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Marx was right. Capitalism may be destroying itself.
August 15, 2011 4:58 PM   Subscribe

Roubini warns of global recession risk. In a video interview with the Wall Street Journal, Economist Nouriel Roubini of Roubini Global Economics warns that the risk of a global recession is higher than 50%, suggests investing in cash, blames George Bush for the United States' economic predicament, advocates higher taxes, warns of a possible break-up of the European monetary union and states that "Karl Marx was right".
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?

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.
Previously

Previously
posted by moorooka (122 comments total) 45 users marked this as a favorite

 
"Risk?" "Another?"
posted by The Card Cheat at 5:01 PM on August 15, 2011 [3 favorites]


Marx was right about a lot of things, but I don't think the debt crisis is quite what he was getting to with Das Kapital.

Maybe he meant that Keynes was right, and that we do actually have to stimulate demand, especially in order to keep a tech/service economy growing.

But hey, as long as we can avoid Leninism and Stalinism, Marxism's not too bad.
posted by klangklangston at 5:03 PM on August 15, 2011 [2 favorites]


Well isn't it about the internal contradictions?
posted by symbioid at 5:06 PM on August 15, 2011 [1 favorite]


Karl Marx had it right. At some point, Capitalism can destroy itself.

I think that's what he means.
posted by wemayfreeze at 5:06 PM on August 15, 2011 [9 favorites]


Wait, Dr. Doom is down on the economy?!
posted by 2bucksplus at 5:07 PM on August 15, 2011 [1 favorite]


Why did he have to mention Marx? Conservatives will read that and dismiss everything else he has to say about demand. A bit tone deaf I think.
posted by fleetmouse at 5:08 PM on August 15, 2011 [4 favorites]


At the risk of derailing, what Karl Marx had right in this case was about as insightful as his famous world-shaking pronouncement that 'water is wet'.
posted by stavrosthewonderchicken at 5:09 PM on August 15, 2011 [6 favorites]


C'mon, any system taken to its dogmatic extremes is going to destroy itself.
posted by xmutex at 5:11 PM on August 15, 2011 [5 favorites]


Karl was right again, ask Bakunin, I say that because the S.O.B. is probably still alive.
posted by clavdivs at 5:18 PM on August 15, 2011


Nouriel Roubini is... warning of economic doom? Is that still newsworthy?
posted by indubitable at 5:20 PM on August 15, 2011 [1 favorite]


Marx was right about a lot of things, but I don't think the debt crisis is quite what he was getting to with Das Kapital.

It seems like a clear example of a system cannibalizing and weakening itself and yet hypocritically due to it's entrenched and unquestioned influence asks for a government to step in and save it and in the process asking the citizens of a country due to its negligence and irresponsibility paying the price of their incompetence and greed.

Think about that, I mean at it's root this is the biggest sin a free market can commit. It's hypocritical and is a level of rot only displayed by and economic system just before it's complete capitulation.

The irony is that, Capitalism itself, in order to retain it's integrity needs to work within a number of different economic systems interacting off one another. A meta-market, if you will.

It was only a matter of time, and it's still only a matter of time since the USSR fell, that Western Capitalism would take it's own triumphalism and hubris and become similarly corrupt with a dogmatic oligarchy and a self-ruining hubris and propaganda, like that usually found in the Op-ed pages of the WSJ, actually.

Which will probably appear in tomorrow's WSJ paper op-ed pages as a wink and nudge to the disciples to not be swayed by Roubini's anti-Capitalism rhetoric and keep the faith.
posted by Skygazer at 5:20 PM on August 15, 2011 [11 favorites]


The markets would be working just fine, except that we've been hijacking them for the last twenty years with our deficits and our crazy liquidity regime.

The whole point of capitalism is that bad ideas are weeded out, they go away. And since the early 1990s, we have been actively sabotaging that process, primarily with low interest rates and high liquidity. As those trillions of dollars went overseas to China and Japan, it SHOULD have constrained our economy. It SHOULD have forced us, like magic, back into rough balance with production and consumption.

Instead, Greenspan decreed there were only two acceptable economic outcomes: boom, and slightly less boom. And anytime the economy signaled pain of any kind, he'd add more money into the system, sometimes in quite large quantities, and then gradually withdraw most (but not all) of those additional dollars. The net effect has been that we've flooded the world with dollars for the last twenty years or so. No matter how many went overseas, we'd just make more. And so there's a vast flood of wealth tokens in circulation, and it has become far more profitable to manipulate wealth tokens instead of creating wealth -- energy, stuff, and knowledge. And now the real economy is starting to collapse under the weight of all that currency and all that debt and all that intervention.

For markets to be free, they must be free to go down. We've tried to have "Capitalism, The Good Parts", but the down cycles are what makes the up cycles work. Bad ideas and bad players absolutely must be removed from the system. It's like forest management; you WANT forest fires. Small ones, all the time. They keep the forest healthy.

We haven't allowed a forest fire to just burn in twenty years or more; instead, we fought every single fire with however much water it took to extinguish the blaze. And so the undergrowth has accumulated and accumulated and accumulated, and there's so much now that even a tiny accident with a freaking match threatens to set the whole thing ablaze. And when it does finally go up, the damage is going to be incredible.

We've already TAKEN the damage. There is no avoiding the most profound and painful economic adjustments any living First Worlder has seen. We should have had the Second Great Depression in 2001, after the Nasdaq crash and then 9/11. We avoided that by juicing the system full of money, but that meant we didn't fix the problems, and new problems started to accumulate... the housing and debt bubbles. And then when THOSE started to crash in 2008, which would have set off the Greater Depression, we bailed everyone and his uncle out, handing out billions to anyone with a napkin with an IOU scrawled on it. And THAT set off what I believe is the final bubble, that of government debt accumulation.

Eventually, the market is going to stop believing that governments can pay back their debts. They're starting to question that very strongly in Europe. And once that happens, the only remaining remedy is actively printing money to fund government consumption and bailouts.

A lot of people scoffed, very loudly, when I said we were headed for much, much greater troubles ahead because of the bailouts, and that the final resolution was either going to be a deflationary crash or a hyperinflationary spiral. Personally, I'm betting on the spiral, largely because that would be much, much worse than deflation, and we have absolutely consistently chosen the worst possible path at every major economic decision point for just about forty years now.

We've hollowed ourselves out, taken the the country that could go to the moon practically on change it found the couch to having many states barely being able to keep up their road system, in just a little more than one generation. Titanic wealth to titanic debt in just forty years, and the single largest cause is being unwilling to accept that markets go down, and sometimes they even crash. And preventing that with government and monetary intervention has completely crippled the system's ability to reinvent itself, and has transferred most of the wealth in the world to the people who play with currency.
posted by Malor at 5:25 PM on August 15, 2011 [126 favorites]


The only thing more predictable than bitter old Marxists predicting the imminent collapse of capitalism is the fact that they'll be wrong. Rather than the French having a word for it, in this case the Germans do - Ostalgie. Communism sounds like a great idea right up to the very moment that you fancy buying a banana.
posted by joannemullen at 5:27 PM on August 15, 2011 [1 favorite]


PREACH IT BROTHER MALOR!
posted by entropos at 5:28 PM on August 15, 2011 [2 favorites]


Uh, Roubini is no bitter old Marxist.
posted by entropos at 5:29 PM on August 15, 2011 [7 favorites]


Communism sounds like a great idea right up to the very moment that you fancy buying a banana.

If you're going to be dumb, at least try to be amusing about it.
posted by stavrosthewonderchicken at 5:33 PM on August 15, 2011 [34 favorites]


Lenin seems rather prophetic to me.
posted by Shit Parade at 5:41 PM on August 15, 2011 [1 favorite]


Roubini warns of global recession risk.

Global recession risk? Well, I'm glad you're here to tell us these things! Chewie, take the professor in the back and plug him in the hyperdrive.
posted by entropicamericana at 5:44 PM on August 15, 2011 [9 favorites]


But hey, as long as we can avoid Leninism and Stalinism, Marxism's not too bad.

Isn't it important to distinguish between Marx's critique of capitalism and "Marxism", a political ideology of the 20th century?
posted by mondo dentro at 5:45 PM on August 15, 2011 [10 favorites]


> We should have had the Second Great Depression in 2001, after the Nasdaq crash and then 9/11. We avoided that by juicing the system full of money, but that meant we didn't fix the problems, and new problems started to accumulate... the housing and debt bubbles. And then when THOSE started to crash in 2008, which would have set off the Greater Depression, we bailed everyone and his uncle out, handing out billions to anyone with a napkin with an IOU scrawled on it. And THAT set off what I believe is the final bubble, that of government debt accumulation.

That seems way to hyperbolic and extreme. I mean, what if the Clinton surplus hadn't been squandered in record time by Bush and added to so recklessly, AND there'd been a Fed Chairman in place (Greenspan) with his head so far up Ayn Rands ass that he was literally for all intents and purposes the voodoo Pope of system he thought functioned more or less on doing nothing to reign in the abuse of bundling toxic derivatives and allowing them to infect the whole money supply.

He was warned as early as the mid-90s that that level of laissez-faire and dogma exposed the country to a banking disaster..and sure enough 2008 came along.

I think even a bit of skepticism and pro-activity would've done immense good. Sure the housing boom would've been more modest and growth as well, but it's that old saying: An ounce of prevention is worth a pound of medicine.
posted by Skygazer at 5:46 PM on August 15, 2011 [12 favorites]


without his head so far up Ayn Rand's ass...
posted by Skygazer at 5:48 PM on August 15, 2011


Communism sounds like a great idea right up to the very moment that you fancy buying a banana.

Accepting some Marxist explanations of potential problems with Captialism and advocating a Communist state are two different things.
posted by weston at 5:48 PM on August 15, 2011 [18 favorites]


The whole point of capitalism is that bad ideas are weeded out, they go away.

The point of capitalism is the maximization of profit. If socially bad ideas generate more profit than socially good ones, then the social goods must be weeded out.

Although I do like your support of the welfare state.
posted by squorch at 5:49 PM on August 15, 2011 [20 favorites]


"For markets to be free"
"the market is going to stop believing"
"The markets would be working just fine"
"[the markets]...They're starting to question"

To believe that markets are real is to be a religious fanatic as much as any Marxist or Sunday morning soul-saver.
posted by larry_darrell at 5:52 PM on August 15, 2011 [11 favorites]


markets would be working just fine... The whole point of capitalism...

The concepts of "markets" and "capitalism" are not synonymous, are they? One could even say that they're orthogonal. The latter refers to a system of private ownership, the former to a type of social organization for regulating exchanges. One could have anarchist collectives that engage in economic trade regulated by market forces.

In the US, one of our big problems is that "capitalism", "free market economics", and "democracy" are taken as virtually identical, when they are not.
posted by mondo dentro at 5:54 PM on August 15, 2011 [28 favorites]


The argument in no way will change the minds of conservatives. When we had the Great Depression the conservatives argued then as they do now that The "Free Market" without regulations and getting rid of taxes would get the job done. They continue to this day to make that argument.
posted by Postroad at 5:57 PM on August 15, 2011 [4 favorites]


larry_darrell: Reify.

I think deify, might be a better description of making something like a God.
posted by Skygazer at 5:58 PM on August 15, 2011


And so there's a vast flood of wealth tokens in circulation, and it has become far more profitable to manipulate wealth tokens instead of creating wealth -- energy, stuff, and knowledge.

There used to be controls on this sort of behavior in the form of taxes and strong regulation... but that runs counter to unfettered free-market capitalism, so out it went - over the same 20 year timeline that you refer to.
posted by squorch at 6:02 PM on August 15, 2011 [7 favorites]


If I don't have savings, stocks, or a retirement plan, does that count as investing in cash? Because if so, I'm set!
posted by OverlappingElvis at 6:03 PM on August 15, 2011 [2 favorites]


The markets would be working just fine, except that we've been hijacking them for the last twenty years with our deficits and our crazy liquidity regime.

The markets would be working if they were markets. Since capital flows have been unrestricted during the 70s and 80s, and interest rates went unregulated, everything has been upside down. No one knows who has what or what it is worth, because there's no transparency. None of the normal actors in a market have much say anymore, since a majority of the players are now speculating instead of buying and using the product for further production. You can't make a rational decision about an irrational, speculative casino, unless you're one of the insiders remaking the rules for yourself.

The fact that the people in power abuse their position to enrich themselves and their friends (take a look at income data from 1980 to 2010) is not evidence that markets work when left alone. It's evidence that we need a better and less corrupt regulatory body to restore order.
posted by notion at 6:12 PM on August 15, 2011 [5 favorites]


The whole point of capitalism is that bad ideas are weeded out, they go away.

No, that's the point of the free market. Capitalism is the idea that having the gold means you get to make the rules (while actually doing the work means bupkus).
posted by DU at 6:13 PM on August 15, 2011 [3 favorites]


Incredibly I picked up the paper yesterday and there was an editorial heaping praise on Paul Martin and Preston Manning about their successful tackling of the Canadian deficit problem. (This Macleans article is a much more sensible take.) In Disaster Capitalism, Naomi Klein tells the same story in reverse: Canada in the 90s was the prototypical "austerity craze" where everyone freaked out about a cyclical deficit which surprise, went away in the boom time of 1995-2005. But of course it was a good excuse to slash EI benefits. I'm also highly skeptical of these "Canadian success stories" as not only are we chugging along largely on unsustainable resource exploitation (a la Australia), we are again running record deficits, interest rates are still stupidly low, and our housing market is... suspect.

The Eurozone is a whole different mess, of course. They have nothing to learn from history as they're playing by new rules... it's a grand experiment and it may very well fail in near future.
posted by mek at 6:13 PM on August 15, 2011


The Eurozone is a whole different mess, of course. They have nothing to learn from history as they're playing by new rules... it's a grand experiment and it may very well fail in near future.

The Eurozone in its current form is little more than translating the Articles of Confederation to the Continent, and the austerity conditions for new loans are the start of the EU moving slowly towards a stronger central government. Right now there is too much wiggle room for states to pursue their own policies while relying on economically stronger states to pull them through the bad times.
posted by squorch at 6:18 PM on August 15, 2011 [3 favorites]


....but that runs counter to unfettered free-market capitalism, so out it went...

The free market ideology has one huge thing in common with Marxism (again--I'm not talking about Marx, but the "ism"): namely that they both masquerade as "science", but are unsupported, if not outright contradicted, by any empirical analysis. All (as in 100%) of the wealthy high-technology countries that arose after WWII are mixed economies.

If aerospace engineers applied the same logic to aircraft design as free marketeers do to economies, they'd say something like this: "Boy, this new fighter plane is fast, but just imagine how much faster it would be if we didn't waste so much energy on the control system!"
posted by mondo dentro at 6:20 PM on August 15, 2011 [15 favorites]


Monopolies are extremely bad for the economy. Communism was an excessive form of monopoly. Our current capitalism has been erring on the side of monopoly creation too. Anyone else think some jobs could be created by breaking up Walmart? ;)
posted by jeffburdges at 6:24 PM on August 15, 2011 [2 favorites]


... yes?

The fact that the wealthy high-tech countries are all mixed economies lends weight to Marxist critiques of capitalism.
posted by squorch at 6:26 PM on August 15, 2011 [1 favorite]


squorch: I wasn't saying that as a counterpoint to you. I was agreeing with you... and piling on!
posted by mondo dentro at 6:27 PM on August 15, 2011 [1 favorite]


I don't think that the Austrian boom-sin-bust-punishment idea is right. You can have the bad actors go broke without taking down the real economy. We've chosen not to do that, but that's because of the marvelous coincidence of who just rode a bubble and has money + friends in DC.
posted by a robot made out of meat at 6:30 PM on August 15, 2011


Skygazer, it's the Clinton surpluses that jumped off all this craziness. Taking money out of the economy is what provided the vacuum for debt expansion.
posted by wuwei at 6:32 PM on August 15, 2011 [1 favorite]


"The markets would be working just fine, except that we've been hijacking them for the last twenty years with our deficits and our crazy liquidity regime. "

Man, I'm glad now that it's only 20 years of monetary policy that you're copy-pastaing into your regular goldbug rant about fiat economies. No love for Nixonian wage and price controls?

The 19th Century record of unrestrained boom and bust was disastrous.

Communism sounds like a great idea right up to the very moment that you fancy buying a banana.

Cuban bananas, Joanne. I mean, aside from your pretty goofy conflation of Communism with Marxism (product of your education, I suppose). But on that, I should have been clear that my conflation of the incredibly over-broad "Marx was right" (about markets, also beard care) with Marxism itself was supposed to be at least a little tongue in cheek.
posted by klangklangston at 6:33 PM on August 15, 2011 [9 favorites]


...it's the Clinton surpluses that jumped off all this craziness

Oh! My new favorite theory of the absurd. It's of the Goldilocks genus: Deficits? Bad! Surpluses? Bad! No... we need to have our economy ju-u-u-ust right!
posted by mondo dentro at 6:35 PM on August 15, 2011 [1 favorite]


I agree with Malor's analysis, except for an important point, first made by Schumpeter, the pessimist capitalist (Austrian, even, in both senses) who thought capitalism was the most awesomest thing ever, and yet, doomed to fail (oh, he also loved Marxist methodology, even though he disliked his economics). Not because it would fail to do what it's supposed to do, but because it would succeed in doing exactly what it's supposed to do.
The point being: You can't analyze capitalism and policy separately. Even without shortcuts (lobbying), your economic system is your system of power, your system of power dictates the superstructure, the superstructure dictates the ideology, and ideology drives policy (borrowing his Marxist terminology). Free markets would be awesome if the government didn't fuck it up, but that's like saying that gasoline would be the perfect fuel if the atmosphere didn't fuck it by being bitchy and filling up with co2
In this case: The most efficient corporations (and banks) win at capitalism, and economics of scale dictates that more money will, up to some point, make them more efficient. In some cases, they reach that point and just become one of the old world white elephants like Ford or IBM, but in some cases before they reach that point they cross the line where it's more efficient for them to influence policy than to improve their business. It is by design for capitalism that the system will select for the most efficient method. Ending up with a government run by Goldman Sachs is a direct consequence of capitalism. No matter what kind of minarchist ideal government you start with, you'll end up with the Bush government.
So yeah, the unfettered free market is the most awesomest system, and it has a snowball's chance in hell of surviving itself. Fighting the growth of the government or fighting the plutocracy of the government is futile, you're better off optimizing your system so that the ruling banker mafia can ride out the crises and doesn't need to think so short term all the time (bonus point: check out where I live in my profile :))
posted by qvantamon at 6:37 PM on August 15, 2011 [33 favorites]


capitalism was the most awesomest thing ever, and yet, doomed to fail

Leo Panitch's Thoroughly Modern Marx has some excellent analysis along the comparative economics lines that you bring up.
posted by squorch at 6:48 PM on August 15, 2011 [2 favorites]


qvantamon: very educational comment.

One quick thing:

It is by design for capitalism that the system will select for the most efficient method.

When we speak of the "most efficient" something, we are implicitly speaking of optimization, and there's a huge semantic hole in all conversations of optimality that is usually left unexamined: namely, "optimality" always requires a cost function, and most political bamboozlement involving economic policy leaves this cost function either unmentioned, or treats it as if its a part of the Objectively Real Universe. But it's not. Humans can use politics and policy to create cost functions of their choosing.

There is nothing intrinsically "capitalist" about insisting that we maintain the crusty old Cold-War era Military-Industrial-Financial conceptualization of "efficiency". We could, whenever we wanted to, shift to a different one that, say, emphasized ecological stability. The reason we don't is that the old guard is struggling to maintain it's power. They use "free market" rhetoric to obfuscate the radically non-free-market nature of their power struggle.
posted by mondo dentro at 6:49 PM on August 15, 2011 [17 favorites]


The reason we don't is that the old guard is struggling to maintain it's power.

This bears repeating, and is analogous to Marx's insistence that
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)

These constant revolutions - industrial, commercial (GATT, WTO, etc.), financial (derivatives and their incestuous spawn) - are rapidly reaching their end. There simply isn't that much more to revolutionize out there. For a good, if long, read on the subject, see The Financialization of Capitalism.
posted by squorch at 6:57 PM on August 15, 2011 [6 favorites]


Terry Eagleton published a book called Why Marx Was Right a few months ago that's supposedly quite accessible and might be of some interest.

This is also very similar to how Keynes is often described as wanting to save capitalism from itself. The Western European welfare state was greatly expanded after WW2 to help contain communism, redistributing enough wealth and heading off the extremes of inequality that would threaten the capitalist order. After the collapse of the Soviet Union, capitalist countries are able to gradually dismantle their social programs since they no longer serve any strategic purpose of providing a bulwark against the communist threat.

Sure, this creates social unrest, but it's OK because it doesn't feed any political program that threatens the status quo. The left is concerned about tolerance, cultural and identity politics, "anti-authoritarianism," and defending abstract personal freedoms like freedom of speech; the right is obsessed with immigration and religion, so you can just criminalize and imprison the underclass. A crisis of capitalism is no threat, instead it's an excuse to further entrench the interests of the capitalist class.

Capitalism can risk destroying itself and taking down civilization with it because there's no alternative. Even if the social democratic consensus works theoretically, it only ever worked in reality when communism was knocking at the door.
posted by AlsoMike at 6:57 PM on August 15, 2011 [15 favorites]


wuwei: it's the Clinton surpluses that jumped off all this craziness. Taking money out of the economy is what provided the vacuum for debt expansion.

That's some crazy pants Free Market bullshit right there. Whoa.

Sorry, but I don't know if you're even serious or what the what is with that comment.

A responsible steward of savings is a responsible steward. Bush was not a responsible steward. He was a liar and a fool, who thought as long as he acted like Reagan (but even worse), his baloney would work out fine. This is so not the case.
posted by Skygazer at 6:59 PM on August 15, 2011 [2 favorites]


weston: "Communism sounds like a great idea right up to the very moment that you fancy buying a banana.

Accepting some Marxist explanations of potential problems with Captialism and advocating a Communist state are two different things.
"

Shhhhh, don't get between joanne and the fictional boogieman.
posted by symbioid at 7:00 PM on August 15, 2011 [1 favorite]


Even if the social democratic consensus works theoretically, it only ever worked in reality when communism was knocking at the door.

Surely the threat of economic and political collapse of entire states is a good argument for the stability of welfare capitalism.
posted by squorch at 7:00 PM on August 15, 2011 [1 favorite]


Communism sounds like a great idea right up to the very moment that you fancy buying a banana.

Cuba has cheaper bananas then your country, explain!
posted by clavdivs at 7:01 PM on August 15, 2011 [11 favorites]


Capitalism can risk destroying itself and taking down civilization with it because there's no alternative. Even if the social democratic consensus works theoretically, it only ever worked in reality when communism was knocking at the door.

I was thinking about this the other day. I was wondering what it would take to create a Democratic Socialist movement here in the U.S. and I realized that nothing might work, because we would be unable to point to anything "worse" as an alternative.

"You have to increase benefits for the poor because if you don't..." ... then what? They'll riot? In the U.S., they probably won't. And if they do they'll be arrested and imprisoned for lengthy terms.

I think we are on this unstoppable train heading Rightwards because there is no credible threat that the left (or center left, even) can deploy against the conservative status quo.
posted by Avenger at 7:05 PM on August 15, 2011 [4 favorites]


I think we are on this unstoppable train heading Rightwards because there is no credible threat that the left... can deploy against the conservative status quo.

Good point, but this is only really true if we are Humanists in the strict sense. In contrast, I think Physical Reality (aka Nature) might have something to say about that. You know, peak oil, global climate change, and all that.
posted by mondo dentro at 7:09 PM on August 15, 2011 [4 favorites]


I work in the financial markets and so 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.

We produce more of every service and every consumable and durable good than we ever have, and have the excess capacity to produce vastly more of it. Whole classes of goods and services have been created that never existed when Wall Street volumes and wealth-creation were a small fraction of what they are now. MBAs going to Manhattan instead of Detroit simply demonstrated we didn't need as many MBAs to make cars.
posted by MattD at 7:09 PM on August 15, 2011 [2 favorites]


mondo dentro wrote: Oh! My new favorite theory of the absurd. It's of the Goldilocks genus: Deficits? Bad! Surpluses? Bad! No... we need to have our economy ju-u-u-ust right!

You know, given that deficits can be bad or good depending on the circumstances, it just might be possible that the same could hold true for surpluses.
posted by wierdo at 7:11 PM on August 15, 2011


...it just might be possible that the same could hold true for surpluses.

I'll agree to this possibility... but only as a theoretical matter.

My sarcasm was directed at the more politicized version of the debate, one in which deficits are ALWAYS bad, and liberals are bad because they run up big deficits (which, by the way, they don't--conservatives do), and then... when a liberal runs up a surplus... POOF! IT'S BAD!

Perhaps you can understand my skepticism.
posted by mondo dentro at 7:16 PM on August 15, 2011


If I don't have savings, stocks, or a retirement plan, does that count as investing in cash? Because if so, I'm set!

But this only works on payday. The day before payday? You've got nothing left in that investment. But don't worry, there'll always be a need for 65 and half year old greeters at Wal-Mart, so you can scratch "retirement" off of your list of worries that keep you up at night.
posted by NoMich at 7:16 PM on August 15, 2011


I work in the financial markets and so 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 crowded out quantitatively, but crowded out in mindshare. As I said, power drives ideology. If I mention that someone made $500,000 last year and drives a Maseratti, what's the first image that comes to mind? (whether it's based on reality is irrelevant). That's what people who want to be successful will aspire to be. Aspiration turns into identification and that turns into support. The financial system is over-represented in policy not because it has a lot of money, or because it lobbies a lot, but because deep in their minds the population sincerely supports it, because it evokes images of success, and success is good.

MBAs going to Manhattan instead of Detroit means we don't need MBAs making cars, but does more people going to MBAs instead of PhDs mean we need more MBAs than researchers? The huge brain drain of researchers from developing economies to the post-industrial economies that are graduating those MBAs says otherwise.
posted by qvantamon at 7:18 PM on August 15, 2011 [2 favorites]


Free markets would be awesome if the government didn't fuck it up, but that's like saying that gasoline would be the perfect fuel if the atmosphere didn't fuck it by being bitchy and filling up with co2

This reminds me of the exchange between Proudhon and Marx, derived partly from Proudhons' work The Philiosophy of Poverty.

Marx accused Proudhon of not understanding Hegel and the dialectical conflict. Proudhon viewed it as a simple stuggle between good and evil. That is a fallcy in which if we just remove the evil, then the good will remain yet using the same criteria.
posted by clavdivs at 7:20 PM on August 15, 2011 [3 favorites]


Argh. this: "The financial system is over-represented in policy not because it has a lot of money, or because it lobbies a lot, but because deep in their minds the population sincerely supports it, because it evokes images of success, and success is good." was an obscene over-simplification. Please take the rhetorical value of it and throw the rest away.
posted by qvantamon at 7:23 PM on August 15, 2011


The financial system is over-represented in policy not because it has a lot of money, or because it lobbies a lot, but because deep in their minds the population sincerely supports it, because it evokes images of success, and success is good.

Hence Chinas' continuing interest in buying name brand labels. The label itself speaks of success control the label, control the market. More or less.
posted by clavdivs at 7:27 PM on August 15, 2011


hmmm
posted by clavdivs at 7:27 PM on August 15, 2011


...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.

The unregulated financial innovation which substantially contributed to the mortgage bubble over the last decade is a large-scale example of the same class of problem.
posted by Estragon at 7:47 PM on August 15, 2011 [4 favorites]


yeah, mattd. Marx's crises are crises of over-production ("speculation"), not scarcity.
posted by notyou at 7:56 PM on August 15, 2011


"Nouriel Roubini's Global Macroeconomic and Financial Policy Site is big, broad, and pretty amazing. If you can stomach a 50 page .pdf, make sure to read the dollar-bear article: Will The Bretton Woods 2 Regime Unravel Soon? The Risk of a Hard Landing in 2005-2006."
posted by trharlan on Feb 22, 2005

So ... is he still running 4-5 years early or has he lost a bit of ground?
posted by Kadin2048 at 8:04 PM on August 15, 2011


A lot of people scoffed, very loudly, when I said we were headed for much, much greater troubles ahead because of the bailouts, and that the final resolution was either going to be a deflationary crash or a hyperinflationary spiral.

Actually, no, we scoffed because you are an unreformed end-the-fed goldbug.

But to your point, we have seen neither deflation nor inflation, and neither is likely to happen as long as we have central banks (and you do realize that the Fed acts like a central bank, right?) What we have is a severely depressed consumer base because the money has moved from wages to capital - from growth to profit-taking. One generates economic activity through consumption, the other sits in a lump in the banks at record low interest rates, not making much money for anyone.

There is one way out of it - and that's government stimulus, and lots and lots and lots of it. That door has been slammed in our faces by right-wing politics and businessmen playing kingmakers in the US and EU.

The surest sign that your government has taken on too much debt is that there is too little capital running around for business - interest rates skyrocket. That hasn't happened - in fact, the opposite has happened now that the banking industry is stabilized. Lots of credit out there, M&A is going nuts, investment in efficiency (IT and automation) is strong... but no one is building new infrastructure. Everyone is waiting for their competitor to go first, the business and political environment is too toxic for growth. Government, while money is cheap to borrow and labor is cheap to hire, would be suicidally stupid not to make major investments in infrastructure... and in the teeth of economic malaise, they would be criminally negligent, too. Which about sums it up.

The only way out of this is to run the Tea Party out on a rail, or elect a Republican president - at which point all Tea Party objections to deficit spending will disappear in a little puff of brimstone.
posted by Slap*Happy at 8:20 PM on August 15, 2011 [17 favorites]


Does anyone know why mutant doesn't comment in these threads any more?

It was good when there was someone who really knew what they were talking about.
posted by sien at 8:25 PM on August 15, 2011 [8 favorites]


The whole point of capitalism is that bad ideas are weeded out, they go away.

Not in our variant on capitalism. In our version, only badly marketed ideas are weeded out. Properly marketed ideas that deliver no real value or that pull working capital away from actual, real-world investments and tie them up in various paper-based financial shell games will survive just fine and eventually grow into full-fledged economic parasites.

The conservative/libertarian/neoliberal conceptions of free market economics fail to properly account for the asymmetry of economic information, the possibility of deception, and inherited imbalances in wealth and capital accumulation, and thus, offers only a naive, magical belief-like accounting of real world economics.
posted by saulgoodman at 8:27 PM on August 15, 2011 [16 favorites]


"economic market information"
posted by saulgoodman at 8:28 PM on August 15, 2011


Stefan Stern: Marx was right about change. Even now, political leaders are advocating wholly orthodox approaches to managing deficits and currency volatility
posted by homunculus at 8:56 PM on August 15, 2011


Yes, but... What does Nicholas If-Jesus-Christ-Had-Not-Died-For-Thee-Thou-Hadst-Been-Damned Barebon think of all this?

(I ran across his name in an article on strange names, and reading his wiki page, I see Schumpeter was a fan of his economic theories, so thought it fitting to bring him into the thread, you know, just for shits and giggles and syncronicity's sake).
posted by symbioid at 9:00 PM on August 15, 2011 [1 favorite]


Come to think of it, probably one of the only thing that the naive free market model of market behavior (that is, the idea of self-correcting markets, in which bad ideas, goods and services are weeded out by the actions of the market itself, rather than through regulatory intervention) really has going for it is that it's so simple and intuitively appealing, that it's easy to understand.

The easier an idea (or really, a system of thought) is to understand, the more people will believe in it. The more people who believe in it, the more political credibility and popular support it will enjoy.

(And like all misleadingly over-simplified models of reality, naive free market theory makes demonstrably accurate predictions when experiments are performed at certain levels of abstraction and assuming certain preconditions.)

I believe in a very qualified version of free market theory. But the idealized, classical liberal (or libertarian--I think I mistakenly referred to neoliberalism above) model of markets and economies isn't enough.
posted by saulgoodman at 9:04 PM on August 15, 2011


Sheesh, is some script kiddy fucking with me or what? I swear all those typos and redundant words weren't there when I previewed. I need some sleep.
posted by saulgoodman at 9:08 PM on August 15, 2011


see what i mean? i meant to say "script kiddie." ok. g'night.
posted by saulgoodman at 9:10 PM on August 15, 2011


remember that PBS commerical were everyone tucks in the child with the parent, Jim Leherereer, Charlie, others I cant remember; just cut and paste Marx, Engels, Lenin, and Saint-Simon as the stand in for Norm.
goodnight

posted by clavdivs at 9:17 PM on August 15, 2011


In fact, freeish markets are wonderfully effective at pitting different powerful interests against one another in ways that benefit the little people through lower prices, better wages, etc., saulgoodman. Markets fail when powerful interests start merging, colluding, etc., that's Marx' class warfare.

To unseat capitalism, you need procedures for making decisions, allocating resources, etc. that doesn't create one monolithic powerful interest, which sounds pretty damn hard. We've some sweat new tools like sound voting systems, deliberative democracy, and game theory, making it 'hard sci-fi'. Btw, check out A Darwinian Left by Peter Singer.
posted by jeffburdges at 10:03 PM on August 15, 2011 [2 favorites]


Yes, the Europeans have pushed aside Keynes, Slap*Happy, but they're hardly "playing kingmaker".

I donno if it's growing pains like squorch suggested or more fundamental, but it's beyond simply playing politics.

Anyone imagine we'll see the Economist blame Europe for causing the economic downturn by giving the Tea party the idea? lol
posted by jeffburdges at 10:08 PM on August 15, 2011


Eventually, the market is going to stop believing that governments can pay back their debts.

This is wrong. The US always has the means to pay back its debt, it just needs to print more. The market knows this, which is why the worse things get, the more eager it is to buy our bonds. Like it or not, we are the conductor, the world is our train, and we best get shoveling coal.
posted by blargerz at 10:08 PM on August 15, 2011 [1 favorite]


If I mention that someone made $500,000 last year and drives a Maseratti, what's the first image that comes to mind?

Someone bought the wrong car.
posted by atomicmedia at 10:59 PM on August 15, 2011 [6 favorites]


Corporatist capitalism is thriving. Globally speaking, the kind of laissez-faire, open, Adam Smith-style capitalism that the WSJ likes to romanticize probably died completely during the Truman or Eisenhower administration. Extending protectionism to companies across borders was never really capitalism, anyway.
posted by Blazecock Pileon at 11:13 PM on August 15, 2011 [1 favorite]


I like applying Neitzsche's "will to power" to the concept of capital. Capital is driven to maximize itself. In a way, rules of the market don't matter, because Capital will do what ever it has to to optimize returns, to keep growing. I really like Malor's analysis, above, but lets not kid ourselves about 'rules of the market". When capital is challenged, the gloves come off, it becomes a street fight - anything goes. War. Political fraud. Theft on the grandest of scales. Capital is not just money; it's the apparatus that literally "makes" money, controls it's flow, decides how much to dole out for an hour of sweat, and so on. Of course, going meta on capital will not solve any problems, or suggest any solutions, but it does point out that those without capital must understand that there are no rules, so that they have a fighting chance, instead of being paralyzed by analysis. That said, kudos again to Malor; well done!
posted by Vibrissae at 11:30 PM on August 15, 2011 [3 favorites]


The whole point of capitalism

is the continual accumulation of capital. That's it.
posted by carping demon at 12:13 AM on August 16, 2011 [3 favorites]


Last time I went to buy bananas down here in Australia they were something like $17 (so 18~18.50 of your American dollars =P).

Personally I also blame communism.



Oh wait no it was cyclones, that's right.
posted by Hello, I'm David McGahan at 12:53 AM on August 16, 2011 [1 favorite]


derailing for a moment...

I think we are on this unstoppable train heading Rightwards because there is no credible threat that the left (or center left, even) can deploy against the conservative status quo.

Pick an issue. One.

Put a million people on the Mall in something that resembles a uniform. It doesn't have to be anything complicated or expensive. Maybe even all the same color shirts (though for various reasons of historical propriety I suggest you avoid brown), just something that will make a an aerial photograph that looks like a group of very serious yet nonthreateningly reasonable people, instead of a county fair, hippie music festival, Tottenham riot, or Street Parade.

None of this Free Mumia crap. No Free Tibet crap. No Save the Whales or No Nukes or Arctic Seals or Cows for Africa or cute fluffy irrelevant issue of the month. Tolerate no violence, incitements or threats thereto. Armed people count as a threat. It may help here to have a reserve of strong heavy people who can calmly sit on troublemakers until they calm down.

Make sure everyone there knows what the issue is and can speak, if not intelligently, then at least in their own words to it. You don't want an army of talking-point drones (you're not Republicans), but you also don't want Keep Government Away From My Medicare placards (you're not the Tea Party).

Keep them there for a week. Then have them clean up their stuff, and leave.

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.

So, we'll end the derail, and wait for the conservative status quo to eat itself. Though I don't share Roubini's (or even Malor's) optimism: since for the most part the management of economy is the management of perception, and we are now at the point that currency itself can be seen solely as little tiny subdivided units of perception, I think we can keep pumping vacuum into the balloon for quite a while.
posted by Vetinari at 1:02 AM on August 16, 2011 [2 favorites]


None of this Free Mumia crap. No Free Tibet crap. No Save the Whales or No Nukes or Arctic Seals or Cows for Africa or cute fluffy irrelevant issue of the month. Tolerate no violence, incitements or threats thereto. Armed people count as a threat. It may help here to have a reserve of strong heavy people who can calmly sit on troublemakers until they calm down.

A part of me wonders where the MLK, Mandela or Gandhi is... the other remembers what happens/ed to such people. But Mandela was more of a symbol than a visionary of change in the way the other two were.

/end derail's derail
posted by infini at 1:17 AM on August 16, 2011 [1 favorite]


I liked the quote on communism from Karl Kraus in the 1920s:
"The devil take its practice, but god preserve it as a constant threat over the heads of those who have property and for its preservation want to drive everyone else to the fronts of hunger and patriotic honor, with the consolation that life itself is not the highest of goods."

(there's more to the quote, but hard to translate)
posted by ts;dr at 2:00 AM on August 16, 2011 [2 favorites]


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...

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...
Harry Cleaver: Karl Marx: Economist or Revolutionary?
posted by Abiezer at 3:42 AM on August 16, 2011 [3 favorites]


Marx was right about a lot of things, but I don't think the debt crisis is quite what he was getting to with Das Kapital.

What debt crisis? Roubini seems to be talking about the unemployment problem, which is both unrelated to the debt 'crisis' and far more serious for most Americans. The "debt crisis" is really about keeping taxes low for the rich. More deficits means higher taxes in the future, so if spending isn't cut, then taxes must go up in the future.
posted by delmoi at 4:46 AM on August 16, 2011 [2 favorites]


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.
posted by delmoi at 4:48 AM on August 16, 2011


Human civilization is based on farming. In farmining one learns quickly that if you just leave things to invisible hands and let nature take it's course you will starve after a harvest of weeds.
posted by humanfont at 4:56 AM on August 16, 2011 [8 favorites]


Does anyone know why mutant doesn't comment in these threads any more?

It was good when there was someone who really knew what they were talking about.


He's gone back to school, which can take up your time. Mind you, the same question could be asked about Languagehat, who I thought was done with formal schooling.
posted by IndigoJones at 5:15 AM on August 16, 2011


Question: If we accept the premise that "Capitalism" (and by this I mean the hybrid version found in the "West, specifically the U.S.), functions more efficiently when in an adversarial stance against an active competing economic system, specifically, the real or perceived idea (we all know the USSR was more totalitarian plutocracy than true Communist system) of Communism (itself a reaction to an oligarchic money-ed ruling class), than can we say that the present economic system in the U.S. is corrupt and burning itself out because:

A.) It's still functioning in that Cold War stance, even though the Cold War is over. And the very idea of being in an adversarial stance is the problem.

or

B.) It's not in an adversarial stance and is functioning unopposed and unchallenged and the lack of an adversarial stance makes it susceptible to hubris, arrogance and the corruption that comes with, real or percieved, absolute power, absolute zealot-like deification and dogmatic adherence to elements that are no longer questioned?
posted by Skygazer at 8:57 AM on August 16, 2011


Nero didn't fiddle while Rome burned, but this Catholics vs. Lutherans thread hasn't kept one molecule of CO2 from joining the atmosphere.

Who sang 'Keep on Fuming in the Free World'?
posted by Twang at 8:59 AM on August 16, 2011


Another question: All this talk of the Eurozone crisis leading to a possible end to the Euro. Wasn't it U.S. banks and companies like Goldman Sachs, working within the faulty exuberance of toxic derivatives, who led countries like Greece, Spain, Ireland, Italy, Iceland to their economic problems??

Germany, the country with the tightest controls and best banking regulations, has avoided all this shit. Their economy is vibrant. Their manufacturing base is the highest quality in the world. Their middle class is healthy. They have govt run healthcare second to none. They have a robust and generous social net, and educational system.

Everytime a Free Market magic thinker raises their overheated-gold plated rapture dreams the answer should be: But Germany's healthy economy, based on stringent controls and wealth distribution makes all your dreams of gold-filled disaster sound corny and unnecessary.

I don't know, maybe though the U.S. is on the verge of something new and this is the TODTKAMPF, as our German friends might say, necessary to find an evolution to that. I don't know any more. Not sure I even care. The U.S. is pathologically addicted to the idea of hellfire and suffering. It's like a puritan who gets a fever and thinks he's actually dying.

Pffffttt......


DRAMA QUEENS!! ALL OF YOU FREE MARKET DINGBATS!! DRAMA QUEENS, < I TELLS YOU>, Go to yee judgement already and leave the rest of us the fuck out of it.
posted by Skygazer at 9:10 AM on August 16, 2011


Or like a Salem, Mass Puritan, who burns some underbrush to keep the forest healthy (Hello...), unknowing that there's cannabis in there, and next thing you know their seeing witches everywhere. Socialistic wanton, sexually alluring WITCHES, trying to steal their gold.

Then of course they come down off their stoner trip and they think the witches put a curse on them and the end days are sure neigh!!!

posted by Skygazer at 9:16 AM on August 16, 2011


Germany, the country with the tightest controls and best banking regulations, has avoided all this shit. Their economy is vibrant. Their manufacturing base is the highest quality in the world. Their middle class is healthy. They have govt run healthcare second to none. They have a robust and generous social net, and educational system.

I wish this was true, but it just isn'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.

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
posted by ts;dr at 9:18 AM on August 16, 2011 [2 favorites]


Put in big-picture terms, this means that Germany is really the No 1 problem economy in Europe?

I don't understand that. The No 1 problem economy is the U.S., which as the standard currency of the world went ahead and allowed that standard to become seriously compromised. I think their problems, what relatively minor problems they have stem from U.S. policies.

And, also, this is the problem with a bad situation, everything becomes relative. I wish this country had the problems Germany had at this point. They seem to have sheltered themselves effectively from the more egregious dogma based false exuberance and are poised for a strong future growth and continued economic dominance in Europe.

And can there be any doubt, their Merkel, their conservative PM, is to the left of Obama, even?

Like I said, all relative. This country is so blindly more to the Right than is can even properly comprehend. It's a serious dogma based narrative that pervades everything. And it's a rot. Pure effin' ideological rot.
posted by Skygazer at 9:40 AM on August 16, 2011


From your link, ts;dr:

But if the eurozone crisis is to be sorted out, continental governments need to recognise that Germany's business model can't continue to rely so heavily on lending and selling abroad.

That's an opinion, not a fact. This op ed article you linked just seems to be contrarianism for the sake of it. The fact is and remains all the lending and selling worked out very well for Germany. Didn't know about the deregulation of some aspects of the labor market. Good thing, as the op ed acknowledges, Germany has quite strong unions to make up for the lack of regulation.
posted by saulgoodman at 10:20 AM on August 16, 2011


I don't see why we would view the germans or anyone as particularly great in this ongoing global financial crisis. These ulta-smart conservative bankers seemed quite willing to lend money out to the Greeks, Spanish, Americans and so forth. The fact that they now insist that the burden of the bad decision be placed solely with the debtor is ridiculous. Where is the moral hazard if the person loaning out the money is also forced to take some of the loss.
posted by humanfont at 10:47 AM on August 16, 2011 [1 favorite]


I think we are on this unstoppable train heading Rightwards because there is no credible threat that the left... can deploy against the conservative status quo.

Good point, but this is only really true if we are Humanists in the strict sense. In contrast, I think Physical Reality (aka Nature) might have something to say about that. You know, peak oil, global climate change, and all that.


I'd also say that the slow death of mass middle class is also a credible threat. But it's slow, so no one notices it.
posted by breakin' the law at 10:55 AM on August 16, 2011


I don't see why we would view the germans or anyone as particularly great in this ongoing global financial crisis.

For my part, I'm not exactly saying that, just that Germany did, in fact, come out better--judged from the point of view of its own national interest--than most other nation's did after the collapse. Most economists agree with that claim. The op ed linked earlier tries to be contrarian and say, well, nuh uh! Germany's not a good example, it's the problem. But there's no one credible who sees it that way, and the op ed doesn't offer any particularly persuasive evidence of its claims either, so it just seems like so much naked contrarianism--or a writer looking for an untapped niche in the market for op eds, rather than for any purchase on the truth--to me.
posted by saulgoodman at 11:18 AM on August 16, 2011


In farmining one learns quickly that if you just leave things to invisible hands and let nature take it's course you will starve after a harvest of weeds.

Another derail, but this denies the realities of indigenous hunter-gatherer cultures. It's true as far as plow-based agrarian monocroppers go, though.
posted by mek at 11:47 AM on August 16, 2011


Another derail, but this denies the realities of indigenous hunter-gatherer cultures.

Name one successful autonomous HG culture in the world today. The remnants that remain are dependent upon state protection and trade with their settled brethren. This model has failed since we were chasing down mammoths.
posted by humanfont at 12:00 PM on August 16, 2011


Understand that the only reason Germany could run a euro surplus is because the other euro zone nations were in deficit to Germany.

That's why the dickish German attitude about bailouts is so ironic.
posted by wuwei at 3:33 PM on August 16, 2011 [2 favorites]


The only thing more predictable than bitter old Marxists predicting the imminent collapse of capitalism is the fact that they'll be wrong. Rather than the French having a word for it, in this case the Germans do - Ostalgie. Communism sounds like a great idea right up to the very moment that you fancy buying a banana.


Having bananas readily available in a northern European country is not a necessity of life and given the super-exploitation needed for cheap bananas in first world capitalist countries even today, it is probably not the first criterion I'd use for judging a just and democratic society. Where do you think the term "Banana Republic" comes from?
posted by Gnatcho at 3:38 PM on August 16, 2011 [3 favorites]


No is waiting for the collapse of capitalism anymore, it collapsed.
posted by humanfont at 3:43 PM on August 16, 2011


I think an important question is whether Capitalism, in-of-itself, can survive with modifying it in-system or if it will require a radical overhaul or even an entire replacement/revolution.

As others have said, at a certain point it is more efficient (cost effective) for large companies to influence law and policy than to not. This leads to corruption. One argument put forth by Libertarians, which is seductive, is by largely removing government from policy it no longer allows companies to cheaply purchase advantages (e.g. donate x millions to campaigns and receive x billions in subsidies/tax breaks/favorable laws) . "The Market" as they like to say, is more expensive to influence independent of a regulatory structure which would impose constraints "artificially".

Using the above as an example I can reform my original question: can Western Democracies, as they are today, be reformed using their systems to dampen the corrupting political influences of companies or must we entirely change the system by, for example, removing government and forcing companies to compete on the open market.

In general, the great problem in many nations is the ongoing subversion of law. Limited liability, the difficulty and/or reluctance of policing and prosecuting wrong doing, even the entire rewriting/reconditioning of what is legal/illegal is causing havoc and undermining some of the fundamental principles of Democracy. This will, in the extreme, null and void the social contract for many.
posted by Shit Parade at 4:08 PM on August 16, 2011 [1 favorite]


I didn't watch the whole video, but did read his opinion piece here. It makes it seem as though there are so many points of failure that it's mostly a question when, and not if, we are headed towards either a double dip recession, or a full-blown depression. I guess that's his "thing", but still it's a gloomy prospect.
posted by codacorolla at 7:54 PM on August 16, 2011


Name one successful autonomous HG culture in the world today.

Erm. You do know what happened to them, right? They didn't just quietly disappear.
posted by mek at 12:56 AM on August 17, 2011


While agrarian society popped up in Mesopotamia 10k years ago, hunter-gatherer societies continued on for another >9000 years in all sorts of other places, until contact occurred. And then... well, I don't want to spoil the ending for you, humanfont. Yes, their societies quickly collapsed, but it wasn't because of being observed, as if caught in some kind of quantum-mechanical tragedy...
posted by mek at 1:00 AM on August 17, 2011


Name one successful autonomous HG culture in the world today.

Erm. You do know what happened to them, right? They didn't just quietly disappear.


It continues: Drug Traffickers Blamed in Disappearance of Isolated Amazon Tribe
posted by homunculus at 1:20 AM on August 17, 2011


Understand that the only reason Germany could run a euro surplus is because the other euro zone nations were in deficit to Germany.

That's why the dickish German attitude about bailouts is so ironic.

posted by wuwei

Really, so Germany "ran" a surplus because of money lent (deficit), is this correct?

okokok, so Germany had other countries in deficit to them, which they could do because they had a deficit or a surplus.

the dick bit and bailouts i understand. But you know Germany, they get a little jumpy when a large, large debt is involved.

The U.S. is pathologically addicted to the idea of hellfire and suffering. It's like a puritan who gets a fever and thinks he's actually dying.

I know and to think countries actually pay us to keep that hellfire, like Germany for example.

How in the Dickens do you think we created the greatest military machine ever devised by humans, it is by paying a mere 700$ billion a year. Do you relize what it would cost us to have bases everywhere if we had to pay for them all.

Rent of the Land and all that.
posted by clavdivs at 5:36 AM on August 17, 2011


Humanfront: No is waiting for the collapse of capitalism anymore, it collapsed.

It's now literally a governmental subsidiary. It's like the Regpub dude who thinks he's self-made, and independent, and embodies all the best qualities of the Randian "visionary," because he's got a slumlord Uncle, who bails the him out everytime he goes on a massive crack cocaine binge bubble for a few years and another one of his "Randian visionary easy money ponzi-like schemes" screws the pooch. And the dude can't wait for the uncle to die.

Another thing, does Roubini at all address the trillions in record setting profits American companies are sitting on top of right now, and NOT creating new jobs with??

Where does that fit into "the end is neigh, the Depression apocalypse is coming!! CAN I HAS MORE GOLD!!!!!" narrative?

We're companies ever sitting on massive record-setting profits and liquidity just before a recession or depression in the past?

That's a lot of timber and flammable liquid right there to set the economy running fast again, it would seem some sort of flame-retardant keeps getting spread on it by some fucked up something or other, can it really be this convenint "too many regulations" bullshit the Right keeps throwing out there? Can it be, the toxicity in the money supply isn't exhausted by a long LONG shot and companies need to hedge their bets? And who created that SHIT? And why didn't TARP neutralize that? And and and....


Criminal charges NOW!! But, wait, NO, must'n't do that!! Those criminals are the JOB CREATORS!! And the GOP is going to protect them even if it has to destroy, and is destroying the middle class to do it.

Really, where, when will Obama blast the shit out of the system and apply the real disinfectant to that shithole known as Wall Street, when he will finally say loudly and proudly, FDR-like:

"I welcome their hatred."


That's what's necessary and he is the only one who can pull it off and save Capitalism from itself. Which is why he needs a second term.
posted by Skygazer at 9:22 AM on August 18, 2011


Bill Bradley (along with Martin Feldstein and David Leonhardt) on Charlie Rose August 17, 2011:

Paraphrasing here The video is up (no transcript online though, curiously.):

Charlie Rose: What would you do to spur job growth?

Bill Bradley: I'd create a 50 Billion dollar fund and say to companies: We'll pay 20% of every new hire you make (can't let others go) within a certain time frame. First come, first served until the pot runs out. If no one wants it, no one gets it, the money doesn't get spent and no harm done. (He said earlier that (not sure I got this completely right, but like I said, no transcript is up) every one percent point of new employment translates to about $15 billion in govt revenue
).


Would the Right allow such a program? What is the (is there even at this late stage of doddering American Tea Taliban head-up-ass disease) chance the would pay a political price.

Would Obama have the cajones to try something like that out?

It seems like a great idea.


Discuss.

posted by Skygazer at 9:44 AM on August 18, 2011


We'll pay 20% of every new hire you make

The labor market is not as one-sided as people think. Even with jobs net decreasing, there are lots of companies hiring. That $50B would go almost completely to companies that would have hired anyway. It's very inefficient. You'd be better off having the gov buy $50B of stuff where most of the value-added happens in the US.
posted by a robot made out of meat at 10:08 AM on August 18, 2011 [2 favorites]


Even with jobs net decreasing, there are lots of companies hiring.

Yes, good point. I didn't think of that, why give money to companies that were going to hire anyway.

I guess it would have to be targeted on specific well-paying jobs with benefits (none of this fast- food, retail crap). And some effective metrics/guidelines would would need to be established.

But, that 50 Billion wouldn't last very long, I would think, and the new jobs would spur demand for sure, and that in turn would spur another wave of hiring as the concentric rings of that 50 Billion dollar stone of hiring in the employment pool spread further outward.

State and local workers would almost certainly need to be rehired and the new tax revenue generated would take a load off those governments.

I think it's' worth a try. There's trillions in profits out there just sitting around doing nothing, and perhaps getting a 20% compensation insurance policy would undo the hesitation to hire anew.
posted by Skygazer at 10:25 AM on August 18, 2011


That's what's necessary and he is the only one who can pull it off and save Capitalism from itself.

Skygazer, given available evidence, if you think Obama will do anything of the sort.... geeze, man, are you high?

Obama is very hard to differentiate from Dubya in all the ways that matter.
posted by Malor at 4:20 PM on August 21, 2011


I mean -- really, the only significant difference between Bush Jr and Obama is that Obama lies better.

All he does is cloak the exact same behaviors under flowery rhetoric. Couple of cosmetic fixes, and then everything else is the same or worse.

He's far, far more dangerous than Dubya. It was obvious when Dubya was lying. It isn't obvious when Obama does it, so you have to examine what he does as opposed to what he says. And when you look at what he actually does: he still tortures people, he continues extraordinary renditions (secret prisons remain open, despite his claims to the contrary), he's just as corrupt when it comes to Wall Street, he continues the policies of mass surveillance of American citizens, he continues the drug war, he continues to be friendly with and support some truly evil governments, he appears to be just as enamored with the military-industrial complex.... he continues to support essentially every policy of his predecessor.

Well, except for gays in the military. While I don't want to minimize that victory's importance for the soldiers involved, in the large scheme of things, it doesn't rank very high on the list of things that are fucked up in the government. Myself, if I could have a military with DADT still in force that wasn't being used in open warfare, I'd take that trade a hundred times over.
posted by Malor at 4:31 PM on August 21, 2011 [1 favorite]


Skygazer, given available evidence, if you think Obama will do anything of the sort.... geeze, man, are you high?

It's not a zero-sum game. You can Google just as well as I can all the accomplishments Obama's had so far. Considering the blistering obstructionism he's dealt with at every turn, and even without taking that into account he has an impressive list of accomplishments. Granted, most of the key accomplishments (Healthcare, Regulatory Reform), didn't go as far as they should have. And to say he's precisely like Bush is just wrong.

In 2 years and 8 or 9 months, much has happened, but to think you can define or understand the man as a leader in that time is to buy into the dismal and hateful Rightwing narrative. Basically what you're saying is that if this was Ronald Reagan, his whole presidency could be defined by 1983, when Reagan had a higher rate of unemployment than Obama has now and if this was Clinton, his presidency could be summed up in what happened up to 1995.

I would hope that would some perspective as to how shortsighted and ungenerous that is, but somehow, with this president, because he's had every piece of shit hatefulness thrown at him it's okay to dismiss him after 2 years and 8 months??

That's the TRUE RIDICULOUSNESS here. It is that even many on the left, because they need to win every battle decisively they lose sight of what's been accomplished.

You've obviously invested a great deal on the economic apocalypse vision that the Right has put forth, and now, like many on that side of the aisle almost won't be happy until there is an economic disaster of unprecedented loss and misery, and I call bullshit.

All the gold-crazy rapturists out there can kiss my gold-plated liberal ass.

Really, enough with the extreme fearful narrative. The truth is, corporate America, unlike 1929 or 1937 or even 1979 or 1993, IS IN FACT very solvent and very healthy in their checkbooks and profit margins, and I say that sooner or later that wealth is going to unfreeze itself and be regenerated into a new wave of hiring. It might not be a new wave of boom like prosperity, but it won't be a disastrous depression.

When I say Obama is the only one (in the presidential field) who can save Capitalism, it comes from the idea that well designed reform and regulation can make it more responsible and safer from extreme leveraging.

No one on the Right would dare to do that. Not. A. One.

Sorry, the world's not going to end anytime soon, but go ahead and keep banging the drum, and praying it happens, Malor.


It's easy to scare people.
posted by Skygazer at 8:28 PM on August 21, 2011 [1 favorite]


The Rescue That Missed Main Street: The Federal Reserve lent billions to banks during the financial crisis, but has done little for taxpayers, Gretchen Morgenson writes.
posted by homunculus at 5:10 PM on August 28, 2011


A Point of View: The revolution of capitalism. Karl Marx may have been wrong about communism but he was right about much of capitalism, John Gray writes.
posted by homunculus at 1:01 PM on September 4, 2011 [2 favorites]


Capitalism has led to a revolution but not the one that Marx expected. The fiery German thinker hated the bourgeois life and looked to communism to destroy it. And just as he predicted, the bourgeois world has been destroyed. But it wasn't communism that did the deed. It's capitalism that has killed off the bourgeoisie.

Well, no, that's EXACTLY what Marx expected.
posted by mek at 1:33 PM on September 4, 2011


Bloomberg Op-Ed: Give Karl Marx a Chance to Save the World Economy
posted by caddis at 5:11 AM on September 11, 2011 [1 favorite]


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