Sean Andrews wrote: > 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. <
Hayek's view (if I understand it correctly) is that overproduction (excess supply) and over-investment in one sector coexists with underproduction (excess demand) and under-investment in another, what Marxists call "disproportionality." He, like other Austries, explicitly or implicitly assumes that Say's Law applies: the excess demand can't be for money (so that the excess supply can't be for non-money commodities in general) -- ignoring Malthus. Further, they assume that relationship between industries is merely a matter of relative prices "signaling" the how the allocation of resources should occur between them (as in the textbook "price system"). Thus, over-investment in one sector can't cause a slump there which spreads a slump to the rest of the economy (as in Marx, as made more explicit by Keynes). I don't think Cowen understands serious macroeconomics. >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 [in the US] >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. < These types always emphasize the overspending by the government and forget the overspending by the private sector. In theory, the yuan could rise relative to the US$, meaning that the US would cut back on imports and China would buy more US commodities. That is, US dependency on China could be reduced. However, especially if it happens quickly, that would mean a major hit to US living standards by reducing real income and real net worth. That would create a big legitimacy problem for Obama and other "in" politicians and for capitalist employers: the low yuan has been a major force that has helped people in the US tolerate the rapid increases in inequality of wealth holdings and incomes. The rising yuan would eventually create jobs in the US (while reducing their availability in China) but the J curve effect and the difficulty of reviving industries which have been creatively destroyed (i.e., the cost of unscrambling the egg) say that this will take a long time. > 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. < well put. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
