it really is ridiculous that Cowen cites mathus but not marx on this. As if Hayek was ever as concerned about overproduction and overinvestment as marx was. Just goes to show what even a moderate from the GMU school is capable of forgetting in the interest of propping up their fragile ideology. What is interesting to me is that he says we should prepare for this contingency. But the way he says we should prepare is to be more fiscally conservative. This overlooks the more realistic problem that we will face in the short term--namely, that if China has all the capacity and produces all the stuff we need to live, then there is little way we can be financially independent. We'll need to borrow money from them just to buy what we need. It is the final stage of the bankrupt Washington Consensus' export led growth strategy, as numerous highly indebted developing countries have discovered. By seeing this in only monetary terms he forgets that when Keynes said "in the long run we're all dead" he meant that people can't live on neoliberal platitudes alone. In the meantime, if the only food or machine goods they can use are produced by someone else, and they have nothing to trade but their promises of Randian fortitude, they'll have to borrow money just to get by. Malthus was talking about natural limits: Marx was more in tune with the artificial barriers created by capital. Since Cowen assumes the latter is the former, he needn't make mention of Marx. This is inconvenient since overlooking the critique made by Marx gives him nothing of substance to offer in the way of solutions--all he can do is bemoan our profligate borrowing, as if that is what is causing 10% unemployment. And Cowen is one of the better of the lot.
s On Sun, Nov 29, 2009 at 16:16, Jim Devine <[email protected]> wrote: > [a cite from Tyler Cowen] > > The notions of excess capacity and malinvestment were common in > business-cycle theory of the 19th and early 20th centuries, when > growing Western economies had frequent crashes of this kind. Numerous > writers, from the Rev. Thomas Malthus to [Karl Marx to] the Austrian > economist Friedrich A. von Hayek, warned about the overextension of > unprofitable capital deployments and the pain from the inevitable > crashes. These writers may well end up being a guide for understanding >
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