After many years of being written off as outdated – by those who didn’t know any better – the investigation of the capitalist mode of production by Karl Marx, once again proves its undoubted merit. I shall argue in this article (divided into two postings) that the ongoing economic and financial crisis (of 2008 to 2011 and beyond) cannot be fully understood without having grasped the analysis made by Marx. Despite a long interval of time the situation remains as his friend and associate Engels stated, Marx‘s analysis; “…offered to him who knew how to use it the key to an understanding of all capitalist production“. (Engels. Preface to Volume 2 Capital.) A few pro-capitalists have recently admitted as much in the main stream media. One commentator declared the current crisis as the ‘Revenge of Marx‘. Another, Nouriel Roubini, asserted;
“Karl Marx had it right. At some point, capitalism can destroy itself. You cannot keep on shifting income from labour 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 labour costs more and more down, but labour costs are someone else’s income and consumption. That’s why it’s a self-destructive process.” (Interview. Wall Street Journal. Sept.2011.)
However, despite the above insight, the majority of the so-called economic ’experts’ continue to flounder as they try to predict outcomes and suggest remedies for the volatile symptoms of the debt-riddled capital ‘markets‘. Some commentators have understood that there is a problematic connection between the production of commodities and services (the basis of any social and economic system) and the speculative antics of the finance and banking capitalists. However, typically they perceive the relationship the wrong way around. They view the financial sector as determining the economic sector, when in fact, as we shall see, it is the reverse. Thus they start from a position which assumes that in this crisis, everything else in society must be sacrificed to propping this financial sector up. In this way they advise attempting to deal with the symptoms of crisis and not the causes……
The full text of this article has been extended and moved to the section above entitled CAPITAL AND CRISIS. To read it click on the heading.