Marc Faber Warns "karl Marx Was Right"

[interestrateripoff]

http://www.zerohedge.com/news/2013-11-07/marc-faber-warns-karl-marx-was-right

..

So my view is that capital spending booms, which inevitably lead to minor or major investment manias, are a necessary and integral part of the capitalistic system. They drive progress and development, lower production costs and increase productivity, even if there is inevitably some pain in the bust that follows every boom.

The point is, however, that in the real economy (a small capital market), bubbles tend to be contained by the availability of savings and credit, whereas in the financial economy (a disproportionately large capital market compared with the economy), the unlimited availability of credit leads to speculative bubbles, which get totally out of hand.

In other words, whereas every bubble will create some “white elephant” investments (investments that don’t make any economic sense under any circumstances), in financial economies’ bubbles, the quantity and aggregate size of “white elephant” investments is of such a colossal magnitude that the economic benefits that arise from every investment boom, which I alluded to above, can be more than offset by the money and wealth destruction that arises during the bust. This is so because in a financial economy, far too much speculative and leveraged capital becomes immobilized in totally unproductive “white elephant” investments.

..

So it would seem to me that Karl Marx might prove to have been right in his contention that crises become more and more destructive as the capitalistic system matures (and as the “financial economy” referred to earlier grows like a cancer) and that the ultimate breakdown will occur in a final crisis that will be so disastrous as to set fire to the framework of our capitalistic society.

Not so, Bernanke and co. argue, since central banks can print an unlimited amount of money and take extraordinary measures, which, by intervening directly in the markets, support asset prices such as bonds, equities and homes, and therefore avoid economic downturns, especially deflationary ones. There is some truth in this. If a central bank prints a sufficient quantity of money and is prepared to extend an unlimited amount of credit, then deflation in the domestic price level can easily be avoided, but at a considerable cost.

It is clear that such policies do lead to depreciation of the currency, either against currencies of other countries that resist following the same policies of massive monetization and state bailouts (policies which are based on, for me at least, incomprehensible sophism among the economic academia) or against gold, commodities and hard assets in general. The rise in domestic prices then leads at some point to a “scarcity of the circulating medium,” which necessitates the creation of even more credit and paper money.

An interesting perspective although the current system is clearly not capitalist we have a corporatist / debtalism system. However is ending with this type of system inevitable as you get the big winners in a free market system moving to protect their own interests at the expense of everyone else?

It would appear that Faber is alluring to the big black hole that is a recurrent view point on here.

[zugzwang]

Sounds more like Minsky than Marx. But Marx is definitely overdue a critical reappraisal. The last of the great classical economists after Adam Smith and Ricardo?

[interestrateripoff]

Sounds more like Minsky than Marx. But Marx is definitely overdue a critical reappraisal. The last of the great classical economists after Adam Smith and Ricardo?

It's clear we have no one of calibre of Smith, Ricardo or Marx in the present.

[thecrashingisles]

It's clear we have no one of calibre of Smith, Ricardo or Marx in the present.

I know he's too modest to make the comparison himself but Krugman?

[PopGun]

I know he's too modest to make the comparison himself but Krugman?

[fluffy666]

An interesting perspective although the current system is clearly not capitalist we have a corporatist / debtalism system. However is ending with this type of system inevitable as you get the big winners in a free market system moving to protect their own interests at the expense of everyone else?

It would appear that Faber is alluring to the big black hole that is a recurrent view point on here.

It's something the economic Libertarians of the world refuse to 'get'. To define..

Political power is, fundamentally, the power to coerce, to make people do things (or not do things).

Economic power is the power to buy, or invest, or (significantly), refuse to buy/invest.

The problem comes when economic actors acquire political power. The obvious current example being that the banks have enough political influence to directly acquire taxpayer cash without having to do anything in return. But it could be a large supermarket always getting planning permission when a small competitor cannot, a car maker rewriting safety regulations to stifle competitors, whatever.

The end state is that there becomes no essential difference between government and large corporations, and that individual choice becomes entirely prescribed.

The problem with Libertarians is that although they may recognize the problem, their only solution is to try and magically abolish political power.. which makes the problem worse. The power to force people to do something will always exist, unfortunately, and needs to be strongly monitored - this is why we have democratic government. Libertarians don't care about government and therefore are not particularly bothered by questions of consent or legitimacy of government.. which of course plays straight into the hands of the corporations.

[Traktion]

It's something the economic Libertarians of the world refuse to 'get'. To define..

Political power is, fundamentally, the power to coerce, to make people do things (or not do things).

Economic power is the power to buy, or invest, or (significantly), refuse to buy/invest.

The problem comes when economic actors acquire political power. The obvious current example being that the banks have enough political influence to directly acquire taxpayer cash without having to do anything in return. But it could be a large supermarket always getting planning permission when a small competitor cannot, a car maker rewriting safety regulations to stifle competitors, whatever.

The end state is that there becomes no essential difference between government and large corporations, and that individual choice becomes entirely prescribed.

The problem with Libertarians is that although they may recognize the problem, their only solution is to try and magically abolish political power.. which makes the problem worse. The power to force people to do something will always exist, unfortunately, and needs to be strongly monitored - this is why we have democratic government. Libertarians don't care about government and therefore are not particularly bothered by questions of consent or legitimacy of government.. which of course plays straight into the hands of the corporations.

This assumes that the only way to influence behaviour is via coercion. This isn't true.

Thankfully, society no longer tolerates the beating of women to get them to 'conform'. Beating children has also been largely rejected as a 'solution' to them not doing as they're told too. People are slowly moving towards a realisation that using violence to get results is not acceptable in a civilised society.

It isn't the police or the legal system which enforces these rules; it is society itself. It is the horizontal rule, which causes people to judge one another. The main power in politics is the ability to suggest a moral code, either through propaganda or calls from authority. The men with guns are there as a last resort, but the time they are put on the streets, the battle for the minds has already been lost.

Economic power is relatively toothless without political power being subverted. Political power needs to return to the populous from the bottom up, rather than being foisted upon them from the top down. This is a far harder target for corporations to aim at, as the power base is then dispersed.

It isn't that all Libertarians don't get it. It is that the argument is more nuanced than just 'No State' = 'Good'.

[R K]

There never have been and never will be 'free markets'.

Baffles me why anyone ever uses the term. It's clearly utter nonsense from Romans onwards.......

[fluffy666]

This assumes that the only way to influence behaviour is via coercion. This isn't true.

No, it dosen't.

All I'm saying is that the power to force people to do something exists (and will exist for the forseeable future). And as long as this power exists it must be subject to controls, checks and balances. And people under the libertarian flag are usually so busy trying to dismantle government in general that they don't care about these things.

I'm really not sure how you think that 'returning political power to the bottom' would do anything but give complete political power to large economic entities, who would, you realize, be completely free to hire as many thugs as it took to keep you in line. Who are you going to call when they come around to tell you that they own your business now and you work for them?

[zugzwang]

No, it dosen't.

All I'm saying is that the power to force people to do something exists (and will exist for the forseeable future). And as long as this power exists it must be subject to controls, checks and balances. And people under the libertarian flag are usually so busy trying to dismantle government in general that they don't care about these things.

I'm really not sure how you think that 'returning political power to the bottom' would do anything but give complete political power to large economic entities, who would, you realize, be completely free to hire as many thugs as it took to keep you in line. Who are you going to call when they come around to tell you that they own your business now and you work for them?

Steven Pinker argues credibly that the world has become more just and less violent because of the benevolent and enlightened custodianship of human affairs by the state.

[Oliver Sutton]

Steven Pinker argues credibly that the world has become more just and less violent because of the benevolent and enlightened custodianship of human affairs by the state.

He likes to cite Thomas Hobbes a lot.

"In the state of nature the life of man is solitary, poor, nasty, brutish, and short."

[Goat]

From the Telegraph: The Left is trying to rehabilitate Karl Marx. Let's remind them of the millions who died in his name

...I had thought Marxism was over with the fall of the Berlin Wall – when we discovered that socialism was one part bloodshed, one part farce. But unbelievable also because you'd have to be a pretty lacking in moral sensitivity to defend a thinker whose work sent millions of people to an early grave.

I don't want to have to rehearse the numbers but, apparently, they're not being taught in schools anymore – so here goes. Sixty-five million were murdered in China – starved, hounded to suicide, shot as class traitors. Twenty million in the USSR, 2 million in North Korea, 1.7 million in Africa. The nightmare of Cambodia (2 million dead) is especially vivid. "Reactionaries" were sorted out from the base population on the grounds of being supporters of the old regime, having gone to school or just for wearing glasses. They were taken to the side of paddy fields and hacked to death by teenagers.

It's possible to argue that Marx was an economist rather than a politician – that he only analysed the failings of Capitalism and never offered the blue-print for building socialism that would end in disaster in the 20th century. But that misses the point that Marx's analysis was what informed that blue-print and, so, he bears intellectual responsibility for it...

[tomandlu]

It's possible to argue that Marx was an economist rather than a politician – that he only analysed the failings of Capitalism and never offered the blue-print for building socialism that would end in disaster in the 20th century. But that misses the point that Marx's analysis was what informed that blue-print and, so, he bears intellectual responsibility for it...[/i]

A fairly weak argument against his seemingly correct analysis of why capitalism would fail (which they even grudgingly admit).

I don't want communism, but I also don't want whatever shit we're being fed at the moment.

[alexw]

From the Telegraph: The Left is trying to rehabilitate Karl Marx. Let's remind them of the millions who died in his name

...I had thought Marxism was over with the fall of the Berlin Wall – when we discovered that socialism was one part bloodshed, one part farce. But unbelievable also because you'd have to be a pretty lacking in moral sensitivity to defend a thinker whose work sent millions of people to an early grave.

I don't want to have to rehearse the numbers but, apparently, they're not being taught in schools anymore – so here goes. Sixty-five million were murdered in China – starved, hounded to suicide, shot as class traitors. Twenty million in the USSR, 2 million in North Korea, 1.7 million in Africa. The nightmare of Cambodia (2 million dead) is especially vivid. "Reactionaries" were sorted out from the base population on the grounds of being supporters of the old regime, having gone to school or just for wearing glasses. They were taken to the side of paddy fields and hacked to death by teenagers.

It's possible to argue that Marx was an economist rather than a politician – that he only analysed the failings of Capitalism and never offered the blue-print for building socialism that would end in disaster in the 20th century. But that misses the point that Marx's analysis was what informed that blue-print and, so, he bears intellectual responsibility for it...

What a load of nonsense.

Does this mean milton friedman is to blame for the brutal massacres that pinochet carried out?

According to the logic of that article he is.

[alexw]

I think it conflates 'Marxian analysis' with initially benevolent regimes that you can't change and morph over time into authoritarian ones based on seeking favour at whatever cost.

I have no doubt that if Labour and the Tories were to merge and we had a first past the post electoral system whereby you were powerless to change the government, I would predict exactly the same sort of nasty demagoguey would creep in here.

It conflates an economic school of thought with how that school is used to justify certain actions.

As is patently obvious, you can twist anything to justify an action if you look hard enough.

[Traktion]

No, it dosen't.

All I'm saying is that the power to force people to do something exists (and will exist for the forseeable future). And as long as this power exists it must be subject to controls, checks and balances. And people under the libertarian flag are usually so busy trying to dismantle government in general that they don't care about these things.

I'm really not sure how you think that 'returning political power to the bottom' would do anything but give complete political power to large economic entities, who would, you realize, be completely free to hire as many thugs as it took to keep you in line. Who are you going to call when they come around to tell you that they own your business now and you work for them?

You can only envisage political power being centralised? I think you should try using your imagination!

[okaycuckoo]

I know he's too modest to make the comparison himself but Krugman?

Double zing!

ps. Imagine the interview - "Smith, Ricardo, Marx. Where do you come, Paul?"

Edited November 8, 2013 by okaycuckoo