The End of Economic Growth

An anti-capitalist analysis from the anarchist publication, Anathema, which looks at a potential looming economic crash.

Headlines tell us that the United States has historically high levels of employment, that more and moe jobs are being created, and that any economic hiccups are the result of Trump’s trade war with China. Meanwhile, the International Monetary Fund (IMF) is promising that the global economy will return to a higher growth rate of 3.2% next year, after growing only 2.9% this past year. But what does this amazing economic prosperity have to do with our everyday lives? Well, nothing. These official numbers hide a much darker reality, which is that global economic growth is slowly coming to an end — a crisis that, whether it portends revolutionary uprisings or mass catastrophes, has potential consequences for all of us.

The incredible amount of major rebellions around the world in 2019 were, once they became impossible to ignore, attributed by some mainstream commentators to a crisis of neoliberalism. In reality, they signal a much deeper crisis of capitalism itself. Capitalism, as a global economic system, must keep growing in order to survive — this is why economists put so much stock in measuring numbers like global and national GDP growth each year. For decades now, though, the global economy has struggled to find new markets that will expand it at a necessary rate. Neoliberalism is just a name for the brutal austerity measures that many governments had to take during this time in order to reduce costs and keep their economies afloat. Most of the attempted policy changes that set off the recent uprisings — pension cuts, transit fare hikes, taxes on gas — are examples of these kinds of austerity measures.

The term “neoliberalism” obscures the real problem, which is the economic system itself. As part of the economy’s interminable quest for profit and growth, capitalists must cut costs in large part by exploiting people as much as they can. These recent measures have clearly pushed people beyond their breaking point, and it is a testament to how much the world economy is in crisis that those in power have continued to try to offload costs onto regular people as much as they can, even if it provokes widespread resistance.

The growth rate the world economy saw in 2019 was the lowest it’s been since the so-called Great Recession of 2009. According to the IMF, the global economy is in a “synchronized slowdown;” slower growth is expected in more than 80% of the world. For the first time, almost all major markets in the world are stagnating, meaning that there will be nothing to pull the economy out once the next recession hits.

These official numbers hide a much darker reality, which is that global economic growth is slowly coming to an end — a crisis that, whether it portends revolutionary uprisings or mass catastrophes, has potential consequences for all of us.

In order to grow, capitalist industries must find ways to increase their “productivity,” which happens primarily by reducing the cost of labor. Historically, when productivity has successfully increased at the rates necessary to sustain itself, it’s been through major operations that incorporated workers from the agriculture sector into the
higher-productivity manufacturing sector. Over the past five hundred years, almost the entire world has been forced into capitalist production in this way, despite massive resistance. Not enough places remain now that can be incorporated in this way, at least not on a large enough scale to maintain capitalism’s necessary rate of growth. Yet we are still currently seeing those in power ruthlessly attempting to exploit some of the last unoccupied lands and peoples right before our eyes here in the Americas.

One indicator that capitalism is having a productivity crisis, as Aaron Benavev points out in a recent article on automation, is that actual global industrial production growth (which measures output from companies within the manufacturing, mining, and utilities sectors) started slowing at the end of 2017. This trend began way before Trump set up the tariffs to which everyone is attributing the current global slowdown. Service providers, which supply 80% of jobs in the U.S., are also showing deteriorating rates of growth.

Meanwhile, the financial markets are barely staying afloat, but because financialization is magic that depends on investors believing in it, actual information about how bad it’s getting is hard to find. One underreported factor is that the U.S. Federal Reserve has been injecting cash into the stock market to prop it up since September (a major reason for any stock market gains in 2019). In January, the Fed admitted that they would continue to do so at least through April.

Another important indicator is the so-called “inverted yield curve,” in which yields on short-term bonds are higher than those on long-term bonds. This reveals a significant lack of confidence in the market in the long term and is one of the best indicators that a major recession is coming. The yield curve was inverted for much of 2019, and recently became inverted again as of early February.

The world economy may keep staggering along for many years yet; capitalism and democracy may get significantly restructured in order to keep itself afloat; we may even see “wins” that look like socialism, but in reality are this exploitative world system succeeding in maintaining its stronghold over our lives. It’s also possible, though, that all the signs we’re experiencing of a failing economic and political system alongside massive ecological collapse are signs of just that — global systemic collapse.