Crisis of Capitalism, Tariff-War, Inter-Imperialist Contradictions And the Global South

Sunil Ray

The crisis of capitalism (capital system) that stems from its deeper internal contradictions is essentially the crisis of profitability rooted in its development. No doubt capital system, historically speaking, is crisis prone. But it is equally true that it could open up route to escape from it. It then goes on to repair its system that stopped meeting the conditions for its further expansion. A new development narrative surfaces to legitimise the function of the system through the institutions it built over the years. In all these actions of revival of the system, which must not go unnoticed is that the development parameters remain unchanged, central to which is profitability. It is an uncompromising truth beyond which capitalism ceases to function. What it means is that profitability must not go down beyond a level that instantaneously invites stagnation and perpetual decline of the capital system and eventually facilitates it to get trapped by the crisis from which the system fails to rescue itself.

It could rescue only with the help of external intervention as that of the state. While the global capitalism witnessed several such crises in the past and the one which is going on, the immediate factor that could be counted as responsible for it, is declining profitability.

While cyclical crisis which is said to be periodic downturns occurring once in almost every ten years such as 1980, the early 1990 and at the turn of the century, structural crisis that took place in 1830, followed by the great depression of the late 1870, then early 1890 and then the great depression of the 1930. (Robinson, 2025). The crisis that global capitalism witnessed in 1970 called for restructuring the global economy through globalisation while Keynesian benevolence (welfare state through state intervention etc) was dismissed. However, state intervention of Keynesian variety demonstrated enough of its indispensability for the global capital system to be rescued from falling into perpetual decline when it was stuck with financial crisis in 2008.

Globalisation of the world economy was chosen as rescuer after 1970 crisis by global capital system led by the transnational capital. No country was left to have been integrated with the global capitalism. The paradigm of free flow of capital and goods, but not human beings (labour) ignited hope of the capital system of being repulsive against declining profitability gained political legitimacy of all nation states. No doubt, it succeeded remarkably well but the global economy was left with an unprecedented concentration of capital at the hands of a few. Just 17 global financial conglomerates controlled $49.0 trillion wealth more than half the entire global economy (Robinson, 2025). Besides, this is for the first time in the history of global capitalism that saw a massive rise in economic inequality in the world. The top 20% controlled 95% of world's wealth while 80% of the humanity had to manage with just 5% of the world's wealth (Robinson, 2025). This is accompanied by uninterrupted growth of unemployment or surplus labour. Is it the growing unemployment in US the reason why liberalism or the idea of liberal economy is losing its relevance to the US-led global capitalism that opted for 'economic nationalism''?

While one is yet to see the logical end of the transition from liberal economics, its configuration has been garnering remarkable momentum for the new global order to emerge leading the imperialist powers of the globe to sharpen their contradictions further.

The question, therefore, is: If contradiction between the imperialist powers for expanding the sphere of influence sharpens further, will it lead to result in another wave of crisis of the global capitalism? Yes, it is quite likely to be so. The reason is simple. Expanding capitalist network for surplus generation through expanding market and exploiting both natural and human resources is the fundamental law of capitalism. It is here that the sphere of influence particularly over the peripheral countries makes tremendous difference to the imperialist powers that intend to exercise its power including economic, political, technological and military to dominate the former. While the final objective of each one is same, not to be endangered by being trapped by the profitability crisis, the constant drive to expand the sphere of influence sharpens their contradictions leading to result in geopolitical crisis. The most tragic manifestation of this crisis is genocidal war against GAZA to which are added around 56 wars across the planet" (Pastor, 2024).

A new configuration of the global geopolitical order is emerging in that US hegemony is now antagonised by other super powers such as China and Russia. In other words, it is rivalry between imperialist powers in west (US, Western Europe and Japan) and East (China and Russia).

One may argue if this rivalry is antagonistic cooperation in which terms of competition between them is mediated by the mutual interest. Hence, despite crisis tendency towards cooperation between them prevail maintaining stability of the capital system. However, such an analytical view seems to have lost its grip over the reality that sufficiently indicates a long-term declining trend of the global capital system which constantly unleashes processes accelerating contradictions that are only antagonistic. Hence, 'shared interdependence' does not have much of significance to suggest that antagonism between the imperialist powers as antagonistic co­operation. For, as Bukharin once pointed out, interdependence not only deepens economic links but also accelerates rivalry (Probsting, 2025). It is not so long ago that China and USA used to be most preferred trading partners. It is now a history. The same is the case between China and EU, where the latter has imposed substantial tariff on Chinese imports. It means that the Imperialism is not a system characterised by antagonistic cooperation, rather it is antagonistic contradiction. Trading relations between super powers being part of global imperialist system speaks more of antagonistic contradiction than co­operation leading to end up with retaliatory trade practices be­tween them. And, nobody knows where it finally leads as the contradictions sharpen further leaving the global capitalism in deeper crisis. Does it necessarily mean that 'interdependence' even between the countries in the global south, majority of which are peripheral, may cause such an economic battle that could sabotage their mutual interest leading them fall into economic crisis? It is here that one can learn a few lessons from BRICS+ which was formed in the recent past.

BRICS And Imperialism
BRICS, for instance, is the one which is formed in the recent past and most of which are members from the peripheral countries of the global south. The purpose is to meet their mutual economic interest through interdependence between them. Of course, the basic idea is to get relieved from the exploitative hierarchical system of global imperialism under US dominated financial system. They have explored a new payment platform by establishing New Develop­ment Bank (NDB) with no stringent conditionality as compared to the IMF and World Bank. Financial support is also provided through the formulation of Contingent Reserve Arrangement (CRA). One has reasons to hope that this alternative financial institution will facilitate south-south cooperation to intensify trade, investment, technology transfer etc. This appears to hold considerable promise when attempts are underway to reduce dependence on dollar by way of preferring local currency for payments.

BRICS, which was initially formed by five countries including Brazil, Russia, India, China and South Africa, is now opening its membership to many other countries from the global south who are willing to join. It appears to be a historic breakthrough when one looks at it in its totality in view of the steps taken. However, it may not be so easy going when one weighs asymmetry that exists across the countries of the global south in terms of economic priorities, political system and geographical stances and diverse interest. Be that as it may. For, these differences may not come on the way when exchange is mutually inclusive in terms of achieving equitable growth in a non-exploitative framework. However, the question is: can "Interdependence'' paradigm present a 'win-win' situation for all countries in the global south even when capitalist exchange relations rule the roost? It may be possible only if there is no core country to exercise its sphere of influence on the peripheral and semi-peripheral countries. However, such a possibility may dry up if one counts the domineering role of the Chinese and Russian imperialism that seem to have been gradually positioning themselves as the core countries.

Under the pretext of promoting interdependence, same exploitative mechanism may be in place to go against mutual interest. Since their economic principles are fundamentally tied to the law of capitalist development which is primarily surplus generation to be appropriated by the owners of capital, they need constantly expanding market. Hence, surplus transfer from the periphery to the core countries may continue even here also with a competitive drive to expand the sphere of influence over the peripheral countries while keeping the operation of GVC intact. To go a step forward, BRICS+ may turn out to be more useful for China and Russia as an alternative mechanism to transfer their respective development cost/profitability crisis to the peripheral and semi-peripheral countries under their influence. Hence, antagonistic contradiction between the super­powers is inescapable here also, that may finally dismantle the objectives with which BRICS has come into existence. The question, therefore, is under what conditions peripheral countries of the global south cease to function as pawns at the hands of any imperialist power?

Cohesive Development: The Way Forward
Unless countered by cooperation between the peripheral countries of the global south and instituting progressive economic alternative, peripheral and semi-peripheral countries of the global south are likely to be pushed to a new era of economic disorder. They will continue to be used as pawns by the imperialist forces to sink in their profitability crisis as and when they run into it. ''The challenge, therefore, is how to reconstruct antagonistic forces against imperialism based on solidarism that is not subordinated to one or another great power or regional capitalist block" (Pastor, 2024). One may see such a possibility only when interdependence between the nations is not defined in terms of relations that exist between core and periphery. However, if it is otherwise, the competitive drive between the imperialists for expanding the sphere of influence over the countries will automatically lose its steam. Solidarism between the peripheral and semi-peripheral countries of the global south may then put an end to the process of their victimisation perpetrated by the imperialist powers through unequal exchange.

Solidarism, instead of alliance that BRICS+ is founded upon, must be chosen to define the terms of interdependence between the countries of the global south. It creates conditions for bringing nations together to counter such regressive forces and defines interdependence in terms of mutual respect, fair exchange and equitable growth. It gives a sense of unity, cohesion and mutual support to each other to see that none gains at the cost of others. It may be possible to achieve within the framework of what I call 'cohesive development' (Ray, 2024). The primary condition for cohesive development is cohesion among the countries with a sense of commitment to the common objective based on collective understanding and shared consciousness. It is the common objective that binds these countries together despite differences that might exist between them.

The unifying element of all the peripheral and semi-peripheral countries who develop a shared consciousness is exclusion from various forms of power that subordinate them to the dominant powers. It offers an alternative development paradigm that replaces the logic of capital as it works in the capital system with the new one that seeks to establish radically different social metabolic order based on the principles of solidarity between humans on the one hand and human and nature on the other. It does not allow the natural resources, the very base of the productive forces of the economy, to be exhausted beyond the limit where co-evolution of both human and nature stops. While holding the countries together based on reciprocal altruism, it seeks to achieve a common objective, a common world view based on the collective understanding with substantive freedom or actual freedom. It is a new kind of interdependence and group mindedness, a collective intentionality indicating new organisational form. Its acceptability as an organising principle for the exchange of the peripheral countries of the global south to take place in all spheres of all economic activities including trade, investment, technology transfer etc may shield them from the ill effects of the crisis of the global capitalism, hegemonic control of the imperialist powers and their growing contradictions. The 'economic nationalism' will then have a different connotation in respect of the peripheral countries of the global south from that of tariff protection, tariff war etc to sustain equitable growth with no unequal exchange.

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[Sunil Ray, Professor of Economics and Former Director of A.N. Sinha Institute of Social Studies, Patna. I thank profusely Shri Timir Basu, Editor, Frontier for having encouraged me to write this article. Thanks are due to Somoti Lal Kumhar and Vivek Agarwal both are from IDS, Jaipur for their kind help and cooperation.]

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Frontier Autumn Number
Vol 58, No. 14 - 17, Sep 28 - Oct 25, 2025