Rakesh wrote: >Charles, here's Jim D's underconsumptionism: I think it's wrong to call my views "underconsumptionism," since I don't fit with Bleaney's definition, which is based on a serious survey of the history of economic thought. Also, "underconsumptionist" is an epithet used too often by the self-described "orthodox" to avoid serious treatment of the question. If you wish to describe my perspective in one word, I would prefer "over-accumulationism."
<quote from me> >Classical underconsumptionism posited that depression is normal for a >capitalist economy, arising from a persistent tendency toward low consumer >spending [Bleaney, 1976: 11]. Marx and many Marxists decisively criticized >this >theory and have been absolutely right to reject such universal stagnation >tendencies [cf. Bleaney, 1976; Clarke, 1993].14 However, we should not reject >the role of stagnant consumption in causing or encouraging crises under >certain specific historical conditions. Unlike classical underconsumption >theory, this paper (1) emphasizes forces endogenous to capitalism which drive >it to over-expand rather than to stay mired in stagnation (see above); and >(2) >sees major periods (such as the 1960s) in which low consumption did not cause >problems for capitalism. > >Underconsumption forces can play a role in two cases [Devine, 1983]. First, >underconsumption problems can be crucial during the period after the crisis >(whatever its reason), in an "underconsumption trap."15 Falling wages and >workers' consumption hurts profit rates if other elements of aggregate >spending >are prevented from rising enough to fully realize profits. Specifically, if >capitalist accumulation is blocked by a mutually reinforcing combination of >unused capacity, excessive debt, and pessimistic expectations, the >competition >to cut [[p. 125]] wages can contribute to turning a recession into a >depression, as in the early 1930s (see section III.F). > >Second, in the theory of "over-investment relative to consumption," the >existence of stagnant workers' consumption requires a growing share of >accumulation in the national product in order to realize surplus-value and >profits. The structural tensions discussed above and rising profit rates can >encourage such growth. Though in theory it is possible for growth to continue >forever in this situation, accelerating accumulation implies that the economy >becomes increasingly unstable and prone to collapse.16 The theory centers on >the negative effects of excessively rising profit rates in an economic boom, >and is developed for the 1920s in section III.C. <unquote> Rakesh continues: >as i noted in a previous post, jim d's second form of underconsumptionism >seems >to bear a family resemblance to sweezy's theory of underconsumptionism in >Theory of Capitalist Development... Family resemblance, yes, but since I read Sweezy & criticized his view, I avoided some of his mistakes. See, for example, my critique of Baran & Sweezy and the whole MONTHLY REVIEW view of the time (i.e., up to the early 1980s) in my 1983 REVIEW OF RADICAL POLITICAL ECONOMICS. Also, as noted above, the underconsumption cases are not the _only_ reasons for crises under capitalism. Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
