James Wilson's Epistle

Vikash Yadav vikash1 at ssc.upenn.edu
Wed Feb 24 21:15:14 PST 1999

Rakesh wrote:

The international political economy can only continue to exist because of recurrent market failures!

I think that I agree with your point that recessions are "endogenous" to capitalism. I should not have used the word "despite" in my earlier post. But I still have some questions...

1. What exactly do you mean by "contradictory unity"? I am not an economist so you may have to speak very slowly. =)

2. What exactly did Schumpeter mean when he said that "crises are not overcome by forcible adjustment of supply to depressed demand"? This seems to contradict the whole logic of the Keynesian welfare state. I assume that you disagree with Schumpeter.

3. Do you believe, along with Marx, that the recurrent market crises have led to a general decline in the rate of profit? Is there evidence for this claim? I doubt it, but what do I know?

4. Do crises really provide the ground for the centralization of capital? Honestly, I think capital is dramatically centralized even in periods of prosperity. Look at all of the mergers that are going on right now. Even if crises did serve this function, why would that function make the crisis necessary? Seems a bit circular to me. Maybe, I have misunderstood you...

The theories you sketched are illuminating but they seem to discount the role of institutions and regimes in "correcting" these market failures. I am wary of economic theories that view the market as a force akin to nature or a mechanical equilibrium model. (Maybe I just have a prejudice against the Physiocrats and their descendants).

I think of the international political economy as the reflection of the political power and purpose of the major state and market actors. Perhaps our views on capitalism are not mutually exclusive of one another. Nevertheless, I believe that an important avenue for disadvantaged groups to improve their situation is to politicize the economic institutions and networks that regulate international political economy (e.g., The Paris Club, The Basle Committee, The IMF, The World Bank, etc.).

As a side note, it might be interesting to compare Schumpeter's position on douches and Bataille's argument in the Accursed Share about the relationship between capitalism and war.

Please correct me if I have misunderstood your points.


Vikash Yadav

E-mail: vikash1 at ssc.upenn.edu Web: www.ssc.upenn.edu/~vikash1/

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