Bob Cropf

A Marxian take on the financial crisis

In economics on January 31, 2009 at 9:44 AM

I came across this blog post today. I skimmed it and thought it looked rather interesting in light of our class discussion last week. In particular, pay close attention to what the writer says is the importance in Marxian analysis of the word, “crisis.” Recall O’Connor’s use of the word in his article. What is being conveyed is the idea of a complete breakdown in confidence. In a capitalist economy, confidence is key (you don’t have to read Marx to believe that). Therefore, if there is a lack of confidence or declining confidence then things can go south pretty fast. That’s what happened according to the Marxian viewpoint. The conclusion is pretty scary if you believe the writer: We’ve come to the point where we are not trying to save either the poor or the rich, but the system itself! As you read this, think about how a Neo-classical of Keynesian might respond. Do you think they would predict a complete and total collapse of the entire system as readily? How would they challenge the Marxian perspective on the data?

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  1. First, I question the assertion that we’ve given up trying to save the rich… $18.4 BILLION in **bonuses** on Wall St. at the end of 2008 and we aren’t still trying to save at least some of the rich???

    Second, I think that the neo-Classical and the neo-Marxists might actually be in tune here. The neo-Marxist assertion here is that we are at the precipice of a transformation of the system itself (either dissolution or something new) or the neo-Classical model calling for a change of the rules to facilitate commerce – obviously the private market cannot regulate money as it was left to do, which impacted the ability to fulfill contracts and exchanges. Obviously, the Marxists are radical (big change) and the Classicalists are liberal (incremental change) but Friedman states that incremental change can eventually leave the system dramatically different. So the process differs but the outcome maybe not so much.

    Neo-Keynesians seem to be totally irrelevant – dealing with bean counting while the other models lead to the possibility with fundamental change. Okay, not irrelevant just saying this is the time for some intervention but not really questioning whether the lack of intervention might cause a great change or the intervention itself might be transformative… but that’s the whole point, right, stability.

    My question for the Marxist is what comes next? Is it anarchy (Friedman won’t have minded much), socialism, some neo-/post-capitalism?

  2. I think they would be all over the place with that one. In the old days, a Marxist would say that the capitalist system would collapse and then there would be a revolution and the people would take power. I think many are far less optimistic about a revolution and the people taking over.

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