Jim,
Nevermind the detractors. I read what you are saying quite well, and I am not disregarding it. But I think that we are not advancing the argument very much, if, when I raise an issue, you start talking about something completely different. My beef is with people who say that the tail wags the dog, when the dog is only wagging its tail, so to speak. This thread's controversy began when Louis Proyect said: "Krugman says he is more of a Minsky guy. Needless to say, Marx's name does not come up." I responded to this: "Except for containing a few general comments on debt crises, Marx's texts cannot tell us much about the specificity of the contemporary debt crisis. The Marxists only jabber about "falling rate of profit" and blame the nasty capitalists, that is all they know." I then noted, what I thought was the real flaw in Krugman's seemingly nuanced argument (it wasn't that he failed to mention Marx, but that his own columns are chockfull of moral messages according to a definite pattern). Then various people wanted to rap me on the knuckles for heresy or abritrariness - in other words, Louis can say what he likes, and if I disagree with it, then I deserve excommunication, or at least being cursed as a "dickhead". What I argued is, that if the invested means of production are only a smallish minor portion of the total capital assets of the country, then it is unlikely that a small observable drop in the profitability of these productive assets can cause a system-wide crisis. Does there exist an "accelerator" or "multiplier" effect, which can turn an observable tiny fall in the profitability of a smallish minor portion of a country's total capital assets, into a system-wide crisis? So far the evidence is nil. The only quantitative counterargument I can think of, is that I have left out of consideration (in the table I provided) the stock value of variable capital (i.e. labor compensation - depending on how you define productive labour, that stock wil be larger or smaller). But the stock value of variable capital (let us say, circa 1/10th of the annual flow) is only a small fraction of the total value of constant capital assets (fixed capital + inventory + ancillary operating funds), particularly given that the capital tied up for payments to productive workers is normally recovered from product sales several times during the year. It is true in theory, that lower profit rates in industry could trigger a financial crisis, but that was not the case in 2008/2009. The problem in 2008/2009 was that financial firms had overloaded themselves with liabilities on the expectation of high returns, so that it took only a relatively small escalation of subprime mortgage defaults, to trigger a massive cashflow problem for big corporations. That led to a financial panic, which had repercussions for industry as well, since it caused (among other things) massive layoffs. In turn, consumers suddenly spent much less, and banks were no longer willing to lend to each other. Thus economic growth went phut, and that made all the credit problems staked on that growth still worse than they were before - and it brought out into the open a lot of other dodgy financial arrangements, leading to further crises. Rising unemployment acted to curb wage rises, but simultaneously also curbed domestic final demand. Unlike most of today's Marxists, Karl Marx had a NARRATIVE about the crisis. He explained in his own time that the crisis was not the capitalists' fault, but that it arose out of the immanent contradictions in the growth of capitalism - taking most people by surprise, when it happened. However, once the crisis broke out, the different social classes responded in their class-typical way to it, and then a struggle broke out over whose crisis-solving strategy would prevail. J.
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