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The Unfolding Capitalist Crisis a nightmare for workers everywhere

Marxist Analysis · 2026-05-13

Core Argument

The central thesis is that the 2008–09 crisis is not merely a cyclical downturn but the re-emergence of an organic crisis of capitalism — the kind Lenin and Trotsky called the "historical crisis of the whole capitalist system." Rob Sewell argues that the post-war boom temporarily suppressed this organic crisis, but the underlying contradictions have now returned with a vengeance. The credit bubble, far from being the cause of the crisis, was a desperate attempt to postpone the inevitable collapse of overaccumulation. The article insists that the real cause is overproduction — the productive forces have outgrown the limits of private property and the nation state — and that the working class will be forced to bear the costs through decades of austerity, unless it turns to the socialist reconstruction of society.

Theoretical Grounding

The analysis is rooted in classical Marxist crisis theory, drawing directly on Marx's account of overproduction in Volume III of Capital: "The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces." Sewell deploys the tendency of the rate of profit to fall (TRPF) not as a mechanical law but as a tendency mediated by countervailing factors — the increased exploitation of labour, the cheapening of commodities, and globalisation. The article distinguishes between cyclical crises (inherent to capitalism) and the deeper organic crisis, a concept borrowed from the Marxist tradition associated with Trotsky and later developed by Ted Grant and Alan Woods. The organic crisis describes a situation in which capitalism becomes a fetter on the productive forces, unable to utilise more than 65–80% of productive capacity even in good times. This framing places the article firmly within the tradition of revolutionary Marxism, rejecting both Keynesian reformism and the notion that capitalism has been stabilised by state intervention.

Conjunctural Relevance

The article was written in August 2009, at the depths of the Great Recession. Sewell marshals specific data to demonstrate the severity of the slump: US industrial production down 12.5% in twelve months; Japanese industrial production falling 37% in 2008 with a projected further 25% decline; Eurozone industrial production down 20%; Hungary down 29%. He cites Eichengreen and O'Rourke's finding that global industrial output was tracking the Great Depression "horrifyingly closely." The collapse in world trade (10%) was worse than the first year of the 1930s depression. The article identifies the exposure of Western banks in Eastern Europe — $1.6 trillion, heavily concentrated in Austrian banks — as an ominous echo of the 1931 Credit-Anstalt collapse. Sewell also notes the overcapacity in global car production (94 million vehicles capacity against 66 million sales) and semiconductor manufacturing (62% utilisation). The piece anticipates a "slow, painful and shallow" recovery, warning of two decades of austerity — a prediction borne out by the subsequent era of fiscal consolidation across Europe.

Where the Argument Continues

This article is an early statement of the RCI's analysis of the 2008 crisis, which was developed in subsequent IDOM articles throughout 2009–2012. The argument about the organic crisis and the return to "normal" capitalist instability is elaborated in Ted Grant and Alan Woods's World Perspectives (1994), which the article cites. The relationship between the credit bubble and overaccumulation is explored in greater depth in later IDOM pieces on fictitious capital and the housing market. The political conclusion — that the crisis opens an epoch of revolution and counter-revolution — is taken up in articles on the Greek debt crisis, the Arab Spring, and the rise of Syriza and Podemos. The argument about the TRPF and the post-war profitability recovery is developed in Alan Woods's The Rate of Profit and the Crisis of Capitalism (2011). Readers should also consult the Against the Stream episode "The Organic Crisis of Capitalism" for a more extended discussion of the distinction between cyclical and organic crises.

Connections

  • Marx, Capital Volume III, especially the chapters on the tendency of the rate of profit to fall and the internal contradictions of the law.
  • Ted Grant and Alan Woods, World Perspectives (1994) — the key text predicting a new depression.
  • Alan Woods, The Rate of Profit and the Crisis of Capitalism (2011) — a detailed empirical and theoretical treatment of the TRPF in the post-war period.
  • Trotsky, The Death Agony of Capitalism and the Tasks of the Fourth International (1938) — the source of the "organic crisis" concept.
  • IDOM articles on the Greek crisis (2010–2015) — the political application of the same theoretical framework.
  • Against the Stream, "The Organic Crisis of Capitalism" — a more accessible treatment of the same argument.

Key Quotes

  1. "Marxism long ago predicted this deep crisis. 'In the coming epoch', wrote Ted Grant and Alan Woods, 'a new depression on the lines of 1929-31 is inevitable.'"

  2. "The ultimate reason for all real crises, explained Marx, 'always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute [physical] consuming power of society constituted their limit.'"

  3. "Today we are seeing a cyclical crisis exacerbated by what Marxists refer to as an organic crisis of the capitalist system itself. Capitalism has become a barrier to the development of society, where the productive forces – industry, technique and science – are increasingly constricted and hemmed in by the nation state and private ownership of the means of production."

  4. "The massive overhang of debt - personal, business and state - will be a colossal lead weight on the economy. The move to reduce the unprecedented levels of government deficits will result in massive cuts to public spending in the years that lie ahead."

  5. "The capitalist system has now become an enormous fetter on human society. The re-emergence of this organic crisis has enormous implications for the working class: a socio-economic system which proves incapable of developing the productive forces enters into steep decline."

  6. "A new era of social revolution has opened up on a world scale, an era of revolution, counter-revolution and profound instability at all levels. Such a period will repeatedly propel the working class internationally to look for a way out of the crisis."