Spark Conference:
The 50-Year Secular Crisis

Mar 30, 2025

Someone asked, how we can say that the economy is in a crisis, when the official statistics show rising corporate profits.

The kind of crisis we are speaking of is what the first document, “War and Crisis in the Time of Senile Capitalism”, calls a “secular crisis,” that is, a long-term crisis of stagnation and decay.

This secular crisis began in the late 1960s and early 1970s when the capitalists’ rate of profit began to fall. For about 25 years before that, the global economy had expanded and profits grew, with the U.S. capitalists being the biggest beneficiary. This expansion was based mainly on reconstruction following the devastation of both the Great Depression and World War II, as well as war production fueled by the Cold War, the Korean War and the Viet Nam War.

But not too long after reconstruction was completed and the formerly destroyed economies in Europe and Asia came back fully on line, production on a world scale soon outstripped demand. The competition for market share, profits and wealth between different groupings of capitalists heated up. This led to a fall in the rate of profit, bankruptcies, sweeping plant closings and layoffs in the U.S. Within a matter of 13 years, there were four recessions (1969–70, 1973–74, 1978–79, 1980–82), ushering in a new period of instability.

To increase their profits in a U.S. economy spiraling down, the capitalists went on a multi-pronged offensive against the working class. In the private sector, the capitalists imposed widespread cuts in wages and benefits, and increased speed-up. In the public sector, government officials channeled more tax money into the corporate coffers, offering enormous bailouts, tax breaks and subsidies. To help pay for this, government officials also imposed widespread layoffs in public services, as well as cuts to social programs and spending.

To increase its aid to the capitalist class, the state took on much more debt. In 1974, the U.S. federal government debt stood at 475 billion dollars. That is all the debt the federal government had accumulated over the first two centuries. Over the next five decades, the federal debt exploded. By 1990 it had skyrocketed to 3.2 trillion dollars. Ten years later, it was 5.6 trillion dollars. Today it stands at over 36 trillion dollars.

By the mid-1980s the capitalists’ rate of profit had begun to rebound. This opened up a new period of enrichment for the capitalist class. By the beginning of the 2000s, the rate of profit had recovered completely. In subsequent years it hit record levels.

But this recovery in profits did not open up a new period of economic growth. There was no big increase in investment and production. The attacks against the working masses in this country and around the world had reduced a big part of consumer demand. And, as opposed to the nineteenth century, when capitalism was still spreading over the world, there were no big new gigantic markets to invest in and exploit.

Of course, the capitalists could have used the wealth produced by the working class to invest for the betterment of humanity, improving housing, schools, and the basic infrastructure, while providing jobs, higher wages, etc. But this would have cost the capitalists some of their profits. As Lenin explained in “Imperialism, the Highest Stage of Capitalism,” written in 1916:

“It goes without saying that if capitalism could develop agriculture, which today is everywhere lagging terribly behind industry, if it could raise the living standards of the masses, who in spite of the amazing technical progress are everywhere still half‑starved and poverty‑stricken, there could be no question of a surplus of capital. But if capitalism did these things, it would not be capitalism; for both uneven development and a semi‑starvation level of existence of the masses are fundamental and inevitable conditions and constitute premises of this mode of production.”

Thus, under the capitalist system, there is the potential for the productive forces to expand rapidly. But the capitalist stranglehold over the economy spells only greater impoverishment and disaster.

A Crisis Paid for by the Working Class

The last 50 years have been a long period of prosperity for the capitalists. They have successfully enjoyed profits that regularly hit record highs on the scale of the world. At the same time, the ranks of the billionaires have multiplied. In 1987, there were 140 billionaires in the world, with the worth of the richest person set at 20 billion dollars. By 2023, there were 3,323 billionaires in the world. Among them, there are 24 “super billionaires,” worth over 50 billion dollars each. Most of this wealth is concentrated in the U.S., with 17 of the 24 super billionaires based in the U.S.

In this long period of stagnation and decline, the capitalists’ growth of wealth and prosperity has come at the expense of the working masses.

Fifty years of crisis and attacks have taken an enormous toll on the living standard of the American working class. Wages aren’t just lower than they were 50 years ago, when accounting for inflation. The capitalists have completely upended the job situation, producing much greater insecurity and precarity. Over the last half century, there has been a steady increase of prime age jobless males, while a greater proportion of prime age female workers has been forced back into the labor force, without access to the necessary childcare. And child labor is on the rise, even in the U.S.

On the other hand, millions of workers don’t earn enough to pay for the basics. At some of the biggest and most profitable employers in the world, such as Walmart, McDonald’s and Amazon, workers earn so little, they survive only by getting food stamps, Medicaid and other social programs for the poor, which are in the process of being withdrawn.

The combination of high living costs and low wages have also fed big leaps of homelessness. For tens of millions of workers, the greatest threat isn’t just that they can lose their jobs. It’s that their job will never pay enough, never provide enough hours, never offer enough stability to keep them housed. As for older low wage workers, after a lifetime of work, they face the prospect of having to retire onto the streets.

This is the situation of the working class in the U.S., the richest and most dominant imperialist power in the world. It’s much worse for workers in much of the so-called “third world,” who often face famine and wars.

Domination by the Financial Sector

One of the main characteristics of this secular crisis has been the monstrous growth of the financial sector—financialization—that is increasingly suffocating the productive economy.

Certainly, the domination of the financial sector over the rest of the economy is not new. In his book, “Imperialism, the Highest Stage of Capitalism,” Lenin described how the financial sector started out in an indispensable, but subsidiary role of providing loans and credit for big industrial companies to make productive investments. But during the 19^th century, capitalist competition concentrated capital into fewer and fewer hands, resulting in huge monopolies. The same thing happened in the financial sector, with the rise of a few huge banks, which also gained domination over the big industrial companies. In the U.S., for example, by the first decade of the 20^th century, the Rockefeller and Morgan trusts had put together monopolies in oil, railroads, steel, telephone, rubber, sugar, etc. As Lenin wrote in 1916, “The supremacy of finance capital over all other forms of capital means the predominance of the rentier and of the financial oligarchy….”

Financial monopolies used their enormous resources, which spanned the globe, to carry out planning on a vast scale. Planning on an international scale has the potential of being a huge leap forward for humanity—when it is in the hands of the working masses, after taking power. But under the domination of financial monopolies, planning is solely for the benefit of their private owners, for their own profit, wealth and power. This has only amplified anarchy and crises, as attested to by both World War I and the Great Depression.

In 1938, amidst the growth of fascism and the march to world war, Trotsky described in the Transitional Program the role that the banks played and the need for the working class to expropriate them: “Side by side with the trusts and syndicates, and very frequently rising above them, the banks concentrate in their hands the actual command over the economy. In their structure the banks express in a concentrated form the entire structure of modern capital: they combine tendencies of monopoly with tendencies of anarchy. They organize the miracles of technology, giant enterprises, mighty trusts; and they also organize high prices, crises and unemployment.”

Over the last 50 years, the financial sector has grown explosively. At the beginning of the crisis in the 1970s, the capitalists scaled back their productive investments, since the consumer markets were saturated. As their profits accumulated, the owners of capital sought places that would provide a good return in the financial sector to place their money, placements that have only continued to grow. Even manufacturing companies, at least the largest ones, were drawn into financial operations, which appeared to be more profitable than production itself, driving up the price of stocks, bonds, real estate, oil, precious metals, and everything else. Rising prices attracted more money, which then pushed prices higher still.

The capitalists themselves also increased their own debt load, especially on speculative deals. Debt—or as they began to call it, leverage—made their speculative bets potentially much more profitable. The growth in debt supercharged the increase in the prices in speculative markets, which then spurred further growth of speculation in those same markets.

As the great mass of money and credit ballooned, the "old classics" of financial speculation—like placements in the stock exchanges or government loans, as well as speculation based on fluctuating currency rates or real estate market prices or commodity prices—were not sufficient to satisfy the hunger of speculators to make a quick buck. New companies emerged that invented new "financial products." "Private equity" companies, “venture capital funds,” "hedge funds,” “cryptocurrency funds,” "investment funds” of all sorts rapidly proliferated.

Abandoning the essential activities of classic banks, these companies specialize in financial placements offering a much greater return in keeping with their much greater risk. The word "investment" itself soon lost its significance as tied to production. It came to designate all placements of money, those which contributed to create real value and surplus-value, as well as the most fantastic ones, creating nothing, destroying much.

Financial activities create no value. They merely appropriate one part of the surplus-value created by exploitation in the sector of production. Over the years, the financial sector gobbled up increasing amounts of industrial capital directly, or indirectly through the intermediary of the state and of the public debt.

Production and finance were increasingly intertwined—above all, through the financing of huge mergers and acquisitions. The big companies did not aim to expand the market, but to increase their share of the market by buying up their competitors. The numerous takeover bids developed into genuine wars launched by industrial and financial groups against their rivals. These operations, which led to ever greater concentration, developed thanks to the huge sums of money held by companies as well as to cheap credit. The groups which won the rat race increased their profits in proportion to their increased share of the market, or even more, when their winning bid gave them monopoly control.

These concentrations, especially financial ones, did not lead to a rationalization of production or a growth in productive capacity. Huge sums had been thrown into the market for the benefit of the financiers, not for production. All those deals only increased the domination of financial capital over production.

The Leveraged Buy-Out (LBO) employed by private equity companies and hedge funds has become one of the financial sector’s favorite tools. This is an indication that capitalism has become self-destructive as well as parasitic. Basically, a private equity company (using money from pension funds, endowments and other big institutions) buys up a big company, relying heavily on credit. In order to repay the debt, the buyer bleeds the company dry, tears it apart, empties its reserves, sells the profitable units and gets rid of the rest, auctions off the land on which the workplace is built, etc.

This especially poisonous kind of financial company’s control has spread throughout the U.S. economy, owning companies worth about five trillion dollars and employing about 12 million people. The private equity takeover of health care companies has increased 20-fold over the last 20 years, with companies owning large numbers of nursing homes, hospitals, emergency rooms, staffing companies, doctors’ and dentists’ networks, ambulatory services. Investors have placed over a trillion dollars in the energy sector over the last decade. About half of all daily newspapers in the U.S. are owned by private equity companies or hedge funds. Three private equity companies control more than 90% of the prison telecom market, and they are also big players in prison health care, commissaries and food service.

Just how destructive these financial companies are can be measured in how many jobs and lives they destroy. When a private equity company buys out a company in the U.S., employment shrinks by 13% in two years. Private equity companies are responsible for killing more than 1.3 million retail jobs over the last decade. When private equity companies take over a nursing home, mortality rates jump by 10%, implying that their ownership causes the death of more than 1,000 people every year, compared to other nursing home owners.

Private equity ownership of housing is associated with rising rents, higher rates of evictions, and worse quality. Private equity ownership of private colleges leads to higher tuition and student debt, lower graduation rates and more law enforcement action for fraud. One example of this was Trump’s own private college, called Trump University, or the Trump Wealth Institute, which was forced to close its doors amid multiple investigations, lawsuits and student complaints, eventually paying 25 million dollars in order to settle several law suits once he was elected president.

All of this destruction produces fabulous wealth for top executives and stockholders. One study cited by Bloomberg News (“Everything is Private Equity Now,” October 8, 2019) found that more managers at private equity companies make at least 100 million dollars annually than at all other financial companies combined. A working paper by the University of Oxford (“An Inconvenient Fact: Private Equity Returns & The Billionaire Factory,” June 15, 2020) found that the number of private equity multibillionaires rose from three in 2005 to 22 in 2020.

In other words, 21st century rentier capitalism has invented new, more profitable ways to function, destroying production, jobs and the economy, that is, society as a whole.

The Coming Storm

Inevitably, the growth of financial speculation and debt paves the way for ever more devastating financial and economic crises. In the late 1980s and early 1990s there was the savings-and-loan crisis, the commercial real estate crisis, stock market crash and recession. In 2000, the popping of the dot-com bubble set off a stock market crash and recession. In 2008, the bursting of the subprime-mortgage bubble detonated a devastating financial crisis, along with the worst recession since the Great Depression of the 1930s.

The enormous government bailouts funded by taxpayer money, which also ballooned the government deficit, might be presented as the medicine administered to the capitalist economy to lower its fever. But the opposite is true. Massive bailouts fuel the next speculative fevers and economic catastrophes.

And the fact that the financial crises have become bigger has meant that the bailouts have also become ever more massive. And ever since the 2008 financial crisis, the state-sponsored bailouts have never even ended. The Federal Reserve has pumped hundreds of billions of dollars into the financial system every year, with a brand-new massive state-sponsored bailout in response to the financial system collapse in 2020 during the COVID economic shutdown.

Flooding the financial system has fueled even bigger speculative bubbles. The New York Times dubbed 2014, “The Everything Bubble,” which included bubbles in stocks, bonds, real estate, commodities, and more “exotic” instruments, such as cryptocurrencies, etc. The business pages occasionally run articles that call attention to the build-up of risk. In December, there was a New York Times article with this sarcastic title about a potential crisis: “Wall St. Is Minting Easy Money from Risky Loans. What Could Go Wrong?” The subhead makes clear that no one can stop the mad growth of speculation that could collapse at any moment: “Everyone from Jamie Dimon [the CEO of JP Morgan Chase] to the International Monetary Fund is ringing alarms about the shadowy world of private credit. But the money keeps rolling in.”

Here’s another New York Times article, dated February 28, called: “They Crashed the Economy in 2008. Now They’re Back and Bigger Than Ever.” It draws attention to the fact that the same financial instruments, called “asset-backed securities,” that exploded and brought down the entire global economy during the 2008 subprime crisis, are being marketed in a much bigger and widespread way today. The profits are just too fast and easy for big financial institutions to keep away. And—after all—what these same institutions are banking on is the fact that in case of a crisis, they will not be the ones who pay the price, that there will be a new bailout, that could very well enrich them even further.

At a certain point, the government will not be able to bail out the capitalists from the next financial crisis, because that crisis will be too big and expansive. This is exactly why the document, “War and Crisis in the Time of Senile Capitalism” states that the financial press is “haunted by the fear of a possible financial crisis in a highly financialized capitalist world that might well lead to an economic collapse comparable to that of 1929, or perhaps worse.”