How about giving Karl Marx a chance to save the world economy?

Move over Smith, Ricardo, Keynes and Friedman…Time for Karl Marx ideology to take over.

George Magnus,  senior economic adviser at UBS opines that we should look at lessons from Karl Marx to solve current economic woes.

Policy makers struggling to understand the barrage of financial panics, protests and other ills afflicting the world would do well to study the works of a long-dead economist: Karl Marx. The sooner they recognize we’re facing a once-in-a-lifetime crisis of capitalism, the better equipped they will be to manage a way out of it.

The spirit of Marx, who is buried in a cemetery close to where I live in north London, has risen from the grave amid the financial crisis and subsequent economic slump. The wily philosopher’s analysis of capitalism had a lot of flaws, but today’s global economy bears some uncanny resemblances to the conditions he foresaw.

Marx wisdom:

Consider, for example, Marx’s prediction of how the inherent conflict between capital and labor would manifest itself. As he wrote in “Das Kapital,” companies’ pursuit of profits and productivity would naturally lead them to need fewer and fewer workers, creating an “industrial reserve army” of the poor and unemployed: “Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery.” 

The process he describes is visible throughout the developed world, particularly in the U.S. Companies’ efforts to cut costs and avoid hiring have boosted U.S. corporate profits as a share of total economic output to the highest level in more than six decades, while the unemployment rate stands at 9.1 percent and real wages are stagnant.

U.S. income inequality, meanwhile, is by some measures close to its highest level since the 1920s. Before 2008, the income disparity was obscured by factors such as easy credit, which allowed poor households to enjoy a more affluent lifestyle. Now the problem is coming home to roost. 

Interesting times. We are pulling so many economists thoughts from the past to make sense of the crisis.

But am not so sure about Marx..His ideas were based on a different context..

2 Responses to “How about giving Karl Marx a chance to save the world economy?”

  1. pravin Says:

    what kind of halfwits can call themselves economists these days? marx and engels -privileged sons of bourgeois themselves -had the gall and arrogance to propound their nonsense unchallenged for quite a few years until the marginal revolution.
    the 9.1% unemployment is not caused by profits -it is caused by “stimulus”,moral hazard and minimum wage.
    btw,with alan kreuger set to advise obama ,it will only get worse.kreuger thinks minimum wage legislations are a great thing.

    marxism lite aka keynesianism is indeed being tried out.

  2. Craig Says:

    Karl Marx argued that revolution was impossible in a society that lived on the family farm. He believed that urbanization and industrialization were both requirements for a Communist revolution. In the 1920s, half of all Americans lived on a farm. Family farms that remained free of debt, enjoyed full-employment during the 1930s. Those that used debt to expand, were destroyed.

    The Federal Reserve Bank is a Marxist and Fascist institution. It creates the debt necessary to enslave a Republic, and the politics that are required to increase our indebtedness. Whether this country spends money on social programs (Socialism), or military expansion (Fascism), we end up borrowing money from the Federal Reserve. As an added bonus, the privately owned corporation also charges us interest to use its Federal Reserve Notes as our currency!

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