Capitalism and Its Crises: 1973 and 2008

By Emil Fischer 

In the 1970s, global capitalism underwent a major shift. Since the end of World War II, the system had been growing rapidly, with a phase known as the "long wave of expansion," which lasted until the 1970s. During this period, governments tried to ensure employment for everyone, control the money flow, and reduce social inequalities. However, in 1973, with the crisis and the end of the Bretton Woods system (which supported the dollar and global trade), it became clear that this growth was not infinite. In 1971, the U.S. abandoned the gold standard and adopted floating exchange rates to try to maintain economic control. However, this caused profits to fall and global productivity to decrease, interrupting the growth that had been occurring since the end of the war.

The 1973 crisis set the stage for another major crisis in 2008, although with different causes. The 2008 financial crisis, also known as the subprime crisis, had roots in many of the problems that had been present since the 1970s. Both crises share the fact that they were caused by imbalances in the economic system, such as the growth of financial speculation, excessive debt, and wealth concentration. The 2008 crisis was triggered by the collapse of the housing market, the deregulation of financial markets, and the failure of large financial institutions. The response from governments and banks, with bailout packages and austerity policies, only worsened inequalities and increased social and political instability around the world.

However, these crises were not just economic. The environmental crisis, with the depletion of natural resources and the effects of climate change, is a direct consequence of the capitalist growth model. This model, which constantly seeks profit and exploits natural resources without limits, has caused increasingly severe environmental damage, leading to the collapse of various areas of the environment. It is this type of production that focuses on immediate profit and ignores the consequences for nature and future generations.

There is also a growing mental crisis, shown in the anxiety and loneliness of many people. They are pressured to consume and seek satisfaction through consumption, which creates an existential void. The pressure for a materialistic lifestyle has made many people feel dissatisfied and disconnected, affecting their mental health and well-being.

In politics, capitalism has increased polarization and authoritarianism. With democratic institutions weakened, fascist and nationalist regimes are rising in response to chaos and social instability. Capitalist leaders seek more control and repression by limiting people's freedoms and rights. This has caused more social division and weakened democratic institutions.

Capitalism is not just going through an economic crisis, but a collapse that affects various areas of society. The environmental, mental, and political crises are all connected and becoming more visible, as the capitalist model of production and consumption can no longer handle the problems of the modern world. The system is showing that it cannot provide effective answers to the challenges it has created, with its contradictions and limitations. The future of capitalism is increasingly uncertain and unsustainable.

References:

Red, Communist. The Global Crisis of 1973-75: A Turning Point for Capitalism. https://communist.red/the-global-crisis-of-1973-75-a-turning-point-for-capitalism/

Tricontinental, The. Dossier Notebook 4: Economic Crisis. https://thetricontinental.org/dossier-notebook-4-economic-crisis/

Theoria. Volume 71, Issue 179, Article: "Global Economic Crises and Structural Reforms." Berghahn Journals. https://www.berghahnjournals.com/view/journals/theoria/71/179/th7117901.xml