We are probably in the first stages of the fourth international "great depression" in the history of capitalism.
This is a longer version of this article than in the printed paper.
The period between the early 1970s and the mid-1980s was never labelled a "great depression", but belongs with two other periods of economic disorder and recurrent recession: from the early 1870s to the mid 1890s, and from 1929 to World War 2.
Some capitalist economic downturns have relatively little lasting social and political impact. Larger downturns are different. One trend among Marxist economists, the "Regulation School", talks about capitalist development proceeding through successive different "regimes of accumulation". With the period of each regime there will be episodic crises; but when a regime finally builds up so many contradictions and imbalances as no longer to be viable, there is a structural crisis which leads to the emergence of a new "regime of accumulation".
We do not need to adopt the "Regulation School" approach whole-hog ; nor should we ignore the fact that major changes in the structure of capitalism can take place bit by bit, by gradual shifts rather than by crisis-driven catastrophes. Yet the regulationists' terminology captures something of history.
Big enough economic crises fluidify structures; annihilate previously central patterns; spur on, and give opportunities to, capitalist leaders pushing new approaches. They leave things drastically changed not just economically but socially and politically.
Evidence is accumulating that this crisis is "big enough". Banks and other operators in the financial markets ran up losses on financial assets in 2008 of $50 trillion (according to an Asisn Development Bank estimate). That's almost $10,000 for every child, woman, and man in the world.
The losses are "on paper", that is, they mostly take the form of bits of paper which the financiers hold having a lower nominal value than a year ago. But capitalism runs mostly "on paper" (or "on" electronic records): the electronic or "on paper" flows constitute the channels of credit through which all the "real economy" movements of goods and services must flow.
Credit has shrunk dramatically. Even if there are no further big upheavals in the financial markets, the capitalist world is set for a prolonged period of debt-shrinkage, with firms, banks, and households trimming expenditure in order to get their debt under control.
Thus: "The annual rate of decline in industrial production in December was 12 per cent in Germany, 20 per cent in Spain and 21 per cent in Japan. South Korean exports were down 32.8 per cent in January, compared with the same month in 2008. The International Air Transport Association said global international cargo traffic crashed 22.6 per cent in December, year on year. It looks like global trade has been, and maybe still is, in freefall. This means that the global economic outlook could be a lot worse than we thought" (Financial Times, 9 February 2009).
Moreover, the capitalist world of "globalisation" has been one organised, to a large degree, through global financial markets centred on New York. States with large trade surpluses "recycled" the cash through financial markets centred on New York, and mostly through US-dollar assets.
That is still happening, for now. It seems unlikely that it can long continue to happen to the same extent. For example: "A decade ago, a list of the world's largest financial institutions was dominated by banks from the US and UK. Today, just four of the top 20 have their headquarters in the US... HSBC... is Britain's sole representative... China's three big banks dominate the rankings" (Financial Times, 23 March).
The end of that road would be a catastrophic collapse of the US dollar as world currency. Even short of that, big readjustments, and a much less "smooth" world economy, seem likely.
When the G20 top governments met last November, their long statement after the talks contained just one hard commitment: to "refrain from raising new barriers to investment or to trade in goods and services" at least for the next six months. In mid-March a World Bank study showed that 17 of the 20 countries involved have since taken protectionist measures.
So: big social and political impacts are likely. And difficult to predict: the processes are complicated and will involve previously unknown elements. But we can learn from previous epochs of economic troubles.
The disorders from the early 1970s to the mid 1980s were "used" by capitalist leaders like Thatcher in Britain, Reagan in the USA, and Pinochet in Chile to drive through big defeats of the labour movements and lefts that looked strong in the early period of those disorders. They also trashed large chunks of capital (25% of manufacturing industry in Britain collapsed in the early 1980s) and cleared the way for capital to restructure under a new regime of "globalisation" and "financialisation".
Capitalist leaders will always seek to use crises to drive through restructurings of class relations which will "stick" and enable the subsequent upturn to take place on terms more favourable to capital. They do not always succeed.
In the 1970s and 80s, while labour movements were pounded in many "old" industrial countries, big new labour movements arose in South Korea, Brazil, and South Africa.
The depression from 1929 to World War 2 led to the triumph, by 1941, of fascism all over Europe except in Sweden, Switzerland, Ireland, and Britain. Stalinism was consolidated in the USSR.
There again, there were other possibilities. In the USA, workers' struggles in the depression won a much stronger union movement, and much more welfare provision, than in the previous boom. Both the 1930s, and the 1970s-80s included revolutionary crises turned into working-class defeats only by lack of an adequate revolutionary party, such as in Spain in 1936-7.
The period between the early 1870s and the mid 1890s led to the rise of giant capitalist firms and cartels dominating whole industries, to a big expansion of the role of finance, to "high imperialism", to systematic "scientific" racism, and to a new upsurge of the anti-semitism which many had thought an obsolete relic. It also generate the rise of the mass socialistic labour movements in most industrialised countries, in most of them for the first time.
In all such epochs, then, the social and political impact cannot be "read off" directly from the economic developments. It is the outcome of struggles - of victories or defeats which cannot be predicted coldly unless we, the militant working-class activists, want to write down our effort and initiative as a mere fixed quantity.
The social and political impact also generally comes with a lag. In the first flush of crisis, both capitalist leaders and workers tend to be "stunned" and preoccupied with short-term bail-out measures. The political "knock-on" effects of the Great Crash of 1929, for example, took some years to appear. Often the hopeful new developments in working-class activity come with the first slight economic upturn within the general period of depression, rather than with the initial downturn.
These periods of turmoil reshape the left too. The 1850s and 60s saw many socialistic currents - Proudhonism, Blanquism, Chartism, Owenism, Lassalleanism - among which Marxism was one of the weakest. By the late 1890s, all those currents bar Marxism had vanished or been "recycled" into new currents (like for example anarcho-syndicalism, drawing on Proudhonism as well as on Marxism).
The period between 1929 and World War 2 was the one in which the Communist Parties outside the USSR were transformed from a significant revolutionary working-class force (though by 1929 fatally addled) into what Trotsky called a "cynically counter-revolutionary role throughout the world".
In the early 1970s the "broad" left seemed relatively well-placed, as compared to 1873 or 1929. Actually, the political shortcomings of that left (chiefly, Maoist or Stalinist baggage) proved fatal.
The Communist Parties, which at the start of the period still organised the biggest numbers of would-be revolutionary workers, came out of it shattered, demoralised, on course for the outright collapse they would suffer after 1991. The revolutionary left was disabled, mostly by its outright Maoism (the strongest strand at the start of the 1970s in Italy, Germany, France...) or by Maoist contamination (the SWP in Britain, for example, had a quasi-Maoist period, in explicit alliance with Maoist groups in Italy and Portugal, in the mid and late 1970s). By the end of the 1980s, Maoism had been marginalised on the revolutionary left in most countries, but the surviving revolutionary left was battered and weakened.
Four conclusions follow:
1. We must expect big social and political convulsions.
2. The outcome of those convulsions depends on struggles...
3. And so, in part, on us and on our preparations before the big struggles erupt. "The decisive element in every situation is the permanently organised and long-prepared force which can be put into the field when it is judged that a situation is favourable (and it can be favourable only in so far as such a force exists, and is full of fighting spirit)", as the Italian Marxist Antonio Gramsci wrote (emphasis added).
4. It does not just depend on how big "the left", broadly defined, is. It also depends on the clarity of the left. War, wrote Lenin, exposes what is rotten. So does a big and sustained crisis. The coming years are likely to shatter whole chunks of the left. Progress will depend on those - maybe a small minority at the start - who can steer accurately.
5. The social and political convulsions come with a delay. Despite all the drama of recent months, we are still probably in the initial period of stunned response for the current crisis. That could last another year or two or even three. Or maybe only months. We can't know.
6. The "advantage" for us on the left of such Marxist and socialist education as we have been able to acquire is that we we can understand the import of the crisis earlier than others, and so galvanise ourselves earlier, while others are still stunned and overawed by the crisis. For the AWL, in particular, everything depends on our ability to do that - to pull ourselves out of the slovenly habits acquired in two decades of working-class defeat and capitalist triumphalism, and raise ourselves to the level of the new situation.
 See the devastating critique by Robert Brenner and Mark Glick, "The Regulation Approach: Theory and History", in New Left Review I/188, July-August 1991