[OPE-L:6685] Hayek and Strachey (was 'The Good Lord?) and Imperialism

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Fri Mar 08 2002 - 14:38:42 EST

>Re Allin's [6667] and Rakesh's [6668]:
>>From [6667]:
>>  The notion that Hayek has a valuable contribution to make on this (let
>>  alone, more valuable than Keynes's) seems to me fashionable nonsense.
>>From [6668]:
>  > Allin, did you make
>>   any use of John Strachey's The Nature of Capitalist Crisis, which
>>  seems to include the first Marxist critique of Hayek's cycle theory?
>Interesting. The "fashionable nonsense"  reaction seems to be
>Rosdolsky's evaluation of Strachley (_The Making of Marx's
>Capital_, pp. 304-305).   As I'm sure Rakesh is aware of,
>Blake's evaluation of Strachley is mixed: on the one hand 2 of
>his works [_Nature of Capitalist Crisis_ and _Theory and
>Practice of Socialism_]  are said to be "helpful" but on the
>other hand they are damned: "They lack philosophical content,
>and in this they are not much superior to such documents as
>Leontiev" [reference to Leontiev's _Political Economy_] (Blake,
>p. 675).
>In solidarity, Jerry

Jerry, I had in mind Blake's extremely sharp comments on pp.548-553.

In this post, I include some interesting quotations from Shaikh and Strachey.

  Like Howard and King, Blake dismisses as strange Strachey's idea 
that wages rise too slowly, relatively, during a boom, so that there 
is a glut, and yet too high absolutely, so that there is diminished 
accumulation. Blake finds the source of Strachey's later 
revisionism--that is, his promulgation of purchasing power 
expedients--in this incoherent formulation.

Blake however applauds Strachey's critique of the Austrians and the 
revisionists--the book does read to me in last chapters as an 
incediary, rhetorical masterpiece (Mattick Sr reviewed it in 1935 in 
the journal Modern Monthly that I cannot find). At any rate, 
Strachey's argument does not reduce to his failed balancing act of 
falling rate of profit and underconsumption theories, though this is 
all Howard and King have to say about his book.

As for Hayek, what is interesting (I believe) is his critique of 
underconsumptionism and of consumption as the driving force of 
accumulation; also interesting in light of Bush's recent tax cuts is 
Hayek's promulgation of tax cuts for the wealthy and social service 
reductions as a way of shoring up savings as the forcing of savings 
proves unsustainable in the course of an inflationary boom.

It also seems to me that Hayek's idea of the narrowing of the 
consumption base of his triangle echoes Tugan's theory of 
accumulation--has this possible connection been noted before?

Let me make one more point about realization difficulties.

Let me first quote Shaikh's critique of Luxemburg (in which Paul Z 
may be interested):

"What Marx's examples shows is that if capitalists did undertake the 
appropirate amount of investment, they they would indeed be able to 
seel their products and *make the anticipated profits.* If this 
success spurs them to reinvest once again in anticipation of yet more 
profits, they would be rewarded once again, and so on. All the while 
consumption would expand due to the growing employment of workers and 
the growing wealth of the capitalists. but the expansion of 
consumption would be a consequence, not a cause...[Y]et...what force, 
if any, make expanded reproduction possible in reality." An Intro to 
the Theory of crises, p. 229.

Now Strachey thought that capitalists would be forced to undertake 
the appropriate level of investment because of the force of the 
falling rate of profit.

Let me quote him here:

"Marx supplies a formula for this necessary minimum rate of 
accumulation which must be attained unless the amount of profit is to 
decline and the system to stall:

"'In order that the mass of profit made at a declining rate of profit 
may remain the same as before, the multiplier indicating the growth 
of the total capital must be equal to the divisor indicating the fall 
of the rate of profit'...

"But Marx writes accumulation must be just a little faster than this. 
It must be at least fast enough to make the amount of profit not only 
stay the same, but a grow a little from year to year, in spite of the 
fall in the rate of profit. For otherwise there will be no incentive 
for the capitalists in the whole business of accumulation.

"This is the formula of the minimum rate of accumulation necessary to 
capitalism. If ever, and wherever, the rate of accumulation falls 
below this level, the system must, and does, jamb. For it becomes 
more profitable for the capitalists to restrict than to expand 
production. ANd unless it pays the capitalists better to use more 
capital and give more employment, they will use less capital and give 
less employment...

"We have established the fact that there exists for any capitalist 
economy a certain minimum rate of accumulation, a certain minimum 
speed, that is to say, wat which its total capital msut grow if the 
system is to function. And we have estab lished the fact this minimum 
rate of accumulation is determined by the speed at which v/c is 
falling; by the speed , that is to say, of technical progress.

"This is a conclusion of the utmost importance. For it, and it alone, 
enables us to understand why it is that it is impossible to sovle the 
fundamental difficulty, the basis and ever recurrent crisis of 
capitalism in the simple way advocated by all reformers... The 
essence of every crisis is, very visibly a glut...Why then, say the 
reformers, cannot this glut be cured by the simple obvious expedient 
of 'distributing purhcasing power'? How can it be maintained that a 
policy of high wages combined, if necessary, with the institution of 
social services, would not sovle the problem by giving everybody the 
money to buy the available goods, and so end the glut? At length we 
can say clearly why this policy cannot be adopted. It cannot be 
adopted because to raise wages, or to increase taxation in order to 
pay for social services, would at once begin to diminish the rate of 
accumulation: it would make it impossible for the capitalists to 
augment their total capital at a pace sufficient to offset the fall 
in v/c and so achieve that indispensable purpose, some growth in the 
absolute magnitude of v.

"It is clear, moreover, that it is just precisely today, when 
technical progress is proceeding at an unequlled rate, when the 
bottom is dropping out of v/c, that every available penny must be 
devoted to accumulation. And this why, as we have already seen, the 
capitalists in actual practice, far from trying to cure the recurrent 
gluts of the system by increasing the non capitalists purchasing 
power, apply th paradoxical remedy of reducing everyone's purchasing 
power either by cutting wages or raising prices. (Indeed, we saw that 
the whole dispute between the different schools of capitalist 
economics turned out to be concerned exclusively with the question of 
which of these methods of reducing purchasing power should be 
adopted." p. 252-3

Of course to the extent that profitability is not restored by cuts in 
purchasing power within the nation-state, the national capital must 
redouble its efforts to restore the rentability of the system by 
purchasing raw materials at prices ever lower than their values and 
selling the output of its technological monopolies at prices 
exceeding their prices of production.

As Strachey and David Y have argued, the availability of imperialist 
counter-tendencies may dull the sharpness of class contradictions 
within the imperialist nation state and lead intellectuals to lose 
focus on the nature and violence of capitalist contradictions.


This archive was generated by hypermail 2b30 : Tue Apr 02 2002 - 00:00:05 EST