Why the crisis and will there be another? – IMF speaks

I have just attended the 10th annual Historical Materialism conference in London where I presented a paper (among hundreds of others) and heard the contributions of many others. But more on that in my next post.

At the same time as we radical Marxist lefty academics were discussing all sorts of issues about capitalism, including the nature of the current crisis, the great and good economists and strategists of capital were doing the same at a conference under the auspices of the IMF in Washington with the very appropriate title, ‘Crises, yesterday and today’. As at the HM conferences, lots of papers were presented on subjects such as capital controls, will the US and Europe stagnate like Japan has done?; important papers on central bank monetary policy to exit the depression (these are the ones that excited the financial markets); and what is happening in Latin America and Asia etc.

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Exactly the opposite

Excessive lending, enormous public debt, huge public employees’ salaries, all of these factors have been targeted worldwide as reasons for the economic crisis.

The truth, in fact, is exactly the opposite.

These key factors: excessive lending, enormous public – and private – debt, and the huge salaries of public employees, have actually postponed the raging of the crisis for a long time. These factors concealed the fact that the economic system was unable to grow without borrowing, and unable to function without artificially high wages reinforcing demand and keeping the market moving. They concealed the inability of the system to provide consumption and employment to present generations without debting the future ones; without colonizing the future (Academic Fotis Lysandrou).

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