online.wsj.com3분 - 4일 전 In a clip from a longer interview with WSJ's Simon Constable, Dr Nouriel Roubini claims Karl Marx was right about capitalism ...
NYU’s Nouriel 'Dr. Doom' Roubini: ‘Karl Marx Was Right’
By Joseph Lazzaro
August 14, 2011 "International Business Times" - -There's an old axiom that goes "wise is the person who appreciates candor almost as much as good news" and with that as a guide, place the forthcoming decidedly in the category of candor.
Economist Nouriel "Dr. Doom" Roubini, the New York University professor who four years ago accurately predicted the global financial crisis, said one of economist Karl Marx's critiques of capitalism is playing itself out in the current global financial crisis.
Sees Marx's Critique Playing Itself Out Now
Marx, among other theories, argued that capitalism had an internal contradiction that would cyclically lead to crises, and that, at minimum, would place pressure on the economic system.
Companies, Roubini said, are motivated to minimize costs, to save and stockpile cash, but this leads to less money in the hands of employees, which means they have less money to spend and flow back to companies.
Now, in current financial crisis, consumers, in addition to having less money to spend due to the above, are also motivated to minimize costs, to save and stockpile cash, magnifying the effect of less money flowing back to companies.
"Karl Marx had it right," Roubini said in an interview with wsj.com. "At some point capitalism can self-destroy itself. That's because you can not keep on shifting income from labor to capital without not having an excess capacity and a lack of aggregate demand. We thought that markets work. They are not working. What's individually rational...is a self-destructive process."
Roubini added absent organic, strong GDP growth -- which can increase wages and consumer spending -- what's needed is large fiscal stimulus, agreeing with another high-profile economist, Nobel Prize-winner Paul Krugman, that, in the case of the United States, the $786 billion fiscal stimulus approved by Congress in 2009 was too small to create the aggregate demand necessary to advance the U.S. economic recovery to a self-sustaining expansion.
Absent additional fiscal stimulus, or unexpected strong GDP growth, the only solution is a universal debt restructuring for banks, homes (essentially households/families), and governments, Roubini said. However, no such universal restructuring has occurred, Roubini said.
Without that additional fiscal stimulus, that lack of restructuring has led to "zombie houses, zombie banks, and zombie governments," he said.
No Good Choices Outside of Fiscal Stimulus or Debt Restructuring
The United States, Roubini said, can in theory: a) grow itself out of the current problem (but the economy is currently growing too slowly, hence the need for more fiscal stimulus); or b) save itself out of the problem (but if too many companies and citizens save, the flaw Marx identified is magnified); or c) inflate itself out of the problem (but that has extensive collateral damage, he said).
However, Roubini said he did not think the U.S. or the world are now at the point where capitalism in self destructing.
"We're not there yet," Roubini said, but he did add that the current trend, if it continues, "runs the risk of repeating the second leg of the Great Depression" -- the 'mistake of 1937.'
In 1937, President Franklin D. Roosevelt, despite the fact that the first four years of massive New Deal fiscal stimulus had lowered U.S. unemployment from a staggering 20.6 percent during the Hoover Administration at the start ff the Great Depression, to 9.1 percent, felt pressure from Congressional Republicans, and he -- as current President Barack Obama did with the Tea Party-led House GOP in 2011 -- gave-in to conservatives and cut government spending in 1937. The result? U.S. unemployment started rising again, and hit 12.5% in 1938.
Cutting government spending prematurely hurt the U.S. economy in 1937 by reducing demand, and Roubini sees the same pattern playing out today, following austerity measures implemented by the U.S. debt deal act.
Economic Analysis: Roubini identifies the core problem of the current U.S. economy in laser-like fashion. It's a riveting interview that one can watch in full by clicking here.
Roubini also argues that the social uprisings in Egypt and in other Arab world countries, in Greece, and now in the United Kingdom, are economic in origin (primarily unemployment, but also, in the case of Egypt, due to the rising cost of living).
Further, the view from here argues that while no one should expect an 'imminent collapse' of capitalism, or even a collapse of the American version, corporate capitalism -- capitalism and free markets are much too nimble and capable of adapting for that -- to say that the current economic order is not experiencing a crisis would not be accurate.
(Photo: REUTERS/Mike Segar) NYU Economics Professor Nouriel "Dr. Doom" Roubini said unless there's another round of massive fiscal stimulus or a universal debt restructuring, capitalism will continue to experience a crisis due to a systemic flaw first identified by economist Karl Marx more than a century ago.
Marx Was Right. Capitalism May Be Destroying Itself
Nouriel Roubini: "Karl Marx had it right. At some point, Capitalism can destroy itself."
Nouriel Roubini is a mainstream economist who teaches at New York University and may be best known as one of the early predictors of the ’08 crash.
He is no Marxist.
But today, in an interview with the Wall Street Journal, Roubini admitted that Marx was right about Capitalism and raised the possibility that Capitalism is destroying itself in the way Marx outlined more than a century and a half ago.
TRANSCRIPT
( Courtesy of B.J. Murphy)
I’ve produced a rough transcript (Roubini’s accent gives me some trouble) of the critical portion of this very interesting interview. I urge you to read each word carefully at least once, if not twice. B. J. Murphy
WSJ: So you painted a bleak picture of sub-par economic growth going forward, with an increased risk of another recession in the near future. That sounds awful. What can government and what can businesses do to get the economy going again or is it just sit and wait and gut it out? Roubini: Businesses are not doing anything. They’re not actually helping. All this risk made them more nervous. There’s a value in waiting. They claim they’re doing cutbacks because there’s excess capacity and not adding workers because there’s not enough final demand, but there’s a paradox, a Catch-22. If you’re not hiring workers, there’s not enough labor income, enough consumer confidence, enough consumption, not enough final demand. In the last two or three years, we’ve actually had a worsening because we’ve had a massive redistribution of income from labor to capital, from wages to profits, and the inequality of income has increased and the marginal propensity to spend of a household is greater than the marginal propensity of a firm because they have a greater propensity to save, that is firms compared to households. So the redistribution of income and wealth makes the problem of inadequate aggregate demand even worse. Karl Marx had it right. At some point, Capitalism can destroy itself. You cannot keep on shifting income from labor to Capital without having an excess capacity and a lack of aggregate demand. That’s what has happened. We thought that markets worked. They’re not working. The individual can be rational. The firm, to survive and thrive, can push labor costs more and more down, but labor costs are someone else’s income and consumption. That’s why it’s a self-destructive process.