Commentary on Political Economy

Wednesday 17 August 2011

Roubini On Marx - Reprise

There has been a lot of interest about Roubini's comments tp the effect that "Karl Marx was right, capitalism can destroy itself" because, says Roubini, excessive inequality of income distribution will mean that produced goods cannot be sold for lack of purchasing power. It is not a sin, but Roubini does not know his Marx very well. Here on this site we will be discussing the real origins of the present crisis of capitalist economies in the "barrier" that production for profit poses to the utilisation of "privately-owned" social resources in the face of worker antagonism that tends to emancipate workers from the necessity to work.

Essentially, we argue that public debt and deficits are incurred because the reproduction of capitalist society requires an ever-greater intervention in the "private" economy by the collective capitalist, the State, because failure to provide basic services meets with intolerable social antagonism that is made more legitimate by the commensurate "deprivation" and "repression" experienced by wage workers and other sectors of society by the "under-utilisation" of those social resources.

By contrast, Roubini's reason for capitalism "destroying itself" can be easily dismisses simply by remembering that the entire point to "profits", which are the monetary essence of capitalism, is that workers consume as little of what is produced as possible! Underconsumption can never offer a valid explanation for the possible implosion of capitalist industry for the simple reason that if aggregate wages are not sufficient to absorb capitalist production, then the simple solution is.... for capitalists to raise wages! And if it be said that this is not done because of "competition" between capitalists, this is not valid even in the context of the "anarchical production" argument because t would be easy for the State, for instance, to legislate higher wages to boost consumption! Quite obviously, the problem is not "lack of demand" but rather "low profitability", which leads to "speculative bubbles" that require the State "to socialise" private losses as "public debt"! Cheers.

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