By Carlos Carcione
October said goodbye with the widespread forecast that a new recession in the world economy is approaching the horizon in 2020. Sharp swings in a financial market very sensitive to political news and the governmental reports on the progress of the real economy, as well as the evolution of the trade war between the United States and China; the still frustrated Brexit, the deceleration of world trade and the imminent or open crisis in important emerging countries like Brazil, Turkey and Argentina, among others, fed the opinions of specialists and ignited the alarms of financial capital´s main institutions.
The first agreement in the commercial war was reached by mid-December, after a truce was established in early November, amid growing concerns of a possible new crash. The tariffs for electronic and mass consumption products that were supposed to take effect towards the end of the year were suspended. On November 28, the Wall Street bond and stock markets reached a new all-time high. At the time it was known that the Fed, the North American central bank, maintained interest rates without causing a new decline, suggesting that the panic caused in the US central bank by the prospect of recession was tempered. Meanwhile, Boris Johnson’s electoral victory in the United Kingdom brought tranquility to London´s financial center, the second in importance in the world. This tranquility was expressed in the recovery of the stock market.
But despite appearances the dominant mood in the markets is uncertainty. Since October, there has also been a global rise in popular and workers struggles against the capitalist attack on peoples´ standard of living. The awakening of the Chilean people showed the world the true meaning of the neoliberal “oasis,” and the French working class, in a strike with few precedents in that country, is dealing the social security reform a fatal blow. The uncertainty that this generates in markets can also be measured by Donald Trump´s impeachment, which was recently approved in the US House of Representatives.
It has been confirmed that the recession in commercial production is already global, that the poor economic growth of the main economies drags on, that the decline in the evolution of world trade continues, and that the volume of corporate and individual debt is growing, while a restructuring of the Argentine debt is expected, when, in fact, it has entered into a new default.
Beyond the positive signs that financial operators seek and intend to convey, the prospect that a new crisis is approaching remains and the reasons must be sought in the profound depression that the capitalist system has been in for over a decade.
Economic depression and protectionism
As we pointed out in August 2018  the current trade war between the United States and China is explained by a structural economic process that runs through the entire capitalist system since the crash of 2008. In other words, it is not the cause of the current tendency toward recession but the consequence of the crisis, so the truces will be episodic and the agreements reached will not solve the underlying problems.
The current depression is, given its duration and magnitude, the third of its kind in modern capitalism. The first one struck between 1870 and 1890, and ended in the First World War and the Russian Revolution, and the second occurred after the collapse of 1929 and culminated in the Second World War.
In the last ten years, growth has not recovered the level prior to the 2008 crisis, productive investment maintains its downward curve and labor productivity has not grown. This means that all the main indicators to measure the health of the system are showing constant deterioration. Protectionism, with its consequent commercial disputes, is characteristic of these depressive periods.
Imperialist decay and economic stagnation
Despite the levels that financial speculation has reached, the economy shows clear symptoms of prolonged stagnation: the growth of the United States in the last quarter, the period from July to September, shows a mediocre growth of 2.1%, lower than the previous quarter but higher than the rest of the G7 economies. Thus, Canada, for example, has grown 1.7%, Japan 1.5% the European Union 1.2% and the United Kingdom 1%. Meanwhile, the IMF forecasts only a 2.5% growth of the world economy. On the other hand, China and India will have their worst growth rates in almost 30 years.
The imperialist decline is also expressed by two other central factors that measure the vitality of the system: the growth of productive investment and labor productivity. Neither of them manages to break out of the stagnation parameters of the last decade.
As Michael Roberts points out in his article “The fantasy world continues” : According to the US Conference Board, production growth per worker was 1.9 percent worldwide in 2018, compared to 2 percent in 2017 and is expected to return to 2 percent growth in 2019. The latest estimates extend the downward trend in the growth of global labor productivity from an average annual rate of 2.9 percent between 2000-2007 to 2.3 percent between 2010-2017. This means that the much announced increase in labor productivity with the use of new technologies has not yet arrived.
We arrive at the key of the stagnation: weak and decreasing productive investment. According to the data obtained, it is around 30% below the levels it had reached before the 2008 crash. This weakness in investment is mainly due to what we indicated in an article in October of this year, because profits in the productive economy continue to fall, confirming once again, if necessary, Marx’s law of the tendency of the rate of profit to fall.
The threat of corporate debt and the over-accumulation of fictitious capital
Another index that has dangerously exceeded pre-2008 levels is corporate debt, which is almost triple what it was at the end of 2008, currently reaching 8 trillion dollars, 50% higher than at the beginning of the recovery in 2011. While the credit rating itself has its quality deteriorated, today´s low quality debt is now double what it represented then. This is without taking into account so-called zombie companies, that is, companies that fail to make enough profits to pay their debts, and continue to function by continually increasing their debts. According to estimates by financial consultants, there are 548 of these companies in the OECD, barely less than at the most critical moment in 2008.
The low rate of profit in productive sectors that we indicated above stimulates the over-accumulation of fictitious capital. The main destination of the profitability that they obtain and the cash that the companies hoard is destined to financial speculation. The fundamental operations to which this speculation is destined, both in the United States and in Europe, are the repurchase of shares of the companies themselves that has become the largest category of investment in financial assets, reaching the figure of 1 trillion dollars.
The cocktail of debt and financial speculation is causing an over-accumulation of fictitious capital that has already reached the levels prior to the 2008 crisis.
The recession that financial operators have feared since last October has not yet occurred. As profits obtained from speculation remain, they hope to repeat the performance of 2019 in 2020, an objective that means continuing with the current stagnation. But the fact is that they do not expect to recover a cycle of vigorous growth, and given this poorly optimistic hope, the probable outcome is for the system to reproduce the logic of its crises by repeating a new crash of unpredictable consequences.
The path we will walk in 2020 transits between the process of rebellions that will continue to move the world and the prospect of a new global economic crisis.
 Protectionism and world economic crisis: What is the logic of Trump’s trade war? https://lis-isl.org/2018/08/17/proteccionismo-y-crisis-economica-mundial-cual-es-la-logica-de-la-guerra-comercial-de-trump/