I finally got around to reading this article. It's pretty good. I want to talk about only one thing, i.e., the crisis theory that Mattick (Jr.) uses.
I recently published a (technical) article article sketching a theory of the business cycle which includes the key element of Mattick's theory (shared by Paul Mattick, Sr., Bob Brenner, and the so-called "Austrian" school, among others). This element is that persistent prosperity (high employment) due to Keynesian-type stimulus creates imbalances which eventually cause a serious recession (because delaying recessions simply makes them worse) and/or inflation. This is quite different from standard Keynesian theory, in which fiscal stimulus can allow a capitalist economy to attain full employment (as long as it doesn't go past the inflation barrier). The difference is that the standard Keynesian theory is not dynamic and thus misses the possibility of increasing problems (seen by such non-standard "Keynesians" as Kalecki and Minsky). Thus, they miss the role of recessions in purging the imbalances and allowing recovery of accumulation. I agree that trying to straighten out the movement of the economic roller coaster can cause the cars to fly off the track. But I differ in saying that it's possible for capitalism to "fall off a cliff" (to use a phrase that was very popular during 2009) to end up in a deep and persistent depression. The depression is so deep that it feeds on itself (a vicious circle) so that the purgative "function" of recessions sketched above doesn't work (or doesn't work for a really long time, perhaps requiring a big war or something similar to do the job). In that case (which might, in theory, describe 2011), Keynesian stimulus -- such as Obama's 2009 StimPak -- might work, to get the economy "back on track," i.e., back to the business cycle described above. So Keynesian economics isn't totally wrong. The problem with Keynesian stimulus at this point seems two-fold. First, the general obsession with "balancing the budget" goes against it. In the US, the GOPsters and their Teabagging vanguard advocate a (weak) form of Keynesian stimulus, i.e., tax cuts for the rich. But then they turn around (and are joined by right-wing Dems) and use the resulting deficits to justify cuts in government purchases and welfare-state transfer programs. Dollar for dollar, the latter is stronger in terms of pushing the economy deeper into the hole than the tax cuts are at pulling the economy out. So the net effect is to either make the stagnation worse or keep it going for a long time. Persistent high unemployment serves the vested interests of business, which wants both organized and disorganized labor to stay on the ropes (taking wage and benefit cuts) and want to get all sorts of concessions and sops from the government (deregulation, etc.) that business spokescreeps claim will boost "business confidence." Financiers of course, benefit from low inflation (and thus fear the consequences of seriously addressing the disaster of persistent much above-normal unemployment) and _think_ that they might benefit from deflation (because they don't see the big picture). Second, in today's globalized economy, Keynesian stimulus really only works well if it's applied internationally. (A small country that goes it alone has to do something to prevent capital flight or having the benefits leak out to other countries, thus being dissipated.) The US and the Eurozone are the only economies that seem able to fly solo. So far they aren't doing it, likely due to the political forces sketched above. I think that Keynesian stimulus (and going further to the left, social democracy) is likely to be applied only when social unrest grows in the US and Euroland, as long as its not of the Teabag sort. Though of course, there _is_ right-wing Keynesianism, e.g., as practiced by Germany during the 1930s or (more generally) when countries get involved with full-scale wars. A more "moderate" version of right-wing Keynesianism was the permanent war economy of Eisenhower and others. To the extent this involved supply-side stimulus in the form of government investment in infrastructure, education, basic research, and public health -- and this stimulus is done the right way -- it can counteract the negative effects of persistent demand-side stimulus. On Tue, Mar 15, 2011 at 6:29 AM, Louis Proyect <[email protected]> forwarded: > The Chronicle of Higher Education > Tuesday, March 15, 2011 > Capitalism's Dismal Future > By Paul Mattick > > Apart from the patently nonreality-based dissent of its Republican > members, the Financial Crisis Inquiry Commission could hardly have > expected the report it issued in January to arouse much > excitement. After a year and a half of research and the testimony > of academics and other economic experts, it came up with no more > than the already conventional wisdom that the economic downturn > that burst into public view in 2007 might have been avoided, > having been caused by a combination of lax governmental regulation > and excessive risk-taking by lenders and borrowers, particularly > in the housing market. The same conventional wisdom assures us > that swift government action prevented the Great Recession from > turning into a full-blown depression, and that the downturn has > given way to recovery, albeit a "fragile" one. No matter how often > it is repeated, however, this wisdom remains unconvincing. > > Why is the recovery so fragile? Why is unemployment stubbornly > high? Why are the banks, newly stocked with cash by that swift > government action, so uninterested in advancing it for business > expansion? Why is the series of sovereign debt crises in Europe > echoed in the United States by collapsing state budgets? Why do > politicians call relentlessly for austerity even while the economy > remains unable to satisfy the need of millions for housing, health > care, education, and even food? The bankruptcy of the putative > science of economics already demonstrated by the failure of > experts to predict the catastrophe is underlined by their apparent > inability either to explain what is happening at present or to > reach consensus on measures to be taken in response. >... -- 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
