I read the whole article, skimming it really, but it does make sense to me. I did study macroeconomics in college, but Foster writes pretty plainly.
Karl Marx did explain the pitfalls of the capitalist system. We are now seeing the denouement of its workings. Here is the last paras, which explain the basic premise. Whole article here:
http://www.monthlyreview.org/080401foster.php
Posted to Marxmail.org
Still, as important as financialization has become in the contemporary economy, this should not blind us to the fact that the real problem lies elsewhere: in the whole system of class exploitation rooted in production. In this sense financialization is merely a way of compensating for the underlying disease affecting capital accumulation itself. As Marx wrote in Capital, “The superficiality of political economy shows itself in the fact that it views the expansion and contraction of credit as the cause of the periodic alterations of the industrial cycle, while it is a mere symptom of them.” Despite the vast expansion of credit-debt in the capitalism of today, it remains true that the real barrier to capital is capital itself: manifested in the tendency toward overaccumulation of capital.
The well-meaning critique of financialization advanced by Palley, Orhangazi, and others on the left is aimed at the re-regulation of the financial system, and elimination of some of the worst aspects of neoliberalism that have emerged in the age of monopoly-finance capital. The clear intention is to create a new financial architecture that will stabilize the economy and protect wage labor. But if the foregoing argument is correct, such endeavors to re-regulate finance are likely to fail in their main objectives, since any serious attempt to reign in the financial system risks destabilizing the whole regime of accumulation, which constantly needs financialization to soar to ever higher levels.
The only things that could conceivably be done within the system to stabilize the economy, Sweezy stated at Harvard in 1994, would be greatly to expand civilian state spending in ways that genuinely benefited the population; and to carry out a truly radical redistribution of income and wealth of the kind “that Joseph Kennedy, the founder of the Kennedy dynasty” referred to “in the middle of the Great Depression, when things looked bleakest”—indicating “that he would gladly give up half his fortune if he could be sure the other half would be safe.” Neither of these radical proposals of course is on the agenda at present, and the nature of capitalism is such that if a crisis ever led to their adoption, every attempt would be made by the vested interests to repeal such measures the moment the crisis had passed.33
The hard truth of the matter is that the regime of monopoly-finance capital is designed to benefit a tiny group of oligopolists who dominate both production and finance. A relatively small number of individuals and corporations control huge pools of capital and find no other way to continue to make money on the required scale than through a heavy reliance on finance and speculation. This is a deep-seated contradiction intrinsic to the development of capitalism itself. If the goal is to advance the needs of humanity as a whole, the world will sooner or later have to embrace an alternative system. There is no other way. (March 5, 2008)
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