[lbo-talk] "Dr" Greenspan

andie nachgeborenen andie_nachgeborenen at yahoo.com
Sun Apr 6 21:11:04 PDT 2008



> Curious marriage you've got where you struggle over
> who gets to read
> the Greenspan memoir!
>
> You say: "I’ve thought for quite a while that
> mainstream economics is
> supported by an exoskeleton of empiricism rather
> than a backbone of
> general equilibrium theory." That's not really true
> of economics as
> the big university departments, is it? But it's
> certainly true of how
> it's practiced at central banks. They sure act like
> they don't
> believe in equilibrium or efficient financial
> markets.
>

OK, that's because they have real problems to solve and an actual economy to manage. Imposing the theory top down regardless of empirical reality is fine for the poor folks in the third world and (formerly) the ex-beneficiary sufferers under the formerly Stalinist welfare states, but if you fuck up the US economy it's not just folks in Chile or Belarus who starve, it's the world economy that is at risk. That is part of why the current crisis is making everybody jittery.

At least the destruction of the ex-Stalinist economies has a political point, it was part of global class warfare, comparable to breaking the English working class to time and labor discipline, there in part that, in part to destroy as much of what institutionally remained of the system outside the market and the welfare state while allowing the development of a kleptocratic "capitalist" class of biznismen, the oligarchs at the top, not productive (so not competitors) but thoroughly within the fold. (I think, to keep wandering, that Putin's assertion of the power of the state over the oligarchs and the kleptocrats, exemplified by the Berezhovsky prosecution, a total frame job, not that I have any sympathy for Berezhovsky; anyway that's is a reaction to this, one based in nationalism rather than in any remnants of socialist commitments, but reflecting a recognition that shock therapy was intentionally destructive of the Eastern economies.

In the third world a priori neoliberalism as practiced by the WB and IMF, in the teeth of every empirical study those institutions carried out and fifty years of positive and negative experience showing the that NCE and GET doesn't work as development technique (the neoliberal countries experienced crises and stayed poor or went to hell, protectionist regimes with welfare states of some sort and no-strings infusions of foreign capital, like Taiwan, thrived), was only partly a way to keep the third world poor, a mixed benefit -- you get cheap labor and raw materials and compliant rulers who don't make a fuss about export of profits, environmental regs, and such, but you miss out on the development of huge markets that would exist if people in (say) Bolivia had any purchasing power. I suspect that a lot of a priori neoliberalism was just pure blind ideology, imposing a cruel experiment on people who had no voice and didn't matter,

Now, you can't do that here. Smash the unions, break the working class, roll back the New Deal as far as you can, fine. "Everybody' (who matters) benefits. But act as if the realities of the economy were irrelevant and operate as if the world conformed to a manifestly false theory, that would be stupid. It would be the economic equivalent at home of the Iraq war. The US capitalist class would never stand for it. They may be divided, short-sighted, reactionary, love the theory in their hears when they read the WSJ op-ed page, but it's like church. That's for breakfast. They are not stupid.

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