>Doug's problem--and I use the word advisedly--is that he has not fully
>grasped the seriousness of the situation.
My position is that the serious of the situation is not yet proved - that this looks like the greatest risk of a global debt deflation in the last 70 years, but that the case isn't closed. What makes you think the case is closed?
>Doug's problem is that he has--without probably understanding it
>fully--tried to synthesize Marx and Keynes.
I never understand anything fully - do you? I did spend a lot of time on Keynes, and I've been reading Marx for almost 30 years, so I'm pretty aware of the problems of synthesizing the two, assuming that that's what I'm trying to do, which I'm not.
>From Marx, he appropriates the
>analytical tools. Thus, his "Wall Street" is viewed universally as a
>magisterial treatment of the world of finance. But his political
>understanding owes much to standard Keynsianism with some Marxish
>phraseology. It amounts to a defense of welfare state measures, including
>pump-priming, to reduce unemployment and build the self-confidence of the
>working-class. This has very little to do with Marx, who was only
>interested in overthrowing all capitalist states, including "nice" ones
>like Sweden or the Netherlands.
Did you read the book, Lou? I'm intensely critical of Keynes. He's the bourgeoisie at its best, like Ricardo or Wallace Stevens, so worth taking very seriously, but still bourgeois. I criticize Keynes on several counts, from his snottiness and racism to his preposterous view that the rentiers would ever consent to their euthanasia. Here are a few paragraphs:
<quote> In times of reaction, when Marxism is regarded as beyond the pale by many even on the left, Keynes has become a more acceptable model, especially in these days of financial ascendancy. Few economists of any time have had as much to say about the financial markets themselves, or their relation to the real world. As Adorno said of Freud, "like all great bourgeois thinkers, he left standing undissolved such contradictions [those of bourgeois society] and disdained the assertion of pretended harmony where the thing itself was contradictory. He revealed the antagonistic character of the social reality" (quoted in Zizek 1994, p. 14). The more fervent bits -- like the call for the "somewhat comprehensive socialization of investment" -- offer the appeal of radicalism, but in a calm, elegant form, and in one that may unsettle, but not shock, the ruling order. Keynes was a very seductive writer. But as Michael Perelman (1989, p. 1) put it in his very useful book on Keynes, he often sounded "more radical than he was." [...] But the real problems with Keynes lie ultimately in the naïvete and conservatism lurking behind his sophisticated and iconoclastic style. Having (re)discovered that "entrepreneurs" (a word he and post-Keynesians like Davidson prefer to the more loaded "capitalists") are in business to make money, and nothing else, he somehow concluded that rentiers will consent to their euthanasia. Compare this vain wish to a 150-year-old observation: "In England there takes place a steady accumulation of additional wealth, which has a tendency ultimately to assume the form of money" (quoted in Marx 1981, p. 543). A tendency indeed: money, whatever its economic role, is most definitely not neutral in its social role; the accumulation of money is the fondest desire of every good capitalist citizen. Keynes realized this with one half of his mind, and then with the other half thought you could tweak this fundamental tendency out of existence almost unnoticed. Having laid bare some real contradictions, he spuriously proposed to resolve them. [...] The role of the state, then, is to stabilize expectations -- to guarantee there won't be depressions, and to guarantee (insofar as anything can be guaranteed) the position of private wealth-owners in the system. In these senses, bastard Keynesianism did the trick -- of, to paraphrase Claus Offe, regulating the system politically without materially politicizing it. The establishment took what it needed from Keynes and left the rest. </quote>
I don't see what choice a socialist has but to support living wage and comparable worth legislation and a less cretinous NLRB. But those things aren't socialism, and the bourgies will never concede them unless they fear expropriation.
>The problem with this eclectic political-economic program is that it begins
>to fall apart when you run into a genuine crisis. In a genuine crisis,
>pump-priming is virtually useless. The reason for this should be obvious.
>In a general collapse of demand amid deflation, no amount of deficit
>spending can make a difference. The South Korean government will not print
>money to keep Hyundai afloat. It is in the interest of South Korean
>government to see excess production liquidated.
Oh, I'm not sure the Korean bourgeoisie is thrilled with its plight right now, but it knows that to remain a bourgeoisie it has to go along with what its masters tell it. But fuck the bourgeoisie. Is it in the interest of the world working class to see liquidation? Ask the Hyundai workers who were occupying their plant.
>If you can not come to grips with the real situation in Asia, which was
>Doug's favorite example of a confirmation of chapter one of the Communist
>Manifesto, then you are in danger of falling into denial.
I've described the Asian crisis as a crisis over & over, a tremendous economic and social collapse; I have no idea what you're talking about. Here's an excerpt from "Asia melts" <http://www.panix.com/~dhenwood/AsiaMelts.html>:
<quote> PLETHORA OF CAPITAL
It may be that as economies mature, throw off their own financial surpluses and get more deeply involved in the global circuit of capital, it becomes impossible to sustain tight structures, whether Korean chaebol, Japanese keiretsu, or German bank-industry links. As the American model is generalized to the world, the transaction comes to reign, and long-term relationships are shed as a sentimental holdover.
Asia -- including Japan -- may also be in the throes of a classic Marxian profitability crisis, as quaint as those seem. After decades of furious accumulation that emphasized growth and market share above all, vast capacity was created -- an "overproduction of capital" in Marx's phrase. Capital, unable to make a sufficient profit, throttles back on production, and the value of everything, from capital goods to financial assets to wages, deflates. Productive capacity is destroyed until profitability turns upward again. There's no doubt that profit rates across Asia were in decline; it was said even back in the 1980s that the rate of return on newly invested capital in Japan was negative, and aggregate profit rates in Japan have only slipped since then. (The OECD estimates the "rate of return in the business sector" as 13% in Japan and 29% in the U.S.) Korean conglomerates were slipping into the red months before the crisis hit.
In this context, the IMF's role can be read as assuring that the costs of the deflation are shifted as much as possible towards the recipients of its largesse, and to limit the blow to creditor nation finances. Bailouts of these sorts are justified as essential to preventing a collapse of the global financial and economic structure like that of 1929-32. This may or may not be true -- who knows? With every crisis, you never know if it's the one that, unchecked, could lead to ruin. Yet every time there's a bailout, temptations to speculate again and generate another, bigger mess down the line are stoked. As a result of the regime of perpetual indulgence towards rentiers, the record on bank failures and other financial crises, measured in both frequency and expense, is actually worse (measured against GDP) than in the 19th century. Indulgence should be coupled with tighter, not looser, regulation, but the opposite has been the case. </quote>
>(By the way, I
>always recommend to people that they read the second chapter of the CM as
>well, which calls for the destruction of this wondrous capitalist system
>which has the ability to leap over tall buildings with a single bound. Or
>was that the Superman tv show I was thinking of?)
Second part's not possible without the first.
>Marxists must have the courage to see things as they really are.
Which includes the possibility that it's not the bone-crunching crisis some people think it is.
>The NY
>Times today described the situation in East Asia in an unblinking manner.
>If the term crisis does not apply to this key sector of the world economy,
>then the term has no meaning at all.
There's no question that Russia and Asia are in crisis, and that Latin America is teetering on the edge. I also agree that capitalism has lost a good bit of its ideological legitimacy worldwide. So where do we disagree?
Doug