In an interview with the Wall Street Journal, Roubini delivered a fresh prophecy of disaster for the US economy, but amped it up a bit by agreeing with Marx that capitalism ultimately will collapse under its own weight.
“Karl Marx said it right. At some point capitalism can self-destruct itself because you cannot keep on shifting income from labor to capital without having excess capacity and a lack of aggregate demand,” Roubini said. “That’s what’s happening. We thought the markets work. They’re not working.”
Marx predicted that capitalism would fail because people would act for their own self interest and ultimately doom society as a whole.
For that reason and others he said capitalism was inherently immoral.
While Roubini didn’t specifically address the moral issues, he did continue to criticize the system as it is functioning now—and ultimately could cease functioning as the debt burden overwhelms the economy.
“We’re not there yet but I think there is a risk that this is the second leg of what happened during the Great Depression,” he told the Journal. We had a “severe economic and financial crisis, then we kicked the can down the road (and have) too much private debt—households, banks, governments.
“You cannot solve the problem with liquidity. At some point where there is too much debt either you grow your way out of it…either you save yourself out of it…or you can inflate your way out of the debt problem, but that has a lot of collateral damage,” he said.
“We’re not doing it,” he later added. “We’re creating zombie households, zombie banks and zombie governments, and you can have a depression.”
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