MARXISM AND THE CRISIS OF CAPITALISM
Capitalism is going through its greatest crisis since the 1930s or before. The banking system has been saved from meltdown (at least for the time being) only by extensive government intervention in the USA, Britain, and a number of other countries. Stock markets all over the world have plummeted. A long and deep recession is in prospect. Capitalism, it is sometimes said, may be on the verge of collapse. Few economists or politicians foresaw these developments. The long boom had lulled them into the belief that the cycle of boom and bust had finally been overcome. One figure who would not have been surprised and whose reputation has risen dramatically is Marx. After a long period when his ideas were dismissed as `refuted', there is now a new interest in them. 1 He long ago argued that capitalism is inherently unstable and prone to crisis, and he predicted its eventual demise. Marx's analysis of capitalism, some say, has been proved correct.
But exactly which aspects of Marx's analysis have been vindicated? In the first place, Marx's critique of the free market has been confirmed. The liberal, laissez-faire, free market philosophy which has dominated economic and social thought for the past 30 years has been discredited. Even Alan Greenspan, the former Chairman of the US Federal Reserve, one of its most influential champions, has admitted that the free market philosophy is flawed. "I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms". 2 The present crisis is demonstrating, yet again, that the free market is not the benign, self-regulating mechanism that the free market fundamentalists have claimed it to be. It does not always serve the general interest or lead inevitably to economic growth and prosperity. On the contrary, as Marx argues, the free market operates as an alien system with a life of its own. It is an uncontrollable and inherently unstable mechanism. It leads to periodic crises in which huge numbers of people are thrown out of work and useful means of production are wantonly destroyed. These show that the capitalist system is incapable of mastering the productive forces which it itself has created. In Marx's graphic image, it is `like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells.' 3 Periodically the forces of production develop so far that they come into conflict with existing capitalist economic relations. A crisis then ensues. And how does the bourgeoisie get over these crises? On the one hand, by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented. 4
Sales of his works are significantly up, it is reported (The Times, 20 October 2008). `Greenspan – I was wrong about the economy. Sort of,' The Guardian, 24 October 2008. 3
Karl Marx and Frederick Engels, "Manifesto of the Communist Party," in The Marx-Engels Reader, ed. Robert C. Tucker (New York: W.W. Norton, 1978), 478.
Thus the system lurches along through a series of booms and depressions. At the same time, it stifles competition through the growth of monopoly and leads to huge inequalities of wealth. Eventually, Marx believed, capitalism is destined to collapse and be superseded by a socialist form of society.
Is this what we are witnessing? Some seem to think so. The US Administration under President Bush has been forced to take over banks and mortgage companies in order to rescue the world financial system from the danger of immanent collapse. Bush has even felt obliged to plead for the preservation of what he has...
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