Richebacher's comments

Mark Jones jones118 at
Sat Apr 29 15:56:31 PDT 2000

Doug Henwood wrote:

> The "wealth effect" on consumption is unproved. What would a 50%
> decline in the stock market do to investment and consumption? To
> quote Keynes, "We simply do not know." Maybe Dean's numbers are
> right, maybe they're not.

Depends on how long the decline continues and what other effects result from the unravelling. 50% declines are not unusual or even damaging in themselves, of course. But we do know something about the context of the present bubble which might reasonably allow us, for example, to conclude that your analogy with the Japanese implosion is likely misplaced; the Japanese boom/bust were both determined by Japan's subordinate place in the world system; both processes were arguably logiocal consequences of the US offloading onto others the costs of its own crisis. In a general crisis which began in Wall St the same thing would happen, for eg a dollar meltdown would be a great way for the US to renege on its vast overseas debts, wbhile reducing dollarised commodity prices like oil at a stroke, and would massively export deflation to the main US competitors.

> >The present bubble is merely the frothy
> >ending of this half-century cycle of American hegemony,
> Maybe it is, maybe it isn't. "We simply do not know."

I don't agree. We DO know something, a lot in fact. Something radical happened with the ending of the 'short 20th century' in 1991. I remember talking to Richard Gott about it at the time - this was just before he was 'exposed' as a KGB chap. His version was that the US and USSR were like shagged out sumo wrestlers locked in an embrace of mutual dependency. The world has moved on and revealed the utter falsity of most of our preconceptions, mine included, about the balance of forces or about what would happen to US capitalism once the Cold War brakes were off. I think your idea at root is that the brakes coming off released huge new economic and technological potential and ushered in a new upwave with a new world system of production relations to bolster it. My trad-marxian value-theoretic conception is that what was released was a new cycle of composition and recomposition of social capital, changing the organic composition of capital and producing a drastic new expulsion of live labour from production; it's this which has birthed not only the new economy but also the massive new immiseration of vast chunks of humankind. Which brings me to China. You almost sound indeed like Gunder Frank here. But I'm not so sure everything is so rosy in the Chinese garden as people think, and I don't think you can dismiss the externalities quite so easily either. I'd like to come back to this in another post.
> >Not only
> >will the edifice crash down, it DESERVES to crash down
> Reality may not comply with your moral judgment.


> Do you think such a collapse in the U.S. would make this country pull
> back from the world, or make it even meaner?

Does it much matter? This is a real question.

Mark Jones

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