Can capitalism survive? Not if we want to solve the climate and poverty crisis

The opening line of Part II of Joseph Schumpeter’s 1942 book – Capitalism, Socialism and Democracy – were “Can capitalism survive? No, I do not think it can”. His thesis was not that capitalism would perform badly, quite the opposite. Rather the considered that “its very success undermines the social institutions which protect it, and inevitably creates conditions in which it will not be able to live and which strongly points to socialism as the heir apparent.” The climate crisis facing the world is combining with the other outcomes of neoliberalism to create what is now called a poly crisis. Recently, a group associated with the United Nations Human Rights Council has released a – Roadmap for Eradicating Poverty Beyond Growth (published June 10, 2026) – which proposes a series of policy shifts designed to address aspects of the poly crisis. While it recognises that we must “escape the trap of growthism”, it fails to articulate that the fundamental logic of capitalism is capital accumulation that requires growth. To escape the trap, we must move beyond that mode of production. Merely tweaking policy structures within capitalism will not solve the problem.

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Apparently the UK government is about to do the impossible – run out of sterling

Go back to the headlines in 2010 – – “Countries with debt over 90 percent of GDP enter a danger zone”. The 90 per cent threshold entered the media coverage as a result of a paper released by Harvard economists Ken Rogoff and Carmen Reinhart – Growth in a Time of Debt. That paper talked about “debt intolerance limits” arising from “sharply rising interest rates” – and then “painful fiscal adjustments” and “outright default”. It also talked about the “obvious connection” between inflation and high public debt ratios – which had me laughing at the time because no-one has really shown that to be a robust relationship at all. Everyone started quoting the paper, even though at the time it had obvious flaws. The predictions failed to materialise as did all the previous predictions that economists like them had failed. But the press keeps giving their views a public platform because the lurid predictions attract audiences. It is a pity because lame politicians seem to regard the predictions as being based in fact and change policies for the worse. Anyway, Rogoff is back in town predicting that the British government will run out of sterling and be forced to bring in the IMF to address the fiscal crisis. That is what the headlines say. But if you delve more deeply, his position is a little different and exposes the chicanery of mainstream economics which holds itself out as a consistent body of theory but regularly uses that pretence to bully governments into political shifts that help the elites and damage the rest of us.

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Australia’s lowest paid workers enjoy a modest real wage gain courtesy Fair Work Commission

On May 19, 2026, Oxfam Australia’s media release – Australian billionaires’ wealth grows by $50,000 per minute – informed us of the growing inequality in Australia, a country that promotes a ‘legend’ that egalitarianism is at its core. I will discuss their research in detail at another time but the results are stunning. In a population of 28 million, the “20 richest Australians hold more wealth than the bottom three million households”. While most of the population are struggling with “rising rents, grocery prices and energy bills”, the top-end-of-town have had a “bumper year” increasing their wealth by around $A50,000 per minute. That should frame our response to Tuesday’s (June 2, 2026) decision – Annual Wage Review 2026 – by the Fair Work Commission, Australia’s minimum wage setting authority, which increased the National Minimum Wage (NMW) by 6 per cent. A further cohort – those on minimum awards were given a 4.75 per cent increase in their wage. Against the current CPI growth, that increase provides for some modest real wage increase for the lowest paid workers in Australia. Of course, the employer groups are up-in-arms as usual claiming that the increase (and flow-ons – see below) will devastate employment growth and all the usual bunk as they post record profits. Fortunately, the FWC mostly ignored the bleating of the bosses. But compared to what is happening at the top of the income and wealth distribution, this change to the NMW is trivial to say the least.

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Australian national accounts – economy weakened in the March-quarter (and we are yet to see the Trump War impact)

Today (June 3, 2026), the Australian Bureau of Statistics (ABS) released the latest – Australian National Accounts: National Income, Expenditure and Product, March 2026. This data does not really capture the full impact on the Middle East disruptions nor do they capture any interest rate impacts arising from the recent hikes in rates from the RBA. But the economy is slowing and really only being held up by the massive private investment in data centres, which will exhaust in coming quarters. The Australian economy grew by 0.3 per cent in the March-quarter 2026 (down) from 0.4 per cent) and by 2.5 per cent (down from 2.6) over the 12 months. I expect the economy to slow further in the June-quarter 2026.

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Monetary policy is not fit for purpose

I have said this many times – monetary policy is not fit for purpose and central banks should be prevented from having discretionary powers to alter rates at will. There are two levels of justification for that assertion. First, at the ideological level, a major (dominant under neoliberalism) arm of macroeconomic policy should not be outsourced to an unelected, unaccountable body of technocrats. This subverts the operation of democracies by allowing elected officials to depoliticise policy settings through their ‘pass the parcel’ approach – ‘oh the central bank is independent and we never interfere in their decisions’ type narrative. Second, on a technical level, the officials have little idea of when and what the impact will be of their policy changes. There are too many unknowns, mostly relating to the distributional consequences of interest rate changes (creditors win, debtors lose) which make it impossible to predict when the creditors will spend up their gains and debtors cut their spending. As a result, there are many examples in history of central banks moving too early (relative to their stated objective) or too late, with the outcome being that they make matters worse, particularly prolonging recessions. This situation is once again looming up in Japan at the moment.

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Latest changes to Australian privatised job service industry are just window dressing and the sociopaths remain dominant

In the 1990s, a new industry was created in Australia. It produced nothing. But it was the federal government’s response to the political fallout from the high unemployment that had persisted since it abandoned its committent to full employment in the 1980s as neoliberal ideology became dominant and the corporate sector took control of public policy. The industry was the ‘unemployment’ industry and took the form of a privatised job services system which was paid billions of dollars in public money to ‘manage’ the unemployment. It produced nothing beneficial and has destroyed millions of lives. It has been a public policy disaster for more than 28 years yet successive federal governments have persisted with it. Yesterday (May 27, 2026), the Federal government announced what it claims are the first major reforms in decades of this failed system of job services provision. Unfortunately, the changes announced by the Australian government yesterday are just window-dressing and behind the hype remains a deeply flawed system that will never produce positive outcomes for disadvantaged Australians. What it will continue to achieve is the enrichment of the privatised operators and their shareholders or stakeholders, while the unemployed are forced to live on income support payments that are well below the poverty line and be subjected to sociopathological obligations that do nothing to advance their job prospects. The whole privatised system should be abandoned.

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Another major disservice in the quest for an enlightened society

I read two articles at the airport early this morning, while I was waiting for a flight, which I wish I hadn’t read. The first was bemoaning the approaching “$A1 trillion problem” that apparently the Australian government and all of us are about to face. It was written by a journalist who is schooled in paraphrasing press releases from corporations and investment banks and holding out the results as somehow informed and independent commentary. The second was about the UK and how it faces a major issue with the ‘bond markets’ a la Liz Truss-style and how it should instead do something about the Bank of England. It was written by a progressive academic (sadly). Neither commentary captures the essence of the issue they seek to write about. But they do present enough reality to provide a pathway into something much better. Today, I will deal only with the alleged $A1 trillion problem.

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Australian labour market – sharp deterioration in April (RBA will be happy!)

The Australian Bureau of Statistics (ABS) released the latest labour force data today (May 21, 2026) – Labour Force, Australia – for April 2026 – which showed that the labour market deteriorated significantly in April. All the main indicators were moving in negative directions – employment growth fell, participation fell, unemployment increased, the employment-population ratio fell. There are now 10.2 per cent of available labour not being used (either unemployed or underemployment), which makes a farce of the RBA’s claims that the labour market is tight. There is substantial scope for more job creation given the slack that is present. However, if the global situation doesn’t improve quickly then that slack will increase sharply.

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Australian government being bullied by the RBA to move towards irresponsible austerity

Last Tuesday (May 12, 2026), the Australian Treasurer introduced the 2026-27 Fiscal Statement (aka Federal ‘Budget’). I have been reluctant to comment on the ‘Statement’ given the constant repetition by the Treasurer about a ‘trillion dollars of debt’ and all the rest of the flawed conceptual development and nomenclature that has surrounded its release and subsequent public commentary. But I do want to make a few comments on some of the detail and subsequent commentary. The Government is running scared at the moment as the extreme Right-wing political party, One Nation threatens to take a swathe of seats at the next election (similar to what Reform UK is doing). It is also being bullied by the RBA Governor who is threatening more destructive rate hikes if the government doesn’t cut its fiscal deficit. Such a policy stance will see unemployment rise further (and in my estimation, much higher than the Government forecasts). And if there is any growth associated with the fiscal stance it will come from increasing household debt which is unsustainable given the record levels of indebtedness currently endured by the household sector. Overall, this is not an impressive fiscal statement.

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