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Marx was right all along, says investment bank

rude marx by agitprop, file at, not quite. But a recent study by leading investment bank Credit Suisse shows that long-term growth rates of GDP in selected industrialised economies are negatively correlated with financial returns to shareholders. That is, the best returns for shareholders are from countries where GDP growth has been slowest, and vice versa. Where growth has been strongest, shareholder returns are weakest. This is shown in a chart from Credit Suisse (below, right).

Business Insider magazine carries a report of the research. It makes a series of bizarre arguments in an attempt to explain the correlation. The first is that stock markets anticipate future economic growth. But given that these data are based on the last 113 years, the stock markets must be very far-sighted indeed. The subsequent arguments do not get any stronger.

seb 20140304 Chart 1The negative correlation does not prove negative causality. But it does support the theory which suggests that the interests of shareholders are contrary to the interests of economic growth and the well-being of the population.

The clearest theory which this data supports, that the interests of shareholders are counterposed to that of economic growth, was formulated by Marx. In Capital he argues that the “development of the productive forces” (the investment in the means of production and in education that are required to increase the productivity of labour and hence economic growth) runs up against the barrier of the private ownership of the means of production*.

Shareholders are not concerned with economic development but are driven by profits. Where those two conflict, the latter always win out. This is true in general, but becomes very evident in a period of crisis. Private capitalists could end the current economic slump by increasing their level of investment and they have the means to do so. They choose not to because they judge there are currently insufficient profits to be made.

So, either we wait until they deign to invest, perhaps cutting wages and corporate taxes to encourage them. Or we adopt policies that use their cash hoard to fund the investment that is necessary from growth and economic well-being.

*This contradiction is a running theme of the whole work, as seen when it asserts: “It is not that too much wealth is produced. But from time to time there is too much wealth produced in in its capitalist, antagonistic forms.”

“The barriers to the capitalist mode of production show themselves as follows:

  • “In the way that the development of labour productivity involves a law, in the form of the falling rate of profit, that at a certain point confronts this development itself in a most hostile way and has constantly to be overcome by crises”
  • “In the way that….a certain rate of profit…determines the expansion or contraction of production, instead of the proportion between production and social needs….Production comes to a standstill not at the point where needs are satisfied, but rather where the production and realisation of profit impose this.” (Capital, Volume 3, Chapter 15, Development of the Law’s Internal Contradictions)


  1. David Ellis says:

    `So, either we wait until they deign to invest, perhaps cutting wages and corporate taxes to encourage them.’

    All of which deepens the crisis of profitability of course. Capitalism must grow or, like a shark that stops swimming, it will drown. Without growth it cannot divide and rule. The `strivers’ and the `skivers’ find common cause. There is zero social mobility and the class consciousness of the working masses develops quickly as it no longer wastes its time on individual improvement schemes or chasing useless dreams. But capitalism cannot grow. It has reached its outer limits. In fact the collapsing of the thirty year credit bubble turned Ponzi Scheme illustrate that it went far beyond them and the US-sponsored globalization now rapidly unravelling was the best it could do. The steroids didn’t work and merely gave the moribund patient a gigantic and fatal heart attack. Austerity is merely preparation for the burial.

  2. swatantra says:

    So, Marx was a banker all the time. I figured as much.

  3. David Ellis says:

    Yes, in a mind twisted by irrational hatred Marx was a banker all the time. That’s the kind of figuring that will get you far. There’s a place for you at the Tea Party.

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