Until recently, the global capitalist economy has enjoyed a period of comparative tranquility and grown at a relatively rapid pace since the global economic crisis of 2001–02. During this period of global economic expansion there have been several important economic and political developments. First, the United States—the declining hegemonic power but still the leading driving force of the global capitalist economy—has been characterized by growing internal and external financial imbalances. The U.S. economy has experienced a period of debt-financed, consumption-led “expansion” with stagnant wages and employment, and has been running large and rising current account deficits (the current account deficit is a broad measure of the trade deficit). Second, China has become a major player in the global capitalist economy and has been playing an increasingly important role in sustaining global economic growth. Third, global capitalist accumulation is imposing growing pressure on the world’s natural resources and environment. There is increasingly convincing evidence that the global oil production will reach its peak and start to decline in a few years. Fourth, the U.S. imperialist adventure in the Middle East has suffered devastating setbacks and there has been growing resistance to neoliberalism and U.S. imperialism throughout the world.
As the U.S. housing bubble bursts and the dollar’s dominance over the global financial system becomes increasingly precarious, the U.S. economy is now going into recession and the global capitalist economy is entering into a new period of instability and stagnation. The coming years are likely to see a major realignment of the various global political and economic forces and will set the stage for a new upsurge of the global class struggle.
Neoliberalism and the Global Imbalances
Since the 1980s, neoliberalism has become the dominant economic ideology of global capitalism. Under the neoliberal policies and institutions (such as monetarism, privatization, deregulation, labor market “reform,” and trade and financial liberalization), inequalities in income and wealth distribution surged, and in many parts of the world, people suffered devastating declines in living standards. As financial capital flowed between countries in search of speculative gains, one national economy after another was destroyed. Under the pressure of financial capitalists and their institutional representatives (such as the International Monetary Fund, the World Bank, and the U.S. Treasury Department), many national governments were committed to so-called “responsible” fiscal and monetary policies, often leading to disastrous economic and social consequences.
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http://www.monthlyreview.org/080401li.php
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