The capitalist forecasters have got renewed optimism about the global economy and the
value of their investments on the stock market. After huge falls in stock prices during
September, the last two weeks have seen a significant rally in world financial market
prices - up 15%. But world's stock markets are still down 15-20% on the year, which if
maintained, would make it the third year in a row that they have fallen. That would not
have happened since the Great Depression of the 1930s. Michael Roberts looks at the
prospects for the world economy as it slides further into decline.
This time last year, all the talk among the capitalist economic experts was about the
V-shaped economic recovery that world capitalism would make in 2002. All stock market
experts expected a significant rally in share prices. The main risk was a return to higher
inflation. Everybody expected that the main central banks would have to raise interest
rates in order to curb price rises. This column, however, argued that the underlying
economic forces increasingly suggested that the recession of 2001 was developing into the
depression of 2002. .The whole world is now levered on what happens in the US, even more
than it was in the 1930s. .The danger in 2002 is competitive devaluation and deflation,
driving the world capitalist economy further down.
Maverick Nobel prize-winning economist Stiglitz lifts the lid on his years as Chief Economist to the World Bank and what really goes on behind the scenes. Though he’s certainly no Marxist, his insights confirm the correctness of the Marxist outlook on the world economy and its ruling institutions.