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Trending Toward Global Revolution? Ted Reese

November 23, 2022

Unfortunately for political economists like Francis Fukuyama, who continues to insist that ‘liberal capitalism’ is ‘the end of history’, evolution has not reached a point of stasis and, insubordinately, instead remains ceaselessly dynamic.

Marx regarded socialism’s emergence and supersession of capitalism as an inexorable natural process,1 and as capitalism ages amid the automation industrial revolution it is becoming evermore apparent that his scientific analysis is indeed correct.

As he anticipated, this accelerating industrial revolution is paradoxically abolishing the source of exchange value and profit, i.e. capital’s theft of commodity-producing labour’s surplus labour time (surplus value), the time worked beyond necessary labour time/costs of subsistence.2

This process is not reversible. Capitalist production tends to break down as human labour becomes a relatively smaller part in the production process – producing an underproduction of surplus value (relative to the value of capital to be reproduced); and an overaccumulation of capital (a surplus that cannot be reinvested in production profitably). The capitalist is therefore compelled to raise the productivity of labour through innovation and to reduce the outlay on wages, thereby increasing the absolute mass of value but intensifying the contradiction in the long run.

Expanding the mass of value can take place through simple expansion – on the basis of existing technology – but competition between private producers and the need to meet the ever-rising demands of valorisation (value creation/reproduction) means expansion increasingly tends to be made on the basis of innovation, even if the rate of expansion and innovation tends to slow in relative terms.

As James Manyika, McKinsey Global Institute director, said in June 2017: “Find a factory anywhere in the world built in the past five years – not many people work there.”

Is the apparently unimaginable end of capitalism finally on the horizon then? By analysing long-term empirical economic, technological and scientific trends, a set of compelling evidence indeed comes together to indicate that capitalist production is now both approaching a ‘final breakdown’ and evolving towards, or birthing, socialism.

That is, an increasingly centrally planned state monopoly capitalism – since accumulation is increasingly dependent on the efficiency of central planning both at the state level (e.g. central bank intervention) and within private enterprise; industrial monopolisation (mergers & acquisitions); and state subsidies, facilities and contracts – is ripening the conditions for centrally planned ‘state monopoly’ socialism, whereby a ‘final merger’ of evermore integrated private enterprise, therefore into a public monopoly, is the next necessary shift in the evolution of the productive forces, i.e. man and technology.

The final breakdown?

➤ Official US national debt-to-GDP  –  driven by private sector debt (which in 2019 had trebled since 1950) heaped onto the public  –  hit an all-time high of 137.2% in 2021, beating the 117% at the end of WWII. The actual figure in the US has been estimated (as of July 2019) to be 2.5 times higher.

Global debt across all sectors hit 322% of GDP in 2019, 40 percentage points higher than at the onset of the 2007-09 global financial crisis/‘Great Recession’.

➤ The record high debt has been part of an unprecedented explosion in the money supply since March 2020 when the Federal Reserve, the US central bank, electronically ‘printed’ money exponentially to buy up long-term government bonds that no one else could afford (and – also for the first time – corporate bonds and exchange-traded funds in the primary market, having only ever done so previously in the secondary market), thereby pushing down interest rates to cheapen borrowing and speed up cash flow, turnover and circulation.

In the 22 months from January 2020 ($4tn) to October 2021 ($20tn), the (more liquid) M1 money supply exploded by 80% and the (broader) M2 supply by almost 70%.

➤ A third ‘one-in-100-year’ financial bubble in three decades (following the 2000-01 dot com bubble and the 2007-09 housing bubble)  engulfing the world economy has been labeled ‘the everything bubble’ since it encompasses every asset (debt) class for the first time, especially short- and now long-term government bonds, the foundation of the global financial system.

Official stock market capitalization (the value of publicly-traded stocks) as a percentage of nominal GDP in the US peaked at 199% in November 2021 – Bianco Research, cited by Bloomberg, put the figure at 229% – the previous highs having been 140.5% in March 2000; 101% in November 2007; and 90% in August 1929.

This ‘everything bubble’ demonstrates that investment has been pouring into speculation for lack of profitable opportunities in production on by far the largest ever scale.

➤ The balance sheet of the Federal Reserve, the US central bank, rocketed from $100 billion (bn) in 2000, mainly then made up of short-term government bonds; to $900bn in September 2008, during the global financial crisis/‘Great Recession’, when bailing out banks involved buying high-risk mortgage-backed securities; to $9 trillion (tn) in 2020, following the addition of long-term government bonds .

In March 2022, the US bubble had deflated to 179% of GDP – still 39% larger than the peak of the dot com bubble – and then 145.5% in October, after the Fed started reducing its balance sheet, thereby raising interest rates to fight 40-year-high inflation3 that was set off by surging insolvencies in 2021. This caused production and supply to fall relative to demand, with the inflation creating a vicious circle and taking insolvencies to the highest rates since the Great Recession.

It took eight years of interest rate hikes peaking at 19% in 1980 and 1981 in the US to defeat inflation in the 1970s. Because wages are relatively much lower and mortgage debt much higher, a baseline rate of 3% in Britain is now the equivalent of 14% in 1980.

➤ Since the 1980s, each recession has started at a lower baseline interest rate – 19% in 1981, 8% in 1989, 5% in 2000, 4% in 2008; 1.5% in 2020.

➤ Lifting the US economy out of recession has required on average since 1958 a rate cut of 6%;4 but since the fastever ever stock market crash in March 2020, it was already at zero, having been cut from 1.75%. Britain’s was cut to zero from 0.75%.

Neither the US nor Britain – the two traditional capitalist imperialist superpowers – had ever gone below 0.5% before 2010, but both more or less remained stuck at zero (other than a 2.5-year period up to August 2019) until 2022.

Every attempt to raise rates/reduce debt since the Great Recession – the bond market panic a.k.a. ‘taper tantrum’ in 2013; then in the run up to August 2019, when 10-year government bond yields fell below 2-year yields for the first time since the Great Recession – has tipped the economy towards recession. Now the US suffered (“unexpectedly severe”) negative growth at the start of 2022 and Britain is expecting a two-year downturn, its “longest recession since records began” in the 1920s.

A record 80% of central banks are aggressively raising rates at the same time to induce a recession in an attempt to centralise wealth into fewer hands, thereby restoring accumulation for the surviving corporations.

If and when central banks pivot, going into negative baseline rates  is a limited  option as  there is only so much cash that can be converted into stocks. Banks, many of which are already close to going bust, have warned that negative rates threaten their profitability.

How negative can rates go before lending to the government is disincentivised? Since 2014, trillions of dollars of sovereign debt has been subjected to negative rates – even, due to inflation, at a 0% return – meaning investors have been paying for the privilege of lending money to the capitalist state.

Lending has recently slumped, forcing treasury yields up and making debt more expensive to repay. A 1% rate on £30tn of US national debt is $300bn, but 10% is $3tn – not much less than total US tax revenues of $3.9 trillion in 2021.

➤ Ultimately, the Fed is faced with the choice of continuing to reduce the balance sheet and instigating the worst ever global depression – much of the world is already struggling to import goods – or ‘pivoting’ and instigating higher and higher inflation. In the long run, hyperinflation likely beckons.

Long-term empirical trends

➤ Short- and long-term interest rates have been falling in a secular trend towards zero over the course of seven centuriesregardless of the forms of political-legal or banking regimes.

➤ Of the roughly 750 currencies that have existed since 1700, fewer than 20% remain.

➤ British pound sterling has lost more than 99.5% of its purchasing power since its adoption as official currency in 1694. The US dollar has lost more than 96% since 1913.

➤ The aggregate global rate of profit has trended secularly towards zero, having fallen from an estimated 43% in the 1870s to 17% in the 2000s;5 in line with what Marx identified as “the law of a progressive fall in the rate of profit” [my emphasis].

➤ Average GDP growth rates in what the World Bank defines as ‘high income countries’ fell from 5.59% in the 1960s; to 4.15% in the 70s; 2.93% in the 80s; 2.35% in the 90s; and 1.78% in the 2000s. A slight reprieve of 2.1% in the 2010s – based on extreme debt and ‘austerity’ (transfers of public wealth into private hands) – proved to be unsustainable, with growth slumping by 4.5% in 2020, worse than the decline of 3.2% in 2009.

➤ Between 1964 and 2014, the average lifespan of S&P 500 companies shrank from around 60 to 18 years.

➤ The Energy Return on Investment (EROI) on fossil fuel has fallen from above 100:1 in the 1920s to around 3–6:1 in 2019. Shell has stated that peak oil struck in 2019.

The price of crude oil (per barrel) traded at an all-time high of $147 in July 2008 before crashing to $40 in the following six months and – having become more volatile than ever – $33 in January 2016. Between 2016 and 2020, prices averaged $51, but the break-even cost of production in Saudi Arabia was $86.

The fossil fuel industry’s profitability is highly dependent on subsidies – not a bottomless reservoir – of $16bn a day.6

According to Sid Smith, all forms of energy production are becoming unprofitable.7

➤ Prices have trended secularly towards zero. For example, the fastest supercomputer in 1975 was worth $5m ($32m in 2013 money); an iPhone 4 released in 2010 with the equivalent performance was $400. Aerospace companies producing propulsion systems in 2010 for $24m in 24 months were by 2019 3-D printing them for $2,000 in two weeks.8

One gigabyte of data storage fell from around $200,000 in 1980 to $0.03 in 2014.

According to Rethink X, cheaply growing “unlimited” amounts of food in vats through ‘precision fermentation9 – feedstock plus gene-edited microbes (a form of automation) – will soon “sweep away the industrial dairy and meat industries”.

In 2000, the cost of producing one kilogram of one type of molecule through precision fermentation cost $1million, but fell to around $100 in 2020, when it was on course to become cost-competitive with bulk animal protein ($10 per kg for casein and whey) by 2025. It is expected to be five times cheaper than traditional animal proteins by 2030.

State monopoly socialism

➤ Since capital accumulation is increasingly dependent on the monopolisation of industry10 along with central planning (eliminated internal markets,11 centralised data, etc.) and state (public) facilities12 and subsidies (including tax cuts);13 a ‘final merger’, a therefore public monopoly, and central planning the economy as a whole, is becoming, for the first time, an economic necessity.14

➤ Since money is dying a natural death, with cash also disappearing in relative terms , it must be replaced by an inherently centralised digital voucher system, with the ‘currency’ pegged to labour time, weighted against productivity rates and supply and demand. (5.5 hours of work gains you, on average, 5.5 credits that can buy goods and services that took, on average, 5.5 labour hours to produce.)15

➤ Since the private sector is losing its ability to employ value-creating (commodity-producing) labour , society, via the state and state/social enterprises, must take over responsibility for employment, enabling actual full formal employment (revitalising earn-as-you-learn apprenticeships and retraining for workers displaced by innovation).

➤ Since the workforce has been deindustrialised (shifted out of manufacturing) and is now almost entirely services-based16 – services workers produce relatively little new surplus value per commodity since they tend to handle finished or near-finished commodities17 – stable economic growth can only be established by abolishing exchange between private producers; i.e. no exchange of ownership takes place between social enterprises, making ‘trade’ truly free. With socialism, ‘value’ (used only as an accounting tool) is created not by anarchic (recessions and destructive competition), for-profit commodity-production but by planned (co-operative and co-ordinated), break-even utility-production.

➤ Since the working class (wage-slaves/the proletariat) is now billions of times stronger in number18 than the relatively dwindling capitalist class (the bourgeoisie) and increasingly integrated communcatively and culturally, the shallowness of bourgeois ‘democracy’ (whereby standing for candidacy is prohibitively expensive; only bourgeois ‘representatives’ vote on any policy; etc.) has become thoroughly outdated and must be replaced by participatory proletarian democracy, enabling ‘ordinary people’ to stand in elections and vote for various policies they are affected by, now made eminently viable by modern technology.

Binary to non-binary

Capitalism’s dualistic mode of production – both a technical labour process producing use values (utilities) and a valorisation (exchange value-/profit-making) process – is evolving into a singular fully automated system of production.

Put another way, the commodity is dually characterised as a use value and an exchange value, but as we produce more of the former, the latter inversely withers away.

Mechanistic mechanisms are also dualistic, whereas automation (self-action) is continuous. Whereas computing operations are binary, for example, operations in the emerging field of quantum computing are non-binary, existing on a spectrum.19

Furthermore, the contemporary scientific worldview is accelerating further and further away from the classical mechanistic binary one, rapidly becoming much more holistic and closer to Marx’s dialectical materialism, which views matter itself as intrinsically in motion – dynamic, self-sensing and thus automatic, constantly in flux – and not as static or atomistic but a continuous kinetic process that mutually ‘hangs together’ (a bit like a spider’s web), ultimately inseparably. This development is particularly clear in the ongoing advances of quantum field theory, which rejects the notion of atoms and particles (now called ‘wavefunctions’) other than in abstract moments of measurement and instead reveals the universe to be made up of inseparable fluid-like, vibrational energy fields.20

Evolution to revolution

New relations of production are emerging – socialism, the social/public/human ownership of production.21

Private, capitalist production is breaking down, manifesting economically in rising prices and scarcity; and, politically, in increasingly authoritarian, fascistic and competitive/warmongering capitalist states as capitalists attempt to offset their losses by intensifying plunder and theft.

This is unsustainable – if and when the US defaults, it may not be able to pay its state employees, including soldiers – increasingly compelling the working class to fight back.

The establishment of the new relations of production, however they emerge, will represent a social revolution – a culmination of an inseparable series of evolutionary phases during roughly 13,000 years of privately-owned production (comprising barter, mercantilism, slavery, feudalism and capitalism).

Higher communism: Abundance for all

Once socialism is up and running – especially globally and once the questions of energy and pollution are addressed – as the production of state enterprises becomes more prolific and prices fall back downwards, precision fermentation, 3-D printing, etc., will increasingly diffuse, leading to rising economic independence and abundant (extremely plentiful) material wealth for all; manifesting in increasing free/leisure time, thereby revitalising independent craftsmanship along with creative, aesthetic and spiritual endeavour.

Class and the state will become increasingly irrelevant , thereby withering away – so whereas capitalism has a long-term tendency to centralise wealth and power, socialism has a long-term tendency to decentralise wealth and power. ‘Lower communism’ (socialism) evolves into ‘higher communism’, just as ‘free market/competitive capitalism’ evolved into monopoly capitalism, which today has evolved into a presocialist, advanced state monopoly capitalism.


1. “In the preface to the first edition of Capital, Marx speaks of the ‘natural laws’ of capitalist production… [a]nd the postface to the second edition states that Marx ‘treats the social movement as a process of natural history….’” Grossman, H., Henryk Grossman Works Vol. 1, p. 433, Brill, 2019.

2. What all commodities have in common is that they are all exchangeable; possessing exchange value. What they all have in common which gives them this exchange value is general human labour (time).

That higher labour-intensity produces higher profit rates has been confirmed by statistical mechanics. For mathematical proof of the labour theory of value see Andrew Kliman’s temporal analysis.

3. “When surplus capital is produced at a very rapid rate and its reconversion into productive capital increases demand for all the elements of the latter to such an extent that actual production cannot keep pace with demand; this brings about a rise in prices,” as Marx says.

And when capital flows are sanctioned and new production cannot be found to invest in fast enough, surplus capital is invested in money capital/speculation instead.

4. Summers, G., (2017), The Everything Bubble: The Endgame for Central Bank Policy, p. 165.

5. See also: A world rate of profit: important new evidence by Michael Roberts.

6. Smith believes we are headed for permanent scarcity but as he himself says “nuclear would be perfect” if it were not so expensive – yet it is only too expensive with private ownership because it is inherently capital-intensive. Other emissions-free options that capital cannot take advantage of are hemp supercapacitors, microbial fuel cells, and space-based solar.

7. This legalised extortion is aided by artificial scarcity imposed by producers that raises prices by 70-80%.

8. Bastani, A., Fully Automated Luxury Communism, Verso, 2019, p. 123.

9. Precision fermentation, like 3D-printing, is a form of additive manufacturing, which involves growing and/or layering materials, as opposed to subtractive manufacturing  – metal or trees subtracted from mines or land and from which products are milled or carved, for example. So:

Subtractive, mechanised (binary) production = limited/scarce production (capitalism)

Additive, automated (continuous) production = unlimited/abundant production (communism)

10. See the monopolisation of banking, and food and drink, for example. See also: The four companies that control the 147 Companies that own everything.

11. See Phillips L., Rozworski, M., People’s Republic of Walmart: How the World’s Largest Corporations are Laying the Foundation for Socialism, Verso, 2019.

“While [Walmart] operates within the [international] market, internally … everything is planned… The different departments, stores, trucks and suppliers do not compete against each other in a market; everything is coordinated… (p. 21).”

“It is no small irony that one of Walmart’s main competitors… Sears, Roebuck & Company, destroyed itself by … instituting an internal market (pp. 27-31).”

12. Large private R&D centres in the US have “mostly disappeared” (Mazzucato, M, The Entrepreneurial State, Penguin, 2018, p. 193).

13. Both corporate tax rates and corporate tax as a share of GDP has tended to fall as the rate of profit has fallen, the former implemented to counter the latter.

The state even takes a leading role in establishing commercial viability (Mazzucato, p. 55). State funding for new tech firms is 2-8 times the amount of investment from venture capital, whose risk of loss is 66.2% at seed stage and 53% at start-up stage, but 20% at pre-public stage.

14. ‘Necessity’ is used not in a deterministic but relational way. Marx’s understanding of matter’s movement is that it is part random and part relational – each movement relates to the one that came before. (See footnote 20.)

15. Since vouchers are non-transferable, cancelled like train tickets once ‘spent’, the centralisation of wealth into fewer and fewer hands becomes impossible.

The most productive workers and those whose services are in highest demand relative to supply will receive the highest pay, but more workers will join the ranks of the most productive (scientists, coders, etc.) and falling prices will progressively lift living standards for all.

16. Around 80% of the (private and public) workforce is based in services in the US and other ‘developed’ nations. Even Africa and Latin America have been deindustrialising over the past decade.

Just as the number of slaves in the US declined as a percentage of the population (from approx. 25% in 1790 to 16% in 1860) before slavery ended, via civil war; manufacturing workers declined as a percentage of the US workforce from 26.4% in 1970 to 8.4% in 2016.

17. This may of course be offset by an increase in their absolute productivity thanks to innovation.

N.B. As science and computing play an increasingly large role in production, scientists, engineers, programmers, etc. are increasingly proletarianised. Their pay/necessary labour time is relatively high (qualifications, equipment, etc.) and so the newest specific forms of labour – standing on the shoulders of previous generations – represent a historically ascending economic class, i.e. one set to become the new ruling class, because necessary labour time is subsuming surplus labour time.

The problem for capitalism is that it eventually exhausts its ability to sufficiently appropriate labour’s surplus labour time.

18. In the US, the number of waged workers as a proportion of the economically active population rose from 90.6% in 1980 to 93.2% in 2011. (Smith, J., Imperialism in the Twenty-First Century, Monthly Review Press, 2016, p. 147.)

19. Quantum computing will enable online privacy (as well as electoral security).

20. Marx, K., The Difference Between the Democritean and Epicurean Philosophy of Nature, Progress Publishers; first published in 1902; written in 1841.

According to Thomas Nail, ‘hangs together’ is ​​the literal translation of the German word zusammenhängen, used extensively by Marx. See Nail’s Marx in Motion, Oxford University Press, 2020.

21. Obviously the Soviet Union etc. showed there can be exceptions to the rule that capitalism can be overthrown (albeit not globally) before a country has ‘fully passed through’ the phase of capitalism; but then that has ultimately proved untrue given that every socialist country has either collapsed or to some extent liberalised as a result of capitalism’s global dominance and need to expand its exploitable labour base.

Modern computing and stock coding make the ‘command and control’ style of planning that often overlooked smaller details and components a thing of the past. (Planning was also disrupted by unpredictable foreign prices and the need to build up foreign reserves for trade, upon which the socialist bloc exposed itself to devaluation shocks in the wake of the capitalist crisis of the 1970s.) Components are increasingly integrated anyway: whereas NASA’s first space shuttle had 2.5 million moving parts and SpaceX machines possess around 100,000, Relativity Space aims for its rockets to have a thousand moving parts or less, fewer than most cars.


Ted Reese is the author of The End of Capitalism: The Thought of Henryk Grossman

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