BTW, this is the last time I send an attachment to a mailing list. It was an HTML file. Maybe that's what screwed up the other end of the transfer.
Louis said:
> Your Krugman attachment did not make it through, but since I am fairly
> familiar with his ideas I would assume that it is some variation on basic
> Keynsian doctrine. The basic problem is that Keynsianism does not work.
> What got the US out of a depression was WWII, not pump-priming. We can not
> have another war. It would rapidly turn atomic and lead to the end of
> civilization.
My understanding is that there wasn't much pump-priming until WWII, when the national debt soared to 115% or so of GDP in the space of a couple of years. The war was the basis for the pump-priming, so it might be said that real pump-priming won't happen without the occasion of war. But war is not persuasive to me as a necessary condition for pump-priming, if the survival of capitalism is in question.
Before U.S. entry into WWII, the New Deal was more notable for micro-programs than for Keynesian policy. Where's Lynn Turgeon when we need him?
>
> Furthermore, while Marxists don't get involved with Keynsian
> nostrums, they
> do make proposals for ending an economic slump. For example, during the
> depression Trotskyists argued for 40 hours pay for 30 hours work. The idea
> was to reduce unemployment. If the bosses complained that they couldn't
> afford it, then a related demand would be to open the books. All of these
> demands are contained in Trotsky's Transitional Program, which was very
> much oriented to the Great Depression. Unfortunately his followers never
> understood that this program was not universal and turned into something
> like the followers of Daniel DeLeon who propose a version of industrial
> union based socialism virtually identical to the one that DeLeon
> formulated in the late 1800s.>
The political merits of these proposals or lack thereof have no bearing on whether reflation can save capitalism, which was my original question.
> . . .
> >
> >There is clearly a narrow interest in
> >deflationism, by and large, but it is not
> >obvious to me why such an interest must
> >assert itself in the face of increasingly
> >obvious threats to social stability.
>
> Marxists do not have an "interest" in deflation. All we have an
> interest in is organizing the working-class and its allies so as to
eliminate the crisis-ridden system of capitalism.>
I didn't make myself clear here. I was not proposing deflation as a progressive cure. I was trying to say that the material interest in deflation on the part of some capitalists could explain why governments are slow to respond to this crisis with monetary ease, but I didn't think this material interest was sufficiently strong and obtuse to prevent the system from saving itself.
> >
> >For PK, it is merely a matter of hidebound
> >"ideology." I would think that any Marxist
> >doctrine of inevitability would offer more
> >compelling factors which would certainly
> >foster ideological rationales but more
> >important, convey some bundle of economic
> >and/or financial imperatives to the guys
> >in charge.
>
> No, this is not correct. Economic and financial imperatives are the
> concerns of politicians and economists who are trying to reform
> capitalism.
I would think that in trying to understand where the economy is going, these factors would be of interest. Otherwise the DOI ends up being vacuous and didactic.
> As I pointed out already, history teaches us that such policies are doomed
> to failure. That is why the world is so dangerous today. The "beggar my
> neighbor" financial policies can rapidly mutate into the sort of violence
> that tore apart Yugoslavia, but much worse.
1987 and the 'Johnson bear market' teach me that it is too early to start stockpiling canned goods.
>
> >I expect
> >manufacturers will start howling for the
> >Fed to ease, as they have in past episodes.
> >The question is still, why shouldn't we
> >expect this and end up looking back on
> >this as we currently do at the '87 glitch.
>
> The business press makes it clear why this won't work. There is enormous
> overcapacity everywhere. Capitalism does not have any notion of what to do
> when it builds excess capacity except to lay off workers at best, or go to
> war at worst. We must fight against either eventuality.
Well my whole point, simple-minded enough, is that monetary expansion can expand aggregate demand and transform over-capacity into economic growth. That's worth fighting for too, if it's not too late.
Cheers,
MBS