Jurriaan, thank you for your thoughtful response. I dug out a passage of Sweezy's here, one of the occasions when he attempted to formulate the problem that he saw and found no answers to. And as I said yesterday, I haven't seen it yet either, so I'm inquiring. Here he's been discussing Keynes in an interview conducted by E. Ahmet Tonak [MR Apr 1987]:
I think that Marxists have a certain defensiveness about Keynes: we mustn't take seriously a bourgeois thinker because it may infect us and we may turn out to be revisionists without wanting to be, you know. I don't think that's such a danger as long as you internalize the basic structure of Marxism, which is, of course, embodied in and summed up in the value theory and the accumulation theory, surplus value theory, all of that. That's absolutely crucial. there is no need to lose these basic insights which are based on a very intimate knowledge of the real business world - which of course, Marx also had in his day. But which Marxists taking their stuff out of Capital, can't have in our day. This whole business of finance which I was talking about last night. The present financial explosion which is unprecedented can't be handled in terms of the hints in Volume III about finance. Although, they are not unuseful, not without considerable value. The whole notion of an abbreviated accumulation formula, M-M', without any production element M-C, is a very fruitful way of thinking about finance, how it is possible for M' to relate only to M without the system of [production in the middle. But that's what's happening all the time now. If we don't think about this, if we assume that finance is only an aspect of the circulation of commodities, we're not going to understand a lot of what goes on in the world today. I must say, my own feeling is that this is an area where nobody has done really very well. I sometimes have the feeling that economics is now in need of a general theory, in the sense that physics seems to be in need of a general theory, i.e., that there are a lot of things going on that don't fit into the standard physical theories. And they are looking for a general field theory which would unify all of it. They don't have it yet. In economics we need a theory which integrates finance and production, the circuits of capital of a financial and a real productive character much more effectively than our traditional theories do. I don't see that anyone is actually producing it, but it's terribly complicated. And I'm sure that I'm too old to be able to think of those things. I can get snatches, insights here and there, but I can't put it together into a comprehensive theoretical framework. I think it will take somebody who starts differently and isn't so totally dominated by M-C-M', the industrial circuit, with the financial circuits always being treated as epiphenomenal, not part of the essential reality. I don't know if you are familiar with the book The Faltering Economy edited by Foster and Szlajfer?.... Ralph ----- Original Message ----- From: "Jurriaan Bendien" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Sunday, December 14, 2003 3:53 AM Subject: Re: Question re basics > > It has to do with the connection between the accumulation of capital > > ascribable to the creation of surplus value on one side, and the cascading > > mountainous accretion of debt instruments on the other, the whole > > multi-trillion dollar financial complex. How, basically, do the two > connect > > in a framework consistent with what Marx wrote? I had assumed without > being > > able at my level of comprehension to elaborate, that all credit > > creation rests ultimately, fantastic as it might seem, on call-ins of > > indebtedness to the creators of the surplus value, > > the working class [of course, Sweezy called it 'surplus']. > > Why exactly is it so necessary to connect in a way "consistent with what > Marx wrote" ? Can we not think for ourselves ? If you start off with a false > or dogmatically held premise, then you are driven ineluctably to > contradictory thinking at the very least, but that too could be a source of > creativity. The issue you raise is very complex, it's a bit like explaining > how people can travel to the moon - it can be done, but it takes a lot of > time. Ernest Mandel tackled this question (he considered Schumpeter one of > the most important 20th century bourgeois economists) because, contrary to > Trotskyist expectations, capitalism boomed after world war 2, and then the > question arose, whether this was due to human error, to a faulty analysis of > bourgeois society, or to something inherent in the capitalist system which > had still to be discovered. Technological revolutions are an intrinsic > feature of capitalist development, but as you know, capitalism is by - its > very structure - intrinsically incompatible with long-term steady growth, it > develops spasmodically through booms and busts which we can plot in squiggly > graphs. Thus, under specific conditions, new revolutionary technologies can > expand the market. But the time factor is crucial. Insofar as the market > does expand, the reserve army of labour is depleted, and the economic > bargaining position of the working class strengthened. At the same time, > however, technological innovation has a labour-saving bias. The long-term > effect of technological progress under capitalism is therefore to reduce the > labour-time it takes to produce products, and hence ithat increases > unemployment (at the moment, there's about a billion people excluded from > paid labour in the world). But that is merely to say that the ideal > condition for capitalist growth - rising profitability plus expanding > markets, beloved of equilibrium theorists, is very difficult to achieve, and > if it is achieved, can only be sustained for a limited time - there is no > economic force or law in market logic, which can achieve that sustained > growth, i.e. an expansionary dynamic occurs due to factors that the > economics profession generally fails to deal with, precisely BECAUSE they > are obsessed with commercial logic and believe in the inherent goodness, > superiority and rationality of private commercial pursuits. If you say that > capitalist development always culminates in reducing the total amount of > paid labour necessary (with the familiar pattern of a rising OCC and a > falling rate of profit), then that has at two important consequences: (1) > aggregate demand is reduced, and (2) a competitive struggle breaks out over > the allocation of the paid labour that remains. But in this competitive > battle of capitalist business, the repercussions of all that can be > displaced in space and time, precisely through the instrument of credit - > live now, and pay later, and if possible, shift the burden of paying to > someone else - and the hope is, that in the meantime, policy changes can be > implemented, which provide for more sustainable growth in the future. So, > essentially, the resort to credit is an apologetic strategem for capitalist > mismanagement, an unfortunately indispensable modus for accomodating the > system-immanent contradictions of capitalist economic management, which > allows some to prosper while condemning others to live in hell (the > bourgeois hope the hell exists at some safe distance, far removed from the > pleasantness and comforts of bourgeois life). In reality, of course, > equilibrium is not at all created by market logic, you'd have to be a moron > to believe that in view of the facts, rather, this equilibrium is based on > the ownership of private property, and the ability to defend it. The real > question is not who "earns" what and who pays for what, but who owns what, > and who is the boss. And obviously those who already own wealth, have - > other things being equal - more power to act in defence of their interests, > whereas those who are less strong, who are weaker, seek to resist the > increase in the rate of exploitation, and find alternatives. Marx never > claimed that economic analysis could resolve the problems of capitalism; you > had to overthrow it, get rid of it, replace it with something better, and if > not, the best you could hope for would be to reach a modus videndi with it. > And for their part, the bourgeois hope that such a modus videndi will > eternalise the way of life they consider best for everybody, for the world. > Ultimately, the only way out of debt, is to recognise that one has to leave > commercial logic aside, to reach a better existence. But obviously if that > is all that socialists have to say, then socialists aren't saying very much > ! The question is one of shaping up a better kind of life. Here in Holland, > the Socialist Party is currently campaigning for playgrounds for children, > when the council wants to close them down and the government will not > subsidize their existence. In bourgeois morality, playing must have a > purpose and lead to exploitable work effort, the idea that kids might just > want to play freely in their own space can be very, very frightening, but > that it not what life is supposed to be about, except when we go to the > opera. > > But how for one > > thing does that include Schumpeter's 'creative destruction', a product of > > cycles of reproduction? How for another thing does that affect the > validity > > of the Marxist theory of value creation, that is, how does it preserve the > > practicability of Marx's theory of surplus value? How does that work out > as > > a historical development question? And how in the Marxist schematics can > > this be represented? I know there's an answer in there someplace. > > "Schumpeter's "creative destruction" is based on extreme examples of the > substitution process, where substitution progresses until the established > technology is largely destroyed for a given market. It is shown that > established technologies are not necessarily completely destroyed and that > they may survive in niche markets or a market distinct from that > threatened." > > From: http://ideas.repec.org/p/hhb/aardom/2000_004.html > > Hope this helps - basic enough ? > > Jurriaan
