Across the crises of modern capitalism by Angelo Fusari via Voltaire 18, 00137 Rome e-mail address: anfusari@hotmail.it Presented at the Cfp International Conference on “Large-Scale Crises: 1929 versus 2008, Ancona- December 17-19, 2015 Abstract This essay provides a preliminary assessment of the transition from the 1929 crisis (and its solution) to the 2008 crisis. It points out how the modalities of the solution of the first crisis have paved the way for the recent crisis. The paper hangs the description and explanation of the whole process on a combination of the notions of business cycles and phases of development, a combination that allows the representation and explanation of the successive and various patterns of capitalism across the considered historical period. Thereafter we underline, mainly using the notion of functional imperatives, the important institutional transformations required in the passage from one type of capitalism to another, and the destabilizing effects that have resulted from the absence of those transformations in the wake of the emergence of conflictualconsumeristic capitalism and financial capitalism. On this analytical basis, we ground the widening of the recent crisis, showing a growing menace of long-term stagnation, contradictions and conflicts. Finally, the paper delineates some institutional reforms essential to overcoming the structural deficiencies inherited by conflictual-consumeristic capitalism and the dawning and no less damaging drawbacks that are being prepared by financial capitalism. Keywords: Business cycles; Phases of development; The present failure of demand models; The question of money; Oganization of financial markets; Separation principle
1. Introduction The topic of the conference requires an analysis of the character and the content of the three phases of the capitalist mode of production that have followed competitive capitalism, namely: monopoly capitalism, conflictual-consumeristic capitalism, and the financial capitalism now at work on a world scale. The absence of such an analysis is liable to generate great misunderstanding with regard both to the diagnosis of the considered crises and the suggested therapies. Monopoly capitalism, an outcome of the second industrial revolution, is associated with high increases in labour productivity. Yet the competitive character of the labour market kept down the level of wages. This lowered the degree of absorption of production through consumption, at the same time causing a high increase of profits; while investment, due to the psychological volatility of entrepreneurs’ expectations, was unable to account for the absorption of profits and, more generally, the level of production exceeding consumption. The consequent deficiency of effective demand, and hence unsold production, caused the reduction of output and the growth of unemployment, therefore a further and cumulative fall of demand that pushed towards the great economic crisis of the thirties. J. M. Keynes clearly understood – in stark contrast to the dominant economic thought of his day – the demand led nature of the crisis. He suggested appropriate remedies, mainly public expenditure, even if wasteful, and deficit spending (for the joy of politicians) and the 1