Commentary on Political Economy

Friday 12 August 2011

Roubini And Marx - On the Implosion of Capitalism

To respond to the interest many of our friends have shown on Nouriel Roubini's pronouncement about the correctness of Karl Marx's prediction of the implosion of capitalism, it may be well to make a few observations that will give further "direction" to Roubini's remarks. As you may well know, Roubini's off-the-cuff remark centers on the notion that "capitalism can destroy itself". Evident in this is Roubini's thesis that capitalism will implode because of its "private" character - in other words, because of its "anarchical" tendencies. Given that capitalism is based on "competition" and that competition involves necessarily "decentralised" and therefore "private", self-interested decision-making about resources that are "privately owned" - because of this capitalism must inevitably descend into "anarchy" to a point where there is no "agreement" about the use of privately-owned resources and therefore paralysis ensues and, with economic stagnation, the "anomic" degeneration of capitalist society into a jungle of lawlessness.

There is certainly something to this thesis. One of the things we have tried to highlight on this site is the "inability" of world capitalist elites "to agree" on how to share the burden of adjustment of the costs - the effective annihilation of "value" - of the great financial crisis. These "costs" were initially "private" in that they resulted from bad investments that could not be repaid, so that the State had to "socialise" them and seek to impose those costs on the rest of society - with a view to "repaying" them with interest!

So we have this first level of "indecision" due to the "private self-interest" of individual capitalist interests and individual countries with their elites presenting a spectacle of dissolution, of anomie and paralysis that threatens capitalist societies and economies the world over.

The problem with this view has multiple headings: for one, this thesis still does not explain "why" the burden of adjustment of public or sovereign debt came about - that is, why the great financial crisis occurred. And for another, the thesis does not explain why there are such "private" interests at play and why these "interests" should diverge! After all, it is true that capitalism involves the "private ownership" of the means of production. But capitalists still represent a political "class" - and therefore we have to explain why they cannot "agree as a class" to measures that combat the crisis - even in opposition to, say, the working class.

And a corollary of this "problem" is that indeed capitalist States do act as "collective capitalists". Not only! But they also tend to occupy an inordinate place in the so-called "private" capitalist economy - to the point where now it really makes no sense to talk of a "capitalist society" but rather of a "society of capital", that is, one whose very "reproduction", and therefore "planification" is organised along capitalist lines. Therefore, it really makes little sense to insist on this "anarchy" or "anomie" thesis as the source of "crisis" in capitalism. On the contrary, what strikes about late capitalism is precisely its ability "to plan exploitation" through the necessary (because imposed by us, the workers) ever-expanding role of the collective capitalist in the supposedly "private" capitalist economy!

This last bit is what "conservatives" do not understand and the reason why they hanker nostalgically for the "past glories" of the Gold Standard and of "private enterprise", for freedom of enterprise and "individual liberties", for "the free market" - for "competition" (in sport, in the arts, in medicine - in all spheres of social interaction).

But let us give Roubini the benefit of the doubt. Maybe it is not just "anarchy" that will cause capitalism to implode. Maybe it is a certain "tendency" for capitalist society precisely to become "the society of capital" - in other words, for capitalism to bacome "socialised" and therefore "socialistic". In this thesis, which is Schumpeter's, capitalism does not "implode", but rather it "evolves" to socialism because of its ever-growing "social character. We agree with this only to the extent that capitalism seeks to deny the inter-dependence of social subjects and the "sociality" of the resources it claims are "private" - and therefore the contra-diction between what capitalism wishes to see as "individual labours" that are "priced" by the "market competition mechanism", on one hand, and the division of what is "social labour" (not individual labours!) that "the market" cannot reduce to "individual wage labour", however much it tries. There is a sense in which this "sociality" of "social labour" and the fact that this society is increasingly "the society of capital" gives rise to apocalyptic, cataclysmic "systemic risks" (too big to fail corporations, environmental disasters, breakdowns in supply chains, in financial contract markets, and so on). Again, we can agree with this.

But there is yet another, far more valid "thesis" for the implosion of capitalism that we are exploring in our major work, "Krisis", which we will only outline in our next post on the subject. Cheers to all.

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