From Great Depression to Occupy Wall Street: Slogans Require Philosophy

May 27, 2013

by Paramjit Singh

The rudimentary cause behind crises in the existing capitalist system is system itself. Each crisis, whether it is great depression (1930s), collapse of international monetary system (1970s), or the financial crisis of 2008, has one sole reason, i.e., the gap between haves and have-nots continues to widen. The only permanent solution to this problem is building an empire of the majority.

Historical Background

The classical liberal economic thought which arose from the writings of Adam Smith and his followers was dominant in the world scene prior to great depression. The historical analysis of capitalism reveals that capital required a minimum compound growth, three per cent as Harvey (2010) estimated, to sustain the capitalist system. Anything less than three per cent is problematic, while zero or negative growth defines crisis which if prolonged, as in the 1930, defines a depression. The primary cause behind the 1929 to 1933 depression in world capitalist system was the growth of large scale financial sector along with professionally managed corporations and cartels. In the process, capitalist ownership became separated from daily business management; a large capitalist rentier class, owning shares across multiple sectors, differentiated itself from a new class of professional managers and technocrats (Michl, 2011). The working class, which was main driving force for the circulation of capital, experienced stagnation in real wages that caused decline in demand for capitalistic production. The highly speculative financial sector tried to sustain the compound growth of capital through loans and credit creation which lead to the crash in 1929. During this period, Keynes (1936), a well-wisher of capitalism, suggested the philosophy of government intervention in the form of investment and expenditure. This new interventionist approach replaced the classical liberalism and it became an accepted belief that capitalism requires significant State intervention in economic affairs to sustain the growth of capital. Keynes argued that the main reason behind the depression in capitalistic system is decline in effective demand. This notion accompanied by strong workers movement gave birth to ‘Welfare States’. Relatively high social welfare spending resulted in a rise of average wage level and employment. The era between 1950 and 1970 was also marked as ‘golden age of capitalism’. During this period, the organised working class accepted capitalist markets and property rights in exchange for political democracy. This enabled workers to achieve social security and higher wages on one hand and it caused the rise in demand for capitalistic production on the other (Streeck, 2011). This was the period of balance between market and public goods. Keynesianism entered into crisis in the 1970s characterised by stagflation – high rate of inflation along with the high rate of unemployment which brought this system to its demise.

In 1970s, once again; there was a need to put the system (particularly capital) out of crisis. But this time State intervention is considered as an obstacle in the way of economic growth. Economists like Milton Friedman and his followers argued to assign a very limited economic role to the State. They claimed that the excessive power of labour was the primary source of crisis because labour would not accept lower wages when the demand for their labour falls. They favoured the ‘retreat of the State’ from economic and social affairs with an argument that market has the capacity to settle any crisis. These recommendations include deregulation of business, privatisation of public activities and asset, elimination of or cutback in social welfare programs and reduction of taxes on businesses and investing classes (Kotz, 2002). During this period, capitalist class has made the reduction in number of employees (through intensive use of labour-saving technology) and in wage bill to meet the demand of shareholders for higher profits (Grahl, 2011). Decline in taxes on factory owners and shareholders and reduction in subsidies to commons have raised the profits of capitalists. As a result, situation of workers and common people has deteriorated. This response to economic instability and capitalist crisis was once again temporary. The alternative which the economists have suggested to solve the crisis was an old one. These liberal ideas were nothing but the ideas of classical economists, which viewed State as an obstacle in profit earnings of capitalist class. The finance capital rose up during this decade after the breakdown of Bretton Wood System (1973) because the industrial capital was unable to maintain the minimum growth of capital. The speculative nature of capital which always looks for higher returns on loans are least interested in stability of the capitalist system. Unregulated growth of mortgage financial system which started in mid 1970s caused the collapse of financial system in 2008.

As Marx had pointed out, in advanced capitalism, the capital circulation bypasses the process of commodity production and changes from M-C-M’ to M-M’. The process of increment in initial M without producing any commodity (or new employment) is known as the process of finance capital. It usually takes profits from the savings and the disposable income of the common people. The sub-prime crisis of unregulated financial system in USA and European countries was the product of this greed for higher profits, which resulted in the collapse of banking system on the one hand and depression in the commodity market on the other. This time no one is against the finance capital which has the primary cause of crisis. The state, once again, has played a positive role in favour of capitalist class by shifting the crisis of capital to fiscal crisis of the State. So this historical outlook of capitalist crisis reveals that the State, which is nothing but a class tool, has played a protective role to save the system of minority at the expenses of majority in every crisis.

Bailout and Wall Street Movement

During last year, there was protest at Wall Street. Protesters are objecting the bailout of banking system which enables them to earn enormous profits. The main purpose of capitalist government at this time or at the time of each crisis is to save the present system of exploitation. As Harvey (2011) expressed, the party of Wall Street has ruled unchallenged in the USA for far too long. It has totally dominated the policies over last four decades. The party of Wall Street is nothing but the top one per cent of capitalist who rules over the State and common people. The bailout for those who are already enjoying huge profits at the cost of common people is itself unjust. The USA federal government spent $ 413 billion to save the banks in 2008 crisis, and out of which $314 billion has been recovered from common taxpayers. It means that the cost of bailout (socialising the losses of most important financial entities) ultimately fell on working population. That’s why in San Francisco, a crowd of several hundred people protested around the financial district, chanting ‘they got bailed out, we got sold out.’

The occupy Wall Street movement has struck a powerful chord among the million people not only in USA but also across the most important cities and financial capitals of the entire Europe. This time capitalist system is facing manifold of problems, namely intolerable unemployment, widening inequality, stagnant wages, rising capitalist greed, job loss, anarchy in production and unregulated financial capital, but with a single root, i.e., capitalistic greed for higher and higher profits. Karl Marx (1867) was absolutely right when he wrote ‘With adequate profit, capital is very bold …. 100 per cent, will make it ready to trample on all human laws; 300 per cent, and there is not a crime at which it will scruple, nor a risk it will not run, even to the chance of its owner being hanged.’

The present crisis has a strong empirical case. According to the estimates of Economic Policy Institute (2009), the top one per cent of the population in USA held 35.6 per cent of the national wealth. This one per cent is the combination of three groups of same class, i.e., big corporates, big financers and political elites. The U.S. Census Bureau (2009) assessed that the top 20 per cent of families accounted for 50.3 per cent of the total income and the bottom 20 per cent accounted for only 3.4 per cent of the national income. Once again Marx is correct when he said, as capitalism reaches adulthood, there is concentration and centralisation of capital in the hand of big capitalist which leads the growth of monopoly in each sphere.

Due to the financial crisis the United States experienced 8 million job losses between 2007 and 2009. The national unemployment rate was 9.1 per cent according to the U.S. Bureau of Labour Statistics. The unemployment throughout the world stands at more than 200 million, and is rising. The current rate of job growth at world level is near about one per cent and yet not able to replace 30 million job losses since the present crisis begun in 2008. There are large numbers of workers who are struggling for survival by involving in part time and casual jobs. Foster (2011) quoted International Labour Organisation that there are 2.4 billion people globally who are unemployed, underemployed, and economically inactive or engaged in subsistence labour. Almost 39 per cent of the world’s workers live on less than $ 2 a day, 50 million of people do not have health insurance, and millions of people have lost their homes. If we combine the unemployed population along with the workers involved in informal and part time work than it will surely present the majority of population at the global level. Don’t forget the enormous slum population of world, growing at an extraordinary pace. These men and women are not part of the working class in the classical sense but they are working definitely under unprotected and uncertain conditions (Eagleton, 2011). The remaining proportion is very few who had captured the majority of resource (both wealth and natural) of our planet. The lack of job opportunities and uncertain character of jobs have caused rising frustration among people, particularly among the young educated class who are unable to get secure employment. Policy makers and capitalist economists are again trying their best to find some short term solutions for the present crisis, which can prolong the age of capitalism.

Slogans’ with Philosophy

Marx and Engels (1848) expressed in ‘Communist Manifesto’ that capitalist crisis would become more severe putting the existence of the entire capitalist society on trial, each time more threateningly than the past. The means adopted to overcome them achieve results only at the cost of paving the way for more expensive and more destructive crisis, and diminishing the means whereby crisis are prevented. The present empire of capitalism is becoming increasingly brutal in character. Now, people seems to be well aware of the fact that State is nothing but a class tool favouring and protecting the interests of minority (one per cent) at the cost of majority (common people). The concept of welfare state which came into being during 1950s due to working class struggles and unionism is now out-dated. The State is now favouring capitalist class without any veil. Neither capitalism nor its institutions (State, policy makers and bourgeois economists) can prolong the present system because it has already reached its peak since the beginning of 20th century when Lenin wrote ‘Imperialism: The Highest Stage of Capitalism’. The three per cent compound growth for capital is not possible forever. The injections of temporary solutions (to maintain the growth of capital) are not very effective and people are also well aware about the effectiveness of these injections. Now, one slogan is reverberating everywhere that ‘we are 99 per cent, with the general understanding that the other one per cent is greedy and corrupt rich’. Wall Street protesters have given a message to the common people (99 per cent) of the planet ‘it’s time for us to unite,’ it’s time for them to listen, people of the world rise up.’ The capitalists have built the empire of capital at the cost of our labour and now the time has come to get our empire back for which thousands of workers gave up their life. No doubt, the wealth of our planet is more than sufficient for the welfare of all but it will always be less for the capitalist greed. Capitalism is at its peak and trying its best to exploit everything which is available on our planet. It is not only fearful for the 99 per cent of the world’s population but it is also dangerous for the natural resource base of our planet.

Time has come to rebuild the economic and social structure of our planet by using the abundance of capital (Which is accumulated by capitalist class by exploiting the labour of others) for the benefits of majority. The illusions created by the capitalism in the form of declining poverty, falling starvation, classless society, postmodernism, etc., are losing their grounds because these problems don’t have any solution within the present system due to its very nature of exploitation. The agents of capital are not able to present the permanent solution to solve the crisis because the permanent solution is beyond the reach of capitalism. The permanent solution for these problems is only one, i.e., to build the empire of majority.

The important cause behind the failure of movements and struggles is that our slogans are without accurate philosophy. This philosophy (more or less) remained absent in all the movements of working class in earlier struggles as well as in the present occupy movement. If we really want to establish an egalitarian system then it is necessary to re-examine the guidelines and writings of Marx, Engels and their followers but not necessarily the way shown by the Soviet Union. The failure of Soviet Union and Eastern Europe in developing socialism/communism has presented us a big challenge to find an alternative model for new socio-economic formation.

It is the ethical responsibility of the intellectuals to suggest an alternative socio-economic formation which will be based on equality and social justice. European societies are well advanced and they have plenty of capital for the wellbeing of all. The environment and base to build an ideal society for humanity is available. The important task is to develop a model of transformation to overcome the present system of exploitation. As Harvey stated (2009), we urgently need an explicit revolutionary theory suited to our times. He also proposed a co-revolutionary theory from Marxian ideas of how capitalism arose out of feudalism by making some addition in them. Social change is a multidimensional process that arises by mutual movement among the production, nature, social and technological relations. It requires an institutional, legal and governmental arrangement along with the mental conceptions of world, knowledge and cultural understanding. Time has come to say goodbye to the ideologies of neo-classical economists which has no relationship with the ground reality and common people. We should also avoid the ideas of State sponsored economists and policy elite. The urgent need is to unite and look forward for the better world by making innovative and revolutionary efforts for the wellbeing of all.


T. Eagleton (2011), Why Marx Was Right, Yale University Press, New Haven & London, p.176.

J.B. Foster (2011), Why We Occupy, What We Know, Available at URL:, p. 2.

J. Grahl (2011), A Capitalist Contrarian: Diagnoses and Prescriptions of Jean-Luc-Greau, New Left Review No. 69, p. 40.

D. Harvey (2009), Organizing for the Anti-Capitalist Transition, Available at URL:, p. 6-7.

D. Harvey (2010), The Enigma of Capital and the Crisis of This Time, Available at URL:, p. 1-2.

D. Harvey (2011) Rebels on the Street: The Party of Wall Street Meets its Nemesis, Verso Books Blog, p. 1.

J. M. Keynes (1936), The General Theory of Employment, Interest and Money, Reprinted by Atlantic Publications, New Delhi, p. 24-25.

D. M. Kotz (2002), Globalisation and Neoliberalism, Rethinking Marxism, Vol. 14, No.2, p. 64-65.

K. Marx and F. Engels (1971), Manifesto of the Communist Party, Translated and Reprinted by Progress Publishers Moscow.

K. Marx (1867), Capital: A Critique of Political Economy, Vol-I, Reprinted and translated by Progress Publishers, Moscow.

T. Michl (2011), Finance as a Class?, New Left Review, Vol. 70, p. 117-18.

W. Streeck (2011), The Crisis of Democratic Capitalism, New Left Review, Vol. 71, p. 10


[The author is an Assistant Professor in the Department of Economics, University College, Ghanaur (Patiala)]