Saturday, August 13, 2011

Is Capitalism Self-Destructing? Was Karl Marx Right?

Even the Wall Street Journal is starting to toss around the idea that Marx might have been right - capitalism will destroy itself.  Economist Nouriel Roubini warns the self-destructive transfer of income from labour to capital could lead to an economic death spiral.

Roubini explains quite convincingly why Western leaders are placing our economies in great peril by leaping into austerity budgeting prematurely.  He's joined in this by other top economists, including Krugman and Stiglitz, who warn of further economic contraction in the wake of austerity measures.  So why isn't our supposed economist Ruler, Furious Leader Harper, ignoring their warnings? 

Roubini, Krugman and Stiglitz were the voices warning of the 2008 global meltdown years before it happened when the "smartest man in the room" Harper wasn't having any of it.   When the recession did hit Canada totally unprepared, Harper shrugged off his incompetence by claiming no one saw it coming.  Oh yes they did Steve.  Some, like Krugman, even wrote books about it.   But you weren't reading their books or their papers.   You weren't listening to their kind.   What you're trying to say, Harpo, is that no one you deigned to listen to saw it coming.   And now those same voices are telling you to go the austerity route and you're still listening.


Kev said...

One of the most maddening lies I hear repeated ad nauseum about the meltdown is "Nobody saw it coming"

Anonymous said...

Compounding interest should be outlawed on a global scale.

VULT CULT said...

It's a politically-based lie. It's designed to keep those who vote ignorant, so that said voters will vote for these same politicians over and over again, and keep them in power.

To me, the more damaging thing in society, is a broken political system/process that allows such lies to continue forward, and continue to wreak havoc on all our lives.

The Mound of Sound said...

Yes, Kev, it is a common lie, one that's almost inevitably disseminated by those promoting the very system and institutions that caused the collapse. All Canadians should be grateful that Harper wasn't in power long enough to rejig Canada's financial institutions to bring them in line with America's. That's certainly what he wanted to achieve.

Yet Roubini may be right about the self-destruction of capitalism. We have entered a post-growth era. The Earth simply can't produce renewables any faster and they now present a powerful hurdle to industrial and other forms of economic growth. It's this restriction that turns institutions and even societies predatory.

For example, look at America's federal austerity measures. The prime target is "entitlements." Such a vast amount of wealth has already been transferred from the once robust middle class to the upper class elites that the easiest thing left to squeeze from them is their social security and medicare. It's not that the rich necessarily want this but it's needed to preserve the tax favouritism their "bought and paid for" Congress has delivered.

The skewed division of income between labour and capital is another example, as Roubini pointed out. In an era of free growth it wasn't necessary to exclude labour from the pie. That's changed in the post-growth era.

Anonymous said...

"So why isn't our supposed economist Ruler, Furious Leader Harper, ignoring their warnings? " He IS ignoring their warning. I suppose you meant to write "So why is our supposed economist Ruler, Furious Leader Harper, ignoring their warnings? "