The question then arises of whether a comparable breakdown is now in the making, and whether such an occurrence is as ‘fundamental’ a condition for the revitalization of the global economy as Brenner seems to think. In order to answer this question, we must highlight not just the similarities but also the differences between the two long downturns—which are, indeed, equally striking. Although both downturns were characterized by an escalation of competitive struggles, these unfolded along radically different paths. As previously noted, in 1873–96 the main form of inter-enterprise competition was a ‘price war’, resulting in ‘the most drastic deflation in the memory of man’. Closely related to this tendency, the governments of the main capitalist countries subjected their currencies to the self-regulating mechanisms of a metallic standard, thereby surrendering devaluation and revaluation as a means of competitive struggle.
Increasingly, however, governments became active supporters of their domestic industries through protectionist and mercantilist practices, including the construction of overseas colonial empires—thereby undermining the unity of the world market. Although Britain continued to practice free trade unilaterally, it also remained in the vanguard of territorial expansion and empire building overseas. From the 1880s, this trajectory of intensifying interstate competition in overseas-empire building translated into the escalation of the armaments race among rising and declining capitalist powers, which eventually came to a head in the First World War. Although Britain was an active participant in this scramble, it continued to provide the world economy with capital through two major waves of overseas investment—in the 1880s and in the 1900s—which included pouring significant funds into the United States.
In all these respects, the competitive struggle during the late twentieth century’s long downturn unfolded along a radically different path. During the 1970s, in particular, commodity prices generally rose rather than fell, in what was probably one of the greatest system-wide inflations in a time of peace. Although inflationary pressures were contained in the 1980s and 1990s, prices continued to rise throughout the downturn. At its outset, the last tenuous link between monetary circulation and a metallic standard—the gold–dollar exchange rate established at Bretton Woods—was severed and never again restored. As Brenner underscores, the governments of the main capitalist countries were thus in a position to use the devaluation and revaluation of currencies as a means of competitive struggle. And while they did so systematically, they nonetheless continued to promote the integration of the world market through a series of negotiations which further liberalized global trade and investment, eventually resulting in the formation of the World Trade Organization.
Far from being undermined, the unity of the world market was thus further consolidated during this period. Nor was there any sign of an armament race among rising and declining capitalist powers. On the contrary, after the final escalation of the Cold War arms build-up in the 1980s, global military capabilities became even more centralized in the hands of the United States than they had been previously. At the same time, instead of providing capital to the rest of the world economy, as Britain had throughout the nineteenth-century downturn and financial expansion, since the 1980s the United States has been absorbing capital at historically unprecedented rates, as Brenner himself notes.
In all these respects, the trajectory of the competitive struggle in the latest long downturn differs radically from the previous one. How can we account for this combination of similarities and differences between the two, and what new light does this kind of comparison throw on Brenner’s analysis of global turbulence over the last thirty years? In dealing with these issues, I will focus on the three main shortcomings of Brenner’s argument. The first concerns labour–capital relations; the second, so-called North–South relations; and the third, inter-capitalist competition itself. Let me deal with each in turn.
A) Outflanking Labour Resistance
In ‘Global Turbulence’ and, to a lesser extent, The Boom and the Bubble, Brenner presents his account of the long downturn as a critique of what he calls ‘supply-side’ theories of capitalist crises. Advanced in various forms by Left and Right alike, these contend that, by the 1960s, labour had acquired a leverage in the wealthier capitalist countries sufficient to squeeze profits and thereby undermine the mechanisms of capitalist accumulation. While acknowledging that labour may indeed be in such a position locally and temporarily, Brenner finds it inconceivable that it can wield the power necessary to provoke a long-term, system-wide downturn.
Labour cannot, as a rule, bring about a temporally extended, systemic downturn because, as a rule, what might be called the potential sphere of investment for capital in any line of production generally extends beyond the labour market that is affected by unions and/or political parties or is regulated by norms, values, and institutions supported by the state. So firms can generally circumvent and thereby undermine the institutionalized strength of workers at any given point by investing where workers lack the capacity to resist. Indeed, they must do so, or they will find themselves outflanked and competitively defeated by other capitalists who will. 
It follows that, as Brenner puts it, ‘vertical’ pressure on capital, from below—that is, from labour—could not and did not bring about the spatially generalized and temporally extended squeeze on profits that underlies the long downturn. Only ‘horizontal’ pressure from inter-capitalist competition could do so. 
This hypothesis is based on the assumption that there is in fact ‘cheaper labour that can be combined with means of production embodying something like the current level of technology without loss of efficiency (that is, at lower unit cost)’ According to Brenner, this assumption is justified for two reasons. First, ‘labour forces in regions with long histories of economic development tend to receive wages that are substantially higher than can be explained simply by reference to their relative level of productiveness’; and second, ‘over similarly extended time periods, technical change tends to reduce the skill required to produce any given array of products, with the result that the labour force that can make those products without loss of efficiency is continually enlarged, and the wage required to pay it correspondingly reduced’. 
In short, for historical reasons which Brenner does not explore, labour forces in ‘advanced’ capitalist countries have secured rewards for effort far higher than warranted by their productivity. This in itself makes them vulnerable to the competition of labour forces that—for equally unexplored historical reasons—work for wages lower than their actual or potential productivity might warrant. At the same time, technical change continually enlarges this global pool of underpaid workers, or would-be workers, who can be mobilized to outflank the pressure on profitability coming from overpaid labour. The only pressure on profitability that capitalists cannot outflank is that which comes from the competition of other capitalists.
There are two main problems with this argument. Firstly, it would appear to be logically inconsistent since it claims that, in the past, workers in the ‘advanced’ capitalist countries had been able to gain greater rewards than warranted by their productivity, in contradiction to the theoretical claim that any attempt to do so would price them out of the world market. In addition, the argument overestimates the ease with which, in the present no less than in the past, cheaper labour supplies can be mobilized to outflank more expensive ones. Let us clarify these problems by looking once again at the historical record.
Horizontal vs vertical?
An analysis of the long downturn of 1873–96 provides strong evidence both for and against Brenner’s thesis on the predominance of horizontal (inter-capitalist) over vertical (labour-capital) relations, in bringing about a long-term and generalized squeeze on profits. In support of Brenner’s argument, it could be pointed out that intense labour–capital conflicts—either in the form of sustained strike activity, as in Britain and the United States, or in the form of working-class party formation, as in Germany and elsewhere— followed rather than preceded the onset of the long downturn in profitability. There can be little doubt that intense inter-capitalist competition, in the form of a relentless price war, was the main, and prior, driving force for the substantial increase in real wages that occurred during the long downturn, especially in Britain. It is also plausible to assume that rising real wages at home were at least in part responsible for the explosive growth of British overseas investment in the 1880s. Brenner’s argument for the late twentieth century thus fits key features of the late-nineteenth-century experience. The fit, however, is far from perfect.
Although inter-capitalist competition was undoubtedly the primary force squeezing profitability and pushing up real wages through drastic price deflation, did not workers’ resistance in the form of increasing strike activity and class-based organization contribute in a major way to that outcome, by preventing nominal wages from decreasing as rapidly as prices? And did not this resistance itself affect the trajectory of inter-capitalist competition by strengthening the tendency, not just towards the export of capital from Britain and the import of labour to the United States, but also towards the ‘politicization’ of that competition, through a revival of neo-mercantilist practices and overseas empire-building on an unprecedented scale? Whatever the exact answer to these questions, Brenner’s hard and fast distinction between horizontal and vertical conflicts, and his a priori exclusion of the latter as a possible contributing factor to general and persistent downturns in profitability, are ill-suited to unravel the complex historical interaction between the two kinds of conflicts. 
Similarly, Brenner’s contention concerning the inevitable outflanking of workers’ leverage in core capitalist countries through international factor mobility ignores key aspects of how that mobility actually functioned during the earlier long downturn. Most of the capital exported from Britain and lesser core countries in this period did not involve a relocation of industrial production but the building of infrastructures in overseas territories, expanding demand for the output of British and other metropolitan industries while increasing the supply of cheap raw materials and wage goods. Far from undermining the leverage of labour in the main capitalist centres, this pattern of overseas investment consolidated it. At the same time, while constant immigration may have helped contain the growing leverage of US labour, massive emigration—especially from Britain—surely helped the empowerment of European labour.  All things considered, the persistence and generality of the late-nineteenth-century profit squeeze appear to have been due, not just to the intensification of inter-capitalist competition, but also to the effective resistance of workers against attempts to make them bear the costs of that competition; and to the difficulties which capitalists encountered in outflanking that resistance.
In the half-century following the end of the long downturn of 1873–96, inter-capitalist competition became increasingly politicized: literal wars among rising and declining capitalist powers, rather than price wars among capitalist enterprises, came to dominate the dynamics of horizontal and vertical conflicts alike. From the late 1890s until the First World War, this transformation was instrumental in reviving profitability. Eventually, however, it resulted in the breakdown of the UK-centred world market and a new and more vicious round of inter-imperialist conflicts. For all practical purposes, in the 1930s and 1940s there was no world market to speak of. In Eric Hobsbawm’s words, world capitalism had retreated ‘into the igloos of its nation-state economies and their associated empires’. 
Labour–capital conflicts in the first half of the twentieth century developed along two distinct and increasingly divergent paths. One was the predominantly ‘social’ path of movements nesting at the point of production, whose main weapon of struggle was the disruptive power that mass production puts in the hands of strategically placed workers. This originated in late-nineteenth-century Britain but assumed almost ideal-typical form in the United States. The other was the predominantly ‘political’ path of those nesting in the bureaucratic structures of political parties, whose main weapon was the seizure of state power and the rapid industrialization and modernization of the states that fell under their control. This originated in Continental Europe, most notably in Germany, but assumed its ideal-typical form in the USSR. 
The course of struggle along both paths was fundamentally shaped by the two world wars. Each of these was characterized by a similar pattern: overt labour militancy rose on the eve of both wars, declined temporarily during the conflicts themselves, and then exploded in their aftermath. The Russian Revolution took place during the First World War’s wave of labour militancy, while that of the Second World War saw the spread of Communist regimes to Eastern Europe, China, North Korea and Vietnam. It was in this context of escalating labour militancy in the core, and advancing revolution in peripheral and semi-peripheral regions, that the social parameters of the US post-war world order were established.  Thus the form and intensity of inter-capitalist competition—that is, inter-imperialist rivalries and world wars—shaped the form and intensity of workers’ struggles during this period. Nevertheless, the ‘feedback’ of these struggles on the trajectory of inter-capitalist conflicts was even more powerful in the first half of the twentieth century than it had been during the long downturn of 1873–96. Indeed, without such interaction, the establishment at the end of the Second World War of what Aristide Zolberg has called a ‘labour friendly’ international regime would be hard to explain. 
Along with the US-sponsored reconstitution of the world market on new and more solid foundations, this regime created the institutional conditions for the system-wide revival of profitability that underlay the long boom of the 1950s and 1960s. I have no particular disagreement with Brenner’s contention that ‘uneven development’, in his sense of the term, was a key determinant of the boom and of the long downturn that followed. But his insistence that labour–capital conflicts played no significant role in the extent, length and shape of this downturn seems even less warranted than for earlier comparable periods.
Let us begin by noting that, in the late twentieth century, workers’ struggles played a far more pro-active role vis-à-vis inter-capitalist competition than they did in the late nineteenth century. Whereas in the earlier period the intensification of labour–capital conflicts, and the most significant increases in real wages, followed the onset of the downturn, in the second half of the twentieth century they preceded it. In arguing his case against the role of workers’ leverage in bringing about a system-wide and persistent squeeze on profits, Brenner focuses almost exclusively on the containment of workers’ power in the United States in the late 1950s and early 1960s: since this occurred before the crisis of profitability, he argues, the crisis could not be due to workers’ pressures.  Unfortunately, this narrow focus on the single ‘tree’ of a short-term and local episode of class conflict prevents Brenner from seeing the ‘forest’ of the multinational rising tide of conflicts over wages and working conditions which, between 1968 and 1973, culminated in what E. H. Phelps Brown aptly called ‘the pay explosion’.  Coming in the wake of twenty years of rising real wages in the core regions of the world economy, and at a time of intensifying inter-capitalist competition worldwide, this pay explosion did not merely exercise a system-wide downward pressure on profitability, as many have emphasized.  More important, it had a major and lasting impact on the subsequent trajectory of inter-capitalist competition.
This brings us to a second observation concerning differences between the two end-of-century long downturns. Although he occasionally mentions price inflation, Brenner is generally oblivious to the peculiarly inflationary character of the downturn he describes—all the more remarkable when contrasted with the strong deflation of the late nineteenth century. Brenner never questions this peculiarity; nor does he raise the closely related issue of why the 1965–73 crisis of profitability witnessed the severance of the last tenuous link between monetary circulation and a metallic standard, in sharp contrast with the tendency of the 1870s and 1880s towards the diffusion of the gold and other metallic-based regimes.
To be sure, Brenner does implicitly acknowledge that Washington’s final abandonment, in 1970, of half-hearted attempts to stem the tide of speculation against the gold–dollar system was not just a ploy to shift the downward pressure on profits from American to Japanese and German manufacturers through a radical realignment of exchange rates. As he mentions in passing, ‘the political costs of sustaining a serious anti-inflationary policy . . quickly proved unacceptable to the Nixon administration’.  What these ‘political costs’ were, and whether they had anything to do with labour–capital relations, we are not told. As we shall see in the next section, in the case of the United States such costs were world-systemic as well as domestic. Nevertheless, even in the US—torn as it was by intense social conflicts over war in Vietnam and civil rights at home—the political price of subjecting monetary circulation to the discipline of a metallic standard clearly had a social component, including the risk of alienating labour from the ideologies and practices of the dominant bloc. 
In fact, the most compelling evidence for the role played by labour leverage in the final demise of the gold standard comes, not from the United States, but from the country that had been the staunchest advocate of a return to a pure gold-based regime in the 1960s: De Gaulle’s France. French advocacy of the gold standard ended abruptly, never to be revived again, in May 1968, when De Gaulle had to grant a huge wage-hike to prevent labour from siding with the rebellious students. Had monetary circulation been subject to the automatic mechanism of a metallic standard, such a wage-hike would have been impossible. Being perfectly aware of this, De Gaulle did what was necessary to restore social peace and stopped daydreaming about a return to gold. 
As the US and French experiences suggest, the leverage of labour during the transition from boom to relative stagnation in the late 1960s and early 1970s was not simply a reflection of inter-capitalist competition, as it largely had been at the onset of the late-nineteenth-century downturn.  On the contrary, it was significant enough to make its own independent contribution, not just to the squeeze of profitability that underlay the transition, but also towards launching the downturn along an inflationary rather than deflationary path. This does not mean that inter-capitalist competition was not also at work in squeezing profits, nor that workers and their social power benefited from the inflationary nature of the downturn—they clearly did not. All it means is that Brenner’s model—near-absolute predominance of inter-capitalist competition over labour–capital conflicts—fits the latest long downturn even less than it did the previous one.
Limits to capital migration
A closer examination of the effects of capital mobility on labour leverage provides further evidence for such an assessment. In the 1970s, in particular, there was indeed a strong tendency for capital, including industrial capital, to ‘migrate’ to lower-income, lower-wage countries. Nevertheless, as Beverly Silver has documented in great detail, the relocation of industrial activities from richer to poorer countries has more often than not led to the emergence of strong, new labour movements in the lower-wage sites of investment, rather than an unambiguous ‘race to the bottom’ Although corporations were initially attracted to Third World sites—Brazil, South Africa, South Korea—because they appeared to offer a cheap and docile labour force, the subsequent expansion of capital intensive, mass-production industries created new and militant working classes with significant disruptive power. This tendency was already in evidence in the late nineteenth and early twentieth centuries in textiles, the chief industry of British capitalism. But it has been far stronger in the leading industries of US capitalism, such as automobiles. 
Thus, capitalist attempts to outflank labour pressures on profitability through industrial relocation tended to deprive capital of the considerable benefits associated with producing close to the wealthier markets and in safer political environments, without actually providing many of the expected benefits of abundant low-waged and easy-to-discipline labour supplies. Acting in conjunction with other factors that will be discussed in the next two sections, this tendency made its own contribution to the massive redirection of transnational capital flows in the 1980s, from low- and middle-income destinations to the United States. Again, I am not denying that industrial relocation helped to undermine workers’ leverage in the countries that experienced the greatest net outflow of capital. I am simply saying that, generally speaking, it tended to backfire on profitability; and, in so far as the United States was concerned, the net outflow soon turned into a huge net inflow. If labour’s leverage declined in the course of the long downturn, as it certainly did, capital mobility is not a very convincing explanation.
Labour migration does not provide a very plausible explanation either. It is true that labour migration over the last thirty years has come predominantly from poor countries, to a far greater extent than in the late nineteenth century—thereby constituting a greater competitive threat for workers in the wealthier industrial centres. Nevertheless, in the late twentieth century the capacity of workers in the richer countries to forestall competition from immigrant labour forces (often through adherence to racist ideologies and practices) has been far greater. 
In sum, Brenner’s argument for the absolute predominance of inter-capitalist competition over labour–capital struggles in determining system-wide and persistent contractions in profitability misses the complex historical interaction between horizontal and vertical conflicts. Although, world historically, inter-capitalist competition has indeed been the predominant influence—provided that we include inter-capitalist wars among the most important forms of that competition—labour–capital conflicts were never merely a ‘dependent variable’, above all on the eve and in the early stages of the latest long downturn.  Not only did conflicts over wages and working conditions in core regions contribute to the initial squeeze on profitability in the crucial 1968–73 period; more importantly, they forced the ruling groups of core capitalist countries to choose an inflationary rather than a deflationary strategy of crisis management.
To put it bluntly: by the end of the long post-war boom, the leverage of labour in core regions was sufficient to make any attempt to roll it back through a serious deflation far too risky, in social and political terms. An inflationary strategy, in contrast, promised to outflank workers’ power far more effectively than international factor mobility could. It was, indeed, the great stagnation-cum-inflation of the 1970s—‘stagflation’ as it was called at the time—and its effects on inter-capitalist competition and labour–capital relations, that effectively wore down workers’ power in the core, opening the way for its collapse under the impact of the Reagan–Thatcher counterrevolution. In order to capture the full significance of this development and its impact on the subsequent trajectory of the long downturn, however, it is not enough to focus on labour–capital relations. Even more important were North–South relations, to which we now turn.