 percent of world output to 300 percent, zombie companies have proliferated, and the political equilibrium has shattered. The next crisis, when it comes, will find the ruling class with no remaining ammunition: the monetary and fiscal tools used to contain the last crash have already been exhausted.
Theoretical Grounding¶
The analysis is rooted in the Marxist theory of crisis, particularly the understanding that capitalist crises are not external shocks or policy errors but expressions of the system's internal contradictions. The article draws implicitly on Marx's analysis of credit and fictitious capital in Volume III of Capital: the expansion of debt is presented not as a temporary fix but as a structural feature of late capitalism attempting to overcome the barrier of limited effective demand. The concept of "creative destruction" (Schumpeter) is deployed critically — the article notes that in the 1930s, the ruling class forced the working class to pay for the crisis through mass unemployment and bankruptcy, and that even this failed to restore growth without world war. The contemporary avoidance of such destruction, through state-backed credit expansion, is presented as a symptom of the bourgeoisie's fear of revolutionary upheaval. The argument sits within the Marxist tradition that insists crises are inevitable under capitalism and that state intervention can only displace, not resolve, the underlying contradictions.
Conjunctural Relevance¶
The article was written in March 2018, at a moment when the recovery appeared superficially robust but beneath the surface, warning signs were accumulating. The author points to specific data: global debt at $233tn (300 percent of GDP); US non-financial companies holding $1.9tn in cash; the Federal Reserve's balance sheet growing from $900bn to $4.4tn; the ECB's from €1.1tn to €4.5tn. Housing bubbles in Australia, China, the UK, and Canada are noted, alongside the explosion of stock markets (Dow Jones from 14,000 to 26,600) and the emergence of cryptocurrencies as speculative outlets. Politically, the article situates Trump's trade wars and Brexit as expressions of the breakdown of the post-war liberal order — not as aberrations but as logical consequences of a system that has exhausted its capacity to manage contradictions peacefully. The author notes that even bourgeois commentators at Davos in January 2018 were openly comparing the mood to 2006, with Barclays' Jes Stanley warning that "we've never avoided the next financial crisis."
Where the Argument Continues¶
The article leaves several threads open. The question of when the next crisis will arrive is explicitly left unanswered — the author notes only that the present expansion, if it lasts until 2019, would be the longest since 1945, but that this is a measure of weakness, not strength. The political consequences of the crisis are gestured at but not fully developed: the rise of Corbyn and Sanders is mentioned alongside Trump and Brexit, but the article does not elaborate on how the working class might organise to resist bearing the costs of the next crash. The relationship between China's debt-fuelled growth and global instability is flagged as a "weak link" but not explored in depth. These questions are taken up in subsequent IDOM articles on the Chinese economy, the European debt crisis, and the political trajectory of Trumpism. The broader Marxist theoretical tradition — particularly Lenin's Imperialism, the Highest Stage of Capitalism and Trotsky's writings on the 1930s crisis — provides the framework for understanding the geopolitical dimensions that the article only begins to sketch.
Connections¶
The article should be read alongside Marx's analysis of credit and fictitious capital in Capital Volume III, particularly the chapters on the role of credit in capitalist production and the tendency of the rate of profit to fall. It connects to Lenin's Imperialism for the understanding of how finance capital seeks to overcome barriers through speculation and state intervention. The analysis of the 1930s as a comparator echoes Trotsky's writings on the Great Depression and the rise of fascism. Within the IDOM corpus, the article is part of a series on the long crisis of 2008, including pieces on quantitative easing, the European debt crisis, and the political fallout of austerity. The reference to "zombie companies" connects to contemporary Marxist debates on the "financialisation" of the economy and the work of authors like Costas Lapavitsas and Michael Roberts.
Key Quotes¶
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"None of the problems that caused the crisis in 2008 have been resolved. If anything, they have become even worse."
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"Instead of squeezing the credit out of the system, the bourgeois have been trying to re-inflate the bubble."
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"The very high cost of housing means also plenty of households with large mortgages that they can only repay on the basis of historically low interest rates. Should central banks attempt to restrict credit by raising interest rates or destroying some of the money they created at the height of the crisis, mortgage defaults could become endemic."
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"The world economy has been kept afloat, not by investments, improving productivity and raising wages, but by yet again increasing levels of debt."
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"All the measures that are meant to bring the economy out of recession: lowering interest rates, increasing state deficits and so on, have already been used up, particularly the monetary measures. When the next recession strikes, central banks and governments will have no means of getting out."
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"The ruling class has lost its ability to dictate the line to the political establishment. Perhaps most obviously this is the case with Brexit and Trump, where the ruling class is desperately attempting to rein in its own representatives."