Capitalism in terminal decline: the compelling empirical data trends (short summary)
As production evolves from labour-assisted mechanised manufacturing to supervised automated manufacturing, the labour time required for physical commodity production — realised as profit when commodities are sold/exchanged — is disappearing; making the private ownership of production/capitalism historically obsolete:
➤ The estimated aggregate ‘world rate of profit’ (above) has trended towards zero, from an estimated average of 43% in the 1870s to 11% in the 2010s.
➤ Rates of interest (a form of profit) over (at least) the past seven centuries have trended towards zero, where short-term central bank rates were stuck for most of the period after 2009 — record lows in both the US and UK, the traditional capitalist superpowers.
Ending recessions, however, requires an average 6% cut in the central bank rate (to cheapen capital, incentivising new borrowing and investment).
➤ Despite the falling prices of robots and automation — replacing costlier and slower-working, break-taking workers — Gross Domestic Product (GDP) and labour productivity growth rates are trending towards zero (or even continual ‘negative growth’).
➤ Prices have also closed in on zero — at exponential pace as, amid accelerating innovation, productive output tends to double absolutely every 25 years. X number of commodities made in half as much time as before, all else being equal, cost half as much.
➤ Despite the decades of privatisation of publicly owned industry since circa 1980; along with decades of falling real wages and falling corporation tax — all enforced by the capitalist class to offset falling profit rates — the number of publicly-listed (not publicly owned) US companies fell (via bankruptcies and mergers) from 8,000 in 1996 to 4,500 in 2016 and 3,700 in 2022. Similarly the number of companies listed on the UK stock exchange fell from 2,415 in 2008 to 1,646 in 2021. In Argentina the number fell from 321 in 1975 to 85 in 2021.
Of seven major merger and acquisition waves in the US since the 1890s, four have taken place since 1989.
➤ Between 1964 and 2014, the average lifespan of S&P 500 companies shrank from around 60 to 18 years.
➤ According to Goldman Sachs, about 50% of listed US firms are unprofitable, trending up from about 10% in 1960.
➤ From 1977 to 2013, startups as a share of all US firms fell from 16.5% to 8%, a decline pervasive across states and sectors.
➤ Almost half, 43%, of around 9,000 commercial banks in the US disappeared between 2000 and the end of 2017 (already down from 14,000 in 1986 and 30,000 in 1921).
➤ UK investors are now holding onto their shares for 0.8 years on average — down from 9.7 years in 1980, a decline of 91.75%.
In the US the figure is down from five years in 1975 to 10 months in 2022.
➤ Whereas the capitalist class is a relatively dwindling minority of the world population, the working class (people who work for a wage) has been growing exponentially.
➤ Fossil fuels and energy are becoming too expensive to produce profitably — meaning we are not producing enough energy to reproduce the energy capital accumulation depends on.
➤ To offset falling profitability by economising production, capital accumulation is increasingly dependent on mergers between and central planning within private enterprise. (Private enterprise central planning includes: centralised databases; elimated internal markets (no interdepartment competition); budgets and forecasts; etc.)
A ‘final merger’ — necessitating a public monopoly since no exchange of ownership would exist — with central planning of the economy as a whole and social accumulation replacing capital accumulation is consequently becoming an economic necessity for the first time.
➤ Like any other commodity, the value of the US dollar, the world’s dominant reserve currency since the end of WWII, has tended to decline as absolute productivity has risen, at an accelerating rate.
With money becoming obsolete, it must be replaced by a (digital, non-transferable) voucher system, pegged to labour time.
➤ An all-socialist state (with the rule of the working class replacing the rule of the capitalist class) is required to enforce the conclusion of this historical process (which will include compensation via long-term debt payments to the last capitalists, in order incentivise their capitulation to minimise counter-revolutionary aggression as much as possible). Once all private enterprise (globally) has been taken under public ownership — replacing for-profit commodity production with (therefore more productive) break-even utility-production (since the fetter of the profit necessity is removed) — the state (by definition the rule of one class over another) will have withered away since both class and the authority of one class over another will have been abolished.
With the increasing speed, inexpensiveness and decentralisation of production (as with smartphones and laptops, for example) increasingly enabling abundant material wealth for all (with everyone owning their own increasingly capable 3D printers and precision fermentation labs, etc.) ‘lower communism’ will then evolve into ‘higher communism; with vouchers becoming obsolete and the initially relatively hierarchical centrality of the socialist governing structure decentralising as previously poor peripheral regions and zones become increasingly prosperous.
See the full in-depth analysis
Ted Reese is the author of:
Abundant Material Wealth For All: (Draft) Manifesto For The Coming World Socialist Revolution
Socialism or Extinction: Climate, Automation and War in the Final Capitalist Breakdown
Free PDFs: linktr.ee/grossmanite
Support Ted’s work at Patreon.com/grossmanite or ko-fi.com/grossmanite
