World on the edge

With the global financial system on life support, picking up this week’s issue of The Economist is unlikely to lift anyone’s spirits. Since it went to print, the malaise has only deepened, and some are already heralding the end of capitalism.

Not so fast.

Though capitalism will undoubtedly face profound challenges in a hotter and more crowded world, the present crisis strikes me as a more traditional one – the implosion of a long, unsustainable housing boom rather than a terminal systemic failure. At the same time, echoing the 1930s, there is something deeply paradoxical about economic growth stalling in a world where billions still urgently need to improve their material living standards.

Yesterday, I finally submitted that article. Immersing myself in dependency theory made me reflect on how Marxist explanations of poverty have evolved almost like a three-stage rocket.

First, under early industrialism, the story was comparatively straightforward: the declining rate of profit would, as Marx famously argued, produce an “increasing immiseration of the proletariat”. Second, when that prediction proved empirically untenable – as industrial societies grew wealthier and historic compromises between labour and capital improved living standards – the locus of immiseration was relocated. Poverty had not disappeared, the argument went; it had merely shifted to the periphery, sustained through global structures of exploitation.

Now, with the rapid rise of China and India, a third explanation has gained prominence: material improvement must be restrained not because profits will collapse or because the South is being drained, but because the planet cannot bear universal prosperity.

What unites these three stages is an implicit zero-sum ontology – the assumption that society is a fixed pie carved up under conditions of absolute scarcity. That assumption was questionable in the 1930s and remains so today. Yet before reaching for another mojito and retreating into liberal cornucopianism, some humility is in order. However expansive the future may appear –  space colonization included – we are not there yet. We remain embedded in a fossil economy, entangled in wars, and constrained by persistent forms of spatial and temporal chauvinism. It is far from certain that we will learn to “ride the Juggernaut of modernity”, as Anthony Giddens memorably put it.

Progress is neither inevitable nor linear.

Just a week ago, darker currents resurfaced in Austria, where the xenophobic Freedom Party of Austria and Alliance for the Future of Austria together captured 29% of the vote in the national election. Particularly troubling was the fact that roughly a third of the country’s newly enfranchised young voters – the voting age having just been lowered to 16 – cast their ballots in that direction.