Re: [Marxism] New Deal

[abu hartal <abuhartal@xxxxxxxxxxx>]

Yes Joaquin to the extent that New Deal was predicatedon the recognition that 
capitalist economies can subjectmillions of people to involuntary employment, 
we shouldsupport it against the libertarians who deny the very possibilityof 
involuntary unemployment (as long as there are no minimumwage laws) and against 
the Hayekians who believethat the ultimate cause of Depression levels of 
unemployment can't be located  in the capitalist economy itself but in policies 
of a central bankor perhaps the fractional reserve system itself. That is where 
the argument is today; Marxistsare not part of it. However, as I have already 
argued, New Deal policies can't be defended as having been a solution to a deep 
economic crisis. First, even though unemployment was reduced from around 25% to 
around 13% in FDR'sfirst two terms--a fact sartesian refuses to recognize and 
which leaveshim with the credibility of a sectarian--much of this was a 
resultof firms accumulating inventories given the fears of inflation. Actual 
plant constructionand expansion seems to have remained depressed, as 
profitability never recovered.Inventory accumulation was bound to exhaust 
itself, and it did in 1937. I rely hereon the analysis by Sumner Slichter. 
Second, today's New Deal exponents say that the reason the New Deal was not 
more effective was that fiscal policy was too timid. But in fact firms 
alreadysuffering low profitability were scared that the power of the sack would 
diminishand that FDR would be too supportive of labor. It was not reduction of 
veterans'benefits or other federally created final demand that had investment 
demandcollapse in 1937. It was the exhaustion of inventory accumulation, 
coupled withdim prospects for profitability from new investments--prospects 
dimmed by the appearanceof mass labor unrest.  Now I am not saying that the 
higher rate of exploitation  would havespurred capital accumulation on with the 
prospect of higher profits. But unemployment insurance, public works and 
pro-labor policies  did not save the day thenand they won't now. Investment 
demand is the most volatile part of aggregate demand; it dependson previous and 
anticipated profitability. That remains weak. Either capital costs will have to 
be cutor the rate of exploitation will have to be raised. And even if the 
latter is done, there are ever diminishing returnsfrom that. The point of 
worker organization is to create the economic equality putatively needed to 
stabilize a capitalist economy.  The point of worker organization is the 
building of collective strength, step by step, foraltogether more radical 
actions.  Ultimately in the 1930s the panic inflow of gold and war orders from 
Europe gave FDR something of an economic recovery, but a real 'recovery' would 
have to await the US entry into war so that the capitalistrules of economic 
organization could be broken. Henwood is telling us that Keynesian policies 
work on the basis of the recent Japanese experiment.But he refuses to admit 
that the prevention of the Depression has so far depended more on the cutting 
of labor costs through an explosion in the use of contingent and part time 
workers and in the prolongationof the working day, coupled with the export of 
capital to regions where the rate of exploitation is higher. There is no cost 
free approach to stabilizing a capital economy from the point of view of the 
workers. 

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