Enrique Diaz-Alvarez wrote:
>Here's an interview given to El Pais by Robert Mundell:
>
>
>"I would invest most of the prize money in the stock markets. There are
>two things that worry me: the rise in oil prices and certain volatility
>in the currency rates. In any case, long term I am optimistic.
>
>"I think Europe is roughly five or six years behind the US. Except for
>the short period in the early 90's, the US economy has been growing
>since the Reagan tax cuts, which helped make the US economy the most
>efficient in the world.
>
>"[I attribute the current US success] to both [Reagan and Clinton]. The
>Reagan tax cuts were the preparation..."
This is similar to what Anwar Shaikh says. Shaikh also credits Reagan with the current upswing, and he's also optimistic that this period of prosperity will last a long time. The difference is that Shaikh identifies Reagan's assault on labor as the key factor in restoring corporate profitability and economic growth. As Doug writes in LBO #80, "According to the laws of classical Marxism, [an upswing in profitability] should mean higher growth rates, strong stock markets, and maybe even some gains for labor."
Why should this be surprising? This is a capitalist society. We are dependent for our well-being on the ability of investors to continue finding profitable outlets for their excess money. The health of a capitalist economy does not depend on the alleviation of poverty and misery. It depends on the systematic enrichment of the already rich, whether through tax cuts or an assault on labor or pumping up the Pentagon or extending American penetration of 3rd World markets. How could Reagan not succeed with a plan like that? It wasn't his teflon-coated personality that made him a big hit. It was the logic of his policies in the context of a brutal economic system.
What drives the pendulum to the right is that rightwing policies *work*. What drives it back to the left is that prosperity leads to higher expectations among working people. (Or, in the odd case of the 30s depression, the system was threatened by the pervasiveness and severity of poverty.) This is why liberal democracy has such great staying-power. The course is always being corrected, ensuring a "balance" between prosperity and equality. Under capitalism, these two values are at odds. We need a system that reconciles the two.
Socialism, anyone?
Ted