>Michael Cohen wrote:
>
>It seems to me that the major problem in not addressed by this is the
shortage
>ofaggregate demand in the third world caused by inadequate wages. If wage
rates
>were increased then demand would not be a problem. If the profit rates were
>too low the corporations could simply be nationalized and run if necessaryily
>inefficiently by the state.
>It seems to me that in the midst of world wide depression one needs to
maintain the
>rate of
>return on capital is highly questionable. In the worst case the
governments could
>simply
>print money and hand it out to the industrialists insuring a rate of return.
>
>In the midst of a depression simply printing money and handing it out to
low wage
>or unemployed
>workers and even capitalists may be socially very difficult to do but
appears to me
>quite rational.
>In the more "advanced countries" this is called unemployment insurance. A
strong
>state supported
>measure of unemployment insurance would be the best antidote against world
wide
>deflation.
I take the line of argument. In formal marxist terms there is a contradiction between the limited purchasing power of the masses and the need for capitalism to accumulate. This has manifested itself in a crisis of overproduction in Asia.
The progressive solution is to increase the purchasing power of the masses at the expense of accumulated capital. Of course it will not come about through idealist political thinking. The western powers are not going to vote generous unemployment benefits to the people of the third world.
But what might come about, semi-consciously, is a step towards this. There is a certain recognition that consumer demand needs to be stimulated in Japan. Soros has called for IMF special drawing rights to be made available to emerging countries, (albeit on tied conditions). More progressive economists can produce models for reactivating the circulation of money in a third world country by arguing that inward investment should stimulate labour intensive local work, like house building, which puts purchasing power in the pocket of the masses.
The tougher question is what bits of capital are going to get killed. Stimulation of local economic activity implies accepting hits on part of capital devoted to meeting the export market to the west, and rightly so. It is about a redistribution of the productive activities of society.
Judging by how the developed west relies on services for a large part of economic activity it should not be too difficult in pure logic to argue that this needs to occur in developing markets too and it is irrational that any economy devotes too high a proportion of its energies to exports. In fact the scramble for exports might come to look as old fashioned as the mercantilist scramble for bullion a few centuries ago. So the terms of the debate might be reframed a little.
But the smoothest way to kill off a proportion of old capital is by a degree of inflation. IMF special drawing rights should be increased by whatever arguments are acceptable to the various classes and interests. And even for capitalists, they may vote for something that would promote the circulation of trade again, even if it implied (not too obviously) a proportionate reduction in the true value of their capital.
The argument could come over the distribution of the SDR's. Suppose 1000 billion dollars of SDR's were created for the millenium, "to get the world economy moving again". What chances would we have of influencing that debate in a progressive way that enhances the power and interests of working people world wide?
Chris Burford
London