Missing: Kondratieff and China

The Brenner canvas of postwar expansion and decline has a remarkable affinity to the theory of the early Soviet-era economist Nikolai Kondratieff that capitalism moves forward in fifty-to-sixty-year "waves" that ascend, crest and descend into a deep trough. Yet, surprisingly, The Boom and the Bubble does not contain a single reference to Kondratieff.

This is intriguing.

Perhaps Brenner is trying to distance himself from deterministic interpretations of Kondratieff, which have either posited the exploitation and exhaustion of new technologies as the central driver of long-wave activity or proclaimed the inevitability of a massive, Great Depression-like crisis.

If this is the case, Brenner is right to be wary of sounding apocalyptic, given the resiliency that has enabled US-dominated global capitalism to surmount crises in the past five decades. He fails, however, to discuss the factor that should serve as the greatest reason for caution: China. China's potential role of serving as an exit strategy for the current crisis of overcapacity is underlined by the fact that it has absorbed a yearly average of $45 billion in foreign capital since the late 1990s, making it by far the biggest recipient of foreign investment in the South. China is, however, still focused on export-oriented production, making it a critical contributor to global overcapacity. Should China turn toward a strategy of hitching capitalist growth principally to the expansion of domestic purchasing power, it could turn into the engine that would ward off, perhaps for a few decades, the specter of global stagnation. Already China is the world's largest market for cellular phones, and troubled Ericsson's move to establish a manufacturing base there indicates that key players in the crisis-ridden telecom sector see their salvation in China.

Missing: The Crisis of Reproduction

Barring a sharp turn by China's leaders, the likelihood of a Kondratieff-like deflationary--if not depressive--phase is really great at this point. One is not likely, however, to draw this grim conclusion from an analysis that hews narrowly, as Brenner's does, to developments at the level of production, to the dynamics of overproduction. Focused at that level, the furthest Brenner can go is to state that "it is not easy to see what forces exist to push the economy forward."

However, what is unique about the current conjuncture is the coming together of a crisis of production and a crisis of reproduction of the system, the latter referring to the re-creation of the political and cultural context necessary for global capitalism to survive and thrive. Global politics, the dynamics of cultural hegemony and the interplay of key institutional actors are what is missing in Brenner's broad canvas, and these are the elements whose interaction will determine whether or not the consequences of the crisis of overcapacity can be contained.

Despite capitalism's famed resiliency, containment of the crisis at the level of production is increasingly less of an option owing to the current intersection of the crisis of overproduction with three related "superstructural" crises--something that either did not occur earlier in the post-World War II period or was marked by much less intensity.

The "crisis of legitimacy" refers to the increasing inability of the neoliberal ideology that underpins today's global capitalism to persuade people of its viability as a system of production, exchange and distribution. The disaster wrought by structural adjustment in Africa and Latin America; the chain reaction of financial crises in Mexico, Asia, Brazil, Russia, Argentina and on Wall Street; and the massive combination of extensive fraud and spectacular wiping out of investors' wealth have all eaten away at the credibility of the system. The legitimacy of the transnational corporation--the engine of the system--is at its lowest in years, with more than 70 percent of Americans claiming even before Enron erupted that corporations had too much power over their lives. Also plunged into a crisis of credibility are those institutions that serve as capitalism's system of global economic governance--the International Monetary Fund, the World Bank and the World Trade Organization--making them the weak link in the system.

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