Late capitalism

Late capitalism is a concept first used in print (in German) by the German social scientist Werner Sombart (1863-1941) in 1928, to describe the post-war capitalist order emerging at that time. As a young man, Sombart was a socialist who associated with Marxist intellectuals and the German social-democratic party. As an academic who became well-known for his sociological writings, he had a critical-sympathetic attitude to the ideas of Karl Marx (but never became a true Marxist). Sombart's writings helped to make "capitalism" a household word in Europe, as the name of a socio-economic system with a specific structure and dynamic, a history, a mentality, a dominant morality and a culture.

The use of the term "late capitalism" to describe the nature of the modern epoch had already existed for four decades in continental Europe, before it began to be used by academics and journalists in the English-speaking world - via English translations of German-language Critical Theory texts, and especially via Ernest Mandel's 1972 book Late Capitalism published in English in 1975. For many Western Marxist scholars since that time, the historical epoch of late capitalism starts with the outbreak of World War II in 1939/1940, and includes the post–World War II economic expansion, the era of neoliberalism and globalization, the 2007–2008 financial crisis and their aftermath in a multipolar world society. The term "late capitalism" was not used by Marxist-Leninists, who used the concept of state monopoly capitalism (originally formulated by Vladimir Lenin) to denote the highest developmental stage of capitalism.

The concept of "late capitalism" was never accepted by the majority of social scientists and historians, because it was considered that the expression was tinged with political bias towards capitalism, and because it remained unknowable or uncertain whether capitalism is "on its last legs", or "if and when it will end". The Russian revolutionary Vladimir Lenin famously declared in 1920, that there are no "absolutely hopeless situations" for capitalism; short of an anti-capitalist political revolution overthrowing the rule of the bourgeoisie, the system could always recover sooner of later. Lenin considered that the fate of capitalism was essentially a political issue. The leaders of the Communist International founded in 1919 believed that with the first World War, a new world epoch of wars and revolutions had begun, and the Comintern programme defined imperialism as the highest and final stage of capitalism. Many non-Marxist historians and sociologists have preferred more neutral terms, such as the "late modern era" or "post-modern era". Some Continental and Anglo-saxon historians refer to late bourgeois society, in contrast to early bourgeois society in the 17th and 18th century and classical bourgeois society in the 19th and early 20th century.

According to Google N-gram viewer, the frequency of mentions per year of the term "late capitalism" in publications has increased steadily since the 1960s. In 2017, an article in The Atlantic highlighted that the term "late capitalism" was again in vogue in America, as an ironic term for modern business culture.

Intellectual history of the concept

Sombart's legacy

The term "late capitalism" (Spätkapitalismus) was first used by the German social scientist Werner Sombart in a 1928 publication after he had completed his three-volume magnum opus Der Moderne Kapitalismus ["Modern Capitalism"], which was published from 1902 through 1927 (only the first volume of Sombart's Modern capitalism has been translated into English so far.). Sombart divided capitalism into different historical stages of development:

• Proto-capitalist society from the early middle ages up to 1500 AD.
• Early capitalism in 1500–1800.
• The heyday of capitalism (Hochkapitalismus) from 1800 to World War I.
• Late capitalism since then.

Concluding his 1928 Zürich lecture on the transformations of capitalism, Sombart stated:

"Today we are in a new era. It is obvious that [the beginning of] the new epoch is defined by the [first] World War. What this period is called is to an extent arbitrary, although of course some names will be more appropriate than others in particular situations. I have suggested the term "late capitalism", because I know of no other expression which characterizes this era better. I hope that this term will be favourably received; I am aware, of course, of how much aversion there is, particularly among [academic] colleagues, to accepting unfamiliar new terminology – as Max Weber once put it: "as if it were a question of using foreign toothbrushes." There is always a possibility that other expressions will prevail. But what is most important is not the name, but the phenomenon itself, the thesis that this is a new era of economic life, as well as the issue of the characteristics of this era. If agreement can be reached about that, I would consider my task fullfilled.

Beyond a few articles and lectures, however, Sombart never completed any comprehensive treatise on late capitalism. His studies were disrupted by the new Nazi government when he was 70 years old (he died in 1941). Like many other Germans intellectuals, he hoped that Hitler's leadership would revive Germany from a decade of economic woes, social decay and misery; he regarded national socialism as a type of socialism, and he supported the Nazi party (while retaining much of his intellectual independence). Because of this fact and because of his sociological portrayals of Jews and Judaism in some of his writings, he was often regarded as a "Nazi intellectual" and as anti-semitic. It meant that after the war his writings and ideas largely vanished from university curriculae. Only in the late 1980s and 1990s did considerable scholarly interest for Sombart's intellectual legacy return.

The interwar years and World War II

The term "late capitalism" began to be used by socialists in continental Europe in the 1930s and 1940s. This was not an especially radical turn of phrase, because at that time many people of different political persuasions really believed that the existing social order was doomed. During World War II, leading American economists believed that the economic problems might eventually become insurmountable. In their book Capitalism since World War II, Philip Armstrong, Andrew Glyn and John Harrison comment that:

"Paul Samuelson, who later wrote the bestselling economics textbook published in the postwar years, raised in 1943 the probability of a 'nightmarish combination of the worst features of inflation and deflation', fearing that 'there would be ushered in the greatest period of unemployment and industrial dislocation which any economy has ever faced' (Samuelson, 1943, p. 51). He was speaking, it should be remembered, about the United States, which was relatively unscathed by hostilities. […] Joseph Schumpeter, an eminent economist, summed up the mood of alarm of the early forties: 'The all but general opinion seems to be that capitalist methods will be unequal to the task of reconstruction,' He regarded it as 'not open to doubt that the decay of capitalist society is very far advanced' (Schumpeter, 1943, p, 120)."

In his book Capitalism, socialism and democracy (1943), Schumpeter also stated:

"Can capitalism survive? No. I do not think it can. But this opinion of mine, like that of every other economist who has pronounced upon the subject, is in itself completely uninteresting. What counts in any attempt at social prognosis is not the Yes or No that sums up the facts and arguments which lead up to it but those facts and arguments themselves. (…) The thesis I shall endeavor to establish is that... [the very success of capitalism] undermines the social institutions which protect it, and “inevitably” creates conditions in which it will not be able to live and which strongly point to socialism as the heir apparent."

The post-war era

In Russia, the Marxist-Leninist doctrine of the "general crisis of capitalism" in the imperialist epoch and the theory of state monopoly capitalism defined the official government perspective for the post-war era. The historian Paolo Spriano describes how this caused the demise of one of Russia's top economists, after he dared to suggest that capitalism would not collapse after the war:

"[Eugen] Varga… argued that capitalism would be able to ward off, or at least to postpone, a general crisis. By May 1947 he was being subject to harsh criticism for this. He was soon relieved of many of his duties, and the Institute of World Economy and Politics, of which he had been the director, was closed down. The official line was that the capitalist system was poised on the brink of a catastrophic crisis. Indeed, the virulence and imperialist aggressivity of capitalism were said to result precisely from desparate attempts to avert this crisis by provoking tension, conflict, and war. Propagandistic use of this thesis became common in subsequent years".

In the West, there had been similar expectations across the whole political spectrum that a severe systemic crisis would very likely occur after the war. When it did not happen, it was a surprise. However what exactly could explain the turn of events remained uncertain.

The concept of "late capitalism" was used in the 1960s in Germany and Austria, by Western Marxists writing in the tradition of the Frankfurt School and Austromarxism. Leo Michielsen and Andre Gorz popularized the term "neo-capitalism" in France and Belgium, with new analyses of post-war capitalism. Jacques Derrida preferred neo-capitalism to post- or late-capitalism. Theodor Adorno preferred "late capitalism" over "industrial society," which was the theme of the 16th Congress of German Sociologists in 1968. In 1971, Leo Kofler published a book called Technologische Rationalität im Spätkapitalismus (Technological Rationality in Late Capitalism). Claus Offe published his essay "Spätkapitalismus – Versuch einer Begriffsbestimmung" (Late Capitalism—an Attempt at a Conceptual Definition) in 1972. In 1972, Alfred Sohn-Rethel published Die ökonomische Doppelnatur des Spätkapitalismus. In 1973, Jürgen Habermas published his Legitimationsprobleme im Spätkapitalismus (Legitimacy problems in late capitalism). In 1975, Ernest Mandel published his 1972 PhD thesis Late Capitalism in English at New Left Books. Herbert Marcuse also accepted the term. In 1979, Volker Ronge published Bankpolitik im Spätkapitalismus: politische Selbstverwaltung des Kapitals?, a study of banking in late capitalism. In 1981, Winfried Wolf and Michel Capron extended Mandel's analysis of the long recession in Spätkapitalismus in den achtziger Jahren.

Immanuel Wallerstein believed that capitalism was in the process of being replaced by another world system. The American literary critic and cultural theorist Frederic Jameson thought Rudolf Hilferding's term the latest stage of capitalism (jüngster Kapitalismus) perhaps more prudent and less prophetic-sounding but Jameson often used "late capitalism" in his writings. Hegel's theme of "the end of history" was rekindled by Kojève in his Introduction to the Reading of Hegel. In modern usage, late capitalism often refers to a new mix of high-tech advances, the concentration of (speculative) financial capital, post-Fordism (transition of mass production in huge factories, as pioneered by Henry Ford, towards specialized markets based on networks of small flexible manufacturing units), and a growing income inequality.

Ernest Mandel's analysis

Mandel aimed to explain the unexpected revival of capitalism after World War II, and the long economic boom during 1947-1973 which showed the fastest economic growth ever seen in human history. His analyses stimulated new interest in the theory of long waves in economic development.

According Ernest Mandel, late capitalism involves the commodification and industrialisation of more and more parts of the economy and society, where human services are turned into commercial products. Mandel believed that "[f]ar from representing a 'post-industrial society', late capitalism [...] constitutes generalized universal industrialization for the first time in history". At the same time, the role of the state in the economy kept growing. During and after World War II, the size of enterprises and the scale of mass production increased, and there were more and more attempts at coordinated economic planning (or "economic programming").

Until the late 1960s, Mandel preferred to use the term "neo-capitalism", which was most often used by intellectuals in Belgium and France at that time. This idea drew attention to the fact that new characteristics of capitalism had emerged in its post-war recovery. At the time, however ultra-leftist Marxists objected to the term "neo-capitalism", because, according to them, it might suggest that capitalism was no longer capitalism, and this would lead to reformist deviations rather than the total overthrow of capitalism. The proof of this seemed to be that Mandel argued - at the zenith of the capitalist post-war boom - for "anti-capitalist structural reforms".

Mandel distinguished three periods in the development of the capitalist mode of production.

• Freely competitive capitalist production, roughly from 1700 to 1870, through the growth of industrial capital in domestic markets.
• The phase of monopoly capitalism, roughly from 1870 to 1940, is characterized by the imperialist competition for international markets, and the exploitation of colonial territories.
• The epoch of late capitalism emerging out of the Second World War, which has as its dominant features the multinational corporation, globalization, consumerism, and increasingly internationalized financial markets.

In part, Mandel's analysis was a critique of Henryk Grossmann's breakdown theory, according to which capitalism would collapse after a series of business cycles because of insufficient surplus value production. But Mandel also criticized the methodological approach of Rudolf Hilferding, Rosa Luxemburg, Nikolai Bukharin, Otto Bauer, Michal Kalecki, and Charles Bettelheim. Mandel argued that important qualitative changes occurred in the functioning of the capitalist system during and after World War II. Intermediate between the periodization of business cycles and the ultimate collapse of capitalism, Mandel argued, there were historical epochs of faster and slower economic growth typically lasting about 20 to 25 years. In several publications, Mandel analyzed the dynamics and results of the unexpected post-war boom, the long world recession of 1973 to 1982, the third world debt crisis, the 1987 stock crash and the long-term systemic crisis of late capitalism, as basis for his projections about the long-term prospects of world capitalism in the future.

In the tradition of the orthodox Marxists, Mandel tried to characterize the nature of the modern epoch as a whole, with reference to the main long-run laws of motion of capitalism specified by Marx. These laws of motion were: 1. The capitalist compulsion to accumulate and invest for profit, forced by competition. 2. The tendency towards constant technological revolutions which increase productivity. 3. The constant attempt to increase absolute and relative surplus value. 4. The tendency toward increasing concentration and centralization of capital. 5. The tendency for the organic composition of capital to increase. 6. The tendency of the average profit rate of industrial investments to decline in the long term. 7. The inevitability of class struggle under capitalism. 8. The tendency of the working class and social polarization to increase. 9. The tendency towards growing objective socialization of labour. 10. The inevitability of periodic economic crises in capitalist society.

Mandel thought that six basic variables were most important for the long-term global growth pattern of the capitalist mode of production and its average profitability: the evolution of the general and sectoral organic compositions of capital; the division of constant capital between circulating and fixed capital; the evolution of the rate of surplus value; the development of the rate of accumulation, and more specifically the reinvestment of surplus value in production; the development of the turnover of capital; and the interactions between the producer goods sector and the consumer goods sector. These variables could to an extent fluctuate semi-independently of each other.

Fredric Jameson's analysis

Main article: Fredric Jameson

Fredric Jameson borrowed Mandel's vision as a basis for his widely cited Postmodernism, or, the Cultural Logic of Late Capitalism. Jameson's postmodernity involves a new mode of cultural production (developments in literature, film, fine art, video, social theory, etc.) which differs markedly from the preceding era of Modernism, particularly in its treatment of subject position, temporality and narrative.

In the modernist era, the dominant ideology was that society could be re-engineered on the basis of scientific and technical knowledge, and on the basis of a popular consensus about the meaning of progress. From the second half of the 20th century, however, modernism was gradually eclipsed by postmodernism, which is skeptical about social engineering and features a lack of consensus about the meaning of progress. In the wake of rapid technological and social change, all the old certainties have broken down. This begins to destabilize every part of life, making almost everything malleable, changeable, transient and impermanent.

Jameson argues that "every position on postmodernism today—whether apologia or stigmatization—is also...necessarily an implicitly or explicitly political stance on the nature of multinational capitalism today". A section of Jameson's analysis has been reproduced on the Marxists Internet Archive. Jameson regards the late capitalist stage as a new and previously unparalleled development with a global reach—whether defined as a multinational or informational capitalism. At the same time, late capitalism diverges from Marx's prognosis for the final stage of capitalism.

See also

• Advanced capitalism
• Crisis theory
• Criticism of capitalism
• Late modernity
• Periodizations of capitalism
• Post-capitalism
• Post-industrial society

Further reading

• Jacques Derrida, Specters of Marx (1994)
• Chris Harman : Mandel’s Late Capitalism (July 1978)
• Fredric Jameson, "Culture and Finance Capitalism" Critical Inquiry 24 (1997) pp. 246–65
• Kotsko, Adam (2018). Neoliberalism's Demons: On the Political Theology of Late Capital. Stanford University Press. ISBN 978-1503607125.
• Paul Mattick : Ernest Mandel’s Late Capitalism (1972)
• Immanuel Wallerstein. The Essential Wallerstein (New York: The New Press, 2000), World-Systems Analysis: An Introduction (Durham: Duke University Press, 2004).

External links

• Youtube late capitalism FAQ video by The Atlantic