Following up on my post yesterday about Marxian crisis theory, that little bit about the GOD (“Grow or Die”) Principle and credit was only part of a larger discussion in Kunkel’s article about how Marxian crisis theory envisions economic crises arising naturally out of capitalism.
Below the fold I am going to explain my understanding of what it is Kunkel is saying about how such crises arise, but first I want to present a small excerpt from a recent Bloomberg News op-ed by James Livingston. Livingston is an historian teaching at Rutgers University and he makes the argument that even though economic austerity is what all the cool kidz are smoking right now, it is in fact very bad for your economic health.
I was directed to the article via Digby yesterday, shortly after posting that thing on Marx, GOD and credit, and I was struck by this statement:
In theory, the Great Depression was a financial meltdown first caused, and then cured, by central bankers. In fact, the underlying cause of this disaster wasn’t a short-term credit contraction engineered by bankers. The underlying cause of the Great Depression was a fundamental shift of income shares away from wages and consumption to corporate profits, which produced a tidal wave of surplus capital that couldn’t be profitably invested in goods production – and wasn’t invested in goods production. (emphasis added)
At no place in his op-ed does Livingston mention Marx, and there is nothing to indicate that he has any knowledge of Marxian crisis theory. However, his description of what gave rise to the Great Depression – from the point of view of an historian – mirrors exactly the kind of crisis the theory predicts capitalism will inevitably produce. It also sounds very similar to what we are going through right now.
