File spoon-archives/marxism-international.archive/marxism-international_1997/marxism-international.9712, message 182


Date: Wed, 10 Dec 97 8:05:26 EST
From: boddhisatva <kbevans-AT-panix.com>
Subject: Re: M-I: The World Economic Crisis and American Capitalism




		Rakesh,


	I think that what you are talking about here nets out to what I'll
call speculative deflation.  If East Asian producers start knocking down
prices and knocking down investment, and lenders start knocking off credit
on the *assumption* of slackening returns on goods going forward, there
will probably be a problem.  That condition would not only discourage
local investment, but would create a for-ex downtrend that would
discourage already skittish foreign investors.  Fortunately, Europe may be
prepared to go into a cycle of increased effective credit availability
because of the Euro and general restructuring, and the East Asian crisis
has kept US credit markets looser than they otherwise might have been. 
Furthermore, the currency speculators probably did the Tigers a real favor
by knocking down their currencies so far and so fast, because now the
for-ex situation looks flat to up, making those countries more attractive
for capitalists.  Japan, by contrast, is probably suffering from the fact
that its currency was too highly valued by the West, for too long,
creating a downtrend that encouraged the flight of investment Yen from
Japan.  Interestingly, US bond markets are not panicking at the thought of
Japanese bond sales, which is good because the moderate rise in US
interest rates that these sales will engender is entirely appropriate if
the US is going to share in and rationalize the over- investment in East
Asia. It also creates a positive for-ex trend as it pushes the dollar
towards technical peaks. However, panic selling of bonds would cause too
much turbulence in rates and in capital markets, causing retraction of
credit that would hurt businesses looking to invest their way around
near-term slack demand from Asia. 


	From a Marxian perspective, you have a crisis in surplus value
generation and valuation.  This effects the economy less than one might
suppose because the rate of exploitation is the same or slightly
rejiggered in the proletariat's favor.  Unless there is a vast,
unredeemable structural change in demand and capital availability (which
effectively create a higher rate of exploitation) the economy can recover
well assuming use-value produced is fairly intact.  The connection between
this and the paragraph above is that credit ameliorates the rate of
exploitation, hence its absolute necessity under capitalism. 



	peace



	
p.s. - I actually think it would be good if the East Asian situation
raised Japanese interest rates as I believe Japan may be in something very
like stag-flation, and interest rate rises are the only cure for that
condition in my view.








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