Those Marxists like Michal Kalecki or Paul Sweezy (under the influence of Keynes) who embraced the underconsumptionist thesis did not hold that capitalist states would automatically adopt looser fiscal and monetary policies in order to stop or even to prevent economic downturns. On the contrary, they held that capital would be quite resistant to the general adoption of such policies because they would undermine the political power and the social status of capital.
Kalecki, for instance, argued that under normal circumstances, capital would be resistant to the adoption of Keynesian-style full-employment policies, even if it was manifestly clear that such policies would boost business profits. That's because, according to Kalecki, such policies would less the social status of businessmen and weaken their political power. Capitalists, in Kalecki's opinion, feared the loss of social status and political power even more than they feared the loss of profits. Hence, their tendency to form political alliances with rentiers (whose incomes would be directly threatened by such policies) in order to oppose full-employment policies. See his famous 1943 paper, "Political Aspects of Full Employment" can be found online here. http://tinyurl.com/ykxusra Paul Sweezy echoed Kalecki's arguments in his early book, " The Theory of Capitalist Development." Later on, both Kalecki and Sweezy pointed out how, what may be called, military Keyensianism provided a way to make Keynesianism work in a way that would be acceptable to capitalists. That of course is not to say that the underconsumptionists were necessarily correct, but rather to point out that Marxist underconsumptionists do not accept the thesis, that even if Keynesian economic analysis is basically correct, that we can ever expect capitalist states to use the tools of fiscal and monetary policy to balance out the business cycle. In their view, the class interersts of capital militate against this happening over the long term. Having said that it must be admitted that the Keynesian influence on Sweezy has always been a bone of contention for other Marxists. Back in the late 1960s, Paul Mattick wrote a critique of Keynesianism, in which Sweezy, was at least by implication, one of his targets. Marc Linder et al. in their book "Anti-Samuelson," while primarily (as the title suggests) targeting Paul Samuelson's brand of Keynesianism, also took time out to critique Sweezy precisely for his Keynesianism. And more recently, James Heartfield has simiarly criticized Sweezy Jim Farmelant ---------- Original Message ---------- From: "Paddy Hackett" <rashe...@eircom.net> To: <marxism-thaxis@lists.econ.utah.edu> Subject: [Marxism-Thaxis] The SWP and underconsumptionism Date: Wed, 18 Nov 2009 09:50:38 -0000 "Myth 2: But the government has to borrow over ?20 billion and so cutbacks are necessary. If we don't take the 'hard medicine' now, it will be worse later. The huge government deficit is a symptom but not the cause of the crisis. Before 2007, for example, there was no deficit as government revenue was ?65.1 billion and spending was ?64.6. The economic crash has wiped out many tax revenues. VAT rates have fallen; PAYE taxes are down, property taxes tumbled and more is being spent on social welfare payments. But the cutbacks have made matters worse. You can see this easily through simple figures.In October 2008, the government claimed that the budget deficit would rise to 6.5 percent of GDP and that cutbacks were needed. But in January 2009, the budget deficit had risen to 9.5 percent - and so more cuts were demanded in an April budget.Yet, after all these rounds of cutbacks, the budget deficit has now risen to 13 percent. In other words, all the sacrifices have been wasted because the debt is even higher. The reason why this occurs is simple. If personal consumption is already depressed through unemployment and wage cuts, reductions in government spending only add to the slow down in the economy. There is even less money to go around and a spiral of economic depression sets in. So instead of digging a deeper hole, we need to embark on a jobs programme that puts people back to work" The above argument was recently written by Kieran Allen and published by the SWP. It is based on underconsumptionist assumptions. The underconsumptionist ideology suggests that economic downturns are caused by a lack of demand. This means that the solution to the problem are increases in demand and thereby consumption. This, it is believed, increases demand which in turn leads to increased commodity production. Increased production means an increase, generally speaking, in the creation of value and thereby economic growth. If this theory is correct it means that capitalism never need experience economic downturns. To prevent recessions all that is needed is continuous increases in demand (or consumption). If this theory is correct there is no need to abolish the law of value and create a communist society. Falling demand during an economic downswing is caused by the overproduction of capital which manifests itself in the overproduction of commodities such as houses, building materials, household goods, cars etc. This overproduction is caused by falling profitability. Falling profitability is a product of the failure of capital to compensate for the fall in the general rate of profit by increasing the volume of surplus value. Capital can only overcome its crisis of overproduction by increasing the rate of surplus value through the devaluation and even destruction of capital while pushing the price of labour power below its value. This has to be done on a scale large enough to increase the general rate of profit so that there is growth in total surplus value. Success here means that as the general rate of profit rises profitability starts to rise. Under these new conditions production of commodities begins to increase. Recovery sets in and the cycle gets underway leading to recovery, boom and bust which is ultimately takes things back to the overproduction of capital again. The problem is located within the capitalist production process and not in the circulation process as Kieran implies. In order to bring to an end economic crises the production process must be transformed. This means that the capitalist production process must be abolished and replaced by a process of production liberated from value relations. ____________________________________________________________ Doctorate Degrees Online Boost your career with an online doctoral degree. 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