Forever blowing bubbles: a new phase in the development of capitalism

Capitalism derives profit from surplus value, from the exploitation of the working class. They also accrue capital from the stock markets and bank credits.
Fractional-reserve banking is the banking system in all countries worldwide, under which banks that take deposits from the public keep only part of their deposit liabilities in liquid assets as a reserve, typically lending the remainder to borrowers. Bank reserves are held as cash in the bank or as balances in the bank's account at the central bank. This banking system creates new credit at a much higher level than the original deposits.
For their part, stock markets themselves multiply the value of the original means of production. It thus creates false, fictitious, capital. Here the finance capitalists come into play. They finance debt far beyond the original means of production that it is based on. Debt is sold on, as for example, with the student debt, and the sub-prime loans debt that triggered the crisis back in 2008. In response finance capital reacted to the 2008 crisis by injecting more credit into the economy.
The US economy is incredibly overheated at this present time. An example of this is the Tesla bubble.
Tesla
Tesla shares was running at hugely bloated values. Tesla is the Electrical Vehicle (EV) company owned by Elon Musk, who also has SpaceX and X (Twitter) in his portfolio. Musk is one of the richest people in world history, whose net worth is valued at US$436 billion as of January 2025, according to the Bloomberg Billionaires Index, and $426 billion according to Forbes, which he has gained through his shares in the above companies. He outguns the next richest capitalist, Jeff Bezos who owns Amazon, by hundreds of billions of dollars. After Bezos, Mark Zuckerberg of Meta and Larry Ellison of Oracle are worth hundreds of billions of dollars. They, and five other American magnates and the Frenchman Bernard Arnault, are the richest people in the world.
Between them, they trousered hundreds of billion dollars in six weeks, following Trump’s re-election. There never have been individuals so wealthy.
Their huge rise in wealth is fuelled by speculation, okay, let’s speak plainly, by gambling on the stock market. This is as they slaver over the prospects of a Trump United States, with huge cuts to social programmes, massive tax cuts for the rich, and deregulation. This is exactly the scenario they have dreamed of.
Of all the companies owned by these oligarchs, Tesla gained the most, with SpaceX in second place. In just two days Musk pocketed $24billion! However, his association with Trump and with far right movements has cost him dear, as since December, Tesla’s stock dropped 9.2%, losing him nearly $100 billion in market capitalisation.
But at the same time, the charlatanism of Musk can be seen in the reality of the situation at Tesla. If we were spinning around the world in a satellite, we would be able to see the parks where Tesla EV vehicles stand, quite clearly. There are 50,000 of these unsold vehicles. All of Tesla’s holding facilities are filled to overflowing.
Tesla built 433,371 vehicles in the first quarter of 2024 but only sold 386,810. In fact, the market for electrical vehicles is slowing considerably.
Musk is a master of hype and of boastful schemes that have never come to fruition, like his predictions of putting mice on Mars, robot taxis, getting a Tesla vehicle to drive itself from one coast of America to the other, etc, etc.
Despite being an enthusiastic advocate of a totally free market, with no State intervention, Tesla was funded by the State, under Obama and then Biden, through tax breaks, grants, low interest loans, and regulatory credits to the tune of several billion dollars. During the Covid pandemic in 2020, Tesla received substantial funding from the federal government. This was whilst Musk frothed at the mouth on social media about the funding of ordinary people by the same federal government during the same pandemic.
Some of the more sober financial pundits realise that this overheated Tesla situation cannot last and are wary of investing. One remarked, “Many will wake up to the realisation that Tesla’s rise in the past semester lacks any fundamental basis and it’s all snake oil salesmanship about nothing new and nothing justifying the current valuation”.
Of course, the Tesla bubble is not the only bubble being touted on financial markets. There is the cryptocurrency bubble (Musk himself bigs up cryptocurrency and indeed Tesla has acquired billions of Bitcoins). There is the Meta bubble (Facebook, WhatsApp, Instagram, etc.) There is the bubble of NVIDIA (Artificial Intelligence Computing).
As we said earlier on, the Covid crisis resulted in governments and central banks pumping trillions into the stock markets in 2020. Over the last period, the rich have moved from investing in production and infrastructure, to gambling on the stock markets. This finance capital creates bubbles where the price of a commodity can soar far above its real value. These bubbles then have a tendency to burst. Unfortunately, it is the working class that suffers most from these bubble bursts and big economic crashes take place, bringing on further austerity measures. Indeed, before these crashes, bubbles can cause suffering. Take the housing bubble, where ordinary working people are priced out.
The speculation frenzy has reached a fevered pitch. The Dow Jones Industrial Average has increased by more than 700% ( from 6,381 to over 45,00). The Nasdaq has risen by more than 1,100 per cent! (From 1,300 to more than 20,000). Alongside this, speculative assets have soared in price. This includes cryptocurrency, where a Bitcoin was valued at $100,000 for the first time.
At the end of 2024, Ruchir Sharma of Rockefeller Capital Management warned in an article entitled Mother of All Bubbles in the Financial Times that: “This is not a bubble in US markets, it’s mania in global markets.” He went on to say: “Talk of bubbles in tech or AI, or in investment strategies focused on growth and momentum, obscures the mother of all bubbles in US markets. Thoroughly dominating the mind space of global investors, America is over-owned, overvalued and overhyped to a degree never seen before. As with all bubbles, it is hard to know when this one will deflate, or what will trigger its decline”. In a further article, How ‘the mother of all bubbles’ will pop, he stated: “In the late stages of a bubble, prices typically go parabolic, and over the past six months US stock prices have outgained others by the widest margin for any comparable period in at least a quarter century. When flying in such thin air, it doesn’t take much to stall the engines. All the classic signs of extreme prices, valuations and sentiment suggest the end is near”.
(Ironically, this bursting of the Tesla bubble has been accelerated by Musk’s recent open involvement in US government, causing substantial drops in Tesla sales, due to boycotts in various countries). Tesla is a prime example of overvalued US stock, as is the similar funny money bubble of crypto currencies like Bitcoin. These are all speculative ventures, where stock is expected to go up in price. This is the same with the other Big Tech monopolies alongside Tesla of Alphabet, Amazon, Apple, Meta, Microsoft, and Nvidia. The main aim of all these monopolies is to produce shareholder value. Thus, the biggest financial bubble in history has been created. Signs of the oncoming crisis are seen in the very recent crisis in Argentina over crypto currency. Opposition politicians there called for the impeachment of President Javier Milei after he peddled the crypto currency $Libra. This very quickly collapsed and led to millions of dollars in losses.
Cryptocurrencies
Similarly, cryptocurrencies are central to Trump’s policies. He proposes the creation of a strategic bitcoin reserve (SBR). This would mean the US state buying vast amounts of crypto currency over the next few years to hold as a reserve, similar to the US’s strategic petroleum reserve.
After Trump won the last Presidential election, Bitcoin’s value rose to a new high, from $68,000 on November 5 to more than $90,000 on November 13 and then $100,000 in December. All this happened thanks to Trump’s campaign promises to make the US the world leader in crypto assets and to start storing Bitcoin reserves. Two days before his inauguration, Trump launched his cryptocurrency $TRUMP. And just a day later, his wife Melania announced the launch of her meme coin $MELANIA. Both crypto assets grew rapidly until the day Trump was to officially return to the White House.
The price of the TRUMP token was initially around $3 per unit, but quickly rose to $70 in just a few days, reaching a peak market capitalization of around $14 billion. At the same time, 80% of the total supply of coins is controlled by companies associated with Donald Trump.
The cryptocurrency $MELANIA, quickly reaching a market capitalization of $2 billion, caused temporary volatility in the price of $TRUMP, which fell from $75 to $30 before stabilizing in the range of $55–64.
However, since Trump never mentioned Bitcoin or his token in his inaugural speech, the cryptocurrency market experienced a significant drop for the first time in 2025. In particular, $TRUMP and $MELANIA updated their first historical lows of $25 and $4 per coin, respectively. Currently, the value of $TRUMP is $18 and $MELANIA is $1.5. Despite this, Trump could have made more than $800 million from $TRUMP. "Uncertainty is high, and we can only predict different scenarios. Bitcoin can hold steady, as significant reserves have already been formed. If it falls by 50%, it will become an issue that will affect the global financial situation, as cryptocurrency has become an important tool in economic policy," wrote financial analyst Andrii Shevchyshyn.
When the financial bubble bursts, sooner rather than later, a great depression will loom. This will bring the human race into great danger, as previous great depressions have led to mass unemployment, the rise of fascism and war. But at the same time the possibilities of revolutionary change will open up.
The rule of the rich
The influence of the wealthy in politics is nothing new, and certainly not just in the United States of America.
In Russia, with the collapse of the Soviet Union, Communist Party bureaucrats and industry and factory managers converted themselves into highly rich oligarchs by buying up the economy when it came up for grabs, moving from state capitalism to a market economy. They payrolled Yeltsin in the 1990s, financing his election in 1996. When Putin came to power, the influence of the oligarchs weakened for a while, but a second wave of oligarchs, individuals close to Putin himself and sponsored by him, came to the fore. This indicated a turn from crony capitalism to a form of state capitalism where oligarchs did well out of funding from state banks and from access to public procurement projects. Putin’s relations with oligarchs have not always been easy, with his eventually coming to an agreement that they must give him full support if they wished to survive and prosper.
In China, when Deng Xiaoping came to power in 1978, he maintained a firm Communist Party control over the state capitalist economy, but allowed some free enterprise. Private businesses were encouraged, leading to the emergence of billionaires. China now has more of these than anywhere else in the world, a whopping 814. Some of these billionaires are members of the Communist Party, and even served as delegates to the yearly National People’s Congress. The Chinese state seeks to maintain control over these super-rich whilst at the same time encouraging them. Some of the wealthiest billionaires, who have increased their wealth phenomenally, are in the car industries, renewable energy, and the richest is Zhong Shanshan, head of a bottled water company, with a wealth of $50.8 billion.
In India, Narendra Modi runs a regime of crony capitalism where hugely wealthy oligarchs like Mukesh Ambani and Gautam Adani are granted rich pickings in public projects like roads, ports, airports and railways, and digital connectivity. Unsurprisingly, Ambani and Adani are enthusiastic supporters of Modi. Billionaires had an increase of 42% in combined wealth in the last financial year, to more than $905 billion.
In Britain, the last Conservative Prime Minister, Rishi Sunak, was the first millionaire to rule. He and his wife, Akshata Murty, have a combined wealth of £651 million. In 2023, the Tories made Mohamed Mansour, an Egyptian billionaire with a wealth estimated by Forbes magazine at $3.3 billion, senior treasurer of the Party. Mansour served as Minister of Transportation under the dictatorial regime of Hosni Mubarak.
Alongside this we have a party of the far right, Reform UK, whose leaders and MPs are all wealthy. They include billionaire property developer Nick Candy, party treasurer, and deputy leader Richard Tice, with a wealth of £40 million, made from property investment.
In the United States, the influence of the super-rich is taking on new dimensions. Whereas elsewhere billionaires exert influence mainly from outside the State and parliament, here 12 billionaires took on government roles. This present US administration is now the wealthiest in modern history.
Musk
The wealthiest of these was Elon Musk, ex-head of the Department of Government Efficiency (DOGE). His wealth is at least $400 billion and rising, alongside Vivek Ramaswamy, who made a fortune of $1 billion from biotechnology, and who was joint head of DOGE before quickly dropping out. After this are billionaires Howard Lutnick, Secretary for Commerce, Linda McMahon as Secretary for Education, and Scott Bessent as Treasury Secretary. The financier Warren Stephens serves as ambassador to the UK, airline magnate Leandro Rizzuto Jr. as ambassador to the Organization of American States, property billionaire Simon Witkoff as Special Envoy in the Middle East, the property developer Charles Kushner, wealth $1.8 billion, as ambassador to France, Jared Isaacmann, NASA administrator, also with a wealth of $1.8 billion made from payments processing and aviation, Tom Barrack, ambassador to Turkey, with a wealth of $1 billion, Frank Bisiganano, Social Security Administration Commissioner, who made his wealth of $1 billion from financial technology, and David Sacks, venture capitalist who has been appointed Trump’s AI and Crypto Czar. There are also Kelly Loeffler, Administrator of Small Business Administration, who got rich from crypto currency, Doug Bergum, Interior Secretary and venture capitalist, Mehmet Oz, Administrator of the Centers for Medicare and Medicaid Services, with a wealth of $100 million, a snake oil salesman who promoted an anti-malaria drug as an antidote to Covid. Joe Gebbia, billionaire co-founder of Air BnB, joined Musk on the DOGE. In addition to Air BNB , Beggia has close links to Musk and is on the board of Tesla. Gebbia’s wealth is $9.5 billion.
As for Donald Trump himself, Bloomberg, the business news and data company, estimates his wealth at $7.08 billion.
Trump’s cabinet has a wealth of at least $7 billion, whilst the combined wealth of the wider administration stands at least $460 billion.
Is this unprecedented development a new stage in the development of capitalism, as oligarchs merge with the State? It remains to be seen whether this is a momentary hiccup , as Trump is notorious for falling out with his backers, and he has already spectacularly clashed with Musk.
Whatever the outcome, the integration of these billionaires and multi-millionaires into the administrative structures only spells misery for the working class. Musk and Ramaswamy’s intention was to hack programmes that combat homelessness, and cut hundreds of billions of dollars from Medicare and Medicaid, the two main government healthcare programmes.
Trump
Trump’s sabre rattling over Panama, Canada and Greenland are a manifest sign of the crisis within capitalism. The main power blocs are increasing their competition over global natural resources and trade routes. This explains Trump’s ambitions over Greenland, with its many mineral resources, and the Panama Canal, and his attempt to extort 50% of Ukraine’s mineral resources. It also explains the Trump regime’s attacks on Iran.
Whilst successive Democrat administrations continued their cooperation with its traditional allies like the UK, the Trump government wants to go it alone. This signifies the end of the New World Order proclaimed by George Bush Senior and continued by every American President since then. Trump sees these allies as costly for the USA, as he believes they are not paying their way in military alliances. He is prepared to tear up multilateral agreements and focus on individual bilateral agreements.
This reflects increasing competition between the different power blocs , between the US and China, and regional powers like Iran, Saudi Arabia, and Israel. His threats over Greenland signify not just a grab for its mineral resources, but because the melting of the polar caps means that the Northwest Passage sea lane is now open for short periods. China and other powers are now competing for control of this sea lane.
Similarly, Trump’s desire to remove all Palestinians from the Gaza strip shows a renewed attempt by the US to re-assert its control over the Middle East, as does his aggression against Iran.
However, as said earlier, these perils also open up other possibilities. The US ruling class as well as sections of the State apparatus are divided over Trump’s policies, many wishing to retain the old alliances, and sceptical of Trump’s trade war tariffs, which threaten to drive a wedge between the US and its allies. For example, the head of Ford Motor company, Jim Farely, is strongly opposed to these tariffs.
Abroad too, a rift is widening between the European bloc and the US. The recent European conference convened by French President Macron in Paris over Ukraine shows the disquiet of the Europe bloc over the meeting between US representatives and the Putin regime at the same time, where both they and Ukraine were not invited. There in Paris, there were divisions between France and the UK, on one hand, and Germany on the other, over military backing for Ukraine. Starmer said he was “prepared to consider committing British forces on the ground alongside others if there is a lasting peace agreement" (the morning after, Labour’s Defence Secretary John Healey said that the UK is in a "new era of threat and that demands a new era for defence" and revealed that reforms to include four new leaders in the Ministry of Defence whose jobs will involve trimming down costs, planning for war, driving growth and delivering the UK's nuclear programme.
All of this, imperils the old alliance between Europe and the US as well as the existence of NATO itself. Similarly, Trump’s threatening of King Abdullah II of Jordan with withdrawing funding if he refuses to go along with the Trump plan for Gaza may spark unrest there and in Egypt. The Arab regimes remember the Arab Spring of 2011 and fear such moves may ignite the powder barrel of the Middle East, tumbling the old regimes. But the Arab regimes accepting the plan could spark revolt in the region against dictatorship, imperialism, and Israel.
Thus, the new developments indicate grave new dangers but at the same time, new opportunities for resistance.
The current political situation
The world
On a world level, we have seen the rise of far right and populist right parties. Apart from in the USA, we have governments on the far right in Argentina, India, Italy, and Hungary. We have the corrupt Vučić government in Serbia, aligned to Russia. A theocracy rules in Iran, and a gangster ‘kleptocrat’ (rule of thieves) regime under Putin controls Russia.
In addition, we have the growth of far right parties like Rassemblement National in France, the AfD in Germany, the FPÖ in Austria, Reform UK, and the Conservatives in Canada. Nevertheless, we have seen signs of resistance to the far right agenda, as with the huge level of support for Gay Pride in Budapest, which Orban attempted to intimidate and ban. Up to 200,000 people turned out to defy Orban. In Serbia, there has been mass civil unrest against the Vučić government, seen as responsible for widespread corruption, the collapse of the Novi Sad rail station canopy, which killed 16, and increasing authoritarianism.
The move to the right is being and driven by Trump and his allies. At home, in addition to Trump’s trade wars, his administration has initiated a series of measures against diversity, equity and inclusion (DEI) policies in the armed forces, the federal government, the universities and the private sector. These are the first shots in a culture war. Trump is attempting to reverse the gains made by the civil rights movement, women’s liberation, LGBQT+ movement, etc. In addition, he has ordered the expansion of the detention and deportation of migrants, as mass protests break out against his minions in Immigration and Customs Enforcement(ICE), targeting in particular New York, Los Angeles and Chicago, scenes of the largest protests. Alongside these protests, there were 1200 simultaneous protests against Trump in cities and towns across the USA, mobilising 5 million people. Unfortunately, these protests are controlled at the moment by the Democrats, who will do all in their power to stop increasing militancy.
Trump’s administration, an alliance between neo-conservatives, fundamentalist Christians and other rightists, is increasingly authoritarian. It would be wrong, though, to describe it as fascist. Fascism is employed by the ruling class when it wants to crush an insurgent working class, as in Italy and Spain. It also involves the development of a corporate state, where all institutions are subsumed into a leading structure. This is not the case with Trump. There is little combativity at the present within the American working class and Trump’s platform involved the dismantling of federal institutions. However, some, including anarchists, are mistakenly characterising the Trump administration as fascist.
The global climate crisis
Last year was the hottest on record and 2025 looks, from present circumstances, like beating that. 2024 stood at 1.6 centigrade above pre-industrial levels. The Paris summit called for a limit of 1.5 centigrade. It looks like heat levels will increasingly rise over the rest of the 21st century.
Trump, and indeed practically all of the populist and far right are climate deniers. No attempt will be made to alleviate increasing global warming. Capitalism itself is only concerned in maintaining profit, and puts its short term pursuit of wealth before the future of the planet. For their part, politicians have done nothing to alleviate the increasing emergency situation, tied as they are to their masters in the boss class. For them, the pursuit of profit and the drive towards production, trumps any considerations of the climate crisis.
The UK
The Starmer government is the most right-wing Labour government ever, outdoing the Blair and Brown administrations in its antipathy towards the working class, and its continuation of Tory policies over austerity, the environment, law and order, ‘defence,’ the nuclear ‘deterrent’ and immigration.
How has the orthodox left responded to this? At the time of the last election, the Trotskyist Alliance for Workers Liberty and others called for the usual vote Labour across the board in the hope of a ‘crisis of expectations’!!! The Communist Party of Britain called for no vote for anyone in Labour’s shadow cabinet whilst finding their own candidates and supporting other ‘left’ candidates, including in the Labour Party. Others called for a vote for the Green Party (which has made clear that it supports NATO!) and/or various ‘independents’- Owen Jones, etc. Others supported the nationalist Workers Party of George Galloway and Chris Williamson, others the electoral front controlled by the Socialist Party, the Trade Union and Socialist Coalition (TUSC). The SWP was “encouraging support for election candidates who campaign for the Palestinians, against racism and austerity and for the rights of the oppressed” and “for those candidates that best advance socialist, anti-racist and anti-imperialist politics”. In practice this meant voting for Corbyn, some Greens, some Labour candidates, some ‘independent socialist’ candidates. The same goes for Left Unity. This is all pretty crap and indicates the bankruptcy of the left.
Move to the right
Meanwhile , as can be seen, the Tory Party will move further to the right, partly catalysed by Farage and Reform UK, as are parties of the centre and the left, the LibDems, Labour and the Greens.
Apart from this, the last election was dominated by the re-appearance of Farage, aided by the bourgeois media. Farage and Reform only gained 5 MPs, but sabotaged the Tory vote, as Farage PLC stood in 609 out of 650 constituencies. (Note the reappearance of the Social Democratic Party, which looks towards a Reform-SDP electoral alliance, with a dozen candidates standing under a joint banner).
What this meant was a general wipe-out of the Tories with them retaining only 120 seats. Rishi Sunak, of course, resigned, leading to Kemi Badenoch offering a feeble leadership. It remains to be seen whether there will be an eventual merger between the Tories and Reform UK, which would be on the far right.
As to the trade unions, the RMT, whose leadership was previously sceptical of Labour, called for a Labour vote, as did Sharon Graham of Unite, who previously enunciated a Labour-sceptic, pseudo-syndicalist line.
400,000 joined Labour during the Corbynism phenomenon and many have subsequently left after Corbyn’s defeat. Where are they now? Undoubtedly the Trotskyist groups have benefited from this -it accounts for the growth of, for example the Revolutionary Communist Party (ex-Socialist Appeal) to 1200 members. Similarly Revolutionary Socialism for the 21st Century (a split from the SWP) now have 400 members, having recovered from a loss of membership because of Corbynism. However, the majority of the 400,000 are generally politically directionless, although retaining generally ‘progressive’ views. These are, for the most, still framed by social democratic outlooks, and let us remember that Corbynism means left Labourism. They will still be trapped within electoralist solutions, meaning a vote for Greens, ‘independent’ socialists, one of the attempts at a reconstruction of the Labour Party Mark Two, etc. Already Corbyn and Zarah Sultana, are moving towards creating such a formation, provisionally entitled Your Party. However, it is possible for a minority of this 400,000 and indeed of the millions open to radical ideas to be won to libertarian revolutionary positions.
The ongoing genocide in Palestine has brought a large movement into being in the UK, as it has in many other countries. The Starmer government has attempted to criminalise this movement, as with proceedings against Palestine activists, Kneecap and Bob Vylan. Worst though, is the banning of Palestine Action. Unlike other groups content with A-B marches, Palestine Action engaged in direct action against the war effort. The Starmer cabinet is currently summoning up war fever, spending billions on the nuclear ‘deterrent’ and feels threatened by such actions. Other groups that have taken direct action, like Workers for a Free Palestine, could well be next.
The environmental movement has been, on the one hand, cowed by police harassment and harsh prison sentences meted out to activists. All the stunts employed by Extinction Rebellion and Just Stop Oil have failed and now demobilisation, apathy, and resignation reigns in the environmental camp. Peaceful, ‘fluffy’, get togethers have replaced mass mobilisations and sabotage. On the other hand, corporate greenwash is increasingly colonising environmentalism, as with the recent London Climate Action Week, where most events were corporate controlled. This is similar in many ways to the co-option of the LGBTQ+ movement, with, for example, Tesco trumpeting its support and the need for ‘allyship’ in its house magazine and on its Tannoy systems.
Yet at the same time, we sense a certain radicalisation among some environmental activists, who are now more openly prepared to see capitalism as the problem, as with Youth Demand, which concerns itself jointly with the environmental crisis and Palestine.
All the above means publicising and working towards a body of ideas and indeed an organisation capable of expressing libertarian communist ideas, to the left of both social-democracy and Leninism. This would engage with the radicalising elements in the above-mentioned movements.
How can this come about? We ourselves, are a microscopic minority. We need to look towards dialogue and alliances with other groups and individuals who share, or partly, share, our outlook. We should be thinking of active encouragement of such dialogues and alliances.
We cannot rely on the majority of what passes for anarchism in Britain, permeated by radical social liberalism, ID politics, insurrectionist posturing, and lifestylism, and we should irrevocably turn our backs on them.
That is why it is important to continue with our propaganda and our development of ideas and look towards increasing our influence. Now is not the time to give up. The next period offers new opportunities for the growth of a class struggle based libertarian communism.