Discuss (politely, please)
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Discuss (politely, please)
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It’s welcome that intelligent thinkers like Roubini are willing to acknowledge the salience of Marx, although academics like him might do well also to explore the way in which Marx built on insights from Smith and Ricardo.
But Marx was not primarily a catastrophist, as presented here. His relevance is that capitalism, which is transorming the world leads periodically to crisis because its motor force is profit. When profits decline, or are expected to be lower than previously, capitalists respond by not investing; hoarding money. This is exactly what is happening now and is leading to renewed crisis.
He also argued that this proves that captalism is a barrier to the development of productive forces and needs to be overthrown. But if we can get lots of people to recognise the wisdom of the first contention it would be a big step forward.
Well…interestingly (for me that is) I’m reading Capital at the moment and Marx is quite willing to admit debts to all those he owes debts too. He’s very scathing of both Malthus and Smith at times for plagiarizing without attribution and his opinion of Smith is not high because he thinks he owes much more to people like James Steuart than he ever lets on. If you simply read Capital you find references to a lot of Italian economists, to Sismondi, to Petty and Davenant, to Say and many others. To assume his debt is only to British political economy is not borne out by his intellectual reach and cosmopolitanism.
The Marx that is really interesting to me though is the Marx who was aware of how the continual search for profit disrupts natural systems on which we all depend. Marx has been considered a promethean (by many Greens) who advocated only greater and greater mastery of nature but there’s lots in Capital about farmers robbing their soil of fertility to feed the city etc. John Bellamy Foster’s work Marx’s Ecology is pretty good (as far as I can tell) on bringing out this side of Marx (and Engels).
What bugs me is that most right-wing people will not let Marx’s contribution be discussed without the usual smearing. If those on the right really are aiming to benefit all by the free market system then they at least have something in common with Marx who wanted a similar outcome but by different means. However it’s hard not to read the conditions in the early factories, as Marx lays them out, and not come to the conclusion that capital-ism had no interest in people and their flourishing but treated them as a bearer of a commodity to be put to use for someone else’s gain (20 hour day anyone?). For 19C factory conditions read 21C financial chicanery, bank fraud of all types, triple AAA for sub-primes, vulture funds, IMF structural adjustments, civil wars for precious metals for our mobile phones, oil spills, people-trafficking and so on. The scale has changed but the impulse behind it is the same.
I think that’s been polite but I ain’t no economist so you don’t need to demolish me…pick on the other guy…
I’m no economist either. Perhaps that’s why I wholeheartedly agree with you?
The ‘capitalist exploitation’ that Marx and Engels observed may have mutated into a different form, but it’s still exploitation. And still just as damaging to society.
Having sympathy with Marx’s analysis doesn’t necessarily make one sympathetic to how communist states work(ed), but it does make one ache for control over the rabid economy. Invisible hands can’t control wild dogs.
His transcript in the WSJ interview may be useful alongside the video:
http://www.twitlonger.com/show/cd2dn6
I think Marx’s view was that this propensity towards crises and periodic reform would necessarily lead to it’s eventual destruction; that alienated working class labour would revolt against bourgeois capital and it’s political structures, leading to a socialised political economy which would initially embrace many of the old economic structures under new management.
Roubini’s right to credit Marx with identifying that self-destructive force, but his point seems to be more Keynesian — that rational actions by the individual and the firm may in aggregate be destructive (hence the necessity for demand management by the state). I suppose that would fit within Marx as among the internal contradictions of the ‘free market’ under capitalism.
Also the remarks he excerpted from his most recent opinion piece Global Financial Crisis 2.0: How to Rescue Capitalism, which relate this to particular political events such as ”riots from the Middle East to the UK and massive popular demonstrations in Israel”:
http://www.twitlonger.com/show/cd31km
It would be fairer if he simply said Marx was right about the relentless globalising nature of capitalism, it’s financial characteristics, along with its exploitation and alienation of labour. Disagreeing with Marx on the merits of an alternative political economy seems beside the point — other than distancing himself politically from the implications of embracing fundamental aspects of Marx’s analysis.
Global Financial Crisis 2.0: How to Rescue Capitalism offers some laudable Keynesian proposals on how to rescue capitalism: fiscal stimulus on productive infrastructure; progressive taxation; short-run fiscal austerity with fiscal discipline in the medium/long terms (which seems contrary to infrastructure spending); easier monetary policies and central banks providing lender-of-last-resort support to sovereigns and banks; reducing debt burdens of insolvent households and other agents (i.e. banks?); investment in skills, productivity, new emerging sectors; regulation of the financial system; investing in human capital and skills to increase productivity. by reducing income/wealth economy sufficient to raise aggregate demand. Almost all laudable, except extending wealth redistribution to zombie banks, but he appears to advocate contradictory fiscal policies and even all together they are insufficient.
A more appropriate response might be to reduce the debt burden of ‘other agents’ through bankruptcy and socialising financial capital, banks as publicly owned utilities and investment as co-operative ventures. i.e. to socialise banking and finance, as Marx might suggest, and pegging the free movement of capital to the free movement of labour.
I tend to agree with you – he was fitting marx into a Keynesian paradigm
Retro-fit i may be, but I think the argument plausible
>>>For 19C factory conditions read
…present day 21st century factory conditions in China, Vietnam, never mind the sweatshops of Bangladesh.
>>20 hour day anyone?
Look at what happens in the factory making i-phones.
This is one aspect of globalisation – the worldwide search for the maximum possible rate of labour exploitation
I think it’s worth going beyond Roubini’s rhetorical embrace of Marxist economic analysis, whilst he appears to shun the political and economic implications of that by offering a Keynesian policy prescription.
Marx appears to have been precisely right about the nature of ‘fictitious capital’ [credit, shares, debt, speculation and various forms of paper money] and its role in the most recent crisis of capital, the ‘credit-crunch’ in western finance:
Capital Vol.III: Chapter 30. Money-Capital and Real Capital.
I have yet to read anything that comes close to capturing the specific nature of this ‘credit crisis’ in finance capital that broke out in June 2007 with the abortive liquidation of two Bear Stearns funds. It even anticipates, and rejects, the policy responses we’ve seen the G7 employ by various means.
What the US Fed, BoE and ECB have tried to achieve with QE/ZIRP and sovereign guarantees, is what Marx argued would be beyond their capacity to remedy. He was writing in an age when currencies were convertible to gold, but central banks and states are using their control of fiat currencies and state treasuries to have the “entire artificial system of forced expansion of the reproduction process … remedied by having some bank, like the Bank of England, give to all the swindlers the deficient capital by means of its paper and having it buy up all the depreciated commodities at their old nominal values.”
Marx versus Bernanke, Trichet & King? I wouldn’t bet on the central bankers, not even in their own fiat currencies. They can create money but not value, and as they do so at near zero interest for banks they devalue fiat money and trigger ferocious inflation any commodities of intrinsic use value (foodstuffs, fuels) and transfer wealth from those reliant on money as wages or savings to those invested in assets (housing, shares, etc).
What Marx does is relate systematic and broadly sound economic analysis to the class politics and this is what I think makes him politically taboo. Giving just a nod to Marx’s analysis is considered newsworthy for a public opinion-former, but must always be accompanied by a disavowal of the political component of the analysis:
In our post-modern, fiat money era the ‘gold drain’ seems to have been replaced by the bond spread between AAA sovereigns and others.
Marx clarifies the political significance of QE/ZIRP and guarantees/bailouts (TARP etc) are essentially a new form of class war declared by the state on behalf of of finance capital against labour. I say war because the debts transferred to the state only seem comparable to the debts amassed by participants the World Wars, and the bill is to be paid by liquidating remaining public services, currency devaluation plus inflation and increased taxation of the subject population.
This is finance capital and its political allies (both Thatcherite fundamentalists and Third Way converts) discarding 30 years of neo-liberal, deregulated ‘free-market’ rhetoric in exchange for a corporatist pact which commits the state to extract and transfer even more of the value produced by labour to a privileged and protected financial oligarchy. That transfers a credit crisis originating in finance capital over to states now facing sovereign debt-crises, and creates the kinds of internal contradictions that generate crises of political legitimacy.
Good stuff
Thanks
Appreciated
I’m no expert on Marx but it’s certainly worth reading the UCLA Marxian economist Robert Brenner’s work in this context (particularly “The Boom and the Bubble” and “The Economics of Global Turbulence”.) Brenner believes that chronic overcapacity in the Western economies has been a problem since at least 1975, and was only disguised until 2008 by bubbles in stocks, housing and other assets…
I’m no expert either but these selective quotes are insightful
No doubt the right will no jump up and down and denounce me (and you)
But Marx was beyond doubt a massively important economist
Deregulation of the banks and the subsequent increase in debt has undermined our economy. Thank you for suggesting the works of Robert Brenner, I will be purchasing one of his books to improve my knowledge of Marxist economic analysis.