Capitalism in Crisis? - part 2

Communist Manifesto

A few day ago, I blogged about whether not just the financial sector but rather capitalism is in crisis (see Capitalism in Crisis?, covering a panel of a experts - from OECD and the private sector to a varied group of economists -, and then showing what left-leaning American economist Richard D. Wolff had to say.) The panel seemed inconclusive about the state of capitalism, while Wolff cleary stated that capitalism as a system by definition creates crises and is actually a system itself in crisis. The discussion about capitalism seems to be in the air or at least in the media, as I just read an interesting post, What Marx Got Right by Charles Hugh Smith on his blog oftwominds.com. This is how he starts his article:

"That Marx's prescription for a socialist/Communist alternative to capitalism failed does not necessarily negate his critique of capitalism. (!) Marx spent hundreds of pages analyzing capital and capitalism and relatively few sketching out a pie-in-the-sky alternative that was not grounded in historical examples or working models......

Marx got a number of things right, one of which appears to be playing out on a global scale. You probably know that Marx expected capitalism to experience a series of ever-larger boom-bust cycles that would eventually precipitate revolution and overthrow of the existing financial-political order....

The competition to outproduce industrial rivals with cheaper per-unit production costs and labor's competition for jobs both generate a structural crisis in capitalism: as production of goods rises, both the cost per unit and the number of workers earning enough to buy the goods declines.......

   Increasing cost of energy and marginal returns pushed capitalism back into crisis in the 1970s, but three forces emerged to increase labor's purchasing power:

1. The discovery of supergiant oil fields in Alaska, the North Sea and Africa.
2. Computerization improved the productivity of the service sector.
3. Financialization of the developed economies artificially boosted the purchasing power of labor and finance capital via highly leveraged debt and declining interest rates.......
In effect, the Marxist crisis in capitalism has (now) re-emerged. The "fixes" of declining energy costs, more service jobs and leveraging debt have run their course."

Charles Hugh Smith further shows that fewer people in the U.S. are either self-employed or employed by small businesses, putting many people's income under pressure mostly caused by monopolistic corporations,  and that the government has compensated for this loss in tax revenues and increase in providing incomes to unemployed people by borrowing more and spending more.  He ends by saying, that "this government "solution" of borrowing and spending doesn't resolve either the crisis of capitalism or the state's structural deficits; it simply papers over these crises with financial legerdemain." The more I read, and the more I hear, I tend to agree with the "capitalism is in crisis" critics: the numbers about unemployment, increased inequality, loss of income for the middle class, the housing bubble, fraud by financial executives, lack of confidence in politicians, and much more that has become visible over the last six years - let alone what has been brewing for over 20 years - in the West is just something one cannot ignore or blame on a cyclical downturn. Capitalism is truly in crisis: the question is, can it be repaired or does it need an overhaul?


For those of you interested in studying what Karl Marx described in his works, the following editions of Capital (Vols I part 1 and 2; Vol II; Vols III part 1 and 2) and The Manifesto of the Communist Party.