Capitalism in crisis – the apologia

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Michael Roberts, the self-described Marxist economist, has a great post on the Capitalism in Crisis series which was run in the Financial Times recently. Capitalism doesn’t seem to be working as it should, the FT thinks now, given all the protests and the tendency of the ‘Great Global Financial Crisis” (three years and counting so far) to persist. So it rounded up some of the usual suspects to suggests its relatively rude health(TINA), with the usual “well if wasn’t for the over-egging of the financial system” handwringing to pull a tarp over the fundamental contradictions. Roberts provides a summary at the end of the post here:

“To sum up, Marx was wrong.  Capitalism is the best of alternative systems of human organisation; and it has changed significantly since Marx criticised it.  Unfortunately, some of those changes are for the worse (managers stealing profits; the finance sector undermining stability).  Apparently, we can correct those flaws either by going back to 19th century capitalism where owners not managers ruled (Plender and Kay); or by having state control of the financial sector (Brittan); or by increasing the role of private sector in running public services for a profit (Summers).   Not very convincing, is it?”

But its worth reading all of it. This was the most interesting bit for me:

“Summers knows that one in six Americans aged between 25 and 54 years are out of work while the top 0.1%  have been living the good life.   And, “unlike cyclical concerns (ie the recession), there is no obvious solution at hand”.  But apparently, this is nothing to do with the failure of capitalist mode of production but due to problems “deep within the evolution of technology”.  You see, agriculture gave way to industry in the 19th century and as it did so, people lost their livelihoods in the transition and inequality rose.  Then in 20th century, industry gave way to services and the same thing happened.  Now in the 21st century, all the jobs and incomes are to be found in the sectors raising the quality of human capital, namely health, education (where Summers now plies his trade) and housing and not in goods or other low-value services.   The problem is, says Summers, is that these jobs are found mainly in the public sector and are not subject to the profit motive.  Thus “in many of these new areas, the traditional case for market capitalism is weaker”.  His conclusion is that we need to “shrink or at least slow the growth of the public sector” to allow the provision of these services for profit.  Summers implies that profitability is no longer good enough in the existing private sector and so, to save capitalism, we must destroy public services and marketise them.  It’s not a good advert for the capitalist mode.”

Handy to know if you are wondering why those politicians who are trying to ‘resolve’ the crisis see the privatisation of health (Reilly) and education (Quinn) as a priority.

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Donagh is the editor of Irish Left Review. Contact Donagh through email:

One Response

  1. michael burke

    January 14, 2012 7:31 pm

    This is a good point.

    What Summers doesnt say is why,

    “the jobs and incomes are to be found in the sectors raising the quality of human capital, namely health, education and housing” not in goods-producing sectors or low-value services are found “mainly in the public sector and are not subject to the profit motive”.

    This is because the State is a more efficient provider of these goods and services. He could have added that this is also true of infrastructure, transport networks, telecoms and, yes, banking.

    In the US, Summers’ home, the private sector does actually produce most health car. It is aproximately half as productive as Britain’s mainly public but soon-to-be-privatised health system.

    The drive towards privaisation is, among many other things, the drive towards great inefficiency lower growth.