Rudd races off the Marx to jump hurdles of capitalism

Peter Hartcher watches as Rudd races off the Marx to jump hurdles of capitalism as the vultures circle:

"MARX was right," crowed the banner unfurled outside Parliament House yesterday by a group called Socialist Alternative. "Capitalism doesn't work."

Hartcher disagrees with this assessment, and concludes that being a temporary Socialist is a good thing:

A distinguishing characteristic of the Government's plans is that the state is filling the growth gap only until the private sector recovers.

Commendably, Rudd yesterday set out a doctrine for retracting the size of the Government's role in the economy once the crisis has passed. This sets Rudd apart from Whitlam. Indeed Rudd, like many leaders around the world at present, is saving capitalism from itself.

Crisis is inherent to financial capitalism. As one authority on crises, the late Charles Kindleberger, observed, there is nothing more ordinary in the four century history of financial capitalism than a crisis.

Where Marx went wrong was that he predicted the collapse of capitalism through the crises brought on by its "internal contradictions".

But where the state can sensibly manage its flaws and repair its crises, capitalism will recover and endure.

Emphasis Mine

In essence, Hartcher argues that Capitalism cannot operate without crises and that Marx was wrong to conclude that Capitalism will fail because of crises because Capitalism has survived crisis before and will do so again.

Hartcher asked not really answered the question: where do crisis come from? He relies on a descriptive answer - crises occur in Capitalism. His intellectual curiousity does not extend beyond that. It is like arguing that elephants have trunks because they would not be elephants without a trunk.

The classic Marxist answer to this question is that profits are increased at the expense of reducing income for the workers, and thereby reducing consumption. It is this reduced consumption that triggers these crises.

Keynesian economics is simply substaining consumption to reduce the inventories of goods so that profits can be realised.

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