Jiang criticizes Soros by name.

David Bailey boddhisatva at mindspring.com
Mon Mar 8 12:36:23 PST 1999

C. Liu,

When you write:

> From: Henry C.K. Liu <hliu at mindspring.com>
> To: lbo-talk at lists.panix.com
> Subject: Re: Jiang criticizes Soros by name.
> Date: Monday, March 08, 1999 7:17 AM

> Yours is standard neo-liberal rationalization. Currency traders do not
just make
> profit from their counterparties. They make their real money from the
> markets in anticipation of currency devaluation and volatility they
engineer. By
> saying that devaluation of currencies is not artificial, you are saying
the market
> forces are at work. This claim is simply a neo-liberal myth and is not
supported by
> field data of the past 20 months.

You are forgetting the fact that in every futures market there is a long for every short and vice versa. That's just the fact. Obviously in the options and swaps market it may not be the case exactly, but I alluded to that. There is, in fact, a market in credit that underlies the somewhat artificial market in currency. That credit market is controlled by Western firms, to be sure, but those very Western firms suffered significant losses in the recent dust-up. If you are making the argument that eventually the large, hegemonic, capitalist firms will win the day, you are preaching to the choir and making, for a Marxist, a self-evident proposal. Yet a Marxist cannot rely on the evidence that big, hegemonic, capitalist firms have a tremendous advantage in the world to make the argument that this or that economic incident is part of some great capitalist strategy. Capitalists lost money in the recent currency debacles and lost real and significant amounts. Of course they are going to emerge from the ashes first because they are playing with house odds, after all. It's their show and if they're not going to win, they don't play.

It's the refusal to play the game that endangers places like Malaysia. If capitalists take losses and pull out, so go the sources of international credit. For the ringit to be worth anything, it has to find value against the Western currencies. Otherwise, Malaysians will be playing their game with Monopoly (the game) money, like the Soviets were forced to (and the Cubans, and anybody else the capitalists decide not to play with).

What we're left with is two separate questions. The first is whether the recent currency crises were part of some capitalist ploy. I say not. The second is whether hegemonic capitalist firms will win the game versus second and third world firms. Of course they will, it's their game.

The point I'm leading to is that Marxists need not unmask this particular "capitalist conspiracy". Everybody already knows about it. Matahir is shouting at the wind for the benefit of his political position. He and everybody else knows that absent a source of capital other than Western capital, we will continue to play the game that we all lose.

You continue:

" First World capitalists clearly did well during
> boom, but they will be in a even better position after the bust and the
> with more open markets and more cheaply acquired assets. Please give the
reasons why
> you think First World capital using devaluation to buy Third and Second
World assets
> cheaply is "overstated"- is it the same as the evils of slavery is
overstated? It
> is the openly stated IMF strategy, and privatization and foreign
acquisition data in
> Thailand and Korea are plain for all to see. DaimlerCrysler and Renault
are competing
> for a stake in Nissan that is expected to close by the end of March.
Merril Lynch is
> acquiring large positions in the Japanese financial service sector. The
reason it
> has not occurred as much as expected is merely because Western capital is
> waiting prices to hit bottom. You will be hard put to find any informed
person in
> Asia agreeing with your neo-liberal views, or even from with in the World

When you write the above are you implying that the Japanese are now a third world economy? The Japanese have a third of all the saved money in the world. The Nissan deal is an exchange among capitalists. Ultimately it will benefit Japanese capitalists as they will slowly be able to break down the system of high payments to working people that lingers there.

I remark:

>> I think the reason Marxism has so little *new* to say about
>> capitalism is that Marxists lack strategies for (and often understanding
>> of) credit creation.

And you respond:

" Marxism does not lack strategies or understanding for credit
> creation. Even in the 50s, the Soviet Union operated on national
policies of long
> term credit. Many Marxists on this list will find your remark

I expect many Marxists will find the remark condescending and I hope so. We are making ourselves look like chumps referring back to the clearly failed and unclearly socialist policies of Soviet and Chinese statism. We need to focus on the Do Re Mi and not the past. Of course, ahem, I might hasten to add, this is where people such as Doug Henwood come in.

When I reach my conclusion that:

> > The Marxist concept, to which you alude, of expanded
> > prosperity through better management and techniques is simplistic. The
> > reason is simple when stated as a question: Where is the money to come
> > from? The old answer is to simply create it by government fiat. This
> > effectively credit at zero interest rate with no requirement to pay it
> > back, only the expectation of increased productivity overall. Such
> > has no risk premium. Naturally, therefore, a lender under such
> > ties the "loan" with bureacratic strings in order to make sure the
> > advanced is not simply squandered. Such a system then naturally breaks
> > down to a competition among bureaucracies for resources. Unlike
> > firms trying to secure credit, bureaucracies suffer no ill consequences
> > securing more and more resources. After all they have no one to pay
> > resources back to.
> >
> > Marxism's major theoretical and practical problem is one of
money. Where
> > will Marxists get it and how will they get more of it into the hands of
> > working people to create a rapidly expanding and improving economy.
> > Distribution is certainly a problem but the real political and
> > problem for Marxists is to make the argument, and make it convincingly,
> > that we can engender growth and prosperity better and faster than
> > capitalists.

You respond:

"This is again a neo-liberal line that sophisticated economic theory is a non-Marxist
> property.
> Similar arguments were used to defend imperialism, that Marxism does not
offer a
> better alternative. This is the Rubin/Greenspan argument: neo-liberal
> fundamentalism is not perfect, but all other alternative are worse - the
> argument in defense of Western representative democracy.
> When it comes to an operative theory of money, capitalist economists are
mired in
> confusion on the subject. That does not prevent them from expression the
views on
> how to save the world.
> It is possible that Marxist economists have been silent because they view
> Asian/global financial crises as a factional struggle between national
and global
> capitalism and that they see no benefit in helping either side. The
point of my post
> is to draw attention to the socio-political fall out of the financial
crises which
> can be viewed as an extension of Lenin's observation of industrial
> causal linkage to imperialism. The Third World rejected capitalism not
because it
> was inefficient, but because it was part and partial of imperialism. It
is obvious
> that socialism cannot flourish without a political context. Neither can
> for that matter, but the political context of capitalism is so well
> historically that the myth of its being human nature is widely accepted.
The causal
> linkage between neo-liberal globalism and a new Western economic
imperialism is
> increasingly clear to large number of people outside of the First World,
without the
> need of esoteric theorizing. People are experiencing the evil impacts in
their daily
> lives. A window of opportunity now exist to provide Marxist
> alternatives before national socialism exploits the opportunity.
> Make no mistakes about it: anti-globalism, anti-finance capitalism and
> sentiments are on the rise all over the world.

You response is unresponsive. Naturally sentiment will rise. Naturally the present economic crisis echoes imperialism. After all, it's all caused by the same underlying system of capitalism. Naturally we have a window of opportunity as Marxists. My point is that the opportunity is squandered if we take the Matahir line (Matahir is hardly a Marxist at any rate). Of course we criticize the present instability and the "market" drama that is about as unpredictable as a professional wrestling match. The point is that the present system of increasing domination by hegemonic capitalist firms is not the result of a covert or overt conspiracy but a social structure for which we have found no vital substitute. People aren't so stupid as to take the abuse of things like the currency markets without the promise of capitalist credit. What like promise do we offer? Intricate bureaucracy? Computerized central control? Endless political wrangling? The capitalist system offers people quite enough of that. At this point the working class has a simple requirement of a new order:

"Show me the money!"


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