The economic crisis and the imploding of ‘the faith’, i.e., of the neo-liberal orthodoxies peddled by the likes of Milton Friedman, has seen a resurgence of interest in Karl Marx with a sharp increase in worldwide sales of Das Kapital (one lone German publisher sold thousands of copies in 2008, compared with 100 the year before). Marx, as a thinker, was well ahead of his times. He accurately foresaw many of the fateful factors that would give rise to today’s global economic crisis: what he called the “contradictions” inherent in a world comprised of competitive markets, commodity production, and financial speculation.
The deregulation of the finance sector has been blamed for the current crisis and there have been calls for increased regulation. But deregulation was not the whim of individual governments. It was generalised as a mechanism to increase profit levels. As Marx argued in Das Kapital, speculation is inherent in the functioning of capitalism, and the bankers act and have acted, in unison with the industrialists.
Over the past 30 years the frequency of bursting financial bubbles has increased as we have experienced the biggest ever increase of what Marx called ‘fictitious’ capital, in the history of capitalism. When firms invest in purely financial assets they are deciding to invest in /claims /on new value and profit. This sort of investment in itself adds nothing to the mass of value added.
But beneath this excess of fictitious capital, real profits began to dry up, and another reality expressed by Karl Marx came into play: "The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit." Credit, had extended "the restricted consumption of the masses" in the industrialised countries, for a while while real wages were driven down or stagnated, but increasingly the credit couldn't be repaid.
The current cycle of over-production is based on the expansion of productivity and production and the decline in purchasing power. This surplus in production was fed primarily by Asia, and Asian commodities flooded the world.
Governments around the world have no clear strategies to resolve the crisis. Even the partial solutions they put forward to solve one aspect or a particular manifestation of the crisis, exacerbates another aspect of the crisis. For example, industrialised countries converted agricultural food production to producing biofuels to deal with the potential shortages in oil resources. This contributed to a shortage in food production and the food price crisis in 2008. Attempts to intensify oil exploration and conventional fuels such as coal will exacerbate the environmental crisis that threatens the very survival of the planet.
The massive state intervention seen in the last few months, of nationalisation and financial bailouts to save the skins of the capitalist class at the expense of massive public indebtedness of working people and the poor, has as yet not been able to stop the slide. Meanwhile we are also seeing a rapid increase in acquisitions, leading to a new round of unprecedented levels of capital concentration.
If the current restructuring the capitalist system continues down the same road, there will be enormous productive and social costs and the already fragile sustainability of the environment may suffer even more damage.
The crisis is systemic and represents the crisis of an entire model of capitalist development, including of neo-liberal capitalism. This global crisis also has a crucial environmental dimension: that of climate change and global warming. Third World countries are the most vulnerable, already suffering severe impacts.