Marx on Smith

Rakesh Bhandari bhandari at phoenix.Princeton.EDU
Wed Jun 23 22:08:40 PDT 1999


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



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