In 1997 the author brought out a book The trouble with capitalism 1998 which sought to demonstrate that the dominant ‘market model’ of economic organisation was gradually ceasing to be viable. This should have helped to explain the evident slowdown of growth since the end of the 1970s following the end of the postwar boom. This in turn should have foreshadowed the ultimate demise of what is known as the capitalist or profits system

The author’s analysis was not widely accepted at the time by mainstream economists since it ran counter to the zeitgeist of the times, which supported the belief that market capitalism had won the cold war over Soviet communism.  Given the state of euphoric triumphalism among the western establishment, it is not surprising that there was so much scepticism about the theory advanced in the book.

Now, however, nearly thirty years on, the position is completely different, as reflected in chronically lower rates of global economic growth (GDP). This indicates that the capitalist economic model is under serious threat of collapse. At the same time however there is no sign of any general recognition that the system is failing. However there is clear evidence that it is breaking down in at least three interrelated areas.

 1.   Exponential world population growth   This has resulted in an unprecedented quadrupling of the global population in the last 75 years (Global mass migration .). Despite this, the official view – as reflected in the columns of The Economist, for example –  is that population, if anything, not growing fast enough and that the countries which have slowing or shrinking populations such as Japan and Italy are facing a serious economic and social problems. The unspoken reason for this is that capitalist economies must of necessity expand their population to provide markets for the extra growth of production which must result in the reinvestment of excess profits. Without this the system would ultimately collapse.  As against this the cotinued exponential growth of the world population is imposing ever greater burdens on this finite planet. This excess growth is being reflected in ever greater problems of overpopulation and mass migration from areas where economic growth and resources are insufficient to sustain them, as well as damage to the physical environment (see below).

 2.   Global poverty   It was stressed in the book that mass poverty had taken over large areas of the Global South including most of Asia, Africa and Latin America.  This was happening in spite of the efforts of international aid agencies such as the World Bank to bring about ‘structural adjustment’, which they have dubiously claimed to have lifted billions (out of poverty),.

 A better indicator of the results of such development aid might be the so-called Arab Spring, which in 2011 resulted in the overthrow of the Egyptian regime as well as those of Libya, Tunisia,.  At present the symptoms of these revolts have been neutralised by means of violent repression, but it seems only a matter of time until they recur.

An illustration of how these forces interact to produce chaos within the Global South and beyond is the rising incidence of land disputes, particularly in Africa, where nomadic people have been driven off their traditional grazing lands, thus sparking often serious conflicts.  The same forces further result in the unrelenting growth in the number of migrants coming to Europe and North America.

3   Climate change   A phenomenon which was not recognised 30 years ago is global warming. This is partly linked to population growth, but is mainly due to increasing use of fossil fuels (oil and gas).  This development needs to be seen as part of a process which started with the industrial revolution, dating from the 18th century.

Aside from these factors, economic growth and production are tending anyway to slow down on a cyclical basis, and the world economy is on course for long-term stagnation.  The combination of dwindling demand and constraints to supply also points to the ultimate demise of market capitalism.  

 In these circumstances there needs to be far  greater equality globally in the distribution of assets and income. This will entail a drastic change in the motivation of economic actors. As such it will require an end to giving priority to profits. 

 The idea of profit maximisation has been around from time immemorial.  In the western world it has been sanctified since the 18th century in the writings of Adam Smith.  He famously taught that economic actors were fulfilling a public purpose by seeking to maximise their profits, in that competition would stimulate higher quality and lower price of goods and services. More recently it has been encapsulated in the phrase “greed is good” – an expression made famous in the 1987 film ‘Wall Street’.

 This ideology was strengthened by the incorporation of limited liability in the Companies Acts of the 1850s, a mechanism that has served to reinforce and perpetuate the dominance of capitalism up to the present day.

 This made possible investments in large-scale projects such as railways, as well as  morally questionable activities or purely speculative assets, without exposing investors to undue personal risk. 

 Abolishing or reducing access to limited liability would have the effect of restricting the flow of funds into risky investments and thereby diminishing the danger of excessive investment overall. This in turn should tend to make possible the allocation of funds which would otherwise have gone to wasteful fixed or antisocial investment or speculation into projects or activities that would be useful to the community as a whole. If properly managed this should be of particular benefit to those living in what are now the most deprived parts of the world. Such a transformation would require a huge upheaval, both ideological and institutional, in the existing world order so as to benefit especially the poorest eighty percent of the global population.

It goes without saying that such a profound adjustment could only take place over the very long term. Moreover it would obviously need to be undertaken despite ferocious opposition from the ruling elite – as is the case with all epoch-making revolutions. 

Ultimately, however, a new ruling ideology must emerge incorporating the three following principles:

1. Priority to be given to cooperation rather than competition (obviously conflicting with the thinking of Adam Smith).  This will require a more equitable distribution of the planet’s limited natural resources. 

2.  Prefer sufficiency to growth. This will inevitably result in the slow or quite rapid demise of the capitalist profits system, which depends on more or less continuous growth to sustain itself.

3. An emphasis on relatively greater equality both between and within nations and communities. Achieving this process will be greatly enhanced with the application of Basic Income and other universal benefits.

It should not be supposed that the foregoing analysis implies a purely passive waiting upon the eventual collapse of the capitalist system. Rather, the three principles set out above — cooperation in place of competition, sufficiency in place of growth, and greater equality both between and within nations — require some practical mechanism by which they might be carried from the realm of theory into that of policy. It is suggested here that the provision of vital services (including healthcare and housing) and a Universal Basic Income could serve as just such a mechanism, providing a bridge between the present order and whatever is to succeed it.