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 canâ€™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
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
A reader has objected to some of Michael
Robertsâ€™ criticisms of Andrew Glynâ€™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.
The financial press and the investment houses of global finance capital are in euphoria. The world's stock markets are booming. But a closer look reveals that all this euphoria is misleading and the real situation is far less healthy than would appear on the surface.
Financial Times recently claimed the British economy has been doing
rather well out of globalisation. A closer look at the figures shows that what
we have before us a growing polarisation, with the rich getting richer and the
poor poorer. On a world scale the position is even worse, which may possibly
explain the growing instability all across the globe.
Capitalism cannot provide
a decent living to everyone, but as long as it guarantees significant
layers of the population a reasonable standard of living it can
maintain a degree of social stability. Recent figures on the
situation in the USA show that “middle America” is beginning to
feel the pinch, a phenomenon which indicates that social turmoil will
soon be on the agenda.
One of the key elements in holding up consumer spending – and therefore sales and profits – in the USA has been growing house prices. The growing nominal value of housing has led to a widespread phenomenon of remortgaging, i.e. borrowing more to keep up annual family incomes. This cannot continue for much longer. The signs are already there that we are close to the limit.
Capitalism in the advanced capitalist countries is becoming ever more based on finances and services. The idea is that the actual production of real goods can be done in less developed countries where labour costs are much cheaper. For this to work, the consumer boom in the West must be maintained permanently, otherwise who will buy the goods? Can this be maintained in the long run?
After Hurricanes Katrina and Rita have
ravaged the US coast of the Gulf of Mexico, does the fast-rising oil price presage a worldwide economic
recession? The track record of oil shocks is indeed close to perfect. In the
case of the US, each of the previous three oil shocks was followed by recession.