Re: Schumpeter&Credit

[djones@xxxxxxxxxxxxxxxxxxx (rakesh bhandari)]

In response to Doug's reflections on Schumpeter's theory of credit (the
full development of which many of us are waiting to read in his much
anticipated book):

I will just note what Wolfgang Stolper analyzes as Schumpeter's unique
theory of money in *Theory of Economic Development*:

"'Static' money evidently refers to the function of money in equilibrium,
which is simply that of a *numeraire*.  This is really what monetarism,
boiled down to its essence, is about: Inflation is a monetary phenomena.

"But 'dynamic' money, credit creation undertaken to finance a change in
production functions and the structure of the economy, is a different
matter; and it is one about which monetarism is agnostic and which
Keynesianism does not really consider." (56)

[By the way, I do remember that Robt Guttmann's How Credit Money Shapes the
Economy includes an analysis accessible to the layperson of how deeply
rooted in economic theory is the assumption that money is only a
numeraire].

 As did Doug,  Stolper  emphasizes that money creation and economic policy
in general have not played this dynamic function:

"...the economic policies of the 1980s ahve in fact meant--although not yet
irreversibly--that the next American generation will be the first to see a
lower standard of living than the present one because the prosperity of the
1980s has depended in the best Keynesian manner on consumption and not on
investment.  The true conflict, as Schumpeter never ceased to stress,
between the present and the future, and at present it is the future which
is being sacrificed.  The fact that this is due not to 'laborism' as
Schumpeter expected but to highest income receivers adds another 'joke in
poor taste' of history." (146)

Mattick of course argued that because private capital formation was
insufficient, the state expanded production by drawing on already produced
and future surplus value.  As with Stolper, Mattick insisted that this
could be at best a short-term solution which would compound the problem of
an insufficient production of surplus value in the long run.

Without the criterion of surplus value, Stolper can only seem to assert
that  debt-induced government expansion comes at the expense of (surplus
value) production.

 Mattick of course developed his critique of state spending   on the basis
of value theory and on that basis was able to show the the value-based
limits to the mixed economy.

While Mattick's theory of the mixed economy is very controversial (see
Ernest Mandel, Eric Olin Wright, Paul Sweezy), it should be noted that
Mattick never denied that Keynesian programs could indeed serve to
stimulate production...for some time.  It does now seem that Reaganism was
indeed the last great blast (gasp?).

Rakesh










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