OscailtReview: Paul Krugman, End This Depression NOW!A Radical Critique of the Liberal Economic Program2012-06-06T17:51:40+08:00Anarkismoanarkismoeditors@lists.riseup.nethttp://www.anarkismo.net/atomfullposts?story_id=23053http://www.anarkismo.net/graphics/feedlogo.gifMixing processes is not helping to clear processeshttp://www.anarkismo.net/article/23053#comment142762012-06-06T17:51:40+08:00Ilan S.ilan at shalif dot comThe state debts have nothing to do with the real economy. It just enable big cap...The state debts have nothing to do with the real economy. It just enable big capital firms to "invest" the taxes it do not pay the state in a secure profitable way instead of investing it in means of production and hazardously competing between them. The mounting consumer debts are of similar use - the surplus value extracted from wage slaves is lend to them for consumption as other way the production will have to shrink and class struggle will intensify. <br />
The cycles of up and down are supposed to be around the level of unemployment needed for holding the wage slaves in line. <br />
The Kensian intervention is not about increasing state debt but of printing money to quicken the capitalist cycle one way or another... and when cycle is up and wages increase it is part of inflation tax to neutralize wages increase. <br />
The fact that different sections of the capitalist class have their own priorities restrict the ability of the state to take into consideration the optimum solutions.<br />
The "Marxist" wishful thinking that the decline in rate of profits is an in built time bomb that eventually will explode the capitalist system obscure the real picture for its believers. <br />
<br />
(The profit rates are not even. The rate of profit of the core capital of the big firms seems even to increase... it is just the rate of profit of the saving funds and passive capital "invested" in the firms or state budget via the finance system that decrease. The common capitalist firm usually use more than tree times capital than its own.)Exchange with a Trotskyisthttp://www.anarkismo.net/article/23053#comment142802012-06-07T10:27:29+08:00WayneA friend who is a Trotskyist wrote me some comments. He wrote:
(1) I do find on...A friend who is a Trotskyist wrote me some comments. He wrote:<br />
<br />
(1) I do find one analytical disagreement, or perhaps a difference in emphasis. (I definitely disagree with your spelling of Eisenhower, though.)<br />
<br />
I answered: Oops.<br />
<br />
He wrote: (2) The reasons you give for why Keynesian spending for public works is off the table are right as far as they go. But one has to explain why public spending could be done during the post-WW2 boom (and at times before, as under Bismarck, and to an inadequate extent during the Depression) and then was stopped. One reason is the falling profit rate, which you go into later. But another is the failure of the working-class leadership to fight back when Volcker and then Reagan turned to austerity, so that the ruling class had little fear from the working class. The unions’ etc ties to the Democratic Party are a major factor. Krugman of course can’t complain, since despite his wailing about the DP’s weak programs, he is a staunch Democratic partisan.<br />
<br />
I responded: <br />
Yes. I might have pointed out that even the New Deal's programs only were implemented due to an independent mass movement of workers. Even the lesser gains of the Great Society were a reaction to the independent Black movement. Without such a movement, there is no hope of getting even Krugman's program. I thought that my essay was already too long, however.<br />
<br />
(3) He wrote: Of course, you and I have more fundamental differences. I would use the need for public works plus the failure of Keynesianism to argue for a workers’ state, so I guess there we part company. Who is to do the expropriation you advocate? How are enterprises to be placed under worker and community control if not by confronting, combatting and defeating the capitalists’ state and creating our own? <br />
<br />
I responded: Obviously I did not go into these issues. On the one hand it is an demand on the existing state (and many anarchists are against making such demands, as came out in the Occupy movement). But these demands can only really be carried out by a revolution and the creation of an association of workers' and popular councils, affiliated with a workers' militia. I would not regard this as a state however, since it is not a socially alienated bureaucratic military machine over the working class but is the self-organization of the workers and their allies . On this we may not have such a big disagreement (although I have noticed that your groiup's public statements call for nationalization but do not add the Trotskyist more-or-less traditional "under workers' control"). The real issue comes when you support the state set up by Lenin and Trotsky and even regard the USSR under Stalin as a "workers' state" up to 1939. Well, it is a long discussion....Profits are at historic highshttp://www.anarkismo.net/article/23053#comment142812012-06-07T11:35:11+08:00TomGood review.
Krugman usually calls this the third depression...here referring t...Good review.<br />
<br />
Krugman usually calls this the third depression...here referring to the economic history of the USA since the American civil war. The first was the Long Depression that began with the Panic of 1873 and continued with ups and downs til about 1898. And the second of course was the Great Depression of the '30s. Government spending during the '30s did actually make a difference...leading to significant recovery in 1935-36. When FDR started listening to his deficit hawks and cut back federal outlays in 1937, this triggered a savage recession that threw the country back into the depths of the depression. So it's not quite true that state spending on make-work and infrastructure had no effect.<br />
<br />
It doesn't seem plausible to say that low profits are the cause of the present slump. Corporate profits are at historic highs. But they are not being invested in the real economy. They will go into speculative investments, mergers & acquisitions, cost-cutting forms of investment, etc. They aren't being invested in the real economy because there is already excess capacity so new investment won't lead to sufficient profit to get them to do it. (Maybe that's what you mean by lower profitability.) <br />
<br />
The previous era of speculative booms, especially the housing bubble & real estate investment boom from late '90s to 2007, artificially propped up equity. Meanwhile with over 30 years of declining wages people were using debt to prop up their spending, such as debt based on paper equity of houses. This tended to prop up demand, which encouraged firms to invest in vast new productive capacity, like all those factories in China. Now that the bubble is deflated, a deflated level of demand exposes the reality of excess capacity. Hence no new investment & no hiring. <br />
<br />
Although attempts to pump up employment and consumer spending might help, the capitalists will tend to oppose this for the reasons that you mention. Also, individual capitalists often tend to pursue politics rational for them even if not for their class as a whole. Individual capitalists will want to cut wages and minimize employment and cut their taxes because this beefs up their individual profits. But an austerity agenda will tend to just drive the economy deeper into slump.Response to Tomhttp://www.anarkismo.net/article/23053#comment142822012-06-07T23:50:48+08:00Wayne(1) You write: " Government spending during the '30s did actually make a differe...(1) You write: " Government spending during the '30s did actually make a difference...leading to significant recovery in 1935-36." But what the following recession demonstrated was that the government's fiscal stimulation was enough to pump up the economy immediately but not enough to get it back on its own feet as a self-motivating system. When the state's financial props were taken away, back down fell the economy.<br />
<br />
(2) "Corporate profits are at historic highs. But they are not being invested in the real economy." That is the point. Real surplus value is not being pumped out from real workers in the real economy, not to a sufficient extent. So the bourgeoisie has been channeled into financialization. The paper profits look good but are really "ficticious capital," in Marx's terms. That is, it is a bubble economy at best. And it will repeatedly burst into new and greater depressions.<br />
<br />
Meanwhile, as you say, overall efforts at austerity, to lower the workers' share of the wealth and increase that of the capitalists, has side effects of weakening the consumer market, overproduction, and other aspects of disproportionality.Follow up to Wayne's commentshttp://www.anarkismo.net/article/23053#comment142852012-06-08T13:01:00+08:00SkipOn point 2, I'm unclear about this corner of Marxist economics to be honest. Are...On point 2, I'm unclear about this corner of Marxist economics to be honest. Are you saying that increased inequality has concentrated wealth in a few hands, who then pump that money into the financial industry, making the rest of the economy poorer? Or are you saying that there isn't enough profit in things like manufacturing and more tangible services(the "real economy"?), as compared to finance? The first interpretation makes sense to me, the second not so much.<br />
<br />
On the first point, I think there is at least some historical evidence that when tried stimulus can restore the economy to pre-crisis health. There aren't many examples of this outside of wars because the ruling class is never willing and rarely forced into putting enough money into things like jobs programs building infrastructure, extended unemployment, or food assistance, to give some examples. I do think forcing the ruling class to do that is vastly better than austerity though, and would provide at least some short term relief worth fighting for.<br />
<br />
Thanks for writing this Wayne, it was interesting and topical reading.Response to Skiphttp://www.anarkismo.net/article/23053#comment142862012-06-11T09:06:33+08:00WayneSkip,
So the capitalists concentrate more wealth in their own hands and less in ...Skip,<br />
So the capitalists concentrate more wealth in their own hands and less in that of the workers--which is what rising inequality means. My question then is WHY do they "then pump that money into the financial industry" rather than into the "real economy," where real goods and services are made? I answer: because the real, industrial, economy has become less profitable over a long span (abut 40 years). If you don't agree or are not sure, I gave four possible books to read which cover this topic. Right now I am reading Robert Brenner's The Economics of Global Turbulence, first written in 1998 and slightly revised in 2003. He analyzes the "long downturn" from 1970 to when he wrote.<br />
<br />
I do not really agree that "there is at least some historical evidence that when tried stimulus can restore the economy to pre-crisis health." An apparent prosperity which is based on military spending is not really in "health." It is relying on massive waste-production, which if ever used would destroy the society. Not "health." (I also did not go into how the capitalists have propped up their fictitious profits through looting the environment.) <br />
<br />
But I completely agree that it would be good to fight to pressure (you say "force") the ruling class to spend money on good and useful things for the working class and the real world. I am all for fighting for reforms. If a movement can win them, great! If not, then it (hopefully) demonstrates that the ruling class must be gotten rid of. Which is why I end the piece with a discussion of how revolutionaries raise similar proposals.Towards a Libertarian-Socialist Transitional Programmehttp://www.anarkismo.net/article/23053#comment143122012-06-27T00:56:18+08:00the red star twinkles mischievouslyExcellent article. A series of good articles to read alongside it, which, in det...Excellent article. A series of good articles to read alongside it, which, in detailed form, propose a transition from a capitalist to a socialist economy are from a group of Greek Marxists active in SYRIZA (or, to be more clear, what supporters of the Orthodox Trotskyist International Marxist Tendency view as neccesary to transition to a socialist economy). <a href="http://www.marxist.com/index.php?option=com_googlesearch_cse&n=30&cx=000888792376860785681%3Ase0tky2ydii&cof=FORID%3A11&ie=UTF-8&q=Greece%3A+Ten+Programmatic+points&hl=en" title="http://www.marxist.com/index.php?option=com_googlesearch_cse&n=30&cx=000888792376860785681%3Ase0tky2ydii&cof=FORID%3A11&ie=UTF-8&q=Greece%3A+Ten+Programmatic+points&hl=en">http://www.marxist.com/index.php?option=com_googlesearc...hl=en</a><br />
<br />
While a number of things they advocate seem reasonable enough, of course, there are others which are more controversial, and there are a number of considerable weaknesses in what they propose. For example, while condemning 'bourgeois nationalisations' by capitalist governments in response to our current crisis, and advocating a socialised and democratically planned economy, they themselves seem to confuse nationalisation with socialisation, and socialised property with state property. There's plenty of talk of workers' control and management, but even if they excercise considerable influence, the economy is still under control by some kind of top down, socially alienating 'state'- they seem to be closer to advocating a revolutionary reform of the state so that it loses its capitalist characteristics, rather than its replacement with a 'workers' state' although I doubt they really think what they are proposing can really be done within the framework of a capitalist state- indeed, they are quite keen on saying that the Greek crisis cannot be solved on a purely national basis and advocate the slogan of a 'United Socialist States of Europe'. Furthermore, they tend to confuse democratic planning with central 'planning' and are excessively centralistic in what they are proposing, even though I imagine they are sympathetic to desires of regions, localities, etc, to be relatively autonomous within even a centralised framework. Their ideas about planning seem to owe more inspiration to Year One of the Russian Revolution (i.e. 1917-18- and probably even later on) than to a more modern, less rigid, and thoroughly democratic version of democratic planning and of economic, political and social organisation that can be found in Pat Devine's 'negotiated coordination' model and in his book Democracy and Economic Planning (or Cornelius Castoriadis' 'Workers' Councils and the Economics of a Self-Managed Society' his idea of the 'plan factory', elements of parecon, perhaps even the 'market socialism' that David Schweikhart advocates in his book 'After Capitalism' might be worth a try? from what I understand, he is in favour of a self-managed socialism, even if his model does retain elements of capitalism and the state to a considerable degree). <br />
<br />
So, I fear, despite their good intentions, that this is a kind of more democratised version of state capitalism, and only in a limited sense a genuinely libertarian socialist programme. I known Wayne has already done some work on this already, but I think we need to be presenting a more detailed libertarian-socialist program to combat the deficiencies within some of their ideas, but also to find ways to relate comradely to all other groups on the left which are resolutely anti-Stalinist, democratic, etc, through a united front as most likely the most effective means of advancing the struggle for a libertarian-democratic socialism from below with the maximum unity of democratic left organisations that is possible.<br />
<br />
By the way, I appreciated the clarity and detail of The Abolition of the State: Anarchist and Marxist Perspectives. It's a great book Wayne, and I think it helped me concieve of what a modern-day socialism from below might look like, alongside your discussion in 'Marx's Economics for Anarchists.' Kropotkin's article 'Anarchist Communism' and Alexander Berkman's 'The ABC of Anarchism' were also very helpful.