Karl Marx originally explained the idea quite well.
Wages in a real economy is the real driver for demand. The capitalist yearning to drive down wages and cost as much as they can. That is how the system was designed !
The end result of thus maximum capital accumulation is a Commodification of labour. What does that mean ?
It means that once wages are pushed down enough - there is no room for labour to increase demand and thus generate growth ( the thing that drives capitalism ).
Once you commodity labour then the demand side of your market collapses.
This was what essentially what happened prior to the great depression and what happened ever since 2008.
I know people in silicon valley live in a bubble, but if you go outside you will see that the world is burning.
The reason why tech engineers are being paid 500K is not because of some inherit huge contribution to society but because huge accumulated capital is looking for yield.
One way to solve the european debt crisis for example would be massively start spending. Imagine a massive investment to completely reform europe into green energy. There is however no political will to pursue this.
The Chinese however understand this very well, their leaders are well versed with karl marx's study on capitalism - unlike in the west where neo-classic liberalism has corrupted the field of economics to such a degree that we cannot even openly talk about marx's analysis.
For example the Chinese had 0 miles of high speed trains in 2009. Now they have 6000 miles worth of it !
They spend more cement in a year then america did in 100 !
They have more green energy then then both US and europe combined - even though they had no technological expertise until recently.
The Chinese also are spending a lot on their military but its a small part. They know that it can bankrupt a society.
Their most astounding new initiative is to provide free universal healthcare to 1.4 billion people !
While we in the west cannot even get out act together to solve the greece's debt problem. We are driving up growth by inflating huge tech and asset bubble in hope of driving up demand since the government is completely paralysed to act in a decisive way.
