Capitalism Moving Beyond Neoliberalism: Crises, Changes, and What Comes Next
Michael Roberts is an Economist in the City of London and a prolific blogger.
Cross-posted from Michael Roberts’ blog
In part two of my report on IIPPE 2026 (part one is here), I could continue to report on several good presentations on China’s development, but part one was dominated by issues on China, so in part two I shall look at sessions on other topics.
Chandrasekharan Saratchand, Professor of economics at Satyawati College, University of Delhi. presented his critique of so-called artificial ‘general’ intelligence (AGI). The claim here is that AGI can indefinitely scale output without relying on expanding human workforces. So it threatens labour’s share in output. Using a marginalist neoclassical approach of ‘factors of production’, Saratchand reckons AGI will commodify and automate human knowledge into ‘scalable machine capital’ and then capital owners will no longer need to distribute wages based on human skills. Inequality of wealth and income will rise sharply along with a further concentration of the means of production. Indeed, without ’intervention’, the massive productivity gains brought by AGI will be monopolised, leading to structural unemployment and the disempowerment of the global workforce. Saratchand reckons that relying on commercial entities to practise self-restraint is structurally unviable due to the immense financial pressures from financial backers. Instead, he calls for “rigid, top-down institutional frameworks to preserve human welfare.”
There are several problems with this analysis. First, it assumes that AGI – namely super-intelligent AI models – will emerge capable of replacing human labour almost entirely. In my view, the use of Large Language Models (LLMs) being sufficiently ‘intelligent’ to take over across all sectors and occupations in industry is very unlikely. Indeed it could be a decade of more even for the widespread adoption of ‘normal’ AI across the economy.
Second, AGI will never be able to replace or replicate human knowledge skills. Let’s remind ourselves of what Noam Chomsky said about AI: “The human mind is not like ChatGPT and its ilk, a lumbering statistical engine for pattern matching, gorging on hundreds of terabytes of data and extrapolating the most likely conversational response of most probable answer to a scientific question. On the contrary, the human mind is a surprisingly efficient and even elegant system that operates with small amounts to information; it seeks not to infer brute correlations among data points but to create explanations. Let’s stop calling it artificial intelligence and call it for what it is ‘plagiarism software’ because it does not create anything but copies existing works, of artists, modifying them enough to escape copyright laws.”
As Guglielmo Carchedi and I argued in our book, Capitalism in the 21st century (pp167-74), machines cannot think of potential and qualitative changes. New knowledge comes from such transformations (human), not from the extension of existing knowledge (machines). Only human intelligence is social and can see the potential for change, in particular, social change, that leads to a better life for humanity and nature.
Recently, some Oxford researchers published a paper called “Theory Is All You Need”. It argues against the claim that computational models can generate genuine novelty or new knowledge. LLMs are probability machines that look backward at existing data. Human cognition is forward-looking and capable of generating genuine novelty. Human cognition operates theoretically “top-down” rather than “bottom-up” from data. AI relies on data-based prediction, which is largely imitative. Humans, however, use theory-based causal logic that allows them to hold beliefs that go beyond existing data. Humans don’t just process information; we use theory to practically “intervene” in the world. “We engage in directed experimentation to generate entirely new data”. In my view, these are strong arguments against the current fear expressed by the AI companies and swallowed whole by the media (Martin Wolf) that AI is out of control and set to dominate humanity to our destruction.
The real fear for labour is not that, but the loss of decent jobs and living standards as AI ‘agents’ replace workers in sectors. The IMF reckons 60% of jobs in advanced economies will be affected. Morgan Stanley economists reckon that Europe’s banks could reduce their workforce by about 10% by 2030. The estimate is based on a review of 35 major lenders that together employ around 2.12 million people. A cut of that size would translate to roughly 212,000 roles disappearing over the next five years.
In the 1850s, Marx clarified the effect of new labour-saving technology: “The real facts, which are travestied by the optimism of the economists, are these: the workers, when driven out of the workshop by the machinery, are thrown onto the labour-market. Their presence in the labour-market increases the number of labour-powers which are at the disposal of capitalist exploitation…the effect of machinery, which has been represented as a compensation for the working class, is, on the contrary, a most frightful scourge. ….
So the issue is not some existentialist disaster ahead for humanity from ‘out of control’ super intelligent AI machines – an existential crisis is more likely from climate change. The real issue is who controls the means of production (AI). Rather than develop AI to make profits, reduce jobs and the livelihoods of humans, AI under common ownership and planning could reduce the hours of human labour for all and free humans from toil to concentrate on creative work that only human intelligence can deliver.
There were a number of papers on Marxist political economy, value theory and the rate of profit. Let me concentrate on one empirical study. Leonardo Segura Moraes presented a paper on Value, price of production and profitability in the Brazilian economy between 2010 and 2025. Instead of number-crunching aggregate data from national accounts, Segura took the balance sheets of 48 Brazilian companies – a bottom-up approach. From these accounts, he measured the Marxist categories of constant capital and variable capital, surplus-value, turnover of capital, and the rate of profit. Segura found that Brazil’s rate of profit on capital fell from 2010 to 2015 and then recovered to 2018 and then stabilised. Between 2010 and 2015, the sample’s average rate of profit trended downward, from 13.7% to 7.1%. This period of crisis was followed by a period of recovery until 2018 (when the average rate ofprofit in the sample reached 14.28%). After the end of the pandemic slump, the rate of profit stayed higher.
What I found interesting was that the results from Segura’s bottom-up approach matched results using aggregate data (top-down). I calculated Brazil’s rate of profit on capital using the Penn World Tables (11.0 series) and found a similar fall in the rate of profit when the commodity boom that started in the 2000s came to an end; and as in Segura’s data, there was a recovery from 2015, but the rate was still lower in 2023 than in 2010. So two different methods of calculation gave similar results – strengthening the empirical support for Marx’s law of profitability.
In another session, Cristina Re of the University of Parma and Gianmaria Brunazzi of the University of Milan gave an updated version of their thesis on ‘debt imperialism’ that they presented at the Historical Materialism conference in London last November. Their theory then was that because the dollar was the world’s trading and reserve currency, US debt to foreigners was not a disadvantage, but instead a new economic weapon for US imperialism to dominate other countries. “Debt imperialism is a configuration in which the centre sustains its dominance by issuing internationally demanded liabilities, absorbing foreign surpluses, and using market, monetary and military power to manage the contradictions generated by the rise of the semi-peripheries. U.S. deficits are not simply a symptom of decline. They are part of the architecture of contemporary imperial power.”
I have to say that I did not find this theory convincing then (see my comments attached). For me, ‘debt imperialism’ is where poor countries run up huge debts (loans) from imperialist institutions in order to grow, but then in economic crises are forced to default, devalue their currencies and impose severe austerity measures to meet their obligations with Global North banks and the IMF etc. The US is an exception as a debtor because of the ‘extraordinary privilege’ of the dollar and because it can easily finance its trade deficits through investment from abroad into US companies and financial assets. But I do not see how it follows from this that US debt is a new avenue of domination for US imperialism. At IIPPE, Re and Brunazzi have extended their theory to argue that US debt imperialsim has moved into a ‘terroristic’ phase from just financial power to more political domination and the use of force (presumably Venezuela, Iran etc). I shall be debating this theory in November.
Henrique de Abreu Grazziotin from the Department of Economics at the University of Massachusetts Amherst. presented some economic history, namely a discussion of Marx’s critique of the Bank Charter Act of 1844. This is relevant because the attempt of the monetary authorities to control the money supply and inflation by tying it to the nation’s stock of gold reserves was a disastrous failure. The Act failed to prevent financial panic and instead exacerbated crises during key phases of the capitalist industrial cycle.
Marx argued that the Act—championed by Sir Robert Peel and inspired by the Currency School—was built on the incorrect assumption that the volume of banknotes in circulation directly dictates commodity prices. It was a monetarist theory, precursor of modern monetarism as expressed by Milton Friedman. Marx sided with the Banking School, stating that currency circulation is actually determined by the needs of trade, commodity prices, and the state of the credit system.
Grazziotin has a theory of five phases in capitalist industrial cycle, based on movement of the average rate of profit and the average interest rate. The ‘profit of enterprise’ is the difference between the general rate of profit and the interest rate, which drives capital accumulation throughout the cycle. A crisis might emerge both from the rise of the interest rate or the fall of the general rate of profit. In the graph below, we can see that a fall in rate of profit can squeeze the profit of enterprise and thus provoke a slump; or a rise in the rate of interest could eventualy trigger a financial collapse. In the first three phases of the cycle, a rising rate of profit can accommodate a risie in the interest rate for borrowing, but in fourth phase the rate of profit starts to fall while the interest rate starts to rise. In the fifth phase, the profit of enterprise is so squeezed that a crisis ensues.
Finally let me refer to the plenary keynote presentation by Professor Alfredo Saad Filho on Crises in Neoliberalism and the Rise of Neoliberal Fascism. Saad-Filho argues that “neoliberal fascism” is the structural outcome of fifty years of neoliberalism hollowing out democracy, intensifying inequality, and relying on financialization. But unlike classic 20th-century fascism that rose in reaction to powerful organized labour or surging socialist movements, neoliberal fascism emerges when the working class is at its lowest ebb. So it combines a ruthless defence of free-market interests with the exclusionary violence of modern authoritarianism.These parties and even governments (Italy, US, Brazil, Argentina etc), mobilize public anger against manufactured scapegoats—such as immigrants or a supposed “deep state”—to distract from ongoing economic devastation and consolidate a resilient totalitarian state.
Saad-Filho argues that overcoming this new fascist threat requires moving past the failures of past systems to fight for “a renewed, genuinely inclusive democracy”. This sounds somewhat vague to me – if I have correctly interpreted his view. Also his emphasis on the weakness of the organised working class cannot be compensated for by expecting immigrants and gig workers to lead the struggle against the new fascism of the 21st century. Fascism will only be forced back by the coordination of organised workers, often in new tech industries, mobilised behind an economic programme relevant to them (the cost of living, public services, housing), not just on ‘democracy’ or identity politics.
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