Why Nouriel Roubini and all of us are wrong about Karl Marx

August 15, 2011

“Before I speak, I have something important to say.”

–Groucho Marx

 

In a clip from a longer interview with WSJ’s Simon Constable, Dr Nouriel Roubini claims Karl Marx was right about capitalism eventually destroying itself. While not quite yet at the breaking point, Roubini observes, we are headed down the road to disaster as predicted by Marx.

Roubini echoes my view that debt reduction and restructuring is the only way to restore real growth to the US and other economies. Breaking up a few zombie banks and cartels probably would not bother him either. But let’s focus on Roubini’s somewhat provocative comment that Marx correctly predicted the present global debt bust and economic deflation.

When I hear people talking about Marxism in reverent tones it makes me nauseous. Marx was not right at all about class being the key determinant of human action. Yet despite America’s pretensions to being a free market, democratic society, the Marxian world view won the battle for ideas in the 20th Century. The New Deal and Great Society efforts to increase the scope of government in America all stem from the socialist ideas of FDR and his political heirs in both parties.

So much of our economic discourse in America today is entirely Marxist in nature — a reference to both Karl and Groucho Marx, as noted above. The legacy of FDR and the two world wars was to kill the American republic and put in its place a cheap imitation of France with platonic regulators pretending to moderate the bad old ways of greedy private business.

The Cold War in particular left Americans more Marxist in their economic thinking than we care to admit. We discarded the focus on individual liberty and the rule of law espoused by Thomas Jefferson and Andrew Jackson as the drivers of economic activity in a free, democratic society. Instead we have modern day robber barons, faceless corporate managers openly allied with corrupt politicians in Washington and guarded by phalanxes of vicious lawyers.

The fact of our intellectual reliance upon the work of Karl Marx to benchmark our economic success show humans to be creatures of habit, not reason. Marx embarked from a position of dialectical mysticism borrowed from Hegel and then attacked the classical economists, the enlightenment thinkers such as John Staurt Mill and Adam Smith who elevated the role of the individual. Those who laud Marx disparage all things American.

Ludwig von Mises writes in his book Human Action, that Marx stigmatized the economists as “the sycophants of the bourgeoisie.” He notes that Marx was “the son of a well-to-do lawyer,” and Engles, “a wealthy textile manufacturer, never doubted that they themselves were above the law and, notwithstanding their bourgeois background, were endowed with the power to discover absolute truth. It is the task of history to describe the historical conditions which made such a crude doctrine popular.”

Not only was Marxism crude, but it missed most of the major developments of the 20th Century. Revolution occurred not in bourgeois Germany but in brutal, backward Czarist Russia. More important, the class-centric view of Marxism proved incorrect in a world of greater openness, mobility and individual choice. The act of conscious choice driven not by greed, but the desire for betterment; of human action as von Mises coined the term, rejects Marxist class determinism.

But with the world facing global recession or worse, and the children of the New Dealers demanding blood and higher taxes from the greedy capitalists, the question put to Roubini still comes: has the growth possibility of the “capitalist” world, as we inaccurately label the socialist western economies, reached a logical limit as predicted by Marx? I do not believe so.

Nations which adopted Marxist or other types of authoritarian systems have performed abysmally, while nations that focused on individual freedom and openness thrive. The US and EU have lessened their prospects through over-reliance on government and public debt. The answer in both cases is debt reduction and restructuring, and shrinking the size of the public sector.

Since the end of WWI, the nations of the global economy have faced a difficult paradox: the greater openness of trade and finance have created serious economic imbalances, shortfalls in employment and growth in public debt. John Maynard Keynes was no free trader, as we have discussed previously in this blog, precisely because he feared the destabilizing influence of large trade and financial flows.

The fact that advances in technology cause unemployment in older industries has nothing to do with Marxism or any of the political narratives of the 19th or 20th Centuries. Nor does the fact of global over-capacity confirm the Marxist dialectic as to the inevitability of world socialist revolution. What these ills do point out is that the world needs to revisit not tired Marxism, but the Keynesian concept of a competitive currency system and thereby better govern global flows of capital and commerce.

All nations, regardless of supposed economic creed, now face a more basic series of choices: how to balance employment and economic stability with economic openness and the relentless pressure of competition and new technology. The future is not about class warfare as Marx predicted, but is about maximizing the potential and opportunities for every individual.

Comments

Actually capitalism failed years, perhaps decades ago. There is no ‘free market’, it is and always has been a fantasy. You can have no ‘free market’ while concepts such as ‘intellectual property’ and ‘copyright’ exist. These two concepts are unparalleled banes to hunanity.

Also consider that would be food suppliers (farmers) need to actually BUY INTO the quota system. In order to control market prices (free market?!?) the government ensures less product than is demanded is produced. Understand that. It is contrary to the free market ideology completely. Dairy markets? Grain Boards? Montesanto suing farmers for NOT using GM foods?!?

Western capitalism is a complete and utter failure. Considering that near every western country/state/city in indebted and cannot function without debt only a complete and utter moron could argue otherwise.

Marx, while not being accurate perhaps about socialism was bang on however in predicting the fall of capitalism. As were a number of the American founding fathers for that matter.

Posted by stambo2001 | Report as abusive
 

Mr Whalen rambling has little to do with what Dr. Roubini said. He was saying that capitalism may self-dstruct and he did not mention class warfare at all, he rather had in mind the cycles of booms and busts plus monopolistic positions of those who are “too big too fail”. Mr Whalen seems to be on the libertarian side, Ayn Rand style. Those too big to fail have been really accelerated by rejecting regulation, in the libertarian spirit. It is obvious that the class theory of Marx is dimissed but the selfdestruction picture of capitalism we face now. And surely come capitalists (bankers, financiers) got richer during the current destruction while taxpayers are getting the bill.

Posted by wirk | Report as abusive
 

haha, stambo2001… thanks for the laugh.

Posted by Matt-Chicago | Report as abusive
 

Your kneejerk reaction to anything that has the word “Marx” in it betrays your lack of wisdom.

Dr. Roubini is right, Capitalism was a byproduct of European conquest of the Americas and Africa (not to mention large chunks of Asia) that was a historical perfect storm of European expansionism coupled with a major technological discrepant in military technology between the Europeans and the native armies.

The idea that finite resources are going to support an ever expansive “dog eat dog” system solely because innovation and technology will expand the said resources is a great pipe dream, but hardly something to bank human survival on.

If technology continues to expand the human economies, an uncertain proposal since the root that feeds the tree of technology is science and it seems faith is more on the march today than science and reason.

The author of this article reminds me of the last British Lord who was informed about the Empire’s and refused to believe it.

Posted by LordReuters | Report as abusive
 

Capitalism is well alive and not about to destroy itself anytime soon. I live in Canada and our GDP-debt ratio is fine, our bonds are still AAA, and “Western capitalism” has been raising living standards for generations. Comments about intellectual property and copyright are ludicrous, what are you even saying? Current IP models may be dysfunctional but that does not prove that the concept itself is unnecessary.

On the other hand, this article is quite biased in its unexplained assumption that individualism is the be-all and end-all of political philosophy. J.S. Mill and Marx both contributed very unique perspectives to the development of political thinking and they should be recognized as being two unique perspectives: neither one should be dismissed.

Most of the argument relies on the reasoning that Marx failed to properly predict events of the 20th century – this logic ignores the fact that the theory has since evolved and that the analysis of class struggles is an important method in political theory. Marx himself may have made significant errors, particularly the Labour Theory of Value based on unfounded economic principles. This does not mean that the whole avenue of class analysis is false – that is frankly narrow-minded.

“Those who laud Marx disparage all things American”? I am not a fan of Marx but there’s just too much appeal to emotion rather than sound argumentation going on.

Posted by pelleau | Report as abusive
 

@stambo2001

Calm down, Chicken Little. The sky isn’t failing. And this is easily the first time I’ve ever heard someone call intellectual property a “bane to hunainity(sic)”

And @Whalen
The fact that your article is promoting a balanced capitalist/socialist economy isn’t made apparent until nearly the end. In your zeal to bash Marx, the first 75% of the article seems like a love letter to Ayn Rand.

Posted by RexMax46 | Report as abusive
 

Roubini was being provocative, rather than literal, in invoking Marx. It’s also noteworthy that John Maynard Keynes, whose ideas influenced the New Deal and much of the economic thinking of the 20th Century, dismissed Marx as “unscientific.” I don’t believe anyone is lauding him here.

Posted by Fishrl | Report as abusive
 

Marxist principles only come to the fore when they are adequately funded by capitalistic business endeavors.
Let’s get real, the American people have voted in all the anti-capitalist rhetoric. People voted in healthcare, they voted in spending for jobs. The American people have voted in a move to the left. This is the normal process of America. America will survive because like a good darwinian species the system adapts to the people in it. Large inflation in the future will reduce our debt as it always has.

Posted by freedomadvocate | Report as abusive
 

Capitalism is a religion and when people stop believing in it, they’re gonna be in the same boat as Wily E. Coyote when he walks off the cliff and doesn’t realize it until he looks down. When the system stops providing hope to the masses, a vague road map to prosperity that is palatable and seems fair, then you get what happened in London. Disgraced academics whose theories crash in real life constantly break their ankles jumping from one idea to next, desperately singing the praises of a vicious system. Then they write articles puzzling over social unrest, futility trying to jump ahead of the zeitgeist. Why do people bash in store windows? Cuz they can’t afford the things on the other side and fear they never will.

Posted by Shamrock21 | Report as abusive
 

RexMax46…stambo2001 struggles with words like Marxism and Fascism (see his other posts)…so it really isn’t shocking that he thinks copy rights and intellectual property rights are the bane of “humanity”(?) destroying any concept of a Free Market. Perhaps he thinks we should allow chinese counterfeiters to operate freely on American’s street corners? Like the words Marxism and Fascism, the concept of what constitutes a “free market” eludes our apparently uneducated protagonist.

Posted by xyz2055 | Report as abusive
 

I wanted to stop reading after the author basically called FDR a Marxist. Please. But I went on.

The author invokes Jefferson and Jackson without a) discussing the ways they arrogated power to themselves, especially Jackson and without b) mentioning their opposition, the Federalists and Whigs, who championed just the sorts of things the author might call socialist. Before 1848. But I read on.

There it was! The Mises quotes! If two German intellectuals didn’t peer into absolute truth, then an Austrian one touting an a priori similitude of English liberalism sure did! I couldn’t go on after that.

Posted by Jayhay | Report as abusive
 

Roubini comments simply illogical. An insult to the Capitalist system, that provided his education.

Posted by max5461 | Report as abusive
 

“Marxist principles only come to the fore when they are adequately funded by capitalistic business endeavors.”

The chicken only comes to the fore when adequately hatched from the egg. There would be no need for Marxist principles without the exploitative inequality inherent in capitalism.

Posted by Shamrock21 | Report as abusive
 

Perhaps capitalism won’t destroy itself, but it sure does seem to have knack for destroying almost everything it touches. This endless cycle of boom-and-bust just never seems to end. I’ve seen a number of them in just my lifetime and every time we enter the bust phase I see families wrecked, communities ruined and whole economies upended. And what follows is not necessarily an improvement over what went before.

Posted by IntoTheTardis | Report as abusive
 

It’s easy to tangle up Marx’s economic theories with his political and social theories and forecasts. Better to separate them out. Marx’s economic analysis of capitalism is still, I believe, the most comprehensive and cogent one we have, rivaled only perhaps by von Mises’s ideas. I think if we put both of those together – the economic theories only, not the social ruminations – we’d have an adequate framework for theoreticians like Alan Greenspan and Larry Summers (!) to work from. Marx’s two most powerful insights (in my opinion) were his theories of the surplus value of labor, and of capital deepening (defined as machines and money/credit). Separate those out from the fury of his social commentary and his rather extreme predictions, and we have a simple, interesting way to understand how businesses tend work in the United States. Chris Whalen is the best banking analyst out there, bar none, and clearly a brilliant guy, but I think he looks at Marx in the conventional Anglo-Saxon way – that is, Marx was a smart man but his prescriptions were all wrong. If we ignore Marx’s social and political prescriptions, and instead examine his analysis of the mechanics of how capitalism works, then we see good reasons to drop the emotion and reassess our ‘understanding’ of Marx. We don’t have to interpret him in the same way the Soviets did, and some Europeans, Americans, and Africans do. We don’t have to interpret him at all. We just need to understand his economic analysis, first.

Posted by econogeek | Report as abusive
 

In pure capitalism there should be no government regulators over commerce because the market is supposed to correct all the ills. In the sub-prime mortgage crisis the banks asked for financial bailouts by the government due to their reckless behavior, and the Obama administration demanded, subsequently, more regulations over the banks. Do you think the banks just committed self-destruction during the go-go sub-prime mortgage era? The self-destruction of the capitalism needs not to be on a wholesale scale – all privately owned enterprises becoming owned by the government overnight. The process will take place in one industry at a time or just one aspect of an industry.

Posted by jlpeng | Report as abusive
 

If capitalism is so doomed (as Karl Marx) would suggest then is this the reason that Communist China is now the second largest economy and soon to be first? Get Real!

Posted by jagsr71 | Report as abusive
 

Economic cycles, natural disasters, wars and bad governments, failed any type of political structure through the thousand of years.

Posted by robb1 | Report as abusive
 

How interesting that the communist experiment that China has conducted with capitalism has been such a roaring success!! They are now the second largest economy in the world and soon to be the first! C’mon people! Let’s get real here. This is joke.

Posted by jagsr71 | Report as abusive
 

Pretty good article. When I read Marx’s Communist Manifesto, I was struck by its naievity and ignorance (not used here derogatorily) of human nature. To accept his premise that if only the workers controlled the means of production then everything will be OK is to disregard that greed, power seeking, differences in skill, energy, and mental and physical ability are not driven by class. If the proletariat were invested with equal opportunity on day one, in time, some will gain ascendancy and some will decline. This is human beings are not all the same. Those who rise become the authority figures we see in powerful communist countries like Russia and China. The impact on the masses has been well demonstrated. Only when China began to allow free enterprise did it become an economic force. I believe Russia would have done the same if it had moved more deliberately toward capitlism (like China) and not so precipitously.

Anyway, I at least am confident that all will be well as long as our government is not allowed to swell to something like a dictatorship and as long as the American people begin to realize that the federal government, like families, businesses, state governments, and local governments, must live within its means without abusing the middle class (the proletariat equivalent in our society). I suggest writing one’s representatives in support of balanced budgets, spending cuts, and a flat tax.

Posted by John-B | Report as abusive
 

We have 305 million people in this country, and every 3rd person seems to either sell insurance (or real estate before 2008) or work as a security guard. Stop kidding yourself dear author if you think we can have a prosperous and stable society REGARDLESS of what Mr. Rubini thinks about K. Marx.

Posted by 74LS08 | Report as abusive
 

I posit that what Roubini was referring to was the idea of dialectical materialism, i.e. capitalism undergoing synthesis, which was expounded by Marx but the idea really preceded him and is founded somewhat in Hegelian philosophy.

What you offer is the same old ad hominem attacks. Which, in 2011, some two decades after the end of the Cold War seem tired and tedious.

The irony of your analysis is that the rot you identify (economic instability, corrupt politicians etc) are the very ingredients of antithesis that a Marxist would argue make up the dialectic of materialism, of which what we know as capitalism is just the political economic structure of our times.

By the way, I am no Marxist – I owe a lot to the inherent instability of capitalism for my own self-earned wealth.

Posted by _sid | Report as abusive
 

The problem with capitalism is it only works for those who want to work. Those who feel deprived of the fruits of others’ labors despise capitalism, for in capitalism “you keep what you kill.” You don’t take the fruits of your labors, in other words, and share it with the entire neighborhood. And bureaucrats can’t legally walk into your house and help themselves to family heirlooms “for the good of the State.”

Ah yes, Marx had reason to despise capitalism, because capitalist pigs don’t share their income with those who joined Marx on the high road, in other words, those who would rather sleep in instead.

Posted by DisgustedReader | Report as abusive
 

all things un-American? Like commodity trades? Perhaps you ought to consult “Capital, Vol. I.” Just a suggestion.

Posted by stimpsonjcat | Report as abusive
 

The debate seems to always fall in favor of one OR the other, Capitalism OR Socialism.

We don’t exist in America as a Socialist state or a purely Capitalist state.

We exist in what has thus far been a healthy and successful mixture of the two.

It is disingenuous to state an all-or-nothing view in defense of either.

Can America have a private military? Or a private CIA? Could we see a time when Google had its own Air Force? Or worse, Halliburton had its own Seal Teams and Navy?

What if our system of justice was funded by corporations? How would the rich versus the poor fair in such a state?

Perhaps our FDA should be owned and operated by the drug companies themselves? (aren’t they already?) It would certainly expedite approvals, but to what end?

We’ve allowed privateers to run America’s healthcare system such that it is so corrupt nearly half of every Premium dollar paid to a health insurance provider is used to deny coverage, advertise, pay huge bonuses/executive salaries, and pay shareholders…instead of providing healthcare services…and when you actually get sick, they have been allowed to drop you from coverage, even after you’ve paid-in for decades.

Does it make me a Socialist to complain or question a fully privatized structure for all things American? Does it make me a Socialist to believe ‘social’ programs and agencies are what is best in several instances?

No, I think not. I’d rather have Capitalism with a healthy dose of Socialist (citizen controlled) entities to protect and regulate our system, because without the ‘socialist’ mechanisms to regulate or substitute (for obvious reasons) pure Capitalism Mr. Marx, for all his naivete’, would prove correct.

Posted by NobleKin | Report as abusive
 

Too funny. My point, which was not disproven, is that the markets are controlled. They are not even close to ‘free market’ as you think you understand them. Sorry if I write fast and do not worry about proof reading, this is hardly a white paper. The grammatical cops are out in force today I see.

“Intellectual property” and “copyright” are the reasons that cheap medicines and technologies are out of reach of the poor and developing nations. They also allow for the inherently wealthy to make money without labour or actual production of goods. Cheap ‘chinese knock-offs’ do little but illustrate my point. If the ‘intellectual property’ laws did not exist there would be free and unfettered competition in all industry.

definition of ‘free market’ – An economic system in which prices are determined by unrestricted competition between privately owned businesses.

You don’t see copyright, intellectual property, quota systems, dairy boards or wheat boards as restricted competition? Really?

You are the one lacking in understanding. Eventually there will be ‘open-source’ everything. It’s the next logical step in human evolution from this point. We just need to rid ourselves of small minded dinosaurs of thought like yourself.

Posted by stambo2001 | Report as abusive
 

You can not view what we have today as real capitalism. When the government steps in and helps businesses, specially ones that do not make anything like the banks and such, even when they did illegal, immoral, and just flat out bad business, forcing the people to support them with their money, I think that is more and more like, well surely not capitalism. The only true capitalist, Switzerland, does not seem to have the same problems in depth. But let’s face it, how is anything going to work if the greedy pigs running this country only listen to themselves in their own little world. Who is to say though, makes me so mad I just can not think strait. Flat out, this admin sucks!

Posted by mmScottyB | Report as abusive
 

The problem is that the term “capitalism” can mean just about anything, depending on who is using it. As a result, it is essentially devoid of meaning.

Posted by Bob9999 | Report as abusive
 

I find this article right on the mark. Progressive ideas are corrupting a working system that has brought prosperity to the world, yet these unproven and sometimes failed concepts of governing people have yielded failed systems in many other countries. I don’t need to list the faltering governments and economies that embrace these ideas; we all know who they are. Change for the sake of change is stupid with pie-in-the-sky ideas. Let’s get real ideas that work.

Posted by Still_Here | Report as abusive
 

It is foremost about “class warfare,” but what constitutes class has now expanded to include international economies since, for centuries, private sector multinationals have off-shored to increase earnings at the expense of over-exploited labor while arguing that they are seeking talent, a business-friendly unregulated venue and relief from burdensome taxing structures imposed by the United States―while promising the United States leadership that if it will yield to private sector demands―then and only then will employment resume. These are subversives and traitors and if possible, these “expatriates” should be tried for high treason. Whalen writes “The future is not about class warfare as Marx predicted, but is about maximizing the potential and opportunities for every individual,” but the private sector―those who set pricing structures, but deny the same, and all the aforementioned have demonstrated throughout history that only their personal betterment will be achieved―at the expense of others, the environment and governments. The essay is a denial of the credibility of historical facticities and the philosophy of Karl Marx and others.

Posted by awayneramsey | Report as abusive
 

@awayneramsey Exceptionally well written, far beyond my capacity of expression.

Posted by stambo2001 | Report as abusive
 

Okay, let’s face it: capitalism (defined by the system in use of Western Nations) works better than Marxist socialism, not only as to economics, but in general: people just seem more real and interact nicer when they don’t have to follow some authority or authoritarian belief, such as Marxism-Leninism . It may be that the world that results from the preferred economic system (i.e. capilalism) seems cold and indifferent, but it will eventually lead us to a rational choice for a life most of us want.

Posted by Lambick | Report as abusive
 

What is it with the conservative – self-styled boot-strap so called conservative commenters? When the system collapses it the fault of the people who just don’t want to work for them as hard as they need. But try to join the “managers of the universe”‘ when they are up and it’s get out of here you are intruding in our neighborhoods and our property rights. Their “intellectual” property which is not so brilliant or precious or all fired valuable or unique because the trick is to claim rights before someone else does and to claim them for just about anything that can be claimed. And don’t kid yourself that some of the very successful will pull any dirty trick including theft, slander, espionage and even murder to get to the top. But usually business life is more subtle and slow moving.
It is more strenuous to run a small business than to work for a large one, I found. But it was more satisfying and I was capable of substituting my own skills for a variety of things I would have had to pay others to do. I didn’t have to make as much money and could live a more than adequate standard of living as far as a comfortable but small house and to drive second hand cars. I had worked in a very large defense contracting firm wasting most of the hours of the day. The trick in big shops was to look busy so I would bring books and read. If anyone had a problem with it, it was so obvious what I was doing that I even got comments from people who were snooping at my reading materials although no one actually spoke to me about them. I spent two years in a large firm and have since had a client with another large firm and they were the worst and slowest people to have to deal with. The big shops seem to breed pretension and competition for status because they pay much better and provide the benefits. They build the welfare state into their cost of doing business and claim everyone is doing productive work.

That’s what Marx saw. It’s still alive. Veblen called them the leisure class. They make great customers for people like me but their life is a screaming bore after a few years. They need the sense of being “in” or all the rush, the waste of time, the distraction and the bills begins to look like nonsense.
Today it is the upper and middle managerial working ethic “harried” class with health insurance and a dental plan and a 401K with lots of cash, lots of education, lot’s of expenses because they have to keep up appearances and lots of debt. Careers are actually status symbols. They need distracted and misinformed consumers to keep the whole merchandising scheme alive. Madoff represented the anima of the 80’w and 90’s. He was the wind in the “sales” on everything from stocks to real estate. Snob real estate development is still the most popular way to go. Including walled neighborhoods and condo boards that want millions in cash and just the right people.
And now I’m beginning to miss him actually but I would never have been able to get near guys like him.
Marx had sharp instincts about human nature. But I think he was thinking of the pretensions and colonizing zeal of the industrial aristocracy of the 19th century. The colonial powers knew how easy it was to enslave people using their own ignorance against them. The British used Opium as a cash crop to seduce the Chinese. Serfdom wasn’t abolished in Russia until about the middle of the 19th century. But economies may not be very splendid without conspicuous waste and life is kind of boring without “sin”.

Posted by paintcan | Report as abusive
 

“All nations, regardless of supposed economic creed, now face a more basic series of choices: how to balance employment and economic stability with economic openness and the relentless pressure of competition and new technology.”

So Mr. Whalen, you’ve framed the question… Now what’s the answer ? ? Or are you just like any other loud-mouth with a platform. All questions, and no answers ? ?

Posted by edgyinchina | Report as abusive
 

Anybody the uses or references Ludwig von Mises to discuss Karl Marx’s ideas has already lost. It’s the equivalent to discussing Hilter using quotes from Stalin’s or the reverse.

Posted by AndersonW | Report as abusive
 

“The fact that advances in technology cause unemployment in older industries has nothing to do with Marxism or any of the political narratives of the 19th or 20th Centuries.”

The estimate that technology will likely cease to employ more people more quickly in newer service industries than it has done in “older industries” should have everything to do with the 21st century. Perhaps the working class will just continue to be divided in so many ways by the owner class.

Posted by marcovsky | Report as abusive
 

Mr Whalen sounds like an ideological jerk, dropping references here and there.
Can you really write “Those who laud Marx disparage all things American.” and be serious? Is this a tea party pulpit where you need to constantly make references to america has a ‘exceptional’ nation instead of using your mind to come to conclusions with reason?

Marx philosophy and economic theories have proven useful to understand the industrializing world of the 19th century. Deeming FDR and american politics until the 80s as “socialist” and marxist is nonsense. the concept of a solid and efficient government who cares for its citizens and provides some kind of welfare state doesn’t mean individual freedom is necessarily compromised.
Have some people visited Sweden or Denmark and asked if people felt oppressed by their government? or Germany? or even France?
Are Americans aware that their entire political system is bankrolled by rich donors and corporate interests instead of looking after the interest of its people (where 1 person is always equal to 1 another)?

Please, let’s stop contributing the only true american exception: the mass scale misinformation and fear-mongering of a large part of the poorly educated population in order to achieve political goals.

i won’t comment the rest, but Roubini’s analysis of the underlying causes of our current economic woes, the widening income gap and its devastating impact on demand. read it instead of the sad Mr Whalen: http://tl.gd/cd2dn6

Posted by alftheterrible | Report as abusive
 

There are some excellent comments on this article tonight. The U.S. System is fundamentally flawed, because it caters to large corporations needs first. The Supreme court has made it clear, as well as Mitt Romney recently, that “Corporations are People”. All I have to say is it’s people like him that protect their way of life, and the means of achieving it. Corporations and most Idealists don’t know what it’s like to have empathy for others, because money has a way of blocking out the bad, and creating a lifestyle of preference. Capitalism fosters greed in many respects, and dilutes the value of a cohesive society in favor of profit first. Morals, and the basic fabric of people change, and pretty soon your entire decision making process is driven by money only. Its like a blindfold and a cure all-in-one, it never stops feeling good as long as you have it!

Posted by schmetterling | Report as abusive
 

I think Roubini said capitalism is destroying itself instead of destroyed itself. Very different thing.

I cannot agree more because I can see the leaders of US and major European countries are bowing to market force. As the leaders of their countries, they have no control of how they run their governments. Their policies have to be changed according to the market. That is a very scary thing because market is a mad man. Mad man is hard to predict and very often he is wrong. I know because I am a market observer and petitioner.

The market forces governments to adopt policies that favor wealth polarization. That lead to riots. I can see riots all over the world and that is what Marx described. I don’t know how we get there, but I hope and believe we will alter the capital system before it destroy our society.

Posted by kwokfai | Report as abusive
 

The conclusion of this article reminds me on the socialist phrases – I grew up in East Germany. And Marx missed the developments of the 20th century? Oh well he did.

Posted by Greg6942 | Report as abusive
 

@alftheterrible:

Thank you.

Posted by Rhino1 | Report as abusive
 

“There is a class war in America, we rich people started it, and we are winning,” Warren Buffet.

Posted by Discovery451 | Report as abusive
 

A true capitalist system and the “free enterprise system,” whatever that might mean does not exist in America. It doesn’t exist anywhere. When there are cartels and combines, as well as oligarchies which control the resources, the means of production, transportation, distribution, the media and communications to say nothing of resources, you do not have a”free-enterprise” system. Big Oil controls that resource. A few corporations control ALL the airlines and the hubs. A few banks of enormous size control most of the money flow in this country. There is NO competition in the insurance business. When there is no competition, there is no free enterprise. I’m just surprised that I’m the first person to use the phrase, “economic fascism,” or the corporate state. That’s what we have and we’d better face it. Most of the wealth is in a few hands. Most of the political power stems from two or three universities located in the same area of the country. 5% of the population control almost all of the wealth. Corporations buy and sell legislators with impunity. that my friends is “Economic Fascism.” Marxism is the scary word in America. Fascism is where we are.

Posted by neahkahnie | Report as abusive
 

From 1912 on, a few people and corporations have controlled most of the world’s wealth until China entered the picture in the last 25 years. Those include the central banks of the U.S., England, Germany, and France and the large banking houses which control the central banks.

Posted by neahkahnie | Report as abusive
 

The author has obviously never read Marxs or if he has he is being deliberately misleading.

Marx stated that because of the way the capitalist system works boom and bust cycles are inevitable. The class warfare that Whalen so fears is brought about by the busts and the hunger that follows. Even the most law abiding citizen will steal to save his children from starvation and the capitalists have all the money when the system collapses so they are the obvious targets.
The Great Depression did not end until WWII because war is the only thing that redistributes wealth back to the workers.

When the Nazi’s defaulted on their debts and butchered the Jews they also stole their money, that money allowed Germany to rearm and invade the rest of Europe which they also pillaged.
The allies in their turn pillaged Germany and the riches gained created a golden age in the US.

Both Marx and Roubini are in the genius class, but the author is just a rich scared corpulent man.
Whalen is one of the short sighted rich that Warren Buffet is trying to counteract.

Posted by Sinbad1 | Report as abusive
 

Mr. Whalen,

Shame on you for misrepresenting Roubini’s comments. He wasn’t totally trashing capitalism, and he in fact rejected Marx’s socialism in his comment. Go back and read them. I suspect you already know this, and used Roubini as an opportunity to spew your right-wing Neo-feudalist views.

May FDR visit you in your dreams tonight…

Posted by Robert2020 | Report as abusive
 

It seems that the general stigma against Karl Marx was a successful societal ploy against free thinking in that general direction. I see Capitalism failing miserably. It began failing 40 years ago, in fact, when the basic tenets of a better way of life were fully stripped from our schools by a way of thinking that permits absolute chaos and no moral set.
While Marxism was inherently flawed, it was the introduction of an idea that spurred thought in those capable of thinking of a better future for everyone. Russia became a superpower because of a spinoff of this particular thought pattern, brought down in the Cold War by Capitalism to counter our Capitalism.
Simply put: Capitalism does not work in a community of our size. Once we graduate the fourth digit of a population, a much better system is necessary to cope with the sheer number of people. It’s time America changed its diaper.

Posted by Xeraphim | Report as abusive
 

Stambo and Paintcan:

Suppose you ran a drug company and spent $30 million developing a new drug that destroys cancer cells. By the time the drug has passed its third and final round of FDA tests, everybody in the scientific world knows what it is and how it works. Now you’re ready to put it on the market. But as soon as you do, another company, which has spent $0 on research and development, copies your formula and puts the exact same drug on the market too, only they can sell it at a quarter of the price, having no overhead to recoup. Then another company does the same, then another. You’re out $30 million (this is probably a gross underestimation of real costs), no one is buying the product you spent years to develop, and according to you, that’s tough luck, sucker. Because copyrights and intellectual property rights are, well, they’re just EVIL, so we did away with them. You would never develop another product again. And neither would anyone else.

Posted by NewsLady | Report as abusive
 

These guys are idiots. As long as a guy can work to improve his lot, he’ll do it. It’s as simple as that. And I can guarantee that ANY guy will do it (and or girl}

Posted by othimus | Report as abusive
 

Hmm… I saw that interview too. Unfortunately, other than labelling Dr Roubini’s comment ‘provocative’, you have not offered any alternative to his quite reasonable suggestion.

At the moment, the economic situation does seem to fit a Marxian analysis: that capitalism must always push surplus wealth away from workers towards capital, but that this is inherently unstable, with the lack of workers’ spending power contradicting the increased productivity of capital. Hence, a super-rich ‘class’ (they are very much real – and what else can you call them?) growing ever more wealthy, and a larger population being aggressively encouraged to make up for the wage-deficit by agreeing unsustainable debt contracts.

Nowhere in your post did you address these issues raised by Dr Roubini. I find this an increasingly frustrating aspect of discussing economics with the Ayn Rand brigade.

Posted by cjmcmurtrie | Report as abusive
 

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