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December 26, 2008
Over at The Pinocchio Theory Steven Shavio observes about what has been called “irrational exuberance.”
Nobody should be all that surprised by the recent unraveling of the financial system. Crises are endemic to capitalism, as Marx argued long ago, and as generations of Marxist economists since have repeatedly demonstrated. Capitalism often has periods of dynamic growth; but these tend to turn into crises of underconsumption, or of overproduction and/or the overaccumulation of capital, because the very processes that boost productivity and profit end up increasing the imbalance between what is produced, and what workers and consumers are able to afford to buy. For a while this imbalance is alleviated by easy credit — consumers are able to buy beyond their means, and businesses are able to produce even more — but eventually the mismatch is replicated on a larger scale, and the whole house of cards tumbles down.
So we have the spectacle of financial meltdown and actual human misery--- homelessness, penury, and misery--- that the former caused.
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