Marx on Smith

[Rakesh Bhandari]

Max, there is no doubt that I made important errors.  As you suggest,
between 1969-79 the ratio of govt debt to GDP did decline from 38.6 to
33.2%. My political awareness however begins after that. You forgot to
mention that the public debt quadrupled under Reagan and that interest
payments as a percentage of the federal budget almost doubled between
79-89. Now that latter percentage seems to have remain stable in the 90s
(though it slightly increased until 1996, correct?) and has decreased in
recent years due to the US ability to benefit from a global slump.

You call for a moderate rise in the debt/GDP ratio, but give no specifics
(as high as Japan?). The very moderation of your claim suggests your
awareness of some "limits to the mixed economy", as Mattick subtitled his
book Marx and Keynes. Even Michael Meeropol who presents the left Keynesian
view subjected to critique by Mattick, Cogoy, Rachleff, etc. openly
recognizes the less than stimulative effects of budget deficits on the US
economy in the last decade or so. See pp. 175-76 of his *Surrender*.

In his recent call for a Main Street Alternative in *The Nation*, Thomas
Palley didn't even make a call for greater govt spending, esp. debt
financed; he basically emphasized redistribution to increase the marginal
propensity to consume. So it seems that the need for very moderate
increases in debt/GDP ratio has seeped into even the left Keynesian camp


>There is a lot of public capital -- about 20-30% of the total
>capital stock, and that's just the tangible stuff, not the
>'human' capital.  This functions as capital in the sense of
>boosting public and/or private output.

Max, the whole point of the critique is to underline that boosting output
may not boost the production of surplus value.


>
>On the other hand, there is stuff from Keynesians now on how
>the current boom MUST end relatively soon.

Please say more.

yours, rakesh