Mandel on Keynes

Rakesh Bhandari bhandari at phoenix.Princeton.EDU
Wed Sep 16 11:42:01 PDT 1998

Comrade Proyect,

> Yes, and Harry Magdoff held a top post in a New Deal agency. This fondness
> for New Dealism is actually a soft-spot in MR. I am much more tuned in to
> Ernest Mandel's Marxist economics, which makes no concessions to Keynsianism.

Starting from the index of Mandel's *Late Capitalism*, one quickly turns up such concessions:

"A further important factor should be borne in mind, which has to some extent been correctly pointed out by the Keynesian school. Money as purhcasing power of monetarily effective dmeand should not be compared exclusively with the ongoing flow of commodity production; for it also has a mobilising effect--in other words, it can restore fluidity to a given stock of commodities. This function is especially important in a crisis of overproduction." (p. 419)

And " increase in the quantity of money in periods of recession and crisis can increase the sale of consumer goods...It will only lead to a growth in productive investments however if there are also expectations of a long term expansion of the market and the rate of profit is increased..."(p. 420)

But of course a recession would not have emerged if those expectations and profit rate hadn't decreased in the first place; and from this it cannot be concluded what Mandel is saying about Keynesian monetary policy and its effects. Indeed he doesn't even mention Keynes' own recognition of the possibility of liquidity traps or Joan Robinson's own concession in the context of the analysis of the Great Depression that Marx was not wrong to downplay the stimulative effects of interest rate reductions. Mandel seems to have conceded more to Keynes here than Keynes and the Keynesians themselves.

But of course Mandel also "concedes" the following to Keynesian fiscal stimuli (in the course of a response to Mattick):

"If one assumes that a part of the overaccumulated capital only obtains the average interest, i.e., that it is idle from the point of view of the production of surplus value then its use to produce armaments or infrastructural facilities bought by the State can perfectly well increase the mass of surplus value and hence also accelerate the accumulation of capital, even if the State pays for its purchases partly by means of deficit financing and partly through taxation." (p.557)

Mandel has confused an increase in production with the actual production of greater mass of surplus value (which should not be confused with a state led redistribution of surplus value among various enterprises either). While Mattick did not deny the existence of unemployment (Mandel's charge here is more than absurd) or the manifest power of the government to increase production, he argued that such mobilization of idle capital in itself does not accelerate the accumulation of capital or the production of additional surplus value. Perhaps better infrastructure can

accelerate the turnover of capital and have this *indirect* effect on the greater production of surplus value; that is the most one can say, I believe.

The state's future claim on surplus value incurred by deficit spending can only be met out of the greater masses of surplus value from the actual valorization of capital made possible by a reorganization of the capital structure, along with a rising rate of exploitation.

I don't mean to the make argument here; it is an intricate one. ALong with Mattick's work, there is Mario Cogoy's essays in International Journal of Political Economy, vol. 17, no. 2.

I mean only here to challenge Louis' suggestion that Mandel made no concessions to Keynes.

best, rakesh

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