Firstly I consider how economists’ explanations of the current crisis will be selectively given prominence depending on whom various political parties and interest groups wish to blame, with bankers and speculators being the ‘obvious’ initial targets. Recognising that I cannot escape from being an interested party myself, I argue that the current crisis results from the fundamental nature of capitalism itself as explained by Marx over 100 years ago. I explain how Marx's theory of the determination of the value of commodities by labour-time leads Marx to predict recurrent crisis, moments of self-defeat, will inevitably occur in capitalism through a tendency for the profit rate to fall in labour-time terms as the economy grows. The falling rate of profit in labour-time terms can be hidden by inflation of commodities’ prices relative to their falling labour-time values, but the underlying profitability problem in the ‘real’ economy still manifests on the surface by investment in fictitious capital appearing to offer a higher return than productive investment. Firms now invest a rising proportion of their capital/profits, now surplus capital, in fictitious capital (shares, futures etc.), creating fictitious capital bubbles. Fictitious capital bubbles must inevitably burst and crisis result, appearing on the surface to be purely a financial crisis. I move on to record how Grossmann in 1928 repeats Marx's argument to confidently predict a coming huge financial crisis and depression in the US.
|Number of pages||16|
|Publication status||Published - 2010|