A Dying Capitalism

By Prabhat Patnaik – Aug 30, 2026

The signs of decay and decrepitude of a dying capitalism are all too evident at present. This of course is not the first time that the system is showing such signs; it had done so in the period between 1914 and 1945, which had confirmed Lenin’s prognostication of its being a moribund system. The difference between then and now consists in the response of the system to the crisis that had engulfed it.

At that time, the system had responded, no matter whether by design or under compulsion, by “reforming” itself in at least three distinct ways: one was through political decolonization, which bourgeois leaders like Winston Churchill had vehemently opposed at that time, and through an attempt to control third world resources through other means; the second was through the widespread introduction of electoral democracy with one-person-one-vote in the major capitalist countries of the world; and the third was through the adoption of measures of state intervention for stimulating aggregate demand for reducing unemployment: in Europe these measures entailed larger welfare expenditures while in the US, as Baran and Sweezy were to show, they took the form of larger military expenditure. This last “reform” was particularly important since it allowed the system to survive by withstanding the threat that the first two could have posed to it.

In short, capitalism overcame its existential crisis, while claiming to be a more “humane” and more “democratic” system, functioning close to full employment, and superior to socialism in terms of its record on human rights; and it succeeded to a significant extent in convincing the world about its new image, notwithstanding all the skullduggery in the form of assassinations of leaders and of engineering of coups d’etat that it was inflicting all over the third world, from Mossadegh, to Arbenz, to Lumumba to Allende, not to mention the horrendous wars in Korea and Vietnam.

Put differently, the overcoming of its existential crisis was through the inauguration of a phase of capitalism that has come to be known as the “Golden Age of Capitalism”; and compared to its past it did represent a relatively new and different phase.

The key difference between the existential crises then and now is that state intervention through demand management to overcome the current crisis of stagnation in the capitalist world is no longer possible. Any increase in state expenditure for boosting demand, if it is to be effective must be financed through either a fiscal deficit or a tax on the rich: taxing the working people who consume the bulk of their incomes anyway and spending the revenues so generated, simply changes the composition of aggregate demand, rather than its magnitude. Finance capital however dislikes both fiscal deficits and taxes on the rich (since financiers are usually among the richest); and since finance today is globalized while the state remains a nation-state, its dislike becomes decisive because disregarding it risks a debilitating capital flight.

There is therefore no reprieve today from the crisis of stagnation that neo-liberal capitalism is afflicted by, a crisis caused by the massive increase in income inequality that characterises it. It is this cul-de-sac of neo-liberal capitalism, where the system remains mired in stagnation but can do little to overcome it, that underlies its current symptoms of decay; these symptoms are the very anti-thesis of the image of itself that capitalism had been presenting earlier.

There is first of all a veritable assault on democracy. All over the capitalist world, there are either outright neo-fascist regimes, or repressive regimes operating with democratic facades but characterized by McCarthyite witch-hunts against all attempts at expressing popular anger against government policies. There is not only pervasive support from governments throughout the advanced capitalist world for Israel’s genocide against the Palestinians (with a few notable exceptions like Spain), despite a majority of people in these very countries being openly opposed to this genocide, but severe repression against all popular expressions of this opposition. In Britain, a country that has often prided itself on its toleration of dissent, students are being tried as “terrorists” merely for making pro-Palestine speeches. What is more, a majority of those arrested for committing such “offences” are not even charged, let alone brought to trial. And the situation is similar in other advanced capitalist countries, with meetings to express solidarity with Palestine being banned for instance in most German cities. Not only is capitalism’s claimed defence of human rights thus belied by its open support for genocide, but this support is complemented by a massive attenuation of democracy unprecedented in the post-war era.

This reversion to repression on the part of neoliberal capitalism is also accompanied by an attempt, on the part of the US at any rate until now, at a recolonization of the third world. Donald Trump has not only announced this agenda of his in so many words, but has followed it up with actual incursion into Venezuela, ongoing military aggression against Iran, and possible plans of aggression against Greenland and other countries. In these aggressive manoeuvres the US would like the support of other major capitalist countries. In fact two major steps have already been taken for obtaining such support.

One is the re-arming of Germany and Japan, which had been disarmed after the second world war; and their response to this proposal to rearm has been enthusiastic. This is yet another way in which we see a throwback to the capitalism of the so-called pre-Golden Age era. And with neo-fascism making a strong appearance in Germany in the form of the AfD, the extremely dangerous consequences of rearming that country hardly need to be spelt out.

Capitalism Trains Us To Blame Each Other for Systemic Abuses

The second step is the decision of NATO to increase the military expenditure of its member countries to as much as 5 percent of their GDP by 2035, of which 3.5 percent is supposed to be spent on core military activities and 1.5 percent on building military infrastructure. This represents a huge step up over the current levels which come to 3.4 percent in the US and an average of 2.5 percent for Europe. Exactly the same constraints, on enlarging the fiscal deficit and taxing the rich, which operate for thwarting Keynesian measures of demand stimulation, will also come into effect in enlarging military expenditure; the increase in military budget across NATO countries therefore will have to come from a restriction of welfare expenditure which, in Europe at least, had been a major feature of post-war capitalism. We thus have once more a reversion to large-scale militarism that is the exact opposite of post-war practice.

Lest bourgeois opinion in Europe had fallen prey to the anti-colonial struggle’s arguments about the ill-effects of colonialism, US Secretary of State Marco Rubio recently spoke glowingly of five centuries of Western dominance at the Munich Security Conference and made an unashamed plea for a revival of this past glory through what observers have clearly seen as a call for recolonization. Rubio assured his European allies that they had nothing to feel guilty about their colonial past; and his audience which included virtually all the European leaders, far from being ashamed by his speech, greeted it with thunderous applause.

Fascism has always had a very close relationship with colonialism. While the context for the emergence of fascism is of course different, typically an economic crisis that demands in the interests of monopoly capital an alternative distractive discourse that fascism provides, the violent methods adopted by fascism were first tried out in the colonies. For instance, Germany’s inhuman treatment of the Nama and Herrero in Namibia, and the genocide by King Leopold of Belgium in the Congo that reduced the population by 10 million, that is by one-third, served as “models” for what later occurred in Europe under fascism.

The spread of neo-fascism today and a nostalgic harking back to colonialism, with a project of recolonization on the horizon, thus hang together. We are once again seeing capitalism expose its bare fangs, which had been kept somewhat hidden except on sporadic occasions in the post-war period. This reversion to its utterly ruthless nature, however, which totally negates all the propaganda about “welfare capitalism”, “changed capitalism” and “humane capitalism”, is symptomatic of its decay, its desperation and decrepitude, of the fact that it has reached a cul-de-sac from which there is no obvious escape route. It is symptomatic, in a word, of a dying capitalism.

This reversion to hyper-aggressive, hyper-repressive capitalism however will not save the system. A dying capitalism cannot rescue itself through neo-fascism, through a scuttling of democracy, and through recolonization. What is happening today to the US-Israeli aggression against Iran provides ample proof of this.

 

(Peoples Democracy)