Posts Tagged ‘Crisis of capitalism’

Questions to be answered

March 16, 2016

I think that the United States and other Western countries are in a political and economic crisis.

I think that political leaders in the Western world must answer these questions.

authoritarianism9fd18cDoes the economic and political crisis mean that the system has failed?

If the system has failed, is this a failure of capitalism, a failure of democracy or both?

If the failure is a failure of capitalism, can the capitalistic system be fixed, or must it be replaced?

If the failure is a failure of democracy, can the democratic system be fixed, or is it doomed?

I don’t expect these questions to be addressed this year or the next, but I don’t think they can be evaded indefinitely.  I think there will be some sort of resolution, for good or for ill, within the next 10 years.

Nouriel Roubini asks: Is capitalism doomed?

August 23, 2011

Nouriel Roubini is a professor of economics at New York University’s Stern School of Business, and chair of Roubini Global Economics, a financial consulting firm.  He was nicknamed “Dr. Doom” for his predictions that the booming financial and real estate markets were going to crash.  But he proved to be right.  Now he is saying that the capitalist system itself is in crisis.  Here is what he wrote last week in his syndicated newspaper column.

Nouriel Roubini

Karl Marx, it seems, was partly right in arguing that globalization, financial intermediation run amok, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct (though his view that socialism would be better has proved wrong).  Firms are cutting jobs because there is not enough final demand.  But cutting jobs reduces labor income, increases inequality, and reduces final demand.

Recent popular demonstrations, from the Middle East to Israel to the United Kingdom, and rising popular anger in China—and soon enough in other advanced economies and emerging markets—are all driven by the same issues and tensions: growing inequality, poverty, unemployment, and hopelessness.  Even the world’s middle classes are feeling the squeeze of falling incomes and opportunities.

Unless governments act, he wrote, the world could be on the brink of another depression as bad as the Great Depression of the 1930s.

Over time, advanced economies will need to invest in human capital, skills, and social safety nets to increase productivity and enable workers to compete, be flexible, and thrive in a globalized economy.  The alternative is—like in the 1930s—unending stagnation, depression, currency and trade wars, capital controls, financial crisis, sovereign insolvencies, and massive social and political instability.

via Slate Magazine.

All this seems obvious to me.  Why is it not obvious to our political and business leaders?  It is partly because of the excessive power and influence of the wealthy elite, but I think it is also because of the excessive power and influence of financial institutions compared to goods-producing companies.

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