Rakesh asked me to forward this. I am sending it on even though
it has digs at both Doug and Max, which are inappropriate. Since
he is not part of the list, I am passing the message on in its
entirity, assuming that the danger of flaming is not very high.
Dear economists:
Please indulge this non economist's attempt at understanding.
So let's say we use the idea of Kaleckian surplus instead of the
Keynesian
saving.
This potential surplus can only be realized as monetary profit if
there is
source of demand for it beyond what can be sustained by current
income. This
*autonomous* source of demand could be say borrowing through
overdraft
facilities from the bank.
But any autonomous expenditure--for example, deficit financed
govt
'investments' in infrastructure and the social wage--will do in
situations of
deficient demand and serious unemployment.
I'll leave aside the Marxian objections here (see Paul Mattick,
Marx and
Keyenes). we have a problem anyway: rate cuts are not simulating
investment;
even the threat of deficit financed govt expenditures is putting
upward
pressure on long term rates; we don't seem to have the global
financial
architecture needed to pull off a coordinated monetary and fiscal
stimulus
(which of course assumes that under a different financial regime,
such a
stimulus could be effective...which I doubt).
So this puts all the pressure on net exports, no? Alex has
underlined that US
has huge negative net exports, but does this include sales from
foreign
affiliates and account for services which seem to be
undercounted?
At any rate, exports can be bolstered by some combination of wage
repression,
protectionism and currency devaluation.
But then we seem to run into a fallacy of composition.
Of course the powerful nations can get away with more. So with
the labor and
environmental standards--as called for by the Northern-union
backed, anti
globalization movement--the North will not have to relax fully
the MFA and
system of agricultural subsidies even trade and financial
regulations are
knocked down in obscenely poor countries. No one should be
surprised that India
is threatening to walk away from further neogiations...with the
full backing of
all its major trade unions.
Yet it goes unsaid by even American leftist business observers
that every major
trade union centre in India--that is, not just Indian businessmen
or the Indian
state or Indian free trade economists--has forcefully repudiated
the link
between trade and labor rights. But this fact seems not to have
found itself
into the pages of any publication of the American left!
We have articles about the student anti-sweatshop movement with
titles like
kids vs. economists, though they would be more appropriately
titled ivy league
brats vs. all major trade union centres in India.
But there seems to be another more important response to the end
of social
democracy in the form of govt expenditures.
In short, it seems that as society settles into so called
unemployment
equilibrium, we have become accustomed to either locking up or
locking out the
unemployed. That is, incarceration and restrictive immigration
policy.
The facts about the former are well known. There is an excellent
article in the
recent Monthly Review by Michael Tigar on this.
But it seems that the latter is less well understood. Yet any
objective
comparison between globalization now and globalization one
hundred years ago
reveals a stark contrast in the scale of migration.
Legal inflows into the US today are about the same in absolute
terms as they
were right before WWI. And the US, along with Germany and Canada,
have been
more open than the rest of Fortress Europe for example.
Yet the political opposition to immigration is still very high.
We have even
had EPI fellow Max Sawicky speak well of Michael Lind's liberal
nationalism of
which restrictive immigration policy is a key. Even the recent
AFL/CIO-backed
Bush plan to legalize workers whose labor has already proven to
be needed does
not change that in historic terms immigration policy is very
restrictive. Of
course there have been many bogus rationales given for this--some
outright
racist, but Lind has not hesitated in invoking them.
In short, it seems that as a consequence of the collapse of
social democratic
keynesianism (whether for reasons internal to it or for reasons
of changes in
the international financial system), powerful social forces have
arisen to
accomodate us to unemployment through incarceration and
restrictive immigration
policy. Both policy approaches are intertwined with racism. So
even if in
academic circles The Bell Curve and AlieNation have suffered
lethal blows, the
policy recommendations have lost none of their lustre. In fact
restrictive
immigration policy now has the stamp of "liberal" populism. But
the racism
which is tied up with such policy continues to haunt our social
lives.
Rakesh
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail [EMAIL PROTECTED]
