Capitalism in terminal decline: the compelling empirical data trends (short summary)

Grossmanite
6 min readDec 14, 2023
The general rate of profit tends historically towards zero. Source: Estaban Maito

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 — 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).

“The decrease in interest rate is a symptom of the annulment of capital only inasmuch as it is a symptom of the growing domination of capital in the process of perfecting itself — of the estrangement which is growing and therefore hastening it’s annulment.” — Karl Marx

➤ 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’).

Decade-by-decade average GDP growth rates in ‘high income countries’. Stepped line represents decade average. (Source: World Bank.)
US GDP growth rates
(Source: Harvard Business Review)

➤ 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.

➤ The number of public US companies fell (via closures and mergers) from 8,000 in 1996 to 4,500 in 2016 and 3,700 in 2022.

Of seven major merger and acquisition waves in the US since the 1890s, four have taken place since 1989.

(Source: imaa-institute.org)

➤ 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.

Share of new firms as % of total firms (Source: Census Bureau Business Dynamics)

➤ 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%.

➤ 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.

The green, yellow and red serve loosely as a proxy for feudal, capitalist and socialist bases of production.

➤ 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.

Delannoy et al.

➤ 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’ — 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.

China’s domestic mergers. Source: gov.cn/Compass Lexecon/pymnts.com.
Capitalist competition itself leads to monopoly — primarily offseting falling profitability through expanded production and the efficiency gains via economies of scale — since the merger of two companies enables the combined force to outcompete a third competitor. Other examples: the car industry; the food industry.

➤ 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 absolute authority of the working class replacing the absolute authority 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 break-even utility-production — the state (by definition the absolute authority of one class over another) will have withered away since both class and the absolute 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 become increasingly prosperous.

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Ted Reese is author of The End of Capitalism: The Thought of Henryk Grossman; and Abundant Material Wealth For All patreon.com/grossmanite