Economy

Recently, the Bank of England hiked its interest rates yet again to 5.75%,the fifth rise since August 2005, and "further action" on interest rates could be on its way. The interest rate may go to 6% or more by the end of this year. The credit-led boom is now in jeopardy as central banks raise interest rates everywhere.

The financial turbulence of recent days has wiped billions off the price of shares all around the world. On Friday August 10th London’s stock exchange, the FTSE 100, alone dropped £63 billion. What does this mean?

This speech was delivered at a meeting of the leadership of the International Marxist Tendency in Barcelona on 24 July 2007. The recent turbulence on world stock markets fully confirms the perspectives outlined in it.

The poorest 50% of the world's 6.6bn population own just 1% of the world's riches. The answer? "Although we Americans strive to provide equality of economic opportunity, we do not guarantee equality of economic outcomes, nor should we." (Ben Bernanke, the chair of the US Federal Reserve)

This is an important book, written by Andrew Kliman, and published by Lexington Books. In a nutshell, what Andrew Kliman shows is that Marx's laws of motion of capitalism (how capitalism works and does not work) are logically consistent and theoretically valid.

High levels of growth have been achieved in the world economy, but these have been based on huge levels of easy credit, on debt. This is not sustainable in the long run. Figures on the state of the US economy indicate that the system is reaching its limits and crisis is looming.

The nerves of stock market speculators can’t be in too good a shape these days. Wall Street has just suffered its second biggest point drop in four years. This immediately spread to Asian stocks markets that suffered serious falls.

China hints at a tax on capital gains and the Shanghai stock exchange falls by 10%, but then the fall affects all the other major stock exchanges. What does all this indicate? Michael Roberts gives his view on the question.

A reader has objected to some of Michael Roberts’ criticisms of Andrew Glyn’s latest book. Among others it deals with the question of whether profit rates in the post-war period were affected by wage increases. Roberts replies showing that the fundamental reason for the decline was the same as that stated by Marx.

In his new book, Capitalism Unleashed, Andrew Glyn attempts to explain how capitalism moved from the crisis of the 1970s to recovery in the 1980s and 1990s. However, although full of interesting information, the book fails to provide an overall analysis and misses some essential aspects of Marxist theory.

Milton Friedman died on 16 November aged 94 years. He was one of the foremost bourgeois economists of the 20th century. His reputation as a monetarist theoretician and advisor to the likes of Thatcher, Reagan and Pinochet as these attacked all the gains of the working class was well earned.

The financial press and the investment houses of global finance capital are in euphoria. The world's stock markets are booming. But a closer look reveals that all this euphoria is misleading and the real situation is far less healthy than would appear on the surface.

The Financial Times recently claimed the British economy has been doing rather well out of globalisation. A closer look at the figures shows that what we have before us a growing polarisation, with the rich getting richer and the poor poorer. On a world scale the position is even worse, which may possibly explain the growing instability all across the globe.

Capitalism cannot provide a decent living to everyone, but as long as it guarantees significant layers of the population a reasonable standard of living it can maintain a degree of social stability. Recent figures on the situation in the USA show that “middle America” is beginning to feel the pinch, a phenomenon which indicates that social turmoil will soon be on the agenda.

One of the key elements in holding up consumer spending – and therefore sales and profits – in the USA has been growing house prices. The growing nominal value of housing has led to a widespread phenomenon of remortgaging, i.e. borrowing more to keep up annual family incomes. This cannot continue for much longer. The signs are already there that we are close to the limit.