The Main Contradiction of the Modern Economy

Translated by Ollie Richardson & Angelina Siard


The current crisis of the global economic system is impossible to resolve within the framework of the existing model of the distribution of wealth…

The fundamental contradiction lying in the base of most modern problems of the world economy is the contradiction connected with the growth of labour productivity.

It consists of this: during the growth of labour productivity there is a need for fewer people in order to produce a sufficient quantity of goods to meet all the natural needs of the population. But within the framework of a market/capitalist/liberal/monetarist economy, this inevitably leads to the growth of unemployment. I.e. the number of people who need goods but can’t earn money for it.

The number of unemployed “unnecessarys” is growing like an avalanche, the result of which the growth of labour productivity leads to increased social stratification and, paradoxically at first glance, to the growth in the number of poor (as, in its time, the laws about enclosures led to the emergence in England of a huge number of “unnecessarys”).

In the language of “Economics”, the demand is there, but there is not enough guaranteed demand.

Moreover, in this system there is no state of equilibrium. Each cycle leads to the fact that the produced quantities of goods is not enough for universal consumption, but at the same time is redundant for the part of the population that is able to buy it.

Therefore, the production is reduced again and again, the workers again and again are dismissed. The number of unemployed grows, the amount of guaranteed demand falls.

In this logic, by the way, the collapse of Ukrainian “European integration” happened. The EU considers Ukraine only as a market for European goods, not thinking where the Ukrainians will get the means for their purchase (and not creating conditions for such earnings). As a result, after the logical collapse of the Ukrainian economy because of the rupture of production and economic ties with Russia, it appeared that there is no market for European goods in Ukraine that can be guaranteed by the purchasing power of the population. After which EU officials instantly lost interest in Ukraine as an entity that is impossible to earn from.

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But let’s come back to the problem of “overproduction” or, rather, the lack of guaranteed demand.

All “market” economic schools and theories try to solve this fundamental problem by stimulating consumption. Using consumer loans on the one hand and the formation of the “Homo-consumer” on the other.

A Homo-consumer is a fatty being in rhinestones and moleskin, which in this case goes to the gym and drinks smoothies because it is fashionable, with one hand pawing the new iPhone and camping the night before at the entrance to the supermarket before the release of each new videogame, or “Black Friday” (the main American sale of the year). But this being is not able to do productive work, that’s why he can consume only loans, but at some point loans are ceased to be issued to him, because he is not able to repay them. And that’s all – it’s a dead-end.

The number of people employed in the production of indebted consumers (this same “middle class”) is reduced with every iteration. That’s why all social scientists in one voice talk about the rapid decline of the middle class everywhere and on the global scale.

Welfare, by the way, does not work. Because it only creates a class of parasites living on the “social”, who is not able to work, and increase the workload on the working (or rather producing) class.

Similarly, the attempts to inflate the scope of services don’t work. This only reduces the overall efficiency of the system, because people work more hours and produce and consume the same quantity of goods (or eventually, even less, because a part of them is spent on the provision of services).

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Capitalist economy, the “efficiency” of which the liberal propagandists sing to us about, in fact, is an extremely inefficient monster with low performance and a huge number of poor “unnecessary” people.

Against this background, the texts of ultra-right Nazis (like propagandist of Ukrainian junta Petr Chuklinov, but in the Russian liberal sphere there are many like him too) is very indicative. These texts calls to abandon solidarity pensions, and in reality, kill pensioners. Moreover, not only pensioners, but all people who fall into the category of “unnecessary.” This is perfectly shown in the dystopia American film “The Purge”, where in the US an ultra-right dictatorship is install, where the rich kill the poor with impunity.

We are in a situation when the means of production, goods, and money, which you can buy these products with, are concentrated in the hands of ultra small number of super-rich people. And since they can’t sell anything to themselves, and their consumption is completely closed (even in the most “elite” and perverted forms), the drivers for growth of production can’t occur anywhere, and the world economy predictably stagnates.

Here I do not reinvent the wheel, all this well predicted and described by comrade Karl Marx in his “Kapital” more than a hundred years ago.

And since that time, everything evolved strictly according to the described mechanism. Including a steady decline in the rate of return in production as the markets are saturated and overloaded with goods, and guaranteed demand falls and falls. This explains the virtualization of the modern world economy, when capital flees from the real sector to the stock exchanges, where virtual profits are drawn, which has no real connection with physical goods/wealth.

In the framework of a liberal/market paradigm, this equation has no solutions. If you want to try to prove me wrong, go ahead. I like watching other’s pathetic attempts.

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The Soviet economy, armed by Marxist science, solved this contradiction in a different way – a reduction in the hours of the working day, ensuring full employment.

Thus, demand did not decline (since everybody received salaries, unemployed “unnecessarys” simply did not exist), instead people got more free time. I.e. they were LIBERATED in the true Marxist sense (receiving not abstract “rights”, but real possibilities).

The second aspect of the Soviet solution to the problem of consumption is to increase the reliability of manufactured goods. They last longer, you were less likely to buy new. As a result formal GDP was lower, but the real welfare of the citizens was higher (you needed to spend less for the same amount of consumed goods).

But neither the first nor the second is profitable in the market (chrematistics) sense. This contradiction was described by Aristotle, when he opposed the “economy” (the science of household management) and “chrematistics” (the science of making profit). For more than 2000 years, no one could get out of Aristotelian logic. And the so-called liberal “economists” either don’t know about Aristotle, or pretend that they don’t know.

The liberal market system is profitable (for a narrow layer of “elite” parasitarian), but not effective and not in equilibrium. The Soviet system is not “profitable”, but is effective and balanced.

The current crisis in the global economic system cannot be resolved within the existing model of distribution of wealth. In its place must come a more equal, more just, more free (in the Marxist sense of the term) system.

And there are two ways of change – through awareness and reform (evolutionary) or through turmoil and conflict (revolutionary). Change is inevitable, like the victory of communism. You can only choose the path – easy or painful, pills or surgery – but not the result.

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