The mood in Davos doom and gloom as crisis looms

Marxist Analysis · 2026-05-13

Core Argument¶

The article argues that the capitalist system is entering a new epoch of permanent crisis, from which there is no exit within the framework of capitalism itself. The central thesis is that the global economy is not experiencing a temporary downturn but a structural breakdown, characterised by the exhaustion of all the policy tools deployed since 2008. The mood of "doom and gloom" at Davos is not merely elite anxiety but an accurate reflection of objective reality: the ruling class has run out of ammunition, debts have reached unsustainable levels, and the political and economic crises now feed upon one another in a vicious downward spiral. The argument is that this conjuncture places socialist revolution firmly on the historical agenda.

Theoretical Grounding¶

The analysis is grounded in Marx's law of the tendency of the rate of profit to fall and its corollary, the contradiction between the productive forces and the limits of the capitalist market. The article draws explicitly on Marx's Capital — particularly the passage on the accumulation of wealth and misery at opposite poles — and on the Communist Manifesto's description of crises of overproduction. The theoretical framework is classical Marxist crisis theory, rejecting Keynesian and liberal explanations that posit a "nicer" capitalism to return to. The argument sits within the tradition that sees the 2008 crash not as an accident or a financial aberration but as an expression of the fundamental contradiction of overaccumulation, with the subsequent decade of quantitative easing and near-zero interest rates representing not a recovery but an artificial postponement of the reckoning. The article also deploys Lenin's theory of imperialism to analyse the US-China trade war and the breakdown of the post-war world order.

Conjunctural Relevance¶

The article is written in January 2020, on the eve of the COVID-19 pandemic, and captures the conjuncture with remarkable prescience. It identifies the following specific conjunctural features:

Global debt: $255 trillion, over 300% of world GDP, with government debts 77% higher than a decade earlier despite brutal austerity.
The exhaustion of monetary policy: Interest rates near zero or negative; quantitative easing producing diminishing returns and inflating asset bubbles.
The eurozone crisis: Italy as the new epicentre, with debt at 135% of GDP; Germany narrowly avoiding recession with growth of just 0.5% in 2019.
The US-China trade war: Tariffs of 25% on $250bn of Chinese exports remaining; the dispute characterised as less about soybeans and more about semiconductors and supercomputers — i.e. the means of production.
Political fragility: Weak governments across Greece, Italy, Spain; the gilets jaunes and pension strikes in France; the collapse of the "centre ground" in Europe and America.
The wave of revolutions: Algeria, Sudan, Iraq, Lebanon, Chile, Ecuador — all cited as evidence of the social explosion brewing beneath the economic stagnation.
The breakdown of the WTO: The Trump administration refusing to appoint judges, rendering the institution paralysed.

The article identifies any number of potential triggers for the next slump — from the US-China conflict to Brexit to the Middle East to the climate catastrophe — arguing that the very multiplicity of possible sparks reveals the system's fragility.

Where the Argument Continues¶

The article leaves several questions open, which are developed elsewhere in the IDOM corpus:

The question of stagflation: The article raises the possibility of a 1970s-style "perfect storm" of stagflation but does not develop the analysis. This is taken up in later IDOM articles on inflation and supply-side shocks, particularly those written during the post-COVID inflation surge.
The political strategy for revolutionaries: The article concludes that socialist revolution is on the agenda but does not elaborate on the concrete tasks of building revolutionary parties or the relationship between economic crisis and working-class consciousness. This is a recurring theme in Against the Stream episodes and in the RCI's theoretical documents on the united front and transitional demands.
The specific dynamics of the Chinese economy: The article notes China's debt-fuelled expansion and "zombie capitalism" but does not fully explore the implications of China's rise as a rival imperialist power. This is developed in IDOM articles on the Sino-American rivalry and the nature of the Chinese state.
The climate crisis: Mentioned as one of the potential triggers but not analysed in depth. The RCI's position on ecosocialism and the relationship between capitalist crisis and ecological breakdown is elaborated in other texts.

Connections¶

Marx, Capital Vol. 1: The passage on the absolute general law of capitalist accumulation, quoted directly.
Marx and Engels, The Communist Manifesto: The description of crises of overproduction, quoted directly.
Lenin, Imperialism, the Highest Stage of Capitalism: The theoretical framework for analysing the US-China trade war and the breakdown of the post-war order.
Trotsky, The Transitional Programme: The strategic orientation towards the epoch of permanent crisis and the necessity of socialist revolution.
Other IDOM articles: The article is part of a series on the global economic conjuncture. It should be read alongside Adam Booth's other analyses of the debt crisis, the eurozone, and the trade war. The RCI's The Death Agony of Capitalism pamphlet provides the broader theoretical framework.
Martin Wolf's essays on "rigged capitalism": The article engages critically with Wolf's Keynesian diagnosis, using it as a foil to demonstrate the limits of reformist analysis.

Key Quotes¶

"The out-of-touch elite are meeting in Davos this week for their annual exclusive shindig. But the mood amongst the super-rich and their representatives will be glum and gloomy, with their liberal world order facing threats on all fronts."
"There is no 'nicer' capitalism to return to, as Wolf and other liberals and Keynesians like him imagine. The laws and logic of the capitalist system will always concentrate wealth in the hands of the few, at the expense of the many."
"The fact that any number of incidents or events could precipitate the next recession demonstrates the fragility of the capitalist system at the present time. As Hegel noted, necessity expresses itself through accident. And when so many potential 'accidents' exist that could bring down the entire economic structure of society, then this reveals the utter rottenness of the whole edifice of capitalism."
"This mountain of debt equates to over 300 percent of the world's annual economic output (GDP), and includes over $70 trillion in government debt alone. Added to this is $120 trillion in business and household debts (equivalent to around 150 percent of global GDP), with the remaining $65 trillion or so coming from the debts of the financial sector."
"The unstable balancing act that central bank chiefs are forced to conduct to avoid either rocketing inflation or the doldrums of deflation reflects the general instability of the capitalist system, as it lurches from one crisis to the next."
"The fact is that there will be no return to the past. The status quo is well and truly broken. There is no going back to 'normality'. As the past decade of storm and stress — of struggle and strife — attests: we have entered a new epoch; a 'new normal'."