Issue 1 - Summer 1994

The Cybernetic Revolution and the Crisis of Capitalism (page 1 of 11)
By Jerry Harris and Carl Davidson, The Chicago Third Wave Study Group

In the early 1970s U.S. capitalism began to suffer a deepening crisis of accumulation. This crisis sprang from the very heart of the modern industrial system, arising out of fundamental contradictions in its exploitation of labor and its conditions of production. But this crisis also occurred along side a postmodern revolution in microelectronics and computer technologies, creating significant changes in the forms of accumulation and wealth creation. The two dynamics have created a new historic juncture for rethinking established theories of political and social change.

Marxist economists such as Paul Sweezy have long tracked the crisis of accumulation. Recently key extensions have been added by eco-Marxist James O'Connor. But radicals also need to take note of the important contributions of Alvin and Heidi Toffler and their three waves theory. The Tofflers describe agricultural society as the first wave and industrial society as the second wave. They have added new insights into the nature of changes in the economic base where knowledge has become the most important tool of production. This became possible because of the revolution in the means of production, or information technologies. Toffler calls this information society the third wave, or what we'll call information capitalism.

For about 200 years "second-wave" industrial capitalism was generally expanding and dynamic. Although punctuated by cycles of economic crisis, it grew into imperialism and built a world market. In the metropolitan countries, the circle of wealth grew wider, as a substantial number of workers organized unions and attained "middle class" living standards. But in the early 1970s industrial capitalism hit new limitations to its growth. The crisis was all sided, including both labor and nature. In a frantic race to maintain profits, the system began to toss huge numbers of people into the wastelands of unemployment and insecurity.

In itself this is nothing new. Capitalism has always contained the contradiction between expanding profits and lowering the cost of labor. Each business is driven to maximize its accumulation of capital in order to survive and grow on a field of ruthless competition. In order to do so, the pressure to reduce wages and benefits is constant. But this time, the downturn was not followed cyclically by a "boom" or recovery that could be measured in higher wages or new job creation for those who had endured the "bust" period.

Post War Expansion

While every periodic crisis has roots internal to the nature of capitalism, each crisis also has an historic context. At the end of WWII a number of factors came together, which gave renewed life to capitalism, particularly in America. There were four basic factors that gave rise to a tremendous expansion of the U.S. economy and industrial base:

  • First and most important was a period of vastly reduced competition from foreign rivals. The post-1945 world was America's market because the industries of Europe and Japan had been destroyed by the war. In such circumstances U.S. capitalism quickly grew with an expanded job base.
WELCOME! You are visitor number

Designed by ByteSized Productions © 2003-2006