Doctor Doom predicts dark days for capitalism

Marxist Perspectives · 2022-11-11

Core Argument

The article argues that the current global economic crisis is not a cyclical downturn but a structural crisis of the capitalist system itself, which has exhausted its historic progressive role. Drawing on the warnings of heterodox bourgeois economist Nouriel Roubini, Alan Woods contends that the combination of staggering global debt, the return of inflation, and the exhaustion of Keynesian remedies points toward an unprecedented debt crisis. The central claim is that capitalism can no longer resolve its contradictions through the traditional tools of state intervention, and that the ruling class is entering a period of deepening pessimism precisely because the objective conditions for socialist revolution are more favourable than at any time since 1917.

Theoretical Grounding

The analysis is grounded in the Marxist theory of crisis, particularly the understanding that capitalist crises are not accidents or the result of subjective factors like "confidence" but are inherent to the system's internal contradictions. Woods draws on the classical Marxist distinction between the real economy and the sphere of finance, identifying the mountain of global debt as fictitious capital — value claims that have no corresponding real accumulation. The article also deploys the concept of the exhaustion of the productive forces under capitalism, arguing that the system has fulfilled its historic mission of developing industry and technology and now acts as a fetter on further development.

The theoretical tradition here is that of orthodox Marxism as developed by the International Marxist Tendency (now the RCI). The article explicitly rejects both Keynesianism (as "exhausted") and the voluntarist optimism of reformism, while insisting on the decisive role of the subjective factor — revolutionary leadership — in transforming objective crisis into revolutionary opportunity. The reference to the Bolshevik experience of 1917 is not merely illustrative but theoretical: it demonstrates that revolutionary victory depends on the existence of a party capable of generalising the struggle.

Conjunctural Relevance

The article was written in November 2022, at a moment when the post-2008 era of near-zero interest rates and quantitative easing had decisively ended. The specific conjunctural features Woods identifies include:

• Global debt exceeding 350 percent of GDP by end of 2021, creating the conditions for what Roubini calls "The Mother of All Debt Crises"
• The return of inflation after four decades, with global inflation in double digits for the first time since the 1980s
• The Federal Reserve's rapid interest rate hikes — the fastest since the 1980s — which the article argues make recession inevitable
• The war in Ukraine as a trigger, not a cause, that exacerbated existing inflationary pressures and disrupted energy markets
• The weaponisation of trade by US imperialism, particularly sanctions on Russia, which backfired by driving up energy prices and benefiting Russian revenues
• The exhaustion of Keynesian stimulus used to address the 2008 crisis and COVID-19, leaving governments without "ammunition" for the next downturn

Woods cites specific sources — the IMF's July 2022 report, the Financial Times, Larry Summers, Kristalina Georgieva — to demonstrate that even establishment figures recognise the severity of the crisis. The article also notes the sharp decline in confidence indicators across the US, UK, and China, with only India described as a "bright spot."

Where the Argument Continues

This article is a relatively early statement of the RCI's analysis of the post-pandemic conjuncture. The argument continues in several directions:

• The analysis of inflation and the cost-of-living crisis is developed further in subsequent IDOM articles examining the specific dynamics of wage-price spirals and the limits of central bank policy
• The critique of Keynesianism is elaborated in theoretical pieces on the Marxist theory of crisis, particularly those dealing with the tendency of the rate of profit to fall
• The question of the subjective factor — the missing revolutionary leadership — is the central theme of the RCI's ongoing political work, addressed in Against the Stream episodes and in articles on party-building
• The war in Ukraine and its economic consequences are treated in greater depth in articles analysing the geopolitical dimensions of the crisis, including the energy war between Russia and Europe
• The perspective of "dark days for the bourgeoisie, bright days for the working class" is a recurring motif that reappears in analyses of strike waves, protests, and political instability from Sri Lanka to Iran

Connections

• Nouriel Roubini's Megathreats — the book that prompted the article, which Woods treats as a useful diagnosis but a hopeless prescription
• Marx's Capital, Volume 3 — particularly the chapters on the tendency of the rate of profit to fall and the role of fictitious capital
• Trotsky's The Revolution Betrayed — for the analysis of how capitalism exhausts its progressive potential
• Lenin's Imperialism, the Highest Stage of Capitalism — for the understanding of how finance capital and inter-imperialist rivalry drive crisis
• Earlier IDOM articles on the 2008 crisis — which Woods references as a point of comparison, noting that the current crisis combines debt with inflation in a way 2008 did not
• The writings of the International Marxist Tendency on the subjective factor — particularly the analysis of the Bolshevik experience as a model for revolutionary strategy

Key Quotes

1. "The Keynesian model, so beloved of all reformists (both the right and left variety) is exhausted. That fact is expressed in a huge mountain of debt that looms over the entire world economy. And sooner or later, mountains experience avalanches that sweep all before them."

2. "The crisis facing them is too deep, the contradictions too great to be resolved on a capitalist basis. They have used up all their ammunition in attempting to solve the last crisis. Now they will be compelled to lurch from one crisis to another, without the necessary weapons to tackle them."

3. "The war in Ukraine was not the cause of the inflationary catastrophe. It only provided the spark that ignited the huge barrel of dry gunpowder, which was just waiting to explode. However, dialectically, cause becomes effect, and effect, in turn, becomes cause."

4. "The reason for this general turbulence is that capitalism has fulfilled its historic role in developing the productive forces. That role is now completely exhausted. The perspective on a world scale is for unprecedented class struggle."

5. "While Roubini is highly efficient in describing the problems, he fails completely to offer any prescription for the diseases that he has so ably diagnosed."

6. "The deep pessimism of the bourgeoisie must fill us with optimism for our future: the future of the socialist revolution that will overthrow a monstrous exploitative and degenerate system, and point the way to a new and brighter day for humanity."