In this presentation, David Harvey demonstrates how current discussions of the financial crisis neglect to account for the internal contradiction within capitalism--first identified by Marx, history's greatest liberal economist*- between wages and demand. He then illustrates how the rapid extension of credit over the past three decades was used as a means to prop up demand as real wages fell. And we all know what happened next...
With the Con-Dem coalition rolling out punitive 'workfare' style reforms, one begins to wonder about the longer-term macro-economic effects of this extension in the reserve pool of labour?
* I refer to Marx in this way because he understood how capitalism and the liberal economic theory underpinning it (dis)function better than any of their proponents.
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