Hi Ralph, > 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.
Well, I think the nature of the thing is that many people who read Das Kapital - which is not an easy book - and are persuaded by it, are not economists (I am not either, I am mainly concerned with the human effects of economics and the power of economic ideologies to fool people into believing that non-economic problems are economic problems, and that real economic problems are non-economic problems). And these Marxists feel threatened by references to Keynes, rather than understand the arguments he makes, and make a reply to it (Anwar Shaikh for example does though, and for his part Steve Keen as well). The main thing that Keynes became famous for was the doctrine of effective demand, aggregate demand, which implied that market forces did not automatically ensure that the market would clear, so that the state had to step in to regulate the market, that there were these relationships between income distributions, interest rates, the money supply, investment and so on. And that is all perfectly true in many respects; it implies a rejection of the validity of Say's Law. I could go even further and argue that as regards monetary theory (the theory of the volume, value and circulation of money and its economic effects) there isn't technically very much difference between conventional economic thinking and Marx's thinking. (And Laurence Harris suggested in a book once that technically speaking, Keynesians and monetarists weren't all that different in their understanding of money either, just variations on a theme). But so what - whether or not acknowledging this is actually progressive politically or not, is a moot point. I mean, I could state all sorts of scientific truths that could have all sorts of political implications. The state could intervene in all sorts of ways to boost demand or regulate investment, this is nothing new, and it could kill lots of people too in the process. In the real world, as distinct from an academic office, the interpretation of Keynes has mutated over the years, in line with the changing balance of forces between social classes. The phenomena of stagflation completely contradicted Keynes's theory and then you get neo-Keynesianism. Keynesianism often is interpreted as "Leftwing" because it seems to support the case for income redistribution by the state against mindless "more market" fanaticism promoted by people who think that privatising everything will result in a better allocation of resources. But really the economic arguments are merely distant reflections of the moral controversies among the wealthy who, already possessing funds, have this dillemma of what to fund and what not to fund. I think Paul Mattick was quite pertinent in criticising Keynesians as apologists for the "mixed economy" which wasn't really mixed, but Mattick's understanding of the realisation of value often isn't very good - his own argument, as Ernest Mandel points out, often just assumes the operation of Say's Law, i.e. that the realisation of surplus-value (or value as such) is not a problem on its own. The other thing I don't like about the Matticks is that they slag off at people, and impute view to them which they do not hold. The competitive battle of capitalist business isn't simply about raising the rate of profit or reducing wage-costs, it is also very much about sales, and you can show quite easily through simple maths that if sales increase, but the rate of profit falls, then that fall isn't really such a business problem in the medium term, since incomes will increase anyway. The real problem for capitalist economic growth is the recurrent situation of depressed profits combined with shrinking or saturated markets, that is what must be explained. I personally think that the tendency towards the falling rate of profit, which Marx discusses (he didn't invent the idea himself, Adam Smith and others already refers to it), is real and not imaginary, I could also rustle up at least two dozen good empirical studies for illustration, but from my point of view, this view just doesn't mean very much by itself, because (1) an empirical trend of declining profitability can be explained in many ways, and (2) what you need to know then, is how specifically the the owners of capital attempt to cope with that problem. Outside of an academic office, we deal not with abstract economic laws, but with the observable, experiential effects of those laws, and if you cannot show the experiential implications of the abstract principles regulating market forces, you're not much further ahead. 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. Well, personally I am not a Marxist, I don't recall ever saying that, although I might have implied it, and I wouldn't dream of "internalising Marxism". Marxists like to critique capitalism, and that's good, we need to do that, it's a source of misery for billions of people, but I am interested in socialism, so I am a socialist. I just get irritated when people rubbish Marx, because much of what he says is just so vital to understanding and explaining the real development of capitalism and for the transition to socialism. 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. Well that's true insofar as a commodity theory of money doesn't suffice to explain monetary phenomena in the 21st century. But the real problem is that Marx's own theorising is radically unfinished, and that Marxists often take his idea to be a complete "system" rather than a challenge to do some real thinking. In itself, basic monetary theory is, I recall, one of the simpler areas of economic theory, although it looks all very complex. The real problems are elsewhere, namely in understanding the institutionalisation of processes of exchange, multilateral exchanges and so on. What makes the situation in Iraq interesting from an economic point of view, is that it raises all the core issues economics has always been concerned with, but very few people have picked up on that. For example, how do you create a market where there is none ? This is a preoccupation of contemporary bourgeois thought. > 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. Hah, that's poetic. Well, personally, I want to tackle that topic more quantitatively and empirically. I think I know what the questions are that I should be asking, but I have to look at it empirically and quantitatively. I might have done it by now, but I had a few mishaps in my life, and thus I got diverted. I've always believed that you can have too much of a good thing, and if it ain't broke you shouldn't try to fix it, but not everybody thinks that way, as I learnt to my peril. 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. The real problem is that economics by itself cannot explain a lot of things. Personally I don't believe much in using analogies from physical sciences in social science, except for a bit of sex, and I think "globalisation theory" is pretty much a disaster. If people don't know what the questions are that need to be looked at, and if they don't know how to argue, you just get a whacky politics, and I prefer just to be a gadfly there, because I think it's basically bollocks. 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. Well, I don't think it is all that complicated, but it's a helluva lot of work, that is all. And many people don't value theoretical work very much these days other than in some postmodernist way. Marx basically tore out his life to write his stuff, which is what many of his critics don't like about him. But you don't always have the opportunity to work systematically on theoretical questions, and when you write something serious, you have to think of who you write it for, and where you write it. 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?.... Yes I did see that book, many years ago. It think it must have come out when I was in Amsterdam in the 1980s, we had it in the leftwing bookshop in Christchurch where I worked for a while. Personally, I never stop thinking, although the brain seizes up sometimes. It's one of the most interesting things you can do with your own brain, really. Regards Jurriaan
