Most socialists have long given up predicting the imminent demise of capitalism. While the ‘business cycle’ continues to be punctuated by regular crises, we have grown accustomed to the system's flexibility and its capacity to find new channels for expansion. We may now, however, be encountering something new with which the left has so far failed to come to grips. The protracted crisis in advanced capitalist economies, which even mainstream economists are describing as ‘structural’, may not signal a terminal decline; but it may indicate that these economies have for the foreseeable future exhausted their capacity to survive without depressing the living and working conditions of their own populations – let alone those of the less-developed countries which they continue to exploit, as sources of cheap labour and the bearers of debt. Yet while there has been no shortage of jeremiads, and not only from the left, about the current condition of capitalism, in theory and practice its implications have still to be absorbed.

Let me first sketch the context. There is surely no need here to say much about the catalogue of decline which is the daily fare of the news media in every Western country. The advanced capitalist economies have been in a deep and prolonged recession, while the collapse of Communism has exposed the fissures and contradictions within the capitalist world which had been papered over and disguised by the Cold War. The stronger European economies are experiencing what for them are new forms of long-term structural unemployment, and the unification of Germany has dramatically aggravated the weaknesses that were already beginning to appear before in Europe's most successful economy.