Date: Tue, 25 Nov 1997 11:57:31 -0500
From: Doug Henwood <dhenwood-AT-panix.com>
Subject: Re: M-TH: surplus value


Rakesh Bhandari wrote:

>>As you know, I'm skeptical about these explanations.
>
>I actually don't know exactly on what grounds you base your skepticism
>towards the Moseley analysis which I downloaded.

[...]

> You have made much of the  embarrassing record of Marxian crisis theory,
>while not paying much attention at all to theoretical reasons it gives for
>the persistence of the trade cycle (as if Mattick should be embarrassed
>that he was referring to the limits of the mixed economy in the early 60s).
>
>With the recent vicious emergence of the cycle,  bourgeois economics can
>only refer to corruption and secrecy, accidents, autonomous monetary
>movements, too much and too little financial regulation: in short bourgeois
>economics still seems to have little explanation for the "endogenity" of
>the cycle.
>
>Yes, there is Goodwin's predatory-prey model and Minsky's ideas about
>financial instability. But these models are hardly based on value theory
>and thus tend to abstract from the difficulties within the abode of
>production itself and the class struggle therein: this in the final
>analysis gives it the stamp of bourgeois economics; after all, what can
>they recommend but the Tobin tax and more transparency, marginal
>adjustments in the exchange rate or change from pegged to floating
>currencies, higher reserve requirements, public subsidized bailouts etc.

My major objection to the value theoretic exercise is this: it adds a whole
layer of complexity to economic analysis without really offering that much
in the way of explanatory power. I've asked a hundred times what this
analysis tells you that the intelligent, critical use of bourgeois stats
can't, and I've gotten lots of attitude out of Jerry in response, and now
from you Rakesh, I get the answer that it explains the persistence of the
trade cycle. Some bourgeois economists may be taken by surprise by crisis,
but hardly all - least of all those working in central banks, who are far
more grounded in capitalist reality than their academic colleagues.

So capitalist economies are subject to cycles; big deal. For this you need
the whole priestly vocabulary? I still think the reason people pursue these
methods is to prove that capitalism is heading inevitably towards its
terminal crisis. Maybe it is, I'd never rule that out, but it ain't
happened yet, and I don't think events in Asia will prove a system killer
either.

>These are the technocrats of death: let us not forget what is happening
>ground level in peoples' lives throughout Asia presently.

And, as I've said every time I've expressed doubts about the value
theoretic exercise that the fundamental political truth captured in the
value model - the origin of all the fetishized forms of capitalism, like
profits and interest, in exploitation - is absolutely central and
absolutely true. I really don't see why you need to compute the OCC in
order to understand what's happening in people's lives in Asia (or Latin
America, or Africa, or in Camden, New Jersey either). Nor do you need to
compute r* to figure that the response to the Asian crisis will be
austerity, wage cuts, and massive layoffs.


>As always, the
>cycle catches the bourgeois economists by surprise; at best if they realize
>the positive functionality of crises for the system, they have so much
>faith in its basic stability that they will recommend that recessions be
>consciously engineered, either to check inflation or induce scrapping and
>centralise capital. And in the present case, since they only saw a high
>savings rate and low govt debt to GDP ratio among the Asian governments,
>they are forced to only understand the crisis in purely subjective terms as
>a rational, self-sustaining panic. The bankruptcy of bourgeois economics
>could never be clearer.

Actually I don't remember too many Marxists predicting a crisis in Thailand
spreading into Korea and possibly Japan either.

>Even Krugman who was holding up Indonesian sweatshops as the model of
>development, even as he warning that SE Asian capital accumulation was only
>extensive in a Soviet-like manner, said little about the weakness of South
>Korean accumulation.

Not at all. Lots of partisans of Anglo-American style capitalism have been
pointing to over-expansion of industrial capacity and dangerous financial
leveraging in South Korea for a long time. Maybe the academics haven't made
much of these points, but they've been all over the business press for
years.

Doug




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