Economics

“Under-consumption” and the Marxist Theory of Crisis – Part One

“What did Marx mean by the contradictions of capitalism?” asks Samuel Brittan, the right-wing economist writing in the Financial Times. “Basically, that the system produced an ever-expanding flow of goods and services, which an impoverished proletarianised population could not afford to buy. Some 20 years ago, following the crumbling of the Soviet system, this would have seemed outmoded. But it needs another look, following the increase in the concentration of wealth and income.”

Marx was right!

The crisis of capitalism is accompanied by a crisis of bourgeois thought: philosophy, economics, morality – all are in a state of ferment. In place of the earlier optimism that stated confidently that capitalism had solved all its problems, there is an all-pervading mood of gloom. Not so long ago, Gordon Brown confidently proclaimed “the end of boom and bust”. After the crash of 2008 he was forced to eat his words.

Marx vs Keynes: Where does economic growth come from?

“We are all Keynesians now.” So said Richard Nixon, the Republican and former President of the USA, in 1971. Forty years later, it seems that John Maynard Keynes is back in fashion, especially amongst the leaders of the British Labour movement. The reformist leaderships of the Labour Party and the trade unions cling to the Keynesian idea that the economy can simply be “stimulated” back in growing. But as the Marxists have explained before, the current economic crisis is not just part of some boom-and-slump, but is an organic crisis of capitalism, and growth cannot simply be created at will.

Inflation: Hitting The Poorest Hardest

Earlier this year, it was announced by the Office of National Statistics (ONS) that inflation had risen from November to December, with the Consumer Prices Index going up from 3.3% to 3.7% and the Retail Prices Index (PRI) – which includes housing costs such as mortgage interest payments and council tax – rising from 4.7% to 4.8%. Inflation was persistently high throughout 2010, with an average RPI of 4.6% - the highest since 1991.

Monopoly capitalism and the case for socialism

Monopolisation of big business is endemic to the capitalist system. Big business has become wealthier and more powerful today than ever before.The revolving doors between government and industry has ensured the continued domination of big business over parliament and state. Capitalist economists constantly argue that privately run industry driven by pursuit of profit is the best way for an economy to function. But, even a cursory look at the world around us tells a very different story. Far from being efficient, capitalism is riddled with contradictions and crisis. You could write multiple volumes, as Karl Marx did, on the inadequacies of capitalism, but here, in this limited space, we shall deal with just a few.

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