File spoon-archives/marxism-international.archive/marxism-international_1997/marxism-international.9712, message 231


Date: Sat, 13 Dec 97 7:55:53 EST
From: boddhisatva <kbevans-AT-panix.com>
Subject: Re: M-I: Re: The World Economic Crisis and American Capitalism






		Dennis,


	Obviously the revolution would be a better cure for Japanese
stagflation, but under capitalism the only cure is higher interest rates.
The hallmarks of stagflation to my mind are a lack of interest in new
investment, and artificial price rises supported by custom and expectation
that allow existing capitals to limp along.  Japan's closed economy
creates absurd price structures that are the economic equivalent of the
speculative inflation found in more typical stagflation.  Next, clearly
nobody is demanding a lot of credit for internal investment in Japan or
interest rates would be higher.  Once speculative inflation sets in
(inflation fueled not only by over-utilization and excess money but by
entrenched inflationary expectation), the spell can only be broken by
forcing lenders to charge more to refinance current capitals than can be
offset by pricing.  Recession is the almost certain result, but it is
recession without inflation or irrational price structures.  This
recession is offset (far from completely) by foreign inflows of capital
and reduced outflows of internal capital (that would otherwise seek higher
rates abroad as the Japanese have done).  That there would be bankruptcies
and higher unemployment under a high interest rate regime is simply
appropriate. The economy is doing badly, why shouldn't it show? Allowing
the constant re-financing of an economy that's a proven loser is stupid. 
Let capitals compete with a higher rate of return, that's what economic
growth is all about.  This is capitalism we're talking about, after all. 



	peace





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