Socialist Economics and the Current Crisis

["Donal" <donaloc@xxxxxxxxxxxxxx>]

I would like to ask for any constructive responses to a post I put up
recently it included reference on initial steps towards establishing a
socialist economy. I realise that it was badly headed: 'Best Value Poem'; I
was responding to a post by Jim Drysdale. At present, only Jim has responded
to it with a contribution highlighting the dangers of focussing on
socialised market relations at a time when the whole system is about to
collapse.

In particular, I was wondering about the need to nationalise export trade.
Has anyone a good understanding of this element - I suspect it is something
to do with controlling monetary flows.

In relation to the recent downturn:

I think it was Lou Paulsen who asked about the response of the Imperialist
Central banks to the recent crisis and pointed out the apparent divergence
between a deflationary recession and the cutting of interest rates. To
clarify this apparent contradiction: the latter measure would encourage
capitalists to invest in production at a time when the problem is that
production exceeds demand; understood in this way the behaviour of the
capitalists seems irrational, bound to have no impact on the rate of capital
investment and tending to produce 'Stagflation' (i.e. high inflation and
economic stagnation) in a situation where inflation begins to rise.

The alternative analysis, which I believe is guiding the powers-that-be, is
that cuts in the interest rate in the US will encourage public spending (on
the back of increased indebtedness and lower debt repayments). This measure
is deemed safe at present given the inability of workers to get off our
knees and demand pay increases at this time (with the knock-on effect of low
inflation rates in the US - not so, the EU). Jim's point on German worker's
ability to push for improved conditions is reflected in the higher inflation
rates in central Europe - the EU can't afford to stoke these up at a time
when the economy is starting to weaken - thus, the risk for 'stagflation' in
Europe. I don't understand the Asian economy, perhaps our friend Liu could
help us, but from all accounts, with the exception of China (was it 12%
growth rates?), they are experiencing a dire recession (Japan's fourth this
decade with 0% interest rates and South Korea almost defaulting on debt).

In theory, increased public spending in the US, alongside the
military-industrial spend associated with the war, should drive the economy.
The problems with these measures are that (a) consumer confidence is not
being improved by the rate cuts (b) the average US citizen is already up to
his/her eyes in debt and wouldn't want to spend anymore (especially given
losses associated with market-based stocks, and pensions) and (c) that spend
on the war is likely to be salted away from the main economy. Other factors
which will reduce prospects for economic growth further are the impact of
job-losses in terms of worker wages and the consequential 'multiplier
effect' withing the economy (that is the cumulative sum of knock-on economic
activity from one job). The war will further enlarge US borrowing
requirements, assuming that not all costs can be passed to the working
class, and the nightmare scenario could arise if (a) oil prices began to
rise as a result of shortages due to wars, disruptions in production or
problems with supplier companies; (b) colonial debtor nations defaulted on
debt repayments; or (c) workers in the States/EU/Asia started to misbehave.

>From the Capitalist perspective, the best and surest way of getting out of
this recession is through job-losses and painful (to us) contraction . It'll
not be long before the words 'tightening belt' are heard widely repeating.
At the moment, they are still trying to talk down the recession - although I
can't see this happening.

I hope that this analysis (from the Bourgeois economist perspective) is
correct and edifying; at least, it should focus our attention on what our
alternatives are (the call for workers' and farmers' power and the need for
ever-increasing state control of the entire economy) and how empty the
Bourgeois toolbox is when trying to control the market.

I saw the FSLN lost the election; even if they did retreat from prosecuting
the revolution you have to feel gutted over it. Does anyone know why it is
they have failed to regain power, was it US intervention, bad politics or
have the people really lost all hope in Socialism?

Is mise,

Domhnall.



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