The very popular diary by goinsouth this week on Nouriel Roubini's statement that Marx was right received some comments trying to excuse capitalism itself from being responsible for the woes it seems to be suffering. I imagine that some of the comments, at least, have to do with gut reaction to the invocation of Marx's name, which still has the emotional impact of invoking Satan for some people. But although Marx was certainly over-the-edge on many fronts (antisemitism, for instance), his analysis of the underlying corruption of capitalism stands the test of time. Moreover, unlike many of Marx's theses, it is simple and easy to understand: There is an unjust power imbalance between the capitalist and the laborer who does the capitalist's work for him, an imbalance that favors the capitalist's profits at the expense of the worker's life. When the capitalists push this power differential to the extreme, the system begins to break down.
The simple explanation over the break.
What is the injustice at the heart of capitalism? When the worker meets the capitalist in the so-called labor market to sell at least a portion of his life to the capitalist, he enters the negotiation at a serious disadvantage. The capitalist has much more money stored up than the worker. (That's why he's a capitalist.) So the capitalist can outlast the worker in negotiations until the worker is forced to take the capitalist's terms. That's all there is to it. This built-in opportunity for injustice is the fundamental ethical stain on the capitalist system.
Capitalists, of course, don't want to admit to this inherent injustice. Some won't see it because it would conflict with their sense of their own virtuousness. Others see it, but regard themselves as superior to the workers, and so entitled to abuse them if it seems advantageous to them. Some few see it and try to refrain from using the opportunity by limiting themselves to an amount of profit that will not put undue burdens on their workers.
The fundamental opportunity for injustice also engenders the basic difference in political stances toward capitalism. The economic branch of the conservative pole of American politics, which is dwindling precipitously in influence to the neo-stupid branch, tries to defend the "rights" of capitalists to preserve their power-differential over labor, regarding this differential as the capitalist's God-given right; hence the deification of "job-creators" and the demonization of workers in Republican rhetoric. (Orin Hatch's recent speech in the Senate praising job-creators for their beneficence in bestowing the opportunity for unrewarding labor on the undeserving poor springs to mind in this connection.)
On the other side of the spectrum, the liberal pole of American politics uses rhetoric that derives its power from recognizing the injustice of the fundamental power-differential. Liberals favor limiting the capitalist's opportunities to abuse workers by wielding the power-differential with impunity in order to force workers to accept an unjust deal. When, however, liberals enact regulations to prevent blatantly unethical behavior on the part of capitalists (regulations such as minimum-wage laws, pension requirements, and so forth), capitalists react to the implicit, and accurate, criticism of their character with indignation, and with redoubled efforts to destroy the regulations that limit their "freedom" to exploit the power-differential against the worker for their own selfish ends if they so choose. (After all, why would God have blessed them with the power to inflict misery on others if He didn't want them to use it?) Once established, the vicious cycle—the battle between those wishing to preserve the opportunity to abuse power and those attempting to limit opportunities for abusing power—simply oscillates under its own steam.
Adam Smith unwittingly provided the burgeoning capitalist class of his day with the perfect pretext for abandoning any concern for the worker. He did this by making the speculative observation in The Wealth of Nations that there seemed to be some "invisible hand" guiding the combined self-interests of all investors and capitalists toward overall societal improvement despite any particular injustice on the part of individual capitalists. This unseen power, like God's providence, could produce good out of all the evil that men do. On the basis of this remark, the capitalist class quickly drew the specious—but convenient—conclusion that they were absolved from responsibility for their self-interested behavior.
What Smith, being a decent and highly moral person, could not foresee was the extent to which many people will go to find an excuse for self-interested behavior. And that's what the "invisible hand" gave them—the excuse that they did not need to control their selfish desires or their insatiable greed, because the God of the Market would providentially turn their self-indulgence and their unconcern for their fellows to His good purposes. It was such a useful excuse that it immediately took hold, and remains with us to this day as one of the most deeply ingrained myths of capitalist ideology. That is why conservative economic rhetoric literally drips with the treacle of self-righteous self-interest.
While Smith did not foresee the damage that would be done by his remark, he certainly recognized it when it arose. As a result he spent a great deal of energy during the remainder of his life revising his first bestseller, The Theory of Moral Sentiments, to emphasize that benevolence, not self-interest, is the true source of all that is wholesome and good in society. But the cat was out of the bag; nobody paid much interest to his attempt to undo his mistake.
Anyway, we have entered another era, after thirty years of pro-power-differential politics, in which capitalists have pushed the innate injustice of the system beyond the moral limits of a decent society. In continuing to try to defend their indefensible self-interest, capitalists are simply fueling the fire that will lead to another great social backlash against the privileges of capital. Whether that backlash will take the form of another labor movement like that of the 1930s is a completely different question. The way these tipping points play out in history is not predictable. But the fact that capitalism is eating itself from the inside is clear for all (except probably the hardy adherents of the neo-stupid movement) to see.