Roubini, Marx, Globalization & First World Inequality

This post is a continuation of a recent thread in which more or less conventional economist Nouriel Roubini lauds Marx for correctly describing the situation most of the industrialized world now finds itself in. But first let me revisit a step-by-step compressed version of Marx's explanation:

1. Value is created through labour;
2. Innovation, the bedrock of capitalism, finds ever-newer ways of extracting more "surplus value" at the expense of labour;
3. Since less labour becomes necessary relative to capital as innovation takes place (for productivity has been enhanced), the labourers' share of income diminishes while that of capital holders increases;
4. This process leads to the greater polarization of winners (capital) and losers (labour);
5. Eventually, labour's share of income becomes so minuscule that there are few left who can buy all the wonderful goods and services wrought by innovation;
6. Capitalism succumbs under the weight of its internal contradictions.

While I am by no means a Marxist, political economists worth their salt should nonetheless be able to explain the key concepts of Marxism and apply them to contemporary phenomena. Accordingly, let me point out a relevant passage from Das Kapital that explains things pretty succinctly--especially of globalization before such a term was coined. The interpretation of economies of scale is especially noteworthy. From volume 1, chapter 32 [I break it up into three paragraphs for improved comprehensibility]:

As soon as this process of transformation has sufficiently decomposed the old society from top to bottom, as soon as the labourers are turned into proletarians, their means of labour into capital, as soon as the capitalist mode of production stands on its own feet, then the further socialization of labour and further transformation of the land and other means of production into socially exploited and, therefore, common means of production, as well as the further expropriation of private proprietors, takes a new form. That which is now to be expropriated is no longer the labourer working for himself, but the capitalist exploiting many labourers. This expropriation is accomplished by the action of the immanent laws of capitalistic production itself, by the centralization of capital.



One capitalist always kills many. Hand in hand with this centralization, or this expropriation of many capitalists by few, develop, on an ever-extending scale, the cooperative form of the labour process, the conscious technical application of science, the methodical cultivation of the soil, the transformation of the instruments of labour into instruments of labour only usable in common, the economizing of all means of production by their use as means of production of combined, socialized labour, the entanglement of all peoples in the net of the world market [is that not proto-globalization?], and with this, the international character of the capitalistic regime.



Along with the constantly diminishing number of the magnates of capital, who usurp and monopolize all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working class, a class always increasing in numbers, and disciplined, united, organized by the very mechanism of the process of capitalist production itself. The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralization of the means of production and socialization of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.

Pretty scary stuff, but there's no arguing that Marx foresaw a lot of what's going on--English riots included. It's funny that after the likes of Francis "End of History" Fukuyama declared Communism dead in the wake of 1989, we find ourselves having to say that capitalism is encountering an existential crisis. And while Leninist doctrine may have been incompatible with true Marxist ideology in many respects--especially the Soviet's statist tendencies--the same cannot be said for capitalism's contradictions since Marx described its self-defeating properties well. (Just say no to Soviet apologists like Eric Hobsbawm.)



As it was before it shall ever be. A spectre is haunting Europe...and much of the rest of the world.