As long as they did the above, a Capitalist could stave off revolution in its many forms almost perpetually. Yet what we see today is:
I think it's no wonder that we see Fascism, which is a defensive reaction against progressivism, rising today: the people at the top are self-destructing.
Yeah, who'd have thought if you base your entire system on raw greed and then reward practically unlimited power to the greediest person things wouldn't turn out so well.
Capitalism's self destruction is a key feature of Marx's analysis in Capital.
We like to think of the bourgeoisie as a united group who can collectively ponder the long-term consequences of their actions, but in reality they tend to be somewhat fragmented and, more importantly, in constant competition with each other. They must all race together towards the bottom or risk losing their muh privileges.
And I think you're on point here, but IMO instead of optimistically reading it as the destruction of Capitalism, we need to read it as a cycle of renovation of the elites in the Pareto/Mosca fashion.
In the near future, total collapse is a lot less likely than a wide-range system of reform where new political structures will appear, and they will attempt to provide a framework against things that are harming capitalism today. And if that happens, we'll have an Old vs New Elite conflict like in the 1930's, where the bourgeoisie was divided between reactionaries and reformers.
The neo-cons apparently.
Well yes, but everyone from Malthus to Marx thought that. But we're actually seeing it go down today… hopefully.
So you think we're about to get to a point where the elite will trim the fat, cut out the dysfunctional, and institute some reform that will try and keep capitalism chugging along in a slightly different form for another century? Gloomy, but a tad more realistic than my sunny projections.
That is what they did in 1930.
Do you consider that a long-term move in the direction of Communism/Socialism/etc, a more robust form of Capitalism, or both?
Not to nitpick, but that home ownership graphic seems kind of convoluted for actually just buying a home; my parents moved three times when I was a kid and every house entailed little (if anything) more than getting a mortgage and moving in.
I'll agree that renting is the lowest of the low, however.
I have a strong suspicion this is incorrect and total collapse may actually be impending. All indicators continue to show that civilization is continuing to track Limits to growth predictions for overshoot and collapse. Hard limits to available resources continue to present themselves and proliferate.
Capitalism tends towards crisis because it reaches periods of overproduction, and in order to solve this it must find some way to expand its markets to mop up this overproduction.
In the 1800s, these periodic crises were solved by literal geographic expansion of markets; colonialism. Read Lenin, "Imperialism- the highest stage of capitalism" for more on this; although history has shown it was not the "highest" (read: final) stage after all.
In the early 1900s, two world wars successively solved crises of overproduction by creating the necessity for mass reconstruction of whole urban areas - not to mention the mopping up of unemployment by the casualties.
In the 1980s, it was solved by expanding the market through credit, through the relaxing of financial markets and the creation of markets out of debt.
In the early 1990s, a global crisis of capitalism was avoided when the USSR and China both opened their vast markets to capitalism.
It might yet pull another trick out of the bag, but at this point geographic expansion is very limited. Capitalism is already everywhere. Its two remaining options are to cause mass destruction so that it might rebuild again, or to expand the market via some financial means (wiping debt, for example) thus both angering indivual capitalists and exposing further its contradictions to the masses. Let's hope for option two.
The bank issued the line of credit to the people who built the house. It issued their mortgage. It probably also issues payroll loans to the contractor(s) who built it. The bank got a piece of everything, a developer was a junior partner, and your parents went into debt to purchase consumer real estate.
Honestly I could see it go either way.
I don't know that we're at overproduction yet though. Africa has almost a billion people who lack the means to consume. Give Africa or South America a sizeable middle class and there may be a few turns left in the game.
I know that the bank gets a piece of everything, but in many cases home ownership as simple as Bank → Homeowner so I think that the chart is a bit contorted to match up with the one of the left. Plus it ends with "renters", and renting is pretty much the opposite of home ownership.
Oh, so your parents bought a plot of land and built it?
Also, I'm not suggesting that all properties are rental properties. It's a flow chart.
No, which is why I said that there should be a direct line drawn between the bank and homeowners - to represent simple, turnkey purchases.
I think that the graphic would probably work better as a web than a flowchart because home ownership tends to be somewhat non-linear.
You're not getting it. Whoever built the home took out a loan to do it. Hence the line from bank to developer to home buyer on the web.
Well we are at overproduction - particularly of steel, particularly in China. Essentially all crises of capitalism, historically, have been these periodic crises of overproduction.
And Africa is a potential for some geographic expansion, true, but due to its political instability capitalists are unlikely to invest there. It would be a longer economic project than the ruling class has time for if they want to save capitalism this time.
PEAK OIL!
The Long Descent begins with the Crash at the end of this year.
Bumping because it's vital that we understand how capitalism works, and why crisis happens, in order to predict events and thus plan for them.
Creative destruction (German: schöpferische Zerstörung), sometimes known as Schumpeter's gale, is a concept in economics which since the 1950s has become most readily identified with the Austrian American economist Joseph Schumpeter[1] who derived it from the work of Karl Marx and popularized it as a theory of economic innovation and the business cycle.
According to Schumpeter, the "gale of creative destruction" describes the "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one".[2] In Marxist economic theory the concept refers more broadly to the linked processes of the accumulation and annihilation of wealth under capitalism.[3][4][5]
The German Marxist sociologist Werner Sombart has been credited[1] with the first use of these terms in his work Krieg und Kapitalismus ("War and Capitalism", 1913).[6] In the earlier work of Marx, however, the idea of creative destruction or annihilation (German: Vernichtung) implies not only that capitalism destroys and reconfigures previous economic orders, but also that it must ceaselessly devalue existing wealth (whether through war, dereliction, or regular and periodic economic crises) in order to clear the ground for the creation of new wealth.[3][4][5]
In Capitalism, Socialism and Democracy (1942), Joseph Schumpeter developed the concept out of a careful reading of Marx’s thought (to which the whole of Part I of the book is devoted), arguing (in Part II) that the creative-destructive forces unleashed by capitalism would eventually lead to its demise as a system (see below).[7] Despite this, the term subsequently gained popularity within neoliberal or free-market economics as a description of processes such as downsizing in order to increase the efficiency and dynamism of a company. The Marxian usage has, however, been retained and further developed in the work of social scientists such as David Harvey,[8] Marshall Berman,[9] and Manuel Castells.[10]
This just says that boom and bust cycles occur… Does it offer much in terms of an explanation of why?
Bump
Economics is not about explaining why things happen, but justifying things that already happened.
…is this supposed to be ironic?
"The effect of continuous innovation […] is to devalue, if not destroy, past investments and labour skills. Creative destruction is embedded within the circulation of capital itself. Innovation exacerbates instability, insecurity, and in the end, becomes the prime force pushing capitalism into periodic paroxysms of crisis. […] The struggle to maintain profitability sends capitalists racing off to explore all kinds of other possibilities. New product lines are opened up, and that means the creation of new wants and needs. Capitalists are forced to redouble their efforts to create new needs in others […]. The result is to exacerbate insecurity and instability, as masses of capital and workers shift from one line of production to another, leaving whole sectors devastated […]. The drive to relocate to more advantageous places (the geographical movement of both capital and labour) periodically revolutionizes the international and territorial division of labour, adding a vital geographical dimension to the insecurity. The resultant transformation in the experience of space and place is matched by revolutions in the time dimension, as capitalists strive to reduce the turnover time of their capital to "the twinkling of an eye".
Globalization can be viewed as some ultimate form of time-space compression, allowing capital investment to move almost instantaneously from one corner of the globe to another, devaluing fixed assets and laying off labour in one urban conglommeration while opening up new centres of manufacture in more profitable sites for production operations. Hence, in this continual process of creative destruction, capitalism does not resolve its contradictions and crises, but merely "moves them around geographically"
The truth of the matter, as Marx sees, is that everything that bourgeois society builds is built to be torn down. "All that is solid" — from the clothes on our backs to the looms and mills that weave them, to the men and women who work the machines, to the houses and neighborhoods the workers live in, to the firms and corporations that exploit the workers, to the towns and cities and whole regions and even nations that embrace them all — all these are made to be broken tomorrow, smashed or shredded or pulverized or dissolved, so they can be recycled or replaced next week, and the whole process can go on again and again, hopefully forever, in ever more profitable forms. The pathos of all bourgeois monuments is that their material strength and solidity actually count for nothing and carry no weight at all, that they are blown away like frail reeds by the very forces of capitalist development that they celebrate. Even the most beautiful and impressive bourgeois buildings and public works are disposable, capitalized for fast depreciation and planned to be obsolete, closer in their social functions to tents and encampments than to "Egyptian pyramids, Roman aqueducts, Gothic cathedrals".