Wolfgang Streeck asks “How will capitalism end?”

Summary: Lost in the trivia of the daily news, we can easily lose sight of the great issues shaping our times.  Such as the future of capitalism, tested by demographic change, slowing growth, rising inequality, and political turmoil. Here is the first of two posts with insights by Wolfgang Streeck and Adam Tooze; one of the most powerful essays I have seen in a long time. This post examines how we came to this point, on the brink of great events. In tomorrow’s post they discuss the forces that will test and perhaps break capitalism.

How Will Capitalism End? by Wolfgang Streeck
Available at Amazon.


A General Logic of Crisis

By Adam Tooze,
London Review of Books, 5 January 2017.

Posted with his generous permission.

Review of Wolfgang Streeck’s How Will Capitalism End?: Essays on a Failing System.

Part one of two: how we got here.


‘Whatever it takes.’ These words, spoken by the president of the European Central Bank, Mario Draghi, to a crowd of investors in the City of London on 26 July 2012, have come to represent the symbolic end to the acute phase of the global financial crisis. In the political sphere, by contrast, where words are supposed to be everything, we have not yet been able to draw the line. More than four years on, we know that in 2012 the political fallout was only just beginning.

It was in December 2011 that David Cameron reopened the European question by opting out of the new ‘fiscal compact’ drawn up by Angela Merkel and Nicolas Sarkozy with the aim of enforcing budget discipline across the EU. In the US in spring 2012, Mitt Romney emerged as the candidate from the Republican primaries, but the freakshow anticipated the Trump campaign to come. In Italy the ousting of Berlusconi in a backroom coup in November 2011 and the installation of the ‘unpolitical’ economist Mario Monti as prime minister set the stage for the emergence of Beppe Grillo and Five Star in the local elections of May 2012. In France as the fiscal compact began to bite, François Hollande’s presidency was dead almost before it had started.

Amid all these events, Germany can easily seem like a bastion of stability, with ‘Merkel über alles’ its anthem. But beneath the smooth surface, Merkel’s grip on the chancellorship has since she took office in 2005 been supported by three successive coalitions. And by early 2013 it was clear that her partners since 2009, the free-market, libertarian, liberal FDP, were in trouble. They were being outflanked on their right-wing by a new formation, the AfD, the Alternative für Deutschland, whose focus in 2013 was not immigration but passionate opposition to the euro. Like much of the German right the AfD was indignant not about austerity, but about the failure of Merkel to back an even harder line. The AfD didn’t break the 5 per cent threshold required to enter parliament at its first try, but it took enough votes from the FDP to drop it out of the Bundestag, leaving Merkel to form a new coalition with the Social Democratic Party (SPD).

Logo of Die Linke

The AfD wasn’t the only force in German politics fuelled by the belief that things could not go on as they were. In spring 2013, for the first time in decades, the German left had begun to mount a principled critique of a major element of the European institutional structure – the euro. It was Oskar Lafontaine – ‘Red Oskar’ – who broke the silence. ‘Hopes that the creation of the euro would force rational economic behaviour on all sides were in vain,’ he said, and called for the single currency to be broken up so that southern Europe could recover. Lafontaine is a former SPD finance minister, from the left wing of the party, once described by the Sun as the ‘most dangerous man in Europe’, who in 2005 split from the SPD and took tens of thousands of followers with him to join forces with the ex-East German communists of the PDS. Out of that coalition emerged Die Linke {“The Left”}, arguably the real alternative for Germany, which the entire Bundestag has since conspired to keep at arm’s length.

Until 2013 Die Linke’s line was that it opposed Euro-austerity not the euro. And at first the impact of Lafontaine’s heretical intervention was contained. He had just resigned from official duties in the party. But Cyprus and the elections to the European Parliament of 2014 kept the topic on the boil, and then came Syriza and the intense crisis of 2015.

In 2015, even before the refugee crisis surged to the top of the agenda, the German right was in uproar at what was seen as Merkel’s surrender over Greece, which should, it believed, have been unceremoniously kicked out of the euro. The ECB, in its adoption of quantitative easing, had revealed itself as an inflationist Trojan horse. Meanwhile, the left was divided over the now unavoidable question of whether the EU was neoliberal to the core, and if so, should be regarded as irredeemable, and rejected. Though the main part of Syriza pulled back from leaving the euro, Lexit – the left-wing case for leaving the union – was born that summer, and not only in Britain. In September 2015 Lafontaine popped up again, this time in Paris on a platform alongside Yanis Varoufakis, calling for a Plan B for Europe, a Europe beyond the euro.

Wolfgang Streeck
Wolfgang Streeck. Photo by Maria Camila Romero via Wikimedia Commons.

In the German Lexit camp, alongside Lafontaine and his one-time state secretary in the Finance Ministry, Heiner Flassbeck, the most prominent voice has belonged to the sociologist Wolfgang Streeck. His role is a sign of the times. Until recently a long-term SPD member, Streeck had done teaching stints at major US universities before becoming the director of the prestigious Max Planck Institute.

Buying Time: The Delayed Crisis of Democratic Capitalism
Available at Amazon.

It was the financial crisis that returned Streeck to his youthful roots on the far left. In Buying Time: The Delayed Crisis of Democratic Capitalism (2014) he argued that the crisis of the euro could best be understood in terms proposed by the Frankfurt School. Social theorists like Jürgen Habermas, Claus Offe and others had been right, he said, when in the early 1970s they argued that democratic capitalism faced profound and irresolvable problems.

What they had underestimated, however, was the sheer aggression of capital and the inventiveness of its functionaries in devising makeshifts to maintain profits while at the same time keeping workers and consumers from becoming discontented. Three successive strategies of displacement had kept the show on the road.

In the 1970s inflationary wage and price increases had promised more than was actually available. Then, in the 1980s, state debt had swelled. Finally, neoliberalism became the dominant current in global governance, inaugurating the austere ‘consolidation state’ and simultaneously expanding private debt. Underpinning it all was an unfettered consumer culture that has transformed every aspect of our lives – as consumers, workers, family members and citizens.

Europeans like to imagine they were selective in what they took from this package. But the post-2008 crisis revealed, in Streeck’s eyes, that Europe and its political institutions, notably the EU, were in fact the purest expression of neoliberalism. Streeck was one of the first to dig up a now widely read essay by Friedrich Hayek from 1939, where he argued that liberals should favour international federation because members would be able to agree only on a minimal set of prohibitions on the restraint of trade. Despite its protestations to the contrary, the EU was a free-market vehicle and the euro was its logical fulfilment – a monetary system cut off, like no other before it, from the control of democratic politics.

The significance of 2008, according to Streeck, was that this sequence of makeshift mechanisms of crisis resolution – inflation, public and private debt – had reached its endpoint.

Streeck knows his Marx. But the core of his crisis theory is non-Marxian. It does not rest on the violence of original primitive accumulation, or on the alienation or exploitation inherent to the productive process, or even primarily on the declining rate of growth or accumulation. In one disarming passage he describes capitalism as a ‘a non-violent, civilised mode of material self-enrichment through market exchange’.

What makes capitalism toxic is its expansiveness, its relentless colonisation of the rest of society. Drawing on Karl Polanyi, Streeck insists that capitalism destroys its own foundations. It undermines the family units on which the reproduction of labour depends; it consumes nature; it commodifies money, which to function has to rest on a foundation of social trust. For its own good, capitalism needs political checks. The significance of 2008 and what has happened since is that it is now clear these checks are no longer functioning. Instead, as it entered crisis, capitalism overran everything: it forced the hand of parliaments; it drove up state debts at taxpayers’ expense at the same time as aggressively rolling back what remained of the welfare state; the elected governments of Italy and Greece were sacrificed; referendums were cancelled or ignored.

In early 2014, as the likes of Habermas and the late Ulrich Beck called on their fellow Germans to make the elections to the Strasbourg Parliament the constitutive moment of a European demos, Streeck’s mind was on darker themes. In January 2014 at the British Academy, he gave the lecture ‘How Will Capitalism End?’, which lends its dramatic title to this collection. If, as events in Europe and the US seemed to demonstrate, capitalism had broken free from its constraints, then visions of an ‘ever closer union’, at least in the form of the EU, were out of touch with reality. We should be bracing ourselves for a prolonged and agonising decomposition of the entire social fabric.

It has been said that it is easier to imagine the end of the world than the end of capitalism: Streeck believes we may one day witness the proof of that. Capitalism will end not because it faces serious opposition but because over the course of the coming decades and centuries it can be relied on to consume and destroy its own foundations. We should expect ever intensifying stagnation, inequality, the plundering of the public domain, corruption and the escalating risk of major war, all of this accompanied by a pervasive erosion of social order, generalised social entropy.

Indeed, according to Streeck we have at least since the 1970s been living in what he refers to as a ‘post-social society … a society lite’. We cope individually with conditions of increasing uncertainty, while at the macro level both society and economy become increasingly ungovernable. ‘Life in a society of this kind,’ he writes, ‘demands constant improvisation, forcing individuals to substitute strategy for structure, and offers rich opportunities to oligarchs and warlords while imposing uncertainty and insecurity on all others, in some ways like the long interregnum that began in the fifth century CE and is now called the Dark Age.’

Streeck isn’t merely making a diagnosis, but a call to arms. He encourages his fellow sociologists to break through the ‘disciplinary truce’ that in the 1950s divided the economy from the rest of the social world and hived it off as the exclusive domain of economics. But his hopes extend beyond the academic: ‘Sociologists and political scientists, in alliance with heterodox economists of different stripes, have begun working on a new sort of political economy, a socio-economics that would again make the economic subservient to the social rather than vice versa, first as a theoretical and then, hopefully, as a political project’. Streeck draws urgent practical conclusions: ‘Bringing capitalism back into the ambit of democratic government, and thereby saving the latter from extinction, means de-globalising capitalism.’ Capitalism must be cut back to the scale of the nation-state, because it is at the level of the nation-state that Europeans have over the last two centuries been able to establish ‘social cohesion and solidarity and governability’.

The brutality of the Eurozone’s containment of the Syriza government in Greece seemed to vindicate Streeck’s warnings. His following has soared. In the Anglophone academy his work has been embraced as a refreshing return to the basics of Marxisant crisis theory. In Germany his impact has been more ambiguous. By contrast with the UK, France and the US, where Euroscepticism has always been a strand on the left, in Germany Lexit has not. The early days of the Federal Republic, when the SPD was bitterly opposed to Adenauer’s policy of Westbindung (‘attachment to the West’, involving European integration and membership of Nato), are long forgotten. Since the 1960s the mainstream German centre-left has settled into a position of unquestioning loyalty to the project initiated by the CDU. Franco-German opposition to the Iraq War in 2003 burnished Europe’s reputation as the good side of ‘the West’. Against this backdrop, Streeck’s claim that unwavering commitment to the EU and the ‘European ideal’ might itself be of a piece with neoliberal ideology comes as a shock.

It didn’t take long for Habermas to pick up the gauntlet. In 2013 he accused Streeck of ‘nostalgia’ in favouring a retreat to ‘national fortresses’. Earlier this year Streeck retorted that Habermas favoured a ‘political universalism’ that vainly tried ‘to match the infinite universalistic advance of money and markets’; apparently Habermas regarded ‘the predetermined course of historical evolution [as] normatively desirable and technically necessary at the same time’. Why, Streeck demanded to know, should we fall in with ‘Angela Merkel and her frivolous claim that, “If the euro fails, Europe fails” – identifying a two-thousand-year-old cultural and political landscape of grandiose jointly produced diversity with a trivial utilitarian construction that happens to serve above all the interests of the German export industries’.

Around the same time, dismissing Martin Sandbu’s vigorous defence of the euro, Streeck vented his criticism of Merkel’s refugee policy. It was, in his view, another vain, modernist social-engineering project backed by Germany’s employers and the opportunistic Merkel. What’s more, it was an ‘object lesson in what other countries can expect from Germany acting European’, which means in practice an attack on national autonomy, as Germany’s elite identify ‘their control of Europe with a post-nationalism understood as anti-nationalism, which in turn is understood as the quintessential lesson of German history’.

Responding to Brexit in Die Zeit, Streeck issued a manifesto, co-authored with colleagues from the Max Planck Institute, entitled: ‘Europa braucht die Nation’ (‘Europe Needs the Nation’). In the European context, it argued, Larry Summers’s appeal for a ‘responsible nationalism’ meant limiting the power of the European Court of Justice, more opt-outs and replacing the euro with a reheated version of the European Monetary System of 1979-98 vintage, enabling periodic, co-ordinated revaluations.

See part two tomorrow: Wolfgang Streeck gives his vision of capitalism’s future and Adam Tooze critiques it.


Adam Tooze

About the author

Adam Tooze is a Professor of History at Columbia. He researches the fields of twentieth-century and contemporary history. From a start in modern German history with a special focus on the history of economics and economic history his interests have widened to take in a range of themes in political, intellectual and military history, across a canvass stretching from Europe across the Atlantic.

See his bio here, and his major books: The Deluge: The Great War, America and the Remaking of the Global Order, 1916-1931 and The Wages of Destruction: The Making and Breaking of the Nazi Economy.

I recommend adding the LRB to your reading list!

London Review of Books
Available at Amazon.

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Books by Adam Tooze.

The Deluge: The Great War and the Remaking of the Global Order, 1916-1931
Available at Amazon.
The Wages of Destruction: The Making and Breaking of the Nazi Economy
Available at Amazon.

17 thoughts on “Wolfgang Streeck asks “How will capitalism end?””

  1. I’ve been slowly reading this book and I think he’s basically right. Capitalism has to be saved from itself, as anyone who has read Keynes or studied the Great Depression realizes. The alternative, the true collapse of the economy, is a frightening thing to contemplate. But it looks like the ideology of Neoliberalism has gotten such a grip on people’s minds that this may not be possible.

    I like it that you posted this. In my wild, misspent youth 45 years ago, I was a Marxist. (I laugh at everyone who calls the Democratic Party the Left! Most Americans have no clue about what a real Leftist looks like!) I now think most of Marxism is BS, but the one thing that’s survived the test of time is Marx’s analysis of the inherent instability of unregulated capitalism. The problem with Marx is his either/or thinking: it’s capitalism or barbarism; so of course he failed to anticipate Keynes and his insight that capitalism can survive if it is only partially socialized.

    I find it very frustrating indeed that we have the tools to fix these problems yet a tiny group of very greedy people who have hoarded power are fighting tooth and nail against this.

    1. Camilla,

      Thank you for your fascinating comment! You raise many interesting points.

      “In my wild, misspent youth 45 years ago, I was a Marxist.”

      Me, too. But more of a post-Marx post-Modern Left. I’ve managed to unlearn most of it by now.

      “The alternative, the true collapse of the economy”

      I don’t believe that’s coming. Among other reasons, a new industrial revolution has begun. That’s likely to supercharge the growth of inequality. Political instability seems a more likely result. See more about the new I.R. here.

      “the ideology of Neoliberalism has gotten such a grip on people’s minds that this may not be possible.”

      As many have said, the scary and amazing aspect of our problem is that most people can no longer even imagine an alternative to modern capitalism. That decisively closes the door to deep reform.

      “he one thing that’s survived the test of time is Marx’s analysis of the inherent instability of unregulated capitalism.”

      The other aspect of Marx that has proven itself it his analysis of society in terms of its class structure. For a brief period we believed we were moving beyond that, as inequality declined and social mobility increased. Now those dreams are dashed. Here’s my look at America, using an updated version of Marx’s schema: A picture of America, showing a path to political reform.

      “yet a tiny group of very greedy people who have hoarded power are fighting tooth and nail against this.”

      It’s the Great Circle of Life, just as we learned from Mr. Disney. There are always predators. But it is a choice to be prey.

  2. BTW, I wound up over here because I believe in reading outside the liberal information silo. What made me stay, however, is your approach to prediction. You go back and evaluate your ideas as to how well they match up with reality. I totally approve and wish a lot more blogs and commentators (especially the pundit class) would do this. Instead, most are cherry picking to prove themselves right. There are a few data fiends like Nate Silver who also do this, but rare. I find it very refreshing. I also greatly appreciate the articles on the military and the comments from military people here. It’s a group I don’t get to interact with much.

    1. Camilla,

      “You go back and evaluate your ideas as to how well they match up with reality”

      Especially see the pages listing prediction hits and misses.

      “wish a lot more blogs and commentators (especially the pundit class) would do this.”

      They don’t do that for a very good reason, the same reason Cinderella doesn’t end with a discussion of divorce rates — especially between spouses of different social classes. Today almost all the major blogs and commentators provide infotainment. Their audiences want exciting simple tales of good guys vs. bad guys white hats vs. black hats good people vs. bad people. Successful media operators know that, and provide what their audiences want. It’s a core feature of modern America. For details see A picture of America, showing a path to political reform.

      “I find it very refreshing.”

      But bad business. There is no “reality-based community” in America.

    2. Camilla,

      ” There are a few data fiends like Nate Silver who also do this”

      Not at all. Silver plays with numbers, giving his readers a thrill of having science support their beliefs. But when he publishes hard science that disturbs the liberal sensibilities of his readers, he runs away. That’s just good sense in the infotainment biz.

      As he did when Roger Pielke Jr. told his readers what the IPCC and peer-reviewed literature said about weather-related losses (they’re not increasing as a fraction of GDP) and extreme weather. See details here.

  3. Capitalism must be saved from Itself. Just like the Church must be saved from Itself.
    I don’t think that’s how Things work out here. Breath holding for either Event has proven to be and will be somewhat foolish. The Lion will lay down with the Lamb?
    Certainly a fun read, look forward to more tomorrow.. but that is just my odd nature and proclivity. In the interim, I’ll continue to engage the predators and calculate how to take more from the Masters.


    1. Breton,

      “Breath holding for either Event has proven to be and will be somewhat foolish.”

      That’s the New American ethic in a nutshell. We deserve so much, and will hold our breath until we get it!

      A suggestion: let’s try working to reform American, like citizens.

  4. Pingback: Wolfgang Streeck explains how to reform capitalism for a better 21st century – Fabius Maximus website (blog)

  5. You’re probably familiar with it, but much of this calls to mind the last page of MacIntyre’s After Virtue:

    “It is always dangerous to draw too precise parallels between one historical period and another; and among the most misleading of such parallels are those which have been drawn between our own age in Europe and North America and the epoch in which the Roman Empire declined into the Dark Ages.

    None the less certain parallels there are.

    A crucial turning point in that earlier history occurred when men and women of good will turned aside from the task of shoring up the Roman imperium and ceased to identify the continuation of civility and moral community with the maintenance of that imperium.

    What they set themselves to achieve instead—often not recognising fully what they were doing—was the construction of new forms of community within which the moral life could be sustained so that both morality and civility might survive the coming ages of barbarism and darkness.

    If my account of our moral condition is correct [one characterized by moral incoherence and unsettlable moral disputes in the modern world], we ought to conclude that for some time now we too have reached that turning point.

    What matters at this stage is the construction of local forms of community within which civility and the intellectual and moral life can be sustained through the new dark ages which are already upon us. And if the tradition of the virtues was able to survive the horrors of the last dark ages, we are not entirely without grounds for hope.

    This time however the barbarians are not waiting beyond the frontiers; they have already been governing us for quite some time. And it is our lack of consciousness of this that constitutes part of our predicament.

    We are waiting not for a Godot, but for another—doubtless very different—St. Benedict.”

  6. The thing is we have not had capitalism for a long time. What we have is socialism lite. That is what is imploding as Hayek and Mises predicted.

    Social safety nets destroyed the family unit. Government programs destroyed charity. Europe is not capitalist and that is why Europe is imploding before America has. We have benign dictators in the West telling us the shape of cucumbers and forcing hair stylists to get government permission before cutting hair. We have governments enforcing our right to travel and commingle through passports and artificially drawn borders left over from mercantilist empires run by the Kings who believed in their divine right. We have zombie industries protected by government transfers eliminating the Schumpeter’s idea of creative destruction. We have fake free trade agreements that are 15,000 pages long reducing Ricardo’s comparative advantage. We punish the successful and celebrate the unsuccessful. We have distorted nature by allowing the failed to continue to exist long past their due date.

    We do not have capitalism yet the useful idiots believe the claim it is that capitalism failed us. Had we respected property rights there would be no environmental damage as externalities (pollution) would be costly. We have a form of corporate socialism, mixed with mercantilism run by those who resurrected the divine right to rule. These rulers have controlled the population through social programs, regulations, extensive criminal codes. It is breads and circuses to distract us from ever looking behind the curtain. But it is not capitalism.

    1. Funstein,

      (1) “The thing is we have not had capitalism for a long time. What we have is socialism lite.”

      In the real world these things are not binary, one thing or another. We get mixed systems, not Platonic ideals.

      (2) “That is what is imploding”

      What is imploding?

      (3) “as Hayek and Mises predicted.”

      What prediction? Hayek’s most famous predictions were in The Road to Serfdom (1944), which were almost totally wrong.

      1. 1) fair comment
        2) The EU socialism
        3) maybe true with Hayek, except the fall of experts he predicted but Mises “Socialism” has been more accurate.

      2. funstein,

        (1) Hayek predicted a “fall of experts”

        Then he was wrong again. “Experts” in thousands of fields, from medicine to traffic control, run our civilization. They are people, and make mistakes. Also, people have always been skeptical about experts having knowledge they lack. A prominent example is the anti-vaccine movement: strong in 1880, still too strong today.

        There is zero evidence of any such fall.

        (2) Mises, more accurate than Hayek

        Since Hayek was almost totally wrong, that’s a low bar to jump. Also I suggest skepticism when people claim that an obscure guy, known mostly to their sect, made grand successful predictions.

      3. Fair comment. I guess I just like the forum that Hayek used to tell experts they were wrong and it has biased my comment.

        Mises book on socialism is fantastic but that does not mean I think all his work was prophetic.

  7. Pingback: | A Tease: greece money 01 06

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