Economics

Market madness

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The ruling classes of the US and Britain are reeling in the face of the economic meltdown of their system and the real character of capitalism is exposed, writes Chris Harman

On Sunday 7 September the most right wing Republican administration in the US for three quarters of a century carried out the takeover of the mortgage giants Freddie Mac and Fannie Mae. It was then what appeared to be the "greatest nationalisation in the history of humanity", as Nouriel Roubini, professor at New York University and former US government adviser, described it.

The emperors, and their clothes

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Two new books on the state of the economy expose the speculation and greed that have propped up Gordon Brown's so-called boom years

What a difference a year makes. The conventional wisdom at the beginning of last summer was that the economy was performing wonders. Graham Turner, Larry Elliott and Dan Atkinson were among a small minority of economists and commentators prepared to say the emperor had no clothes. Now everyone can see that they were right.

Economic crisis: the new 1929 or the new Japan?

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Costas Lapavitsas is an economist at the School of Oriental and African Studies in London. He has written extensively on Marxist theories of finance. He spoke to Socialist Review and answered questions on historical parallels with the current economic crisis and its impact.

Many mainstream economic commentators are comparing the current economic crisis to the one that hit Japan in the late 1980s, which saw the country stagnate for 15 years. How strong are the similarities?

There are some clear similarities. First, the bubble that is now bursting in the US economy is in property. That was the same in Japan. Much of the speculation that led to the crisis of the late 1980s in Japan was related to housing and commercial property.

Rate of profit warning

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No one can predict whether the recent financial crises will develop into a proper recession.

Some have hailed China's economic expansion and the development of computer technology as potential saviours of the world economy - Karl Marx would have disagreed.

The mainstream economic commentators have all been revising their calculations since the monetary crisis caused by lending to "subprime mortgages" broke in August. Alan Greenspan of the US Federal Reserve Bank thinks the odds on a recession next year have risen to about 50-50, and the International Monetary Fund seems to at least half agree.

The financial panic that never was

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As we go to press the financial panic that made the headlines across the world in August seems to have subsided.

The message now from many of those who panicked is that nothing was or is amiss. After all, they say, the panic was only in the financial sector, not "the real economy". But it was not so simple.

Blair facts and Brown noses

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"The longest period of uninterrupted growth in the industrial history of our country." So claimed Gordon Brown in his budget speech. This supposedly miraculous economic record is one thing on which the Blairite and Brownite factions of New Labour agree. Except it simply is not true.

There was a far longer period of uninterrupted growth, lasting 25 years, from 1948 to 1973. It was also at a faster rate than we have known under New Labour. The Cambridge Economic History of Modern Britain reported that "from 1949 to 1973, the UK economy grew at an average rate of 3.0 percent per annum." Growth has only been at an average of 2.3 percent since 2000, according to National Institute Economic Review (NIER) figures.

Andrew Glyn: 'Will we face a dystopia in which very large numbers of less qualified and poorly paid people exist to service the consumption needs of the rich?'

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Andrew Glyn has been a prominent left wing economist for more than 35 years. He talks to Rob Hoveman about his latest book Capitalism Unleashed.

Andrew Glyn's previous books sought to analyse the factors which moved the world economy from its "golden age" of strong growth before 1973 into the subsequent period of mass unemployment, lower growth and greater instability.

Alternatives to Neo-liberalism

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Advocates of the free market constantly repeat the refrain that 'there is no alternative'. Alex Callinicos believes that for the movement to be able to answer this claim, it needs to reassert the viability of democratic planning.

The tide of revolt against neo-liberalism continues to rise. In Europe this is most evident in France. Within the space of barely a year the neo-liberal pensée unique (sole ideology) suffered two stunning defeats - first the victory of the left No in the referendum on the European Constitution, then the social insurrection against the CPE law aimed at limiting the rights of young workers.

Criticising Capitalism in Order to Save It

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John Kenneth Galbraith, who died last month aged 98, received very mixed obituaries. This was because he challenged some of the conclusions of mainstream capitalist economics while continuing to accept many of its assumptions.

Karl Marx divided the history of mainstream economics into two stages. The first he called "classical political economy". It was the product of thinkers, most notably Adam Smith and David Ricardo, who identified with the capitalist model of society when it was battling to establish itself in place of the feudal society that preceded it. Their desire to push capitalism forward led them to investigate its fundamental features-especially sources of value in productive labour and, by implication, profits in exploitation.

A War Waged by the Wealthy

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Acclaimed Marxist geographer David Harvey talks to Joseph Choonara about the rise of neo-liberalism, and why it should be seen as a ruling class project.

In January New York based academic David Harvey spoke at a packed London School of Economics public lecture to promote his latest book, A Brief History of Neo-Liberalism. He set out, with characteristic precision, the story of three decades of assaults carried out by a global ruling class. These attacks, made in the name of neo-liberalism, have seen growing social polarisation, the rise of new elites and the impoverishment of many of those at the bottom of society.

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