'..
if we wish to build a truly stable financial and monetary system for the twenty-first century..'
– Jesús Huerta de Soto,
Money, Bank Credit, and Economic Cycles, page 811
'In an unhampered free market system the 'shifting of incomes' Roubini criticizes could not possibly happen. As regards Karl Marx, his economic theory was based on the 'labor theory of value', which was thoroughly debunked by Carl Menger just one year after the publication of 'Das Kapital'. Marx also believed in Hegelian historical determinism and held – without supplying any rational explanation for this belief..''The real reason for growing wealth inequality (what Roubini calls the 'shifting of income from labor to capital') is the very central bank-led inflationary fiat money system that Roubini simultaneously
sotto voce supports. However, this has nothing to do with 'capitalism' or 'markets'. Essentially Roubini asserts that the problems and failures caused by the very socialist central economic planning institution that he fully supports should be blamed on the market.
In an unhampered free market system the 'shifting of incomes' Roubini criticizes could not possibly happen. As regards Karl Marx, his economic theory was based on the 'labor theory of value', which was thoroughly debunked by Carl Menger just one year after the publication of 'Das Kapital'. Marx also believed in Hegelian historical determinism and held – without supplying any rational explanation for this belief (Mises speculated that Marx was likely informed by 'an inner voice') - that history, with the help of some mysterious force, would inevitably lead to the establishment of socialism at its 'end point' so to speak. Capitalism, so Marx, would self-destruct for the very reason Roubini cites. As Ludwig von Mises noted in '
Theory and History':
“Marx never embarked on the hopeless task of refuting the economists' description of the working of the market economy. Instead he was eager to show that capitalism must in the future lead to very unsatisfactory conditions. He undertook to demonstrate that the operation of capitalism must inevitably result in the concentration of wealth in the possession of an ever diminishing number of capitalists on the one hand and in the progressive impoverishment of the immense majority on the other hand. In the execution of this task he started from the spurious iron law of wages according to which the average wage rate is that quantum of the means of subsistence which is absolutely required to enable the laborer to barely survive and to rear progeny.
This alleged law has long since been entirely discredited, and even the most bigoted Marxians have dropped it.
But even if one were prepared for the sake of argument to call the law correct, it is obvious that it can by no means serve as the basis of a demonstration that the evolution of capitalism leads to progressive impoverishment of the wage earners. If wage rates under capitalism are always so low that for physiological reasons they cannot drop any further without wiping out the whole class of wage earners, it is impossible to maintain the thesis of the Communist Manifesto that the laborer "sinks deeper and deeper" with the progress of industry. Like all Marx's other arguments this demonstration is contradictory and self-defeating. Marx boasted of having discovered the immanent laws of capitalist evolution. The most important of these laws he considered the law of progressive impoverishment of the wage-earning masses. It is the operation of this law that brings about the final collapse of capitalism and the emergence of socialism. When this law is seen to be spurious, the foundation is pulled from under both Marx's system of economics and his theory of capitalist evolution.
Incidentally we have to establish the fact that in capitalistic countries the standard of living of the wage earners has improved in an unprecedented and undreamt-of way since the publication of theCommunist Manifesto and the first volume of Das Kapital. Marx misrepresented the operation of the capitalist system in every respect.
(emphasis added)
Well, Roubini has just revived the argument '
even the most bigoted Marxists have dropped'. As to which system has prospered – communism or the market economy – the answer has already been given by history. Socialism wasn't quite as 'inevitable' as Marx and Engels had believed.
Marx himself may not have '
embarked on the hopeless task of refuting the economists' description of the working of the market economy' as Ludwig von Mises averred – he evidently left that particular task to Nouriel Roubini.'
- Acting Man,
Karl Marx Resurrected – Let’s Quickly Bury Him Again, August 18th, 2011
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