WSJ: So you painted a bleak picture of sub-par economic growth going forward, with an increased risk of another recession in the near future. That sounds awful. What can government and what can businesses do to get the economy going again or is it just sit and wait and gut it out?Previously
Roubini: Businesses are not doing anything. They're not actually helping. All this risk made them more nervous. There's a value in waiting. They claim they're doing cutbacks because there's excess capacity and not adding workers because there's not enough final demand, but there's a paradox, a Catch-22. If you're not hiring workers, there's not enough labor income, enough consumer confidence, enough consumption, not enough final demand. In the last two or three years, we've actually had a worsening because we've had a massive redistribution of income from labor to capital, from wages to profits, and the inequality of income has increased and the marginal propensity to spend of a household is greater than the marginal propensity of a firm because they have a greater propensity to save, that is firms compared to households. So the redistribution of income and wealth makes the problem of inadequate aggregate demand even worse.
Karl Marx had it right. At some point, Capitalism can destroy itself. You cannot keep on shifting income from labor to Capital without having an excess capacity and a lack of aggregate demand. That's what has happened. We thought that markets worked. They're not working. The individual can be rational. The firm, to survive and thrive, can push labor costs more and more down, but labor costs are someone else's income and consumption. That's why it's a self-destructive process.
The bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby relations of production, and with them the whole relations of society...(emphasis mine)
...perhaps I am defending my livelihood, but the notion that somehow the increase in financial trading has crowded out other forms of wealth production is absurd.Not sure what you're responding to, here, but even if it hasn't crowded out other industry, it is manipulating prices in other industries for the sake of personal gain. What do you think Goldman Sachs is going to use all that aluminum for? Interview with Commissioner Bart Chilton of the Commodity Futures Trading Commission.
There is a long history of the capitalist appropriation of Marxist ideas... ...the numerous attempts in recent years in the business press and in professional economic journals to give space to radical ideas and to evaluate current Marxist economic research demonstrates the on-going interest of business and its ideologues in the possibility of appropriating something new from Marx. Nowhere has this tolerance been more obvious than in the area of Marxist research on the theory of economic crisis...Harry Cleaver: Karl Marx: Economist or Revolutionary?
The second shortcoming of Marxist work on crisis, and the one I would like to explore here, concerns the tendency to think about crisis as a subject of “economics” and to apply methods of analysis that closely parallel those of mainstream economics. This tendency not only leads Marxists to forget the political content of their categories and theories but also makes it easy for capitalist ideologues to examine and appropriate the theory for their own purposes...
The alternative to the economic interpretation of Marx that I find the most useful is the reading of his concepts and theories as moments of his political analysis of capitalism as class struggle. This is what I call a political reading of Marx...
This political reading of Marx is an interpretation that takes seriously his repeated admonition that capital is above all a social relation...
The American Left is no threat because they cannot do this: you've got sixty million people (give or take), a hundred twenty million opinions, two hundred forty million minor causes and issues, and zero discipline.They did exactly that just a couple years ago... to elect Obama. If you have money, you can organize people to do whatever you want. If you don't, you can't.
The German way of doing business has vastly changed in the past 15 years. First reunification, then the privatisation of state-owned utilities (and thus the erosion of terms and conditions for employees at Deutsche Telekom and all the rest) and finally out-and-out deregulation of labour markets have left workers worse and worse off.posted by ts;dr at 9:18 AM on August 16, 2011 [2 favorites]
In an irony that will appeal to anyone who remembers New Labour, many of these changes have been pushed through by Social Democrats.
The result is a country that does not have a national minimum wage, and where 2 million workers are now paid around €5 (£4.35) an hour. Most other comparable European countries have a minimum wage – from France to the Netherlands to Greece – and in the UK the hourly rate is about to go up to £6.08. As Germany's leading expert on pay and inequality, Gerhard Bosch, observes, workers in manufacturing (BMW and VW, say) still get good wages and conditions, thanks to their strong trade unions. And there are lessons to be learned from how to use banks to foster decent small-business growth and maintain a manufacturing supply chain. As for the rest, he says: "The German social model is really like a Swiss cheese where the holes are getting larger and larger."
Put in big-picture terms, this means that Germany is really the No 1 problem economy in Europe. Again, that sounds plain wrong: surely the bad cases are on the southern periphery of the eurozone?
But consider: German workers saw their wages (after inflation) actually fall by 4% in the 2000s, so they were hardly in a position to consume a growing proportion of those products turned out by German businesses. Which means that the country exported more to the go-go economies of the south of Europe, and lent Spain, Greece and the rest the cash to buy their goods. Put in simple terms, it's a bit like buying a kitchen and the showroom arranging a loan so you can make the purchase. And German banks were only too happy to shovel credit to the countries that couldn't really afford to buy all this stuff. In effect, Germany blew the bubbles that popped up in the rest of Europe.</blockquote
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posted by The Card Cheat at 5:01 PM on August 15, 2011 [3 favorites]