Economy

According to a recent United Nations study, the richest 1% of adults in the world own 40% of the planet's wealth. Europe, the US and some Asia Pacific nations accounted for most of the extremely wealthy. More than one-third lives in the US, while Japan accounts for 27%, the UK for 6% and France for 5%. But bourgeois economists still insist Marx was wrong!

The bourgeois economists are incapable of understanding crises, which are an inescapable result of capitalism. They look for subjective factors such as “confidence”, even “human nature”. In reality what we are witnessing are the real workings of the capitalist system in a period of decline.

The recent chaos on world stock markets is a manifestation of the general turbulence that is the most prominent feature of the present epoch. The crisis that affected the Northern Rock bank in Britain is but an indication of dramatic events that are being prepared globally.

Over the past 15 years production has risen at about 3% a year in the OECD countries, while money supply, mortgage and company debt, personal borrowing and the massive so-called derivatives market based on this credit has increased at over 25% a year! Result? A huge bubble which is now bursting, starting with Northern Rock.

Recently, the Bank of England hiked its interest rates yet again to 5.75%,the fifth rise since August 2005, and "further action" on interest rates could be on its way. The interest rate may go to 6% or more by the end of this year. The credit-led boom is now in jeopardy as central banks raise interest rates everywhere.

The financial turbulence of recent days has wiped billions off the price of shares all around the world. On Friday August 10th London’s stock exchange, the FTSE 100, alone dropped £63 billion. What does this mean?

This speech was delivered at a meeting of the leadership of the International Marxist Tendency in Barcelona on 24 July 2007. The recent turbulence on world stock markets fully confirms the perspectives outlined in it.

The poorest 50% of the world's 6.6bn population own just 1% of the world's riches. The answer? "Although we Americans strive to provide equality of economic opportunity, we do not guarantee equality of economic outcomes, nor should we." (Ben Bernanke, the chair of the US Federal Reserve)

This is an important book, written by Andrew Kliman, and published by Lexington Books. In a nutshell, what Andrew Kliman shows is that Marx's laws of motion of capitalism (how capitalism works and does not work) are logically consistent and theoretically valid.

High levels of growth have been achieved in the world economy, but these have been based on huge levels of easy credit, on debt. This is not sustainable in the long run. Figures on the state of the US economy indicate that the system is reaching its limits and crisis is looming.

The nerves of stock market speculators can’t be in too good a shape these days. Wall Street has just suffered its second biggest point drop in four years. This immediately spread to Asian stocks markets that suffered serious falls.

China hints at a tax on capital gains and the Shanghai stock exchange falls by 10%, but then the fall affects all the other major stock exchanges. What does all this indicate? Michael Roberts gives his view on the question.

A reader has objected to some of Michael Roberts’ criticisms of Andrew Glyn’s latest book. Among others it deals with the question of whether profit rates in the post-war period were affected by wage increases. Roberts replies showing that the fundamental reason for the decline was the same as that stated by Marx.

In his new book, Capitalism Unleashed, Andrew Glyn attempts to explain how capitalism moved from the crisis of the 1970s to recovery in the 1980s and 1990s. However, although full of interesting information, the book fails to provide an overall analysis and misses some essential aspects of Marxist theory.

Milton Friedman died on 16 November aged 94 years. He was one of the foremost bourgeois economists of the 20th century. His reputation as a monetarist theoretician and advisor to the likes of Thatcher, Reagan and Pinochet as these attacked all the gains of the working class was well earned.