A historical perspective on the economic stagnation afflicting the United States and the other advanced capitalist economies requires that we go back to the severe downturn of 1974–1975, which marked the end of the post-Second World War prosperity. The dominant interpretation of the mid–1970s recession was that the full employment of the earlier Keynesian era had laid the basis for the crisis by strengthening labor in relation to capital. As a number of prominent left economists, whose outlook did not differ from the mainstream in this respect, put it, the problem was a capitalist class that was “too weak” and a working class that was “too strong.” Empirically, the slump was commonly attributed to a rise in the wage share of income, squeezing profits. This has come to be known as the “profit-squeeze” theory of crisis. | more…
In Marx’s work, no final presentation of his theory of crisis can be found. Instead, there are various approaches to explain crises. In the twentieth century, the starting point for Marxist debates on crisis theory was the third volume of Capital, the manuscript of which was written in 1864–1865. Later, attention was directed towards the theoretical considerations on crisis in the Theories of Surplus-Value, written in the period between 1861 and 1863. Finally, the Grundrisse of 1857–1858 also came into view, which today plays a central role in the understanding of Marx’s crisis theory for numerous authors. Thus, starting with Capital, the debate gradually shifted its attention to earlier texts. With the Marx Engels Gesamtausgabe (MEGA), all of the economic texts written by Marx between the late 1860s and the late 1870s are now available. Along with his letters, these texts allow for an insight into the development of Marx’s theoretical considerations on crisis after 1865. | more…
America’s latest war, according to renowned social critic Henry Giroux, is a war on youth. While this may seem counterintuitive in our youth-obsessed culture, Giroux lays bare the grim reality of how our educational, social, and economic institutions continually fail young people. Their systemic failure is the result of what Giroux identifies as “four fundamentalisms”: market deregulation, patriotic and religious fervor, the instrumentalization of education, and the militarization of society. | more…
The history of capitalism is replete with cases of successful captains of industry who, suddenly concerned with their place in history, decide to write a book celebrating their achievements, while articulating a new philosophy of philanthropic capitalism—usually with the help of a ghostwriter or “collaborator” of some sort.… [In this genre] is a new book, Conscious Capitalism: Liberating the Heroic Spirit of Business, written by Whole Foods Market co-CEO John Mackey in collaboration with Bentley University professor of marketing Raj Sisodia.… [I]n spite of all the references to a new form of “heroic capitalism,” which cares about employees and customers, Mackey, like most of his class, is a strong proponent of the most extreme forms of neoliberal exploitation. Both in Conscious Capitalism and in his public actions he has shown himself to be virulently anti-union, priding himself on keeping Whole Foods Market 100 percent union free, and slashing the wages of his workers even as profits have increased. | more…
Given [the] background of high unemployment, lower-wage jobs, and smaller portions of the pie going to workers, it should come as no surprise that, according to the U.S. Census Bureau, nearly 50 million people in the United States live in poverty (with income in 2011 below $23,021 for a family of four) while another 50 million live between the poverty level and twice the poverty level—one paycheck away from economic disaster. Thus, the poor (those in poverty or near poverty), most of whom belong to the working poor, account for approximately 100 million people, fully one-third of the entire U.S. population.… Wage repression and high unemployment are the dominant realities of our time. A vast redistribution of income—Robin Hood in reverse—is occurring that is boosting the share of income to capital, even in a stagnating economy. Is it any wonder, then, that for years on end polls have shown a majority of the population agreeing with the statement that the United States is on the wrong track and not headed in the right direction? | more…
The debates concerning the present and future of China—an “emerging” power—always leave me unconvinced. Some argue that China has chosen, once and for all, the “capitalist road” and intends even to accelerate its integration into contemporary capitalist globalization. They are quite pleased with this and hope only that this “return to normality” (capitalism being the “end of history”) is accompanied by development towards Western-style democracy (multiple parties, elections, human rights). They believe—or need to believe—in the possibility that China shall by this means “catch up” in terms of per capita income to the opulent societies of the West, even if gradually, which I do not believe is possible. The Chinese right shares this point of view. Others deplore this in the name of the values of a “betrayed socialism.” Some associate themselves with the dominant expressions of the practice of China bashing in the West. Still others—those in power in Beijing—describe the chosen path as “Chinese-style socialism,” without being more precise. However, one can discern its characteristics by reading official texts closely, particularly the Five-Year Plans, which are precise and taken quite seriously. | more…
Economic hit men (EHMs) are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, the U.S. Agency for International Development (USAID), and other foreign “aid” organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet’s natural resources. Their tools include fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder. They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalization. I should know; I was an EHM. —John Perkins, Confessions of an Economic Hit Man (2004) | more…
When I was a lad, I wrote amorous ditties, To Judy, Aleine, Edelina, and Sue. But now that I’m gray, I’ve abandoned those pretties, I’m singing my songs to the MONTHLY REVIEW.… So sang E.Y. “Yip” Harburg, to the tune of “The Streets of Laredo,” at Monthly Review’s fifteenth anniversary party. Accompanying him on piano was my late wife, the Judy to whom Yip wrote ditties. You will not find her or Aleine Mufson mentioned in the pages of this biography. Nor will you find cited any who, because they rubbed elbows or other body parts with Harburg, could lead the reader to the fullest possible understanding of who he was. | more…
For a long time now orthodox economics has been hindered by its extreme irrealism—a refusal even to attempt a realistic theoretical understanding of how modern capitalism functions. The shift to using fanciful assumptions to explore largely minor issues, following a brief Keynesian moment in the post-Second World War era, has been in many ways self-reinforcing. Once fundamental characteristics of the capitalist economy such as labor exploitation, accumulation, built-in inequality, monopoly power, rent-seeking behavior, technological change, and the tendency to stagnation were removed from the analysis—as a result of an ideological process of system-rationalization—there was little recourse but to fall back in successive stages on more and more abstract models based on increasingly purified notions of individual rationality.… Nevertheless, the deepening crisis of today’s monopoly-finance capital has given rise to a new era of questioning within the economics profession, and some top-tier neoclassical economists are now struggling—though hindered at every step by their own training and inclinations—to recapture knowledge long abandoned. | more…
The world at present is fast approaching a climate cliff. Science tells us that an increase in global average temperature of 2°C (3.6° F) constitutes the planetary tipping point with respect to climate change, leading to irreversible changes beyond human control. A 2°C rise is sufficient to melt a significant portion of the world’s ice due to feedbacks that will hasten the melting. It will thus set the course to an ice-free world. Sea level will rise. Numerous islands will be threatened along with coastal regions throughout the globe. Extreme weather events (droughts, storms, floods) will be far more common. The paleoclimatic record shows that an increase in global average temperature of several degrees means that 50 percent or more of all species—plants and animals—will be driven to extinction. Global food crops will be negatively affected. | more…
When the real estate market was building momentum during the 2000s, [new types of restructured, risk-based financial instruments] looked like a free lunch and insurers could pocket the insurance premium without ever being called in to make up for losses. However, when the market reversed in 2006, the payday came: some insurers lost heavily, others went bust, and a few, such as AIG, were bailed out. … By the end of the cycle, we had learned about the pro-cyclical nature of ratings-based structured products and the dangers of the new food chain. Hedge fund manager George Soros called Credit Default Swaps “weapons of mass destruction.” We had, many believed, been defeated by novelty. Or had we? Many think that subprime products are new, and that the use of ratings to structure financial instruments and so-called Credit Default Swaps (CDS) are a recent invention permitted by advances in modern finance. They ought to study the history of Levy Maybaum, a man who lived in New Jersey in the late nineteenth century and invented the first CDS. | more…
Sandwiched between revelations of mounting losses ($5.8 billion and rising) at JP Morgan in the face of bungled bets by a trader known as the London Whale, and allegations of money laundering for Mexican drug cartels and breaches of U.S. sanctions by HSBC, the disclosures of deliberate rigging of the Libor rate by Barclay’s Bank might appear mundane and a trifle boring in comparison. It is, however, this scandal about an arcane interest rate that most starkly exposes the rotten core of the global financial system.… [T]he scandal is not simply one of colossal greed and hubris. It is about systemic failure. It is about the fictions and illusions that form the basis of today’s complex global financial system. | more…
