Economist Nouriel Roubini says the risk of a global recession is greater than 50 percent, and the next two to three months will reveal the economy’s direction. The economist who predicted the financial meltdown in 2005 says Marx was correct that capitalism can collapse.
Fortune Magazine: “In 2005 Roubini said home prices were riding a speculative wave that would soon sink the economy. Back then the professor was called a Cassandra. Now he’s a sage.”
Paul Krugman (2009): “Nouriel Roubini was right. At a time when the likes of Alan Greenspan were dismissing concerns about excessive home prices and declaring that banks were stronger than ever, Roubini warned that there was a monstrous bubble in the housing market and that the bursting of that bubble would cause much of the financial system to collapse. And so it has turned out, with even the most seemingly outlandish of Roubini’s predictions matched or even exceeded by reality.”
In a fascinating interview with The Wall Street Journal’s Simon Constable, Dr. Roubini doesn’t have much good to say about the future. In fact, his answer to Mr. Constable’s first question, “What can we do to get the economy going?” is “Probably very little.”
Later in the interview he states:
“If you are not hiring workers, there is not enough labor income, there is not enough consumer confidence, there is not enough consumption, there is not enough final demand.
“And the last two to three years we’ve had actually worse than this because we had the massive redistribution of income from labor to capital, from wages to profits, inequality of income and wealth has increased. The margin of propensity to spend of a household is greater than the margin of propensity to spend of a firm because they have a higher margin of propensity to save, firms compared to households. So that redistribution of income and wealth makes the problem of excessive lack of aggregate demand even worse.
“Karl Marx had it right. At some point capitalism can destroy itself because you cannot keep on shifting income from labor to capital without not having excess capacity and a lack of aggregate demand, and that’s what’s happening.”
Free market apologist Christopher Whalen’s rebuttal to Roubini’s assertion, “Why Nouriel Roubini and all of us are wrong about Karl Marx” is also worth reading for it’s disjointed assertion that Marxist analysis is old and bad. “Those who laud Marx disparage all things American.”
Mr. Whalen doesn’t seem to agree that businesses should be regulated, yet he seems to decry the fact that businesses are beneficiaries of socialism reserved only for the privileged class: “We discarded the focus on individual liberty and the rule of law espoused by Thomas Jefferson and Andrew Jackson as the drivers of economic activity in a free, democratic society. Instead we have modern day robber barons, faceless corporate managers openly allied with corrupt politicians in Washington and guarded by phalanxes of vicious lawyers.”
As Dr. Rubini acknowleges, economies, as we know them, are destined to fail if wealth is not more equally distributed. A small, very wealthy class alone cannot sustain an economy which relies upon large scale consumption.
Whether he understands it or not Mr. Whalen admits this in his conclusion, “The future is not about class warfare as Marx predicted, but is about maximizing the potential and opportunities for every individual.”
When a confirmed capitalist like Dr. Roubini speaks of zombie housing, zombie banks and zombie governments and recommends that wealthy investors put their assets in cash, one can easily conclude that Marx was correct about the collapse of capitalism. What else can the future be about other than class warfare?
How the fuck do you maximize the potential and opportunities for every individual without stripping wealth and power from a small class of people whose very existence depends upon denying individuals that potential and those opportunities? Thomas Jefferson understood that change was impossible without getting rid of the king. Marxists understand that change is impossible without getting rid of the rich. That’s called class war, and it’s the only war worth fighting.