Re: [Pen-l] re: A layperson's guide to crisis theory

["Chris Burford" <cburford@xxxxxxxxxx>]

Having been out of touch with Pen-L for several years, probably when I
changed computer, I was delighted to find myself receiving messages again,
apparently as a result of a reconfiguration of list settings. I gather I am 
still a
member. I note that many of the names are familiar.

Time presses on all of us, but this theme is especially important. I am not
sure how easy it is for lay people without a lot of translation.

I would suggest there is a tension in the left wing and marxist perspective
on crises between seeing them as part of a homeostatic mechanism and seeing
them as a teleological harbinger of the final destruction of capitalism.

I think it is wiser to see them as homeostatic. Marx's insights in the
Communist Manifesto give hints of this, at a time when his economic ideas
were not well thought out. The following formulation in Part 1 probably
reflects ideas already in circulation at the time -

"And how does the bourgeoisie get over these crises? On the one hand by
enforced destruction of a mass of productive forces; on the other, by the
conquest of new markets, and by the more thorough exploitation of the old
ones."

The latter part of the formula is about how rising capitalism seeks out new
enterprises for new investments. The first part is I suggest still a
profound truth which perhaps seemed more obvious to contemporaries than it
does to us today, that it is a cycle of purging, of death, before any sort
of rebirth can occur.

I suggest that with increasingly sophisticated methods of state intervention
in the financial markets, politically the most tactful and smoothest methods
to officiate over the destruction of old capital, which causes the mildest
possible crises in the circulation of the economy, is inflation, preferably
at no more than a few percent a year. *Especially* if it can be disguised in
the general expansion of the currency supply that plausibly goes with a
story of ever expanding wealth in terms of use values. Expansion of credit
is useful for this.
Allowing a currency to devalue relative to others is another lesser evil but
is also inherently inflationary.

It is interesting that inflationary pressures in the US economy are now
thought to be spreading to other countries like those of Arabia whose
currency is linked to the US dollar.

Marxism is noted for searching for a teleological eschatological end to the
cycle of crises. But Marx's later work gives good reasons to regard a
homeostatic model as the basic model, however class forces organise
themselves to manage it.

If the proportion of the total exchange value in a society that goes to
surplus value to provide interest on capital, must continuously rise for the
cycle to continue, it will inevitably come up against a limit on that
proportion of total exchange value of the society that is available for
consumption by the mass of consumers. - A contradiction exacerbated by the
expansion in the productive forces, which comes up against the limited
purchasing power of the masses - However that purchasing power is redefined
by increasingly creative and wobbly credit instruments, which vanish like
morning dew when the heat is on.

Although the fundamental tendencies of capitalism towards crisis and
monopoly remain, they are heavily disguised by a host of measures invented
by the state to smooth out these contradictions and to maintain class
divisions promoted by the capitalist system.

It need not always be that way but it will take political will.

The current political debate about how to distribute tax reductions in order
to maintain as much as possible the circulation of the economy, is highly
relevant about the political direction of the way out of the latest crisis
domestically.

Sorry if I repeat things that have been well trodden before, but maybe with 
the benefit of a sabattical of over 3 years, this formulation helps the 
ongoing discussion.

Chris Burford
London






----- Original Message ----- 
From: "Marens, Richard S." <marensr@xxxxxxxx>
To: "Michael Perelman" <michael@xxxxxxxxxxxxxxxxx>; "Activists and scholars
in Marxist tradition" <marxism@xxxxxxxxxxxxxxxxxxx>
Cc: <pen-l@xxxxxxxxxxxxxxxxxx>
Sent: Monday, February 25, 2008 1:39 AM
Subject: RE: [Pen-l] re: A layperson's guide to crisis theory


Steve Pressman and Robert Scott, two fine PKers at the Bruce Springsteen
School of Management on the Jersey shore, just published a piece in AER
about how debt is beginning (finally) to wear thin as a substitute for the
historical pattern of American wage growth, due to the need to service the
debt at often usurious rates, a situation worsened, ironically, by the
recent change in bankruptcy law.

Regarding crisis theory, I found a comment some years ago by B. Fine in
Rereading Capitalism helpful.  Ultimately the issue is not to carefully
distinguish taxonomically between underconsumption, overproduction,
overaccumulation, underinvestment etc..   Ben's point was that underlying
these categorizations are the contradictions of capitalism that make finding
any robust equilibrium between supply, demand, and investment impossible,
and any attempt to do so with fiscal or monetary policy, wage arrangements
or financial tricks, ultimately kicks the can down the road toward new
crises.

Marens
Sac State


-----Original Message-----
From: pen-l-bounces@xxxxxxxxxxxxxxxxxx on behalf of Michael Perelman
Sent: Sun 2/24/2008 10:05 AM
To: Activists and scholars in Marxist tradition
Cc: pen-l@xxxxxxxxxxxxxxxxxx
Subject: [Pen-l] re:  A layperson's guide to crisis theory

Although underconsumption is not the whole story of the limitations of
capitalism, it
is still a significant factor.  Without the buildup of household debt, the
economy
certainly would have grown much less and possibly could not have avoided a
substantial
downturn.


-- 
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu
michaelperelman.wordpress.com
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