The Great Recession is it over
Core Argument¶
Michael Roberts argues that while the Great Recession of 2008–2009 may have reached its trough for capital — with slowing rates of decline, stock market rallies, and stabilising housing markets — the recovery will be structurally stunted and profoundly uneven. The central thesis is that the underlying contradictions that produced the crisis have not been resolved. Record overcapacity, the overhang of private and public debt, and the insufficient devaluation of capital mean that any upturn will be weak, jobless, and vulnerable to a second downturn. For the working class, the recession is far from over: unemployment, foreclosures, and falling real incomes will persist and deepen long after GDP figures turn positive. The article thus rejects the notion of a V-shaped recovery and instead anticipates a square-root-shaped trajectory — a modest upturn that fails to restore pre-crisis growth rates, leaving capitalism exposed to a new slump.
Theoretical Grounding¶
The analysis is grounded in the Marxist theory of crisis, specifically the tendency of the rate of profit to fall and the periodic need for the devaluation of capital as a precondition for renewed accumulation. Roberts draws on Marx's concept of the reserve army of labour, showing how unemployment is not a malfunction but a mechanism for driving down labour costs and restoring profitability. The article also deploys the distinction between the interests of capital and those of the working class — a class-relational approach that refuses to treat "recovery" as a neutral category. The discussion of overcapacity (more than 30% spare industrial capacity across major economies) is a concrete expression of overaccumulation: too much capital has been invested relative to the possibility of realising profit. The treatment of debt — household, corporate, and financial — reflects the Marxist analysis of fictitious capital, where credit expansion temporarily masks underlying contradictions only to deepen them. The article sits within the tradition of Marxist crisis theory associated with the work of Henryk Grossmann and later developed by writers such as Andrew Kliman and Roberts himself. It is explicitly opposed to Keynesian and neoclassical frameworks that treat recessions as cyclical aberrations correctable by demand management.
Conjunctural Relevance¶
The article was written in September 2009, at the precise moment when official statistics were beginning to show a slowdown in the rate of contraction across the major economies. Roberts identifies the following conjunctural features:
- Uneven stabilisation: Germany and France recorded small rises in national output in Q2 2009; Australia and Norway saw modest growth; China and India continued to expand. But the UK lagged behind, not expected to recover until the end of 2009.
- Stock market rally: A 50% rise in equity prices from March 2009 lows, led by financial sector shares — a classic bear-market rally driven by state intervention rather than genuine recovery.
- Housing market: US home prices had fallen 30% from peak; UK experienced similar declines. Sales transactions and mortgage applications had fallen over 75%. A tentative stabilisation was visible, but Roberts warns that rising unemployment would trigger further defaults.
- Banking system fragility: The IMF estimated total credit crunch losses at $4.1 trillion (6–7% of world GDP). US banks had admitted 60% of losses; European banks only 40%. The ECB warned of another $300 billion in losses for Eurozone banks. Globally, financial institutions had raised less new capital than their losses, implying a need for further state bailouts.
- Fiscal cost: Governments had committed $11 trillion of taxpayer funds — one-fifth of global output — to support the financial sector, the largest such intervention since the Second World War.
- Working-class devastation: US unemployment hit 9.7%, the highest in 26 years, expected to exceed 10%. Real household income fell by $2,000 in 2008, the largest annual drop in 40 years. One in 25 US homes were in foreclosure. UK households lost an average of £31,000 in wealth.
- World trade collapse: A 15% fall in real terms since the start of the recession — the first synchronised contraction of global trade in the post-war period.
Roberts's conjunctural judgement is that the recovery will be "stunted" — a square-root shape rather than V, U, or W — because the underlying contradictions (overcapacity, debt overhang, insufficient devaluation) have not been resolved. This proved prescient: the post-2009 recovery was indeed the weakest of the post-war period, with low growth, persistent unemployment, and anaemic investment across the advanced economies.
Where the Argument Continues¶
Roberts develops this analysis in several subsequent works. His book The Great Recession: A Marxist View (2009) expands the theoretical framework. His later articles on marxist.com track the evolution of the recovery — or lack thereof — through the 2010s, including analyses of the Eurozone crisis, the Chinese slowdown, and the return of stagnation. The argument about square-root recovery is revisited in his 2016 book The Long Depression, where he argues that the 2008 crisis marked the beginning of a prolonged period of depressed accumulation, not a cyclical downturn. The article also connects to the broader Marxist debate on the tendency of the rate of profit to fall, which Roberts has defended empirically in numerous publications, including his blog The Next Recession and his contributions to Against the Stream.
Connections¶
- Andrew Kliman, The Failure of Capitalist Production (2012) — provides the empirical case for the falling rate of profit as the cause of the Great Recession.
- Michael Roberts, The Great Recession: A Marxist View (2009) — the book-length treatment of the same conjuncture.
- Michael Roberts, The Long Depression (2016) — extends the argument to the entire post-2008 period.
- Marx, Capital Volume III, Part III — the theoretical foundation for the tendency of the rate of profit to fall.
- Henryk Grossmann, The Law of Accumulation and Breakdown of the Capitalist System (1929) — the classical Marxist statement on crisis as a necessary outcome of accumulation.
- Ernest Mandel, Late Capitalism (1972) — on the long waves of capitalist development and the structural crises of the post-war period.
Key Quotes¶
"For the capitalists, this Great Recession could be more or less over... But for the working class, the Great Recession has a long way to go yet."
"Every major capitalist economy now finds that it has more than 30% more capacity than it needs to meet demand. That is a record high of overcapacity in industry."
"The big fall in output is over. Now there will be an upturn. But it will fall short of restoring the rate of economic growth achieved before the Great Recession. Instead of 3-4% a year, output in the major economies will be closer to 1-2% a year. That will not be good enough to restore profitability to previous levels."
"The burden of meeting debt repayments remains at record levels – around 18-19% of average income... Out of 42 top capitalist nations, Americans saved the least."
"Such is the overhang of spare capacity in industry and construction this time and such is the level of debt still owed by businesses, government and households alike that this recovery may be stunted."
"The capitalist system will thus face the risk of a new slump further down the road."