Blog Archives

Was Marx Right about Capitalism Destroying Itself from Within?

One of the core tenets of Marx’s work is that capitalism will be undone by internal contradictions that would manifest as ever-greater crises that would eventually destroy the system from within.

As the global economy continues to unravel beneath the surface, it’s a good time to re-examine Marx’s claim. If if turns out the current version of global capitalism is indeed unraveling due to its internal contradictions, it would be valuable to understand this now rather than later.

Sartre once observed that students are only taught enough about Marx’s work to refute it. Despite the difficulty of Marx’s writings (only German philosophers can be so convoluted), its elevation to scripture by various academic tribes, and his failure to describe his “scientific socialism” alternative to capitalism in the same detail he devoted to his critique of capitalism, Marx’s work remains relevant and insightful.

Thus we continue to see articles such as Capitalism is unfolding exactly as Karl Marx predicted.

I’m not in either of the two camps, those trained to dismiss Marx’s critiques or those who devote their careers to jousting over Marxist minutiae. It’s been decades since I studied Marx in a college classroom, but I’ve continued to apply his core insights to our era.

To understand Marx’s critique of capitalism, we have to understand that he came to economics via philosophy, specifically the writings of Hegel. In other words, Marx did not approach the study of capitalism from the abstractions of classical 19th century economics (Marx was born in 1818) but from a profound interest in history, social and spiritual development and human alienation. Marx ended up devoting his life to an understanding of capitalism because it is a world-system that drives history and society.

Hegel believed human history wasn’t just “one damn thing after another;” he saw it as teleological, i.e. on a trajectory leading to higher social and spiritual development. Given this context, it’s little wonder that Marx viewed capitalism as a necessary stage of history creating the conditions for the next advancement.

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Why Is Bitcoin a Big Deal?

Why is bitcoin considered such a big deal? Why has it grabbed so much mind-share, and why is it skyrocketing? And why is the cryptocurrency sector going bonkers?

The short answer is that cryptocurrency is the first major innovation in money in 300+ years, back when central banks first emerged in the late 1600s as centralized clearing houses for international payments and sole issuers of national bank notes/currency.

(Those who trace central banking to the Bank of Amsterdam’s founding in 1609 might say it’s the first major innovation in 400 years.)

Why is it an innovation? There are four basic reasons:

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Beyond Income Inequality

Judging by the mainstream media, the most pressing problems facing capitalism are 1) income inequality, the basis of Thomas Piketty’s bestseller Capital in the Twenty First Century, and 2) the failure of laissez-faire markets to regulate their excesses, a common critique encapsulated by Paul Craig Roberts’ recent book and 2) the failure of laissez-faire markets to regulate their excesses, a common critique encapsulated by Paul Craig Roberts’ recent book The Failure of Laissez Faire Capitalism.

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When Capitalism Turns to Cannibalism

With authentic growth scarce, there’s no other way to reap huge profits but cannibalism.

When people say “capitalism has failed” or “capitalism has succeeded,” we have to ask: what type of capitalism do you mean? Authentic capitalism, in which capital is placed at risk to earn a return in a competitive, transparent marketplace, or do you mean cartel-state capitalism, or crony-capitalism, or monopoly capitalism or finance capitalism, i.e. the types that dominate the global economy?

As long as most startups crash and burn, and anyone with a few bucks and plenty of inner drive can start an enterprise, authentic capitalism still lives. But let’s face it, authentic capitalism occupies a diminishing corner of the U.S. and global economies.

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China and the Dragon Tail of Marx

The dragon tail of Marx’s end-game of overcapacity and finance capital is about to shred China’s fantasy that the state can micro-manage both capitalism and financialization with no contradictions or consequences.

Longtime readers know my one expertise is annoying the entire ideological spectrum in 1,000 words or less. Today is one of those days, so strap on your blood pressure monitor and prepare for full-spectrum annoyance, regardless of your ideological leanings.

Marxism is typically considered discredited outside of a few protected fiefdoms of academia which tend to engage in obscure debates over the labor theory of value and other signifiers of membership in the inner circle of deep Marxist thinkers.

Outside these cloistered academic circles, Marxism is dismissed for two basic reasons:

1. the predicted final crisis and implosion of capitalism did not occur

2. the vaguely outlined post-capitalist incarnation of a stateless worker’s paradise not only failed to materialize, but was used to justify destructive, murderous totalitarian regimes.

But those egregious failures of Marxist theory should not blind us to the value of his critique of capitalism.

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Nobody Wins Elections Promising to Trim Waste/Fraud and Simplify Regulations

The problem in representative democracy is that every instance of waste, graft, fraud and monopolistic racket is somebody’s fat paycheck or government contract.

Promising good governance guarantees a losing campaign for public office. The central irony of representative democracy is similar to the central irony of capitalism: the relentless pursuit of narrow self-interest ends up eroding the shared foundations every self-interested participant relies upon.

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A Critique of Piketty’s Solution to Widening Wealth Inequality

The real problem with Piketty’s taxation/social welfare solution to wealth inequality is that it does nothing to change the source of systemic inequality, debt-based neofeudalism and neocolonialism.

Those of us concerned by widening wealth/income inequality have been following the work of Thomas Piketty and Emmanuel Saez for many years. I’ve cited their analysis many times; for example: Two Americas: The Gap Between the Top 5% and the Bottom 95% Widens (August 18, 2010).

Thomas Piketty has taken his meticulous research and turned it into a book, Capital in the Twenty-First Century, that has catalyzed the discussion of widening inequality by essentially proving that capital expands at rates far above the overall economy and wages. Since capital grows much faster than wages or the underlying economy, the gap between earned income and unearned income (rents) widens, along with the net worth of those who own capital and those who own little to no capital.

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The Alienation of Work

The emerging economy is opening up new ways to reconnect workers to their work and the profits from their work.

One of the most striking blind spots in our collective angst over the lack of jobs is our apparent disinterest in the nature of work and how work creates value. This disinterest is reflected in a number of conventional assumptions.

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The “Impossible” But Inevitable Solution: Decentralization

What lies beyond the current failing, unsustainable versions of Capitalism and Socialism? Decentralization.

Correspondent John D. recently sent in a link to an interview with energy expert and author Jeremy Leggett. The title, “Make no mistake, this is an energy civil war” is a bit sensationalist, but the gist of his point is that centralized control of energy (and the capital that controls the energy and distribution networks) are colliding with new models of decentralized, locally autonomous control and ownership of energy generation and distribution.

Given the immense power of the banking/energy/political Elites that directly benefit from centralization of energy, capital and political power, I term this decentralization solution “impossible.” Yet because it is driven by the diminishing returns of the centralized model and the emergence of the Web as an unstoppable force distributing decentralization and new models, the transition from ossified, failing centralized models to adaptive, faster-better-cheaper decentralized models is also inevitable.

This is the context of Leggett’s view that there is an ‘energy civil war’ between the powers defending centralization and those promoting community ownership and control of energy:

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