US, China, and the Structural Crisis of Global Capitalism:

What Will be the Next?

Dr. Minqi Li, Assistant Professor

Department of Economics, University of Utah

Salt Lake City, Utah 84112

E-mail: minqi.li@economics.utah.edu

Phone: 801-828-5279

December 2009, Paris, France

Structural Crisis of Global Capitalism • 1914-1945: Great Depression / World Wars • 1968-1989: World Revolutions / Counter-Revolutions • 2008-?: Capitalist Restructuring / Self-Correction / Global Revolution?

Keynesian-Big Government Capitalism • US Hegemony • Big Government / Keynesian Macroeconomic Policies • Welfare State / Income Redistribution • Periphery / Semi-Periphery: Socialist / Import-Substitution Industrialization

1968 “World Revolution” • 1960s: Working Class Militancy • Triumphs of National Liberation Movements • Revolutions: China (1966-1976); France (1968); Chile (1969-1973); Portugal (1974) • World-wide Decline of Profit Rate • Collapse of Bretton Woods System (1971)

Global Capitalist Counter-Offensive • 1973: Chile • 1976: China • 1979/1980: Thatcher / Reagan • 1989 or “The End of History”

Neoliberal Capitalism • Monetarism • Privatization / Deregulation • Trade / Financial Liberalization • Periphery / Semi-Periphery: Structural Adjustments / Shock Therapies

China and Neoliberalism • 1976: Counter-Revolution • Pro-Capitalist Alliance: Bourgeoisie and Petty-Bourgeoisie (the so-called “intellectuals” or middle class) • Dismantling of People’s Communes 100-200 million migrant workers / massive cheap labor force rise of new capitalist sector • 1990s: large-scale privatization / destruction of the urban working class

Neoliberalism: Contradictions and Crisis • Neoliberalism absolute declines of living standards / surge of global inequality depression of global mass consumption • Global capital relocation exploitation of new cheap labor force (the so-called “rise of China / India”) rapid expansion of global production capacity • Global stagnation / financial crises • How has neoliberalism survived? – US: the world’s consumer of last resort (household debt / trade deficits)

What Will Be the Next? • A Revival of Neoliberalism? • A Return to Keynesianism / Global New Deal / “Change”? • Structural (terminal, fatal) Crisis of Capitalism / World Socialist Revolution • Not 1945 Again: Decline of American Hegemony (and China will not become the new hegemony); exhaustion of global space of social reform; global environmental crisis

Global Economy: 2010-2020 (Scenario 1) • US: Aggressive Keynesian Expansion large government deficits / massive increase in government debt • Rest of the World: Export-Led Growth • Eventually – Collapse of US$, US Treasury Bonds, US Economy, and Global Economy

Global Economy: 2010-2020 (Scenario 2) • US / Europe: Stagnation • China: Leads Global Expansion • China: Investment-Led Growth Massive Excess Capacity • China’s Economic Crisis Global Economic Crisis

Wolfgang Munchu: Countdown to the Next Crisis is Already Under Way Our present situation can give rise to two scenarios … The first is that central banks start existing at some point in 2010, triggering another fall in the prices of risky assets. Alternatively, central banks might prioritise financial stability over price stability and keep the monetary floodgates open for as long as possible. This, I believe, would cause the mother of all financial market crises – a bond market crash – to be followed by depression and deflation Financial Times, October 19, 2009

Global Climate Crisis • IPCC: 50-85 emissions reduction from 2000 levels by 2050 is required to prevent global warming by 2-2.4C • 2C Warming: Tipping Points / Climate Feedbacks • 3C Warming: Global Sea Level Rising by 25 Meters / Destruction of Amazon Rainforests • 4C Warming: Global Population Reduction by 90%? (James Lovelock) • James Hansen: 350 ppm is required to prevent 2C Warming (IPCC: 450 ppm)

Capitalism and Global Climate Crisis • Capitalism: Endless Accumulation of Capital • Environmental Sustainability: Requires Stable and Sustainable Flows of Material Consumption / Environmental Impact

Class Struggle and Global Revolution • Core (US / Europe): Exhaustion of Historical Space for Social Reform Accumulation Crisis of Legitimacy Crisis? • Periphery (Africa / Middle East / South Asia): General Societal Collapse? • Semi-Periphery (BRICs): Centers of Global Accumulation / Convergence of Multiple Social and Environmental Contradictions – the Decisive Battleground of Global Class Struggle?