They hate us for our freedom
The Ouroboros eats its own tail.
“We thought the markets work. They’re not working.”—Dr. Nouriel Roubini
I have always maintained that the global future will ultimately be a socialist one, but it was not easy to “keep the faith” after the collapse of the Soviet bloc and the (seemingly) robust (dot)economy of the Clinton years. However, these days Marx’s predictions for voracious end-stage capitalism seem well-vindicated by what we’re seeing take place in Greece, Israel, Iceland and especially in England. The system hollowed itself out from the inside far faster than I ever would have thought possible in 1999.
So as someone whose politics have been more or less wildly out of step with American mainstream opinion for my entire life, I have watched with great bemusement at the surprisingly Marxist-tinged rhetoric that is now being espoused in places like TIME, the Wall Street Journal and Forbes. It doesn’t get much more “establishment” than these venerable publications, I think you’ll agree, which is why they’ve always been such credible markers of where the cultural conversation is headed.
Try this one for size. Joel Kotkin writing at Forbes, “The U.K. Riots And The Coming Global Class War”:
The riots that hit London and other English cities last week have the potential to spread beyond the British Isles. Class rage isn’t unique to England; in fact, it represents part of a growing global class chasm that threatens to undermine capitalism itself.
The hardening of class divisions has been building for a generation, first in the West but increasingly in fast-developing countries such as China. The growing chasm between the classes has its roots in globalization, which has taken jobs from blue-collar and now even white-collar employees; technology, which has allowed the fleetest and richest companies and individuals to shift operations at rapid speed to any locale; and the secularization of society, which has undermined the traditional values about work and family that have underpinned grassroots capitalism from its very origins.
All these factors can be seen in the British riots. Race and police relations played a role, but the rioters included far more than minorities or gangsters. As British historian James Heartfield has suggested, the rioters reflected a broader breakdown in “the British social system,” particularly in “the system of work and reward.”
In the earlier decades of the 20th century working class youths could look forward to jobs in Britain’s vibrant industrial economy and, later, in the growing public sector largely financed by both the earnings of the City of London and credit. Today the industrial sector has shrunk beyond recognition. The global financial crisis has undermined credit and the government’s ability to pay for the welfare state.
With meaningful and worthwhile work harder to come by — particularly in the private sector — the prospects for success among Britain working classes have been reduced to largely fantastical careers in entertainment, sport or all too often crime. Meanwhile, Prime Minister David Cameron’s supporters in the City of London may have benefited from financial bailouts arranged by the Bank of England, but opportunities for even modest social uplift for most other people have faded.
Forbes. That’s right, that was from Forbes.
On the Project-Syndicate website, and widely covered and quoted elsewhere (including TIME), Nouriel Roubini (aka “Dr. Doom”), the NYU economist who became a high-profile “big brain” pontificator after he accurately predicted the global economic meltdown a few years before everybody else, asked “Is Capitalism Doomed?”
Usually, when such thing is posed as a query, the answer in the text tends toward the affirmative. Roubini writes:
So 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 proven 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 UK, 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.
To enable market-oriented economies to operate as they should and can, we need to return to the right balance between markets and provision of public goods. That means moving away from both the Anglo-Saxon model of laissez-faire and voodoo economics and the continental European model of deficit-driven welfare states. Both are broken.
The right balance today requires creating jobs partly through additional fiscal stimulus aimed at productive infrastructure investment. It also requires more progressive taxation; more short-term fiscal stimulus with medium- and long-term fiscal discipline; lender-of-last-resort support by monetary authorities to prevent ruinous runs on banks; reduction of the debt burden for insolvent households and other distressed economic agents; and stricter supervision and regulation of a financial system run amok; breaking up too-big-to-fail banks and oligopolistic trusts.
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.
Below, Roubini interviewed by the Wall Street Journal: