Policy makers struggling to understand the barrage of financial panics, protests and other ills afflicting the world would do well to study the works of a long-dead economist: Karl Marx. The sooner they recognize we’re facing a once-in-a-lifetime crisis of capitalism, the better equipped they will be to manage a way out of it.
The spirit of Marx, who is buried in a cemetery close to where I live in north London, has risen from the grave amid the financial crisis and subsequent economic slump. The wily philosopher’s analysis of capitalism had a lot of flaws, but today’s global economy bears some uncanny resemblances to the conditions he foresaw.
Consider, for example, Marx’s prediction of how the inherent conflict between capital and labor would manifest itself. As he wrote in “Das Kapital,” companies’ pursuit of profits and productivity would naturally lead them to need fewer and fewer workers, creating an “industrial reserve army” of the poor and unemployed: “Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery.”
First, you do not need Marx to get any of the ideas presented in this article. Keynesian economics offers the same solutions. But here is the real problem with this naive reading of Marx. The writer wants us to return to Bush-era consumption levels. Neoliberalism is now unable to do this. Capitalism, therefore, is only reading the writing on the wall of its survival: It can’t survive without consumers. But the ruling economic ideology, neoliberalism, is not about consumers; it’s all about producers. Money does not, as the ruling ideology insists, make itself, grow from itself, produce itself. The makers of money will always be consumers, and consumers need money to consume, and, in this current system, you can only make money if your labor is consumed by a producer.
The problem with all this? The problem with dumping neoliberalism for neo-Keynesianism? We simply can’t consume as if no limits exist—meaning, consume to maintain a system which can only survives on boundless growth. The world must come to an end. And we need a new economic system that can operate, survive in a world that is limited.
Ten or 20 years ago there was a LOT of discussion (books published, hypotheses floated, conclusions drawn, etc.) about moving toward sustainable existence that wasn’t predicated on the upward spiral, that wasn’t dependent on population growth, increasing home size, always more horsepower under the hood, more workers supporting pensioners, and so on. I didn’t pay much attention at the time because I’m not an economist and I had an all-consuming (time, sanity, what-have-you) job.
But I cared about the issue and the questions, and I’m surprised at how little attention they’ve gotten in these recent years of burst bubbles. It seems everyone’s main concern is getting the boilers going again, and the pell-mell pace resumed ASAP, leaving worry about the next bubble(s) for the agonizing months after THEY collapse.
I still wonder why we can’t have a world where the population is stable or slowly shrinking; per-capita energy and raw-materials consumption slowly drops; and health, nutrition, personal fulfillment—”gross national happiness,” to borrow Bhutan’s phrase—can’t be the main growth targets.
Nouriel Roubini agrees.
http://online.wsj.com/video/nouriel-roub…
humans are not capable of changing course/systems wo/ a catastrophic failure of their operating course/system. sadly, we’re living through a catastrophic failure of modern crony-capitalism.
@2, I find it ironic that someone from the Wall Street Journal, which has been a fierce advocate of the interests of big business (including less government influence) and its investors is asking what government can do.
Though there always has to be a physical computational substrate and limitions therefrom, goods in the virtual world might as well be limitless in possible scope…and often are exchangeable for other more familiar, highly-valued, if immaterial goods, most notably the feeling of having some higher-than-lowest status.