Economist Nouriel “Dr. Doom” Roubini, the New York University professor who four years ago accurately predicted the global financial crisis, said one of economist Karl Marx’s critiques of capitalism is playing itself out in the current global financial crisis.
“Karl Marx had it right,” Roubini said in an interview with wsj.com. “At some point capitalism can self-destroy itself. That’s because you can not keep on shifting income from labor to capital without not having an excess capacity and a lack of aggregate demand. We thought that markets work. They are not working. What’s individually rational…is a self-destructive process.”
This process is made worse by compliant, captured governments and an elite class mostly devoid of ethics and primarily concerned with looting the middle and lower classes. Roubini makes the key point that the Arab Spring uprisings are economic in origin. So, I would say, are the recent riots in Britain.
Roubini doesn’t think there will be an “imminent collapse” of capitalism but that we are definitely in one of those crises of capitalism that Marx predicted.
We are not so fortunate that the wagon will fall over all by itself as the key question is what is it that it can be so destructive? But herein lies the bare bones of a solution — like an old penny: if there is excess capacity, destroy it and built it up again and/or create new aggregate demands.
Welcome to World War II –the means by which capitalism saved itself from the self destruction long wave of the Great Depression. Maybe it costed a few tens of million dead and maybe capitalism lost markets big time as large portions of the planet went soviet style, but the post war boom merely confirmed the wisdom of the 1939-1945 entrepreneurial enterprise as a ‘solution’.
Good times were to had this side of the slaughter.
The problem is: what now? As the populace gets testy and angsty do we have to put up with another round of fascism so the feral masses are kept in check? Is there any capacity on hand worth the destruction? Laying to waste the infrastructure of Iraq is small potatoes compared to the great European and Pacific wars. And no Marshall Plan is on offer for Baghdad’s high rollers…
So the irony is that despite laissez faire neo-liberal capitalist groupthink the most reliable solution is a state bail out assuming the state is still rich enough still to do it.
What a contradiction!
The irony is that if there weren’t so many ideological constraints — funding a war footing shift to a sustainable economy based on renewables is a short term panacea as that would suck up capacity and extend markets in a similar way to the state run infrastructure programs of the thirties…as did the Second World War.
Outline (albeit a little dated): http://www.slideshare.net/ratbagradio/capitalist-economic-crisis-presentation
The problem is that when capitalism is in deep shit crisis things get desperate and so do the solutions: fascism, war….barbarism. But you need to recognize that this crisis set in in 1974 and today’s mess is but one symptom of the failure to solve the underlying problem that set in 40 years ago during this current economic wave. Despite the driving down of wages and the looting of the capitalist states; deflector military spending and the collapse of the Soviet Union…all we have had is bandaid measures.
If it was real capitalism, the state wouldn’t have bailed out the banks, it would have let them fail.
People across the political spectrum are getting furious. Something’s going to give.
I meant to respond to this earlier but will do so after I promote it to being a post. Thanks.
Are you saying that there are ways that governments can make capitalism work? Or will any government fiddling merely kick the can down the street, to be picked up later?
Right now, the US and Eurozone are just playing kick the can.