“So Karl Marx, it seems, was partly right in arguing that globalisation, financial intermediation run amok, and redistribution of income and wealth distribution of income away from labor to capital could lead to capitalism to self-destruct (though his view that socialism would be better has proven wrong). Firms are cutting jobs because there is not enough final demand. But cutting jobs reduces labor income, increased inequality and reduces final demand”- Nouriel Roubini
As one of the most well-known economists globally, Nouriel Roubini was one of the few pro-capitalist commentators to predict what has now become known as the “great recession” of 2008/2009, thus earning him the title of “Dr.Doom”. Now, as the above quote shows, he has partly conceded that Karl Marx’s analysis of the workings of capitalism has proven to be correct in a recent article entitled “Is Capitalism Doomed?”. Unsurprisingly as a defender of this system, albeit a critical one, he sees an economy based on democratic socialist planning as being failed and discredited.
Since the beginning of August stock markets internationally have been convulsed with fear of a “double dip recession” in the world economy. Of course the term “double dip recession” itself implies that there has been a noticeable recovery in economic growth since 2009 when capitalism faced its worst crisis since the great depression of the 1930s.
Clearly for most working class people this has not been the case given the return of mass unemployment and a vicious onslaught on wages and conditions, combined with austerity, being on the order of the day. Within this context workers and young people will begin to embrace the analysis and ideas of Marxism in much more deep and meaningful way than Roubini as they search for an alternative to this crisis ridden system.
In a number of his key writings Karl Marx explained the inherently exploitative and unequal nature of capitalism. He argued that the “value” of all commodities or goods that are produced within an economy was created by the labour of the working class. Yet workers only receive a certain proportion of this value that they have created through payment of their wages, the remainder of this value, or “surplus value” would go to the capitalists in the form of profits. Fundamentally these profits represent the theft of the wealth created by working people.
Since the 1970s capitalism internationally has sought to increase its share of the value created within society by increasing its exploitation of the working class. This as meant that real wages have declined globally and despite the advances in technology workers are forced to work for longer hours. In 1981 the average worker in Britain worked 69,000 hours over his or her lifetime, by 2008 this figure stood at over 82,000 hours.
The massive transfer of wealth that Roubini refers to is illustrated by the fact that in 2010 the chief executives of some of the largest companies in the US earned 343 times the average wage of a US worker. The cutting of expenditure on public services that is now being implemented by capitalist governments in Ireland and throughout Europe also represents an attack on the “social wage” of workers, while taxes on the super-wealthy and big business have been slashed.
Given that workers do not receive the full value of the wealth that they create this in turn means that they are incapable of fully buying back the commodities that they have produced. Marx explained that this led to periodic crises of overproduction . Such a crisis is taking place within the world economy today which is creating a vicious spiral downwards as a result of job losses and cuts to the income of ordinary people. Up until 2008 capitalist governments, particularly in the United States and Britain, partially overcame this problem by injecting cheap credit into the economy.
For Karl Marx the need for democratic socialist planning of the economy arose out of the anarchy that resulted from capitalism’s drive for profit. Undoubtedly Nouriel Roubini will point to the experiences of Stalinism to try and prove that socialism is a failed system. Yet Karl Marx never advocated that socialism could be achieved by the rule of a dictatorial, bureaucratic elite as existed within the Soviet Union and Eastern Europe. The Russian revolutionary Leon Trotsky, who was to courageously defend the genuine ideas of Marxism against its Stalinist distortion, correctly argued that democracy to a planned economy was like oxygen to a body.
“Accumulation of wealth at one pole is, therefore, at the same time the accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole”. Despite being written more than 100 years ago, these words accurately sum up what the dictatorship of the capitalist market means for the vast bulk of humanity today.
Globally, vast sums of wealth are being amassed and hoarded by a tiny minority, the richest 300 people in Ireland now one €57 billion, while working and unemployment people face a future of increasing poverty and hardship. Only by fighting for a socialist world, where its resources are collectively owned, controlled and planned by the majority for the majority, can we ensure that this is not inevitable.