Ruling class flounders faced with the worst crisis in the history of capitalism

Marxist Analysis · 2026-05-13

Core Argument¶

The central thesis is that the COVID-19 pandemic has triggered not merely a sharp recession but the most profound crisis in the history of capitalism, one that exposes the terminal exhaustion of the system itself. The article argues that the pandemic is not the cause of the crisis but its detonator: the underlying fault lines — overaccumulation, debt saturation, and the exhaustion of credit-driven growth — were already present. What distinguishes this moment is that the ruling class has been forced to abandon every orthodox economic principle of the past eighty years — central bank independence, fiscal restraint, the separation of monetary and fiscal policy — in a desperate attempt to prevent systemic collapse. The state is being transformed into the direct guarantor of the entire capitalist economy, a shift the article argues will be permanent, not temporary. The conclusion is that capitalism can no longer play a progressive role; the productive forces have outgrown the limits of private ownership, and the only question is which class will impose its solution.

Theoretical Grounding¶

The analysis is rooted in the Marxist theory of crisis, specifically the tendency of the rate of profit to fall and its manifestation as crises of overaccumulation. The article draws on the classical Marxist understanding that credit expansion serves as a temporary means to postpone the day of reckoning — allowing continued investment and consumption beyond what the underlying productive base can sustain — but that this merely builds up greater contradictions for the future. This places the argument firmly within the tradition of Marx's analysis of fictitious capital and the cyclical nature of capitalist crises, as developed in Volume III of Capital and later elaborated by theorists of the long downturn such as Henryk Grossman and, more recently, the work of the International Marxist Tendency (now the RCI).

The article also engages with the Marxist theory of the state in crisis. It shows how the bourgeois state, which for decades was presented as an inefficient meddler that should be rolled back, is now being rapidly expanded to absorb private losses and guarantee the continued functioning of capital. This is not presented as a contradiction within bourgeois ideology but as the logical outcome of a system in extremis: when the market can no longer reproduce itself, the state must step in, not to supersede capitalism but to save it. The reference to the war economies of 1914–1945 situates the argument within the Marxist understanding of state capitalism and the historical pattern of capitalism requiring massive state intervention during its most severe crises.

Conjunctural Relevance¶

The article was written in March 2020, at the very onset of the pandemic-induced economic collapse, and its value lies partly in its predictive framework. The specific data points cited — Morgan Stanley's projection of 30 percent annualised contraction in the US, 3.28 million US unemployment claims in a single week, 500,000 new Universal Credit claimants in Britain, the Eurozone PMI falling to 31.4 (the lowest on record since 1998) — capture the sheer speed and scale of the initial shock. The article notes that the French finance minister compared the crisis to 1929 and that the German economic minister warned that "whole markets are completely breaking down."

The conjunctural analysis identifies three key features of the moment. First, the unprecedented scale of state intervention: $2.2 trillion in central bank measures and $4.3 trillion in government measures across the major economies, equivalent to 17 percent of their combined GDP. Second, the abandonment of central bank independence, with the Federal Reserve preparing to buy long-term and municipal bonds and the ECB effectively committing to bankroll eurozone governments. Third, the specific vulnerability of the former colonial world, with currencies like the Mexican peso, South African rand, and Brazilian real losing around 20 percent of their value, compounded by dollar-denominated debt burdens.

Crucially, the article situates this within the pre-existing conjuncture: the German and Japanese economies were already in recession, the effects of Trump's 2018 tax cuts had waned, Chinese credit expansion was yielding diminishing returns, and Trump's trade wars had damaged international trade. The pandemic struck a system that was already faltering.

Where the Argument Continues¶

This article is an early statement of what became a sustained analysis of the pandemic-era crisis across the RCI's theoretical output. The argument is developed in several directions in subsequent material:

The question of inflation — raised here as a likely consequence of money-printing against static or declining productive capacity — is explored in depth in later IDOM articles, particularly those analysing the post-2021 inflation surge and the debate over whether it represents a temporary supply-side shock or a structural crisis of the monetary system.
The comparison with the 1914–1945 period, and the concept of a "war economy without war," is elaborated in subsequent articles on the permanent state intervention in the economy and the erosion of the distinction between normal capitalist cycles and crisis management.
The political consequences — the prediction that the bailouts would eventually provoke a "populist backlash" and intensified class struggle — is taken up in analyses of the strikes, protests, and political instability that followed, including the 2020–2021 wave of labour militancy in the US, the Chilean and Colombian uprisings, and the French pension struggles.
The critique of "free money" and the rejection of Modern Monetary Theory as a reformist illusion is developed in several theoretical pieces distinguishing the Marxist understanding of money and inflation from bourgeois and petty-bourgeois approaches.
The broader argument about the terminal crisis of capitalism and the impossibility of a return to "normal" is the subject of ongoing debate in Against the Current (the RCI's theoretical journal) and in episodes of the Against the Stream podcast, particularly those addressing the long-term trajectory of the global economy after the pandemic.

Connections¶

This article should be read alongside several key texts in the Marxist tradition and the RCI's own corpus:

Marx's discussion of credit and fictitious capital in Volume III of Capital, particularly the chapters on the role of credit in overcoming barriers to accumulation and the way it prepares the ground for more severe crises.
Lenin's Imperialism, the Highest Stage of Capitalism, for the analysis of the parasitic and decaying character of monopoly capitalism and the role of the state in managing crisis.
The RCI's own series of articles on the 2008 crisis and its aftermath, which laid out the argument that the post-2008 recovery was built on debt and asset bubbles rather than genuine productive expansion — a claim this article directly builds on.
The article "The Tendency of the Rate of Profit to Fall: A Marxist Explanation" (marxist.com), which provides the theoretical foundation for the crisis analysis deployed here.
For the international dimension, the RCI's analyses of the debt crisis in the Global South and the role of the dollar as a world currency, particularly in relation to the vulnerability of "emerging markets" during global downturns.
For the political conclusions, the articles on the need for a revolutionary workers' government and the impossibility of a progressive capitalist recovery, which follow from the argument that the productive forces have outgrown the limits of private ownership.

Key Quotes¶

"The expansion of credit did not begin in 2008-2009, but much earlier. The way that the capitalists got out of the crisis of the '70s is what has prepared the way for a much bigger crisis today."
"This is not a crisis caused by a virus, it is a crisis triggered by the virus. The pandemic only reveals all the fault lines that were there before."
"For decades, we have been told that governments are inefficient, wasteful and should keep their fingers out of the economy as far as possible. Now, suddenly, being threatened with the complete collapse of the system, Draghi and his fellow bourgeois want the state involved in every part of the economy, ignoring all the regulations and laws that they have introduced over the past four decades."
"The measures they take now are unlikely to be of a temporary nature. Rather, the state will have to continue to support the economy for years to come, because it would have been forced to do so even without the pandemic."
"Capitalism is an anarchic system, which will not allow itself to be planned and controlled. In times of crisis, it becomes even more ungovernable, difficult to predict and chaotic."
"The bourgeois have all now become 'socialists' in that they are keen for the state to bail them out but they will naturally try to lay the bill at the feet of the working class, asking them to pay."