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The crisis of world capitalism is gathering speed

Marxist Analysis · 2026-05-13

Core Argument

The central thesis is that the 2008 financial crisis is not a self-contained banking panic but the opening phase of a systemic crisis of overproduction that will unfold across the real economy, triggering a downward spiral of closures, unemployment, falling demand, and intensifying class struggle. The article argues that the credit crunch was merely the prelude; the crisis of the real economy — factory closures, mass sackings, collapsing commodity prices — is the substance. The bourgeois response — bailouts, deficit spending, appeals to "confidence" — is futile because the crisis is rooted in the fundamental contradiction between the productive forces and the limits of the capitalist market. No amount of state intervention can resolve this; it can only displace and deepen the contradictions. The article further claims that this objective crisis will produce a rapid radicalisation of the working class, opening the possibility for mass Marxist currents, but that this depends on breaking the stranglehold of reformist and opportunist leaderships.

Theoretical Grounding

The analysis is grounded in classical Marxist crisis theory, specifically the theory of overproduction and the realisation problem. The article draws on Marx's argument in Volume III of Capital that the ultimate limit to capitalist production is capital itself — that crises arise not from a lack of credit or confidence, but from the inability to realise surplus value when markets are saturated. The distinction between the financial crisis (the "credit crunch") and the crisis of the real economy is a concrete application of Marx's distinction between fictitious capital and productive capital. The article explicitly rejects Keynesian and monetarist explanations, arguing that the lack of credit is a symptom, not a cause.

The analysis also draws on Trotsky's theory of uneven and combined development, particularly in its treatment of China, India, and Latin America. The claim that China cannot "decouple" from the world market and that its internal market is insufficient to absorb its productive capacity is a direct application of the law of value on a world scale. The discussion of the gold standard and the dollar's role as world currency draws on the Marxist theory of money and credit, particularly the work of Rudolf Hilferding and the later debates on the international monetary system.

The article sits firmly within the tradition of the International Marxist Tendency (now the Revolutionary Communist International), which has consistently argued that the post-war boom was an exceptional period and that capitalism has entered a long-term phase of stagnation and crisis. The rejection of reformism — whether Keynesian demand management or the "Venezuelan model" — is a settled position of this tradition, not a matter for debate.

Conjunctural Relevance

The article was written in December 2008, at the height of the global financial crisis. It captures a specific conjuncture: the collapse of Lehman Brothers (September 2008), the bank bailouts, the near-collapse of the US auto industry, and the first wave of mass layoffs. The data cited — 533,000 jobs lost in the US in November 2008, unemployment at 6.7% (12.5% on a broader measure), the fall of oil from $147 to $40, the collapse of Chinese exports — are concrete markers of the crisis's depth.

The article's treatment of China is particularly prescient. It notes that China's growth was already slowing sharply, that exports had fallen for the first time since 2001, and that the government's stimulus package was insufficient. It also identifies the social consequences: factory closures in the Pearl River Delta, unpaid workers protesting, and the regime's fear of "mass-scale social turmoil." This analysis anticipated the wave of strikes and labour unrest that would erupt in China in 2009-2010.

The article also identifies the geopolitical tensions that would intensify: protectionism, US-China rivalry over currency valuation, EU disunity (Germany refusing to reflate), and the strategic implications of falling oil prices for Russia, Iran, and Venezuela. The claim that "a world war is ruled out" but that "constant small wars" would continue has been borne out by the wars in Libya, Syria, Ukraine, and Gaza.

The treatment of Greece — where a student killing triggered a general strike and semi-insurrectionary situation — is a concrete example of the article's claim that the crisis would produce explosive class struggles. The Greek events of December 2008 were a dress rehearsal for the mass movements that would follow in 2010-2015.

Where the Argument Continues

The article leaves several questions open, which are developed in subsequent IDOM articles and broader Marxist texts:

  1. The long-term trajectory of the crisis: The article states that the recession will be "longer and deeper than anything since the Second World War" but does not specify whether it will take the form of a 1930s-style depression or a prolonged period of stagnation. This question is taken up in later IDOM articles on the "long depression" and the tendency of the rate of profit to fall.

  2. The fate of the Venezuelan Revolution: The article poses the question as "either-or" — advance to socialism or defeat — but does not resolve it. Subsequent IDOM articles track the decline of the Chavez and Maduro governments, the economic crisis, and the rise of the right-wing opposition.

  3. The role of China: The article correctly identifies that China cannot decouple from the world market, but it does not fully develop the implications of China's integration into global capitalism. Later IDOM articles and Against the Stream episodes examine China's role as a competitor to US imperialism and the contradictions of its state-capitalist model.

  4. The question of leadership: The article argues that the crisis will produce a radicalisation of the working class, but that this will be held back by reformist leaderships. The question of how to build revolutionary parties and mass Marxist currents is the central strategic question of the RCI's work and is developed in countless IDOM articles, internal documents, and the writings of Alan Woods and Ted Grant.

  5. The relationship between economic crisis and war: The article rules out a world war but predicts "constant small wars." The subsequent wars in Libya, Syria, and Ukraine, and the escalation of tensions between NATO and Russia, are analysed in later IDOM articles that update this assessment.

Connections

  • Alan Woods, "The Crash of 2008 and the Crisis of Capitalism" (2008): A companion piece that provides a more detailed theoretical exposition of the crisis, including the tendency of the rate of profit to fall.
  • Ted Grant, "The Unbroken Thread" (1989): A historical overview of Marxist crisis theory, from Marx to the post-war period.
  • Karl Marx, Capital, Volume III, Part III: The theory of the tendency of the rate of profit to fall and the counteracting factors.
  • Rudolf Hilferding, Finance Capital (1910): The classic Marxist analysis of the role of banks and credit in capitalism.
  • Leon Trotsky, "The Death Agony of Capitalism and the Tasks of the Fourth International" (1938): The Transitional Programme, which analyses the relationship between economic crisis and revolutionary strategy.
  • IMT/RCI, "The Crisis: Make the Bosses Pay!" (November 2008): The manifesto cited in the article, which outlines the political demands arising from the crisis.
  • Against the Stream episodes on the 2008 crisis and its aftermath: A series of podcasts and videos that update the analysis for subsequent conjunctures.

Key Quotes

  1. "During the boom, everyone is prepared to borrow and lend, confident of obtaining handsome profits. As always there was a large element of speculation in all this. The dizzying rise of stock market prices bore no relation to the real situation. It must be borne in mind that, in the last analysis, the profits of the capitalists can only be derived from the unpaid labour of the working class."

  2. "The unprecedented expansion of credit in the last period served to maintain high levels of demand in the USA and other countries. But now this has reached its limits. The whole process is thrown into reverse. Now nobody wants to lend money and few wish to borrow. Society is seized with a parsimonious and miserly mood."

  3. "In effect the bourgeois are trapped. Whatever they do now will be wrong. If they do not intervene to pump money into the banks and failing businesses there will be a deep slump with massive unemployment as in the 1930s. But if they resort to Keynesian methods of deficit financing, they will create huge debts that will undermine any future recovery and act as a tremendous drag on productive investment, creating the conditions for a long period of cuts and austerity."

  4. "The objective situation that we have now entered will be far more similar to the interwar period, or the 1970s, than to the last twenty years. Similar conditions will tend to produce similar results. The masses will be far more open to our ideas than they were in the past."

  5. "The occupation of the Republic Windows and Doors factory in Chicago (which has now been settled) shows the revolutionary potential that is being prepared in the USA itself. These were mainly poor paid Latino workers. The factory was forced to close because the banks were refusing credit, and the bosses were not going to give the workers redundancy pay. This is what sparked off the occupation. The workers said: 'we have no money to pay our mortgages; we will lose not only our jobs but our homes!' So they occupied. But then the question of property was raised. The idea took root among the workers: these assets belong to us! This is how consciousness is rapidly transformed in the course of struggle."

  6. "What the Greek events show is the weakness of reaction and the enormous strength of the working class at the present time. If the leaders of the Greek labour movement had had a revolutionary policy, they could have taken power. But without adequate leadership the movement will be reduced to pointless rioting, which the government will eventually bring under control."