Yoshie asked what some of us may think here of Adolph's theorization of the state, perhaps the one big topic with which I have disagreements with him--I have learned a tremendous amount from Prof Reed. I believe that his understanding of the possibilities of social democratic and left keynesian reforms leads him to have much greater faith in electoral politics than I have. But then I dropped out of grad school in poli sci! I would love it if Doug and others with a deeper understanding of Keynes commented critically on below.
Adolph writes:
>>
>>The state is the only vehicle that can protect ordinary citizens
>>against the machinations of concentrated private power. Even though
>>it does function as an executive committee of the ruling class, the
>>national state is the guarantor of whatever victories working people,
>>minorities, gays, women, the elderly, and other constituencies we
>>embrace have been able to win
>>
>>The public sector is the area of the economy most responsive to
>>equal-opportunity employment. And the national state--ours as well as
>>others--is the only entity powerful enough to control the activities
>>of piratical multinational corporations.
Here is a rather long excerpt from a paper I have written on the contemporary significance of Paul Mattick's critique of Herbert Marcuse whose Keynesian assumptions, shared by Adolph (I think), are here brought into question (footnotes are not included so where I have quoted from others may not be clear):
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However, for a radical Keynesian, whose expansionary monetary and fiscal economic program has not been advocated by a single top government official in the US government for more than twenty years, big deficits, adjusted for the effects of recession and inflation, can indeed raise the level of economic activity such that whatever debt has been run up it will remain stable as a percentage of GDP. The argument proceeds from the assumption that a slow down in accumulation results from a so- called declining marginal efficiency of capital which however is a subjective concept of which "the state of confidence" is a key part , and can thus be improved if animal spirits are revived simply by expectations of future buoyant demand, presently undermined by consumer underconsumptionism, that aggressive fiscal policy can indeed bolster while thereby reversing the vicious downward spiral of private investor pessimism and retrenchment.
This subjective explanation for the fall off in investment thus feeds the illusion--quickly dissipating in Japan of early 2000 as the mind boggling public debt exceeds 600 trillion yen ($ 5.5 trillion), or 130 percent of gross national product from lavish government waste production of bridges to sparsely populated islands, concrete linings for rivers and roads to nowhere (thanks Ulhas, just added that!)--that aggressive demand side policies can act as an answer to what is conceived as a collective action problem among uncertain private investors and signal a switch in investment behavior, culminating in a high GDP equilibrium in terms of which the run-up debt would remain manageable. Actual changes in the condition of production, usually effected in the downturn of the business cycle such as the devaluation and centralization of capital , are thought unnecessary to revive accumulation. Keynes' argument here became the reductio ad absurdum of the subjectivist turn of bourgeois economics., as William J Blake noted. Via the Keynesian panacea the capitalist economy was thought in the 1960s by bourgeois economists and radical theorists alike in the post war consensus to be free from the boom-and-bust cycles and stagnant performance.
Mattick argued that such debt-financed government spending would actually in the future undermine accumulation by forcing government resort to higher taxes and interest rates that would lay claim to surplus value otherwise capitalized in order to service or roll over the government debt that had mounted. In the US of the 1990s, profitability enjoyed a spike in part due to lower interest rates as governments (facing the limits of the mixed economy) competed less for capital with diminished bond issue, though one of the effects of the narrowing outlet of relatively safe government securities has been the global flow of surplus capital, bloated by expansionary monetary policy by the US Federal Reserve Bank in response to the Asia crisis, into an already overheated stock market that has become a substitute stimulus of the economy through the so-called wealth effect.
Now in the present wake of a US budget surplus--itself resulting from relatively high marginal tax rates on those who have enjoyed massive equity inflation partially also due to continued difficulties in the profitable capitalization of surplus value leading to its flow into the US stock market simply for the reasons of corporate buybacks and speculation --even the leading Democratic presidential candidate in the US has promised, to the displeasure of establishment Keynesian economists, that in likely future occurrence of an economic downturn the US government will not submit to debt financed expansionary fiscal policy and instead continue to pay down the debt of over three trillion dollars with annual budget surpluses of around two hundred billion dollars projected over more than the next ten years. Meanwhile Europe finds itself, under the stringent Maastrict criteria, struggling to reduce deficits to no more than two percent of GDP. The limits of the mixed economy have been reached, leaving no floor for a severe economic downturn during which only the slaughterous destruction of rival capital will point a way out, bringing again to naught all visions of organized global trading system.