Stefan Stern: Marx was right about change

Even now, political leaders are advocating wholly orthodox approaches to managing deficits and currency volatility The pundit could not have been clearer. "Equities are cheap," she declared with wonderful certainty. In plain English what listeners to the Today programme were being told was that they should consider scrabbling together whatever spare cash they could to buy shares in stock-market companies. But we never got to hear which companies in particular we should be investing in. Equities may indeed be cheap. Then again, perhaps they aren't. I really don't know, and neither do you. And nor do any of the experts who earn a good living telling pension fund managers, insurance companies and other investors where to place their financial bets.If you think you know for certain what will happen next to US unemployment levels, their budget deficit, the eurozone, Chinese inflation, or the price of oil, wheat or copper, you are either a genius (sorry, but that is unlikely) or deluded (I'm tending to option (b) here). That is not meant to be as rude as it sounds. I know no more, and possibly less, than you do.At a time like this in the global economy confusion is a rational and not unhealthy response. But we should seize this moment to move on from confusion and enjoy intellectual liberation. That is what Charles Moore, the High Tory former Daily Telegraph editor and official biographer of Baroness Thatcher, has done.In a recent column for that newspaper he shared his anxiety that "the left" may have been right about business all along. He summarised the workings of the free market in these terms: "The rich run a global system that allows them to accumulate capital and pay the lowest possible price for labour. The freedom that results applies only to them. The many simply have to work harder, in conditions that grow ever more insecure, to enrich the few." I'm not sure that the subject of his long-awaited biography would accept this characterisation of global capitalism.Other respected figures are daring to say things that, perhaps only a few months ago, would have still been completely unsayable. Nouriel Roubini, professor of economics at the Stern school of business in New York, managed to produce "Marx was right" headlines after an interview with the Wall Street Journal last week. "Karl Marx got it right, at some point capitalism can destroy itself," he said. "We thought markets worked. They're not working." Roubini earned himself the nickname "Dr Doom" revealing label for being among the first economic commentators to declare that all was not well in the world's financial system. I first heard him speak at a conference in Tel Aviv about five years ago, before the crisis started. Seemingly without pausing for breath for around 30 minutes, he explained calmly why things looked grim for the global economy. But it was still possible, then, to disregard his warnings as over-the-top and unnecessarily pessimistic. That, of course, is the psychological problem which lies behind politicians' and financiers' reluctance (or inability) to recognise that radical change in their system is required. Everyone is more comfortable with familiar orthodoxy. When a critical voice is raised to suggest things are going badly wrong, it is easier to reject it as a misguided voice of doom. Whistleblowers face this problem, whether employees in a business or organisation or participants in a network. For two or three years after the credit crunch of 2007 first struck, newspapers and airwaves were filled with earnest people announcing that we must not at all costs go back to "business as usual". At that time expressing this view was a sure way to win supportive nodding from all who were listening. But the nodding dogs did not really mean it. They have reverted to type. Perhaps this is what has provoked figures such as Professor Roubini to ratchet up the rhetoric a bit more.Even now, most global financial institutions and political leaders are advocating wholly orthodox approaches to managing budget deficits and currency volatility, even as their efforts are revealed as being more or less futile, or worse. The truth is perhaps too scary for some to contemplate. Either that, or the temporary winners of the current system are simply filling their boots with as much as they can before the next, potentially even bigger crash.Those who regard the recent actions of rioters in English cities as "criminality pure and simple" will not see any

connection between Roubini's declaration that "Marx was right" and the decision to steal a 42-inch TV from a burning electricals store. But, for some, looting may have seemed a sensible (if illegal) response to the apparently continuous turmoil of the economy. If everything about your financial future seems at best uncertain and at worst desperate, why not carpe diem, or carpe television at any rate? Rational economic man (and woman) has finally been sighted, legging it down Tottenham High Street in a new pair of trainers. Marx said that while interpreting the world was all very well, the point was to change it. If capitalists want to keep their world safe for capitalism, they need to face up to what is wrong with it, and change it, fast. The writer is visiting professor of management practice at Cass Business School, London
I disagree; I think its pure capitalism or, at least, pure neo-liberalism. For capitalism to work there must be effective demand in order to buy the fruits of production and return the required profit to oil the wheels for the future. In the last two decades that effective demand has been fuelled by cheap and easy credit. That bubble burst in 2008, leading to a massive capital devaluation and that has had to be corrected. The correction has come, not from reapplying the profits of capitalism to its refinancing, but from diverting the value that should have gone into social welfare and social infrastructure provision into the recapitalisation of the casino capitalism sector. Imperialism, in the sense of rampaging through less developed countries for profit, no longer works as the economies of those previously less developed countries are developing apace. Countries like China and India, as they become richer, should provide markets for western goods, but that would mean losing competitive advantage by paying their own workers more so that they can consume more. At the moment China at least seems to prefer to hold down pay to make exports to the West cheaper. In the end, though, if labour is cheapened everywhere and unemployment keeps rising, who will buy the products of capitalism? Some states tried communism; that didnt seem to work well. Other states have relied heavily on the market and now that approach seems to have run into a wall. As David Harvey points out in The Enigma of Capitalism, it is irrational to try and impose regulation on a system based on pure self-interest. You wont tame the beast. But the advocates of free market capitalism, including Thatcher, Reagan and the Chicago School, derided the system of social democracy that, in parts of Europe at least, seems to have provided the most stable and just societies so far.Its not easy to motivate people to follow a middle path; its much easier to get people rallied behind a polarised idea of capitalism OR socialism. A mixed economy would work much better, with the infrastructure, social and economic, provided and managed by the state and with enterprise and industry free to do its thing within properly regulated bounds. The market works in its place, but it has to know its place.But this ideal wont work with the current democratic deficit in most of the western world. In the US voters have the choice of Republican or Democrat and only money gets you into that race. How is that democratic? In most European countries you can only get into government, even at a local level, by becoming a member of the political party club, whose rules and membership are set by those who already wield power. And the EU is now a true bureaucracy, in the sense of rule by unelected officials; the Commission is powerful while the Parliament is enfeebled.We need greater engagement. People need to regard politics as something to do with them, not something out of their control, imposed on them by outside vested interests. We need a financial system that works at a local level, supporting enterprise and industry (isnt that what banks are for?). And we need a better system of wealth distribution to help remove the inequalities in much of modern western society. I'd counter that by saying that as soon as they state starts appropriating wealth from one group to another it is a political act. It's also worth bearing in mind that we saw a financial crisis, distinct from a crisis of Capitalism per se. "We need greater engagement. People need to regard politics as something to do with them, not something out of their control, imposed on them by outside vested interests." I agree completely. Unfortunately, as you explained previously, the reality of the situation is that for the majority of people politics IS out of their control, it IS imposed on them by outside vested interests. Even if someone decides to do the almost unheard of, and run as an independent candidate and actually get elected, they will never have any real influence, as they will be marginalised by larger political entities with cohesive voting blocs which are controlled by vested interest. "Only money gets you into that race" and only vast quantities of money allow you to be more than an also-ran, the only way to obtain the necessary funds is to pander to vested interest, which makes you more beholden to your sponsors than your own moral compass... And the cycle continues.

Money=Power There is no way that those currently in posession of large amounts of money/power will voluntarily share it with anyone whose interests may not align exactly with their own. Hence vast disparities in wealth, an economic system designed to funnel as much money into the hands of a tiny tiny minority of plutocrats as possible, and an electorate who feel utterly disillusioned with the entire political process, because they know deep down that they are, as individuals, as near to disenfranchised as makes no difference. Every article about the riots and about the economy, about money and who does what to

whom, has avoided the word Class as if the word itself does not exist. Marx banged on about the class system in all his books and I will do the same. We all live in a global world and the class that a human being is born into, is a huge deal. I also do not want to do the sociological stuff that is all pervasive in the colleges all over the world, I would want to talk about Class in Marx's own terminology, the Ruling Class who own and control the means of production; the middle classes who aspire to the ruling class but are pulled either upward or downward by the factors of taxation or the ownership of the means of production albeit in a leasehold manner, and lastly, those who create the wealth of the world, the Working Class. Marx is absolutely right and the only way to know whether he is either right or wrong is to damn well read it for yourself and tell the world how it really is, dear prof. Paragluteus, I hope that he not only nicks the stationery but makes sure his student 'nick' the world. Be proud of being a working class man or woman, after all created wealth is from the workers.