Dublin Opinion

There are many explanations for the crisis of capital that began in 2007. But the one thing missing is an understanding of “systemic risks.”

I was alerted to this when Her Majesty the Queen visited the London School of Economics and asked the prestigious economists there how come they had not seen the crisis coming.

Being a feudal monarch rather than an ordinary mortal, the economists felt impelled to answer.

After six months of reflection the economic gurus of the British Academy submitted their conclusions. The gist was that many intelligent and dedicated economists had worked assiduously and hard on understanding the micro-processes. But everyone had somehow missed “systemic risk.”

A year later, a former chief economist of the International Monetary Fund said “we sort of know vaguely what systemic risk is and what factors might relate to it. But to argue that it is a well-developed science at this point is overstating the fact.” In a formal paper, the IMF described the study of systemic risk as “in its infancy.”

In Marxian theory (as opposed to myopic neoclassical or financial theory), “systemic risk” translates into the fundamental contradictions of capital accumulation. The IMF might save itself a lot of trouble by studying them.

So how, then, can we put Marx’s theorization of the internal contradictions of capitalism to work to understand the roots of our contemporary dilemmas?

You can read the rest of Harvey’s paper here.