(of course we have to get right the actual nature of Marx's theory as one not of 19th century British capitalism or 20th century Western capitalism but of the specific generalization or type or model of the capitalist socio economic formation as such; that is, we have to get right the actual nature of Marx's method of idealization and abstraction, and this forces us to understand the arguments of a Henryk Grossman, Galvano Della Volpe, Lucio Colletti, Leswak Nowak, Daniel Little, and Patrick Murray).
Now if we falsely attribute to Marx a predator-prey theory of the business cycle based on the exhaustation of the reserve army of labor, we could argue that in a world of unlimited global supplies of labor a capitalist upturn can no longer founder on a shortage of labor. That is, "socialism" by having modernized ancient societies, i.e., created a proletariat out of or on the backs of the peasantry, proves itself to have only been a prepatory stage in the true globalization of capital.
With the incorporation of one billion new proletarians from Eastern Europe and China into the capitalist world system--do you remember Milton Friedman salivating at the thought--there is simply no chance that capital will find its booms terminated by a shortage of labor and a resultant wage squeeze. The withdrawal of short term credits from East Asia has not made a dent in the actual foreign direct investment (is this purely a financial crisis?), and foreign suppliers may even become more attractive given the currency devaluations (many in Silicon Valley think so; note also recent stock market instability has been concentrated in the financial sector, tech stock remains strong).
At the very least, the availability of foreign labor power, even paid at the full value as morally historically determined in underdeveloped conditions, underlines that in overproduction crises, the restoration of profitability through the saving of labor costs no longer requires substantial improvements in technique or any technical improvement whatsoever. And this suggests that there may be little upward pressure on the organic composition of capital as well!
So does globalization negate the predator-prey trade cycle and the rising OCC? That would indeed be a lethal blow to Marx's theory.
And in the metropoles, loose monetary policy can now be used to keep booms alive. If all previous US booms have been killed by the Fed, the new world capitalism has changed all that. It is a new economy, Greenspan has realized that, time to box up the Marx books and see if anyone will buy them. The only problem are destabilizing short term capital flows, so exchange the Marx books for some Tobin and Bhagwati.
best, rakesh
>Dear LBOers,
>
>Rakesh draws on some analysis from 1932. At that time Russia and the olde USSR
>was more or less isolated from the rest of the world economies. After WWII
>eastern Europe and the Asian economies of China, North Vietnam and North Korea
>followed the USSR into isolation from the rest of the world economies.
>
>I'm not debating policy here of who did what or didn't do what or anything like
>that---what I'm talking about is that these economies were not an integral part
>of the economic or financial structure of the rest of the world. Today in 1998
>they are part of a world financial and economic structure. A fact with which
>we must cope.
>
>Sincerely,
>Tom L.
>
>
>Rakesh Bhandari wrote:
>
>> At one level, we shouldn't let our discussion about Keynesianism get in the
>> way of analyzing how capitalists actually do respond to a crisis of
>> overproduction--I'll draw here from Emile Burns, The Only Way Out. New
>> York: International Publishers, 1932.
>>
>> Now the fall in prices which results from overproduction means that it no
>> longer pays to produce--in other words, production slows down because the
>> only motive for capitalist production is profit, and profit becomes more
>> and more difficult to realize in the existing conditions of the market.
>> The capitalist way out fundamentally, the effort to improve the position of
>> capitalism therefore involves a restoration of profits; if this can be
>> secured, the wheels of capitalist industry will again begin to turn. All
>> the efforts of capitalism are therefore concentrated on the problem of the
>> restoration of profits.
>>
>> While we argue about the efficacy of interest rate reductions to restore
>> profitability and govt provision of effective demand to improve the
>> existing conditions of the market--and perhaps even entertain ideas about a
>> new world central bank to organize the movement of credit to enable such
>> policy where the crisis is deepest (Jeffrey Garten as the new Josiah
>> Stamp)--we may be diverting ourselves from the actual practical steps
>> capitalists are taking in their search for a way out of crisis for
>> themselves at the expense of workers. These practical steps aim at securing
>> a restoration of profits by the violent reduction of wages (direct and
>> social), by rationalisation aimed at reducing the labor cost of production
>> per unit ( extension of hours, changes in technique which eliminate labor,
>> reduction of overtime, speeding up, hyper taylorisation, etc), by
>> monopolistic restrictions of production, and by protective tarriffs and
>> devaluations which merely displace the crisis of profitability on other
>> national capitals.
>>
>> The real way out of crisis of overproduction for any national capitalism is
>> through rationalisation and tariffs/devaluations. Its success depends, even
>> partial and temporary, on driving down still further the conditions of
>> workers. Its success, even partial and temporary, depends on further
>> restrictions of output, still greater unemployment, still further narrowing
>> of the market for consumption goods. The partial and temporary way out for
>> any national capitalism thus offers not even a partial and temporary way
>> out for the working class, but only greater exploitation, greater misery,
>> leading to deeper crisis in which they will still be faced with the same
>> alternatives: to suffer and starve for capitalism or to rebel against
>> capitalism.
>>
>> The virtue of Brenner's approach is that he never loses sight of the
>> practical steps capitalists actually take to restore profitability in the
>> context of a crisis of overproduction.
>>
>> best, rakesh