Re: $/Euro dynamics

[Jurriaan Bendien <bendien@xxxxxxxxxxxx>]

That article by Stephen Roach is really superb I think, thanks for posting
it, although I think the investigation should go further and look at the
position of social classes in China. The essential issue is put very well:

"By putting pressure on the Chinese to change their currency regime, the
industrial world is working at cross-purposes -- in effect, squandering the
fruits of its own efforts. Fear of the so-called China threat completely
misses this critical point. The power of the Chinese export machine is more
traceable to "us" than it is to "them."

A psychotherapist would no doubt identify this as a "blaming strategy" - in
this case, the "yellow peril" is to blame (a science which bases itself on
the notion of "rational economic actors" exercising preferences in the
market place must, when these actors do not actually display the rationality
expected of them in response to price signals, end up on the therapist's
couch). This blaming strategy results from the incapacity to analyse
correctly the causal concatenation of events, and, consequently, the
inability to place responsibility where it belongs. Needless to say, there
exists a powerful potential within the world market to accentuate this
irresponsibility, simply because it allows market actors to appropriate what
they haven't created and play around with resources that don't really belong
to them anyway, justified to the nth degree with reference to an enormous
complexity of human motives. Once one begins to think through the
implications of this seriously, one realises with a shock what a disaster
the theoretical basis of neoclassical economics really is for the world,
what a disaster it is, that at least three generations of economists have
been trained to look at economic life on the basis of these wrong or
arbitrary assumptions.

That is why I think myself, that heterodox economics is of gigantic
importance - it is not that neoclassical economics is entirely wrong, it is
rather that we must tear out its valid content from the ideological
framework in which it is contained, which prevents the correct application
of its insights. Wassily Leontief remarked once, how Marx was the "great
character reader" of the capitalist system, but not really a true
"economist", in the sense of being able to formulate good solutions for the
optimal allocation of scarce resources. For his part, Ernest Mandel talked
about "the economic theory of Marxism", basically rejecting the idea of
Marx-as-economist, since economics cannot be separated from class morality
and class politics. And Ernesto Che Guevara remarked once (if I remember
correctly) that although neoclassical economics was mainly a managerial
ideology in capitalist society, its technical insights could often find
valid application within a socialist-type economy (I do not remember the
exact source of that quote). So personally, I think there is a gigantic task
for heterodox economics, once we surmount the infantile diseases of Marxist
dogmatic orthodoxy. The task of economics is indeed the "optimal allocation
of scarce resources", a concept of "economising" which can be traced at
least as far back as Aristotle, but this task should be tackled on the
foundation of classical political economy and Marx's critique of it.

J.