[was: RE: [PEN-L:20847] Re: RE: jim d? doug?] Rakesh writes: > as i am writing on the state, mixed economy, etc presently, i would > appreciate it if you could point me to the quote in which Marx > accepts Ricardo's view of fiscal policy.
In the volume III, chapter 29, there's a reference to government debt as "purely fictitious." (Intl. Publ. 1967 ed. p. 465.) To Marx, as I understand him, this means that government borrowing does not promote the production of surplus-value at all (so it's not non-fictitious capital, i.e., self-expanding value), with the interest payments simply coming from taxes. See also chapter 30 (pages 476-7). In a footnote in the latter, Marx quotes Sismondi, a deviant Ricardian. As I understand Ricardo (and I am far from being a true student of that economist), he believed that any government borrowing (i.e., Keynesian stimulus) corresponded to taxes to pay the interest on the government's increased debt. This lowers the present and future income of the population, reducing spending, counteracting the fiscal stimulus. The Chicago-style Harvard economist Robert Barro put this in terms of so-called "rational expectations" and pushed it further than Ricardo, who didn't seem to take it seriously in practice. CRITIQUE: The problem is that increased government borrowing might (1) increase the capacity of the economy to produce, e.g., by corresponding to investment in infrastructure, education, public health, etc., which allows a higher profit rate to be produced (cet. par.); and/or (2) increase the demand for the economy's production, allowing faster turn-over of commodities and capital (higher volume of sales and capacity utilization rates) and thus higher realized profit rates. A combination of these means that the tax base (i.e., aggregate income) rises, so that the interest on the government debt can be paid without there being a higher tax burden on any individual. That is, as Jim O'Connor might say, the government's efforts might be "indirectly productive" even if they aren't directly productive of surplus-value. Of course, the state might engage in "state capitalism" (as with places like Algeria or Mexico, until recently at least). In this case, the state debt would be a claim on the surplus produced directly by the state. The Ricardian view (or at least the Barro version) is based on the idea that the economy is always at full employment and that government investment in "public goods" never bounces back to help government revenues. I guess the latter is saying that the private sector can do a better job of providing public goods (which is quite silly). Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
