File spoon-archives/marxism-international.archive/marxism-international_1997/97-01-01.033, message 58


Date: Wed, 1 Jan 1997 15:10:36 +1000
From: rws-AT-comserver.canberra.edu.au (Rob Schaap)
Subject: M-I: Re: Rate of Profit


[Thanks to Doug for his explanatory note.  Everything seems to point back
to 1975, it seems to me.  The Compton's international PR offensive,
Friedman's world tour, the New York 'experiment', the post-OPEC
environment, corporations formerly reliant on the Vietnam war and the space
race looking for urgently needed world civvy markets etc etc.  A couple of
observations, though:

Doug wrote:]
When you're deep in debt, you need new financing, and if you don't get it,
you have to default.  Unless you're willing to do that, you do what the
creditors say. And now the creditors say: cut public budgets, cut wages,
bust unions, lift
regulations, etc. This is one of the great ironies of Keynesianism:
sanguine about building up debt, they provide the future instruments of
austerity.

[We're in the midst of flogging our public telecommunications company at
the moment (Telstra).  The debate in the parliament is cosmetic (the
numbers are agin us and the opposition is not convincing, having wanted to
go this route only a year ago), and the debate in the papers was promising
but has now adopted the bipartisan line.  Pub conversation suggests people
are very sophisticated on all this, and surveys show that, as always,
Australians are opposed to privatisation (although the margin is closing). 
Both parties are, and have long been, to the right of the electorate on
this issue, anyway.

The projected cost (out of govt revenues) of fibre optics and associated
switching and terminal equipment is considered too much - but the cost of
duplicating such networks by way of private enterprise is not (competition
is an end in itself these days - and so beyond criticism that such
ridiculous inefficiencies are ignored).  The national accounts cop it of
course, but that post-'75 bogey, 'government spending' is down.  So is a
guaranteed $2 billion annual windfall from the public Telstra to the
government, but that's how the whole mess is being sold.    

Anyway, to my mind, national debt is up for reasons over and above the
Keynesian policies of 1945-75.  Neo-classical economics itself was a
significant contributor.  Remember, we also deregulated banking (which cost
Oz dear after the 1987 crash exposed the opportunistic loans of 1984-1987),
'floated the $A (it floated like a brick), privatised the public bank (the
Commonwealth Bank had been instituted precisely to guard against this
nonsense, and to prevent troubled banks trying to square the post-'87
ledgers by reaming borrowers and, by way of bank charges, absolutely
everybody), and tariffs were dropped faster than anyone else was dropping
'em.  Exports dived, imports rose, employments dived and tax receipts
followed suit.  I'd like to see Milton Friedman go on an other world
evangelising tour and explain how all his 1975 crap has turned out for the
better.

Conclusion: Much of our debt is actually a function of Friedmanite policy
rather than Keynesian policy.  I know bugger-all about economics, but
national debt throughout the west began its exponential rise after 1975 -
not before.  Isn't this right?]

When the banks decided not to roll over the city's debt anymore -
and they'd known all along that the level of borrowing wasn't sustainable -
the crisis ensued. It was "solved" through the imposition of a new
governance structure, two banker-dominated bodies that took over the city's
finances. As Milton Friedman said at the time, essentially NYC no longer
had an elected government. And of course their strategy was to cut services
while assuring that creditors were lushly serviced.

[Prompting much allegiance to the nationalist right, and some to a left
that is, I think, more internationalist than Dave might think, is just this
perceived problem: that Oz no longer has an elected government.  The
sanguine 'functionalist integrationism' of our major parties is not, to my
mind, going over well to much of the electorate.  It destroyed Keating
because he'd come out of the closet on the issue.  Howard is very confident
just now, and is rather arrogantly forgetting to mystify his similar
agenda.]

L.D. Solomon, had an op-ed piece in the New York Times during the thick of
the crisis saying that (and these are almost direct quotes, though I'm
doing them from memory) if the "promises of the 1960s" could be rolled back
in NYC, the most difficult environment in the country, then they could be
anywhere - which he thought likely, since "thankfully, the poor have a
great capacity for suffering."

[Is this quote cited in your forthcoming book?  I'd love a reference.]

Once again, the bankers spoke with one voice, and the debtors were not only
internally divided, they couldn't even begin to assemble a debtors' cartel.

[Why not?  I remember the 'non-aligned countries' were pretty powerful back
in the seventies and eighties - just the sort of body within which such a
cartel might be put together.  I suppose the end of the 'cold war' has put
an end to this possibility.]

Thanks again, Doug.  Rob.




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