[OPE-L:8207] Re: Re: Marx's Notes on Wagner available on MIA

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Wed Dec 18 2002 - 02:50:06 EST

>Re Paul B's [8197]:
>>  Impossible for me not to  note this will therefore mean that our
>>  discussion  about the state , 5248, 5250, 5272, and especially
>>  your 5274, and my closure  in 5280.  (all over  your general
>>  reluctance to accept state industries as  'capitalistic' ) is now
>>  further resolved more clearly along the lines I was
>  > consistently suggesting.

5304 was interesting too. Paul B said I understood him in 5172, but 
this was not an argument about whether state owned enterprises are 
capitalist (right?) but about whether state expenditures on 
infrastructure (e.g., state taxing surplus value in order to pay 
private contractors for the construction and maintainence of canals, 
roads and airports) should be counted as constant capital in the 
sense that its value is transferred through its use to the commodity 
output and thereby recovered, i.e., businessmen recover their tax 
costs for public forms of constant capital in the selling price of 
their wares.  Fred and Murray E.G. Smith have argued over this 
question as well sometime in the last, say, 6 years.

  Paul B argued if we do not falsely charge the state with stealing 
surplus value but rather understand it to be carrying out the 
constant capital investments which individual capitals cannot 
undertake, then we will not reach the unjustified conclusion that the 
state and private capitalists are at odds with each other.

This does not quite follow because businessmen could well accede to 
state taxation  if the state does not burn more surplus value than 
needed for the functioning of the capitalist system. That is, tax 
financed state expenditures on infrastructure could still represent a 
pulverization of value to which capitalists may accede out of 
necessity. The capitalists would thus not be at odds with the state 
unless it overstepped its function.

Of course if huge sums of surplus value lay idle (say a trillion or 
two dollars in money market funds) capitalists (especially the bond 
dealers) may have the state  create "investment" opportunity by 
selling bonds even if those bonds as a form of fictitious capital 
will ultimately have to paid back with interest through appropriation 
of surplus value via taxes.

If the system is in immediate crisis and in throes of a downward 
spiral, businessmen may figure that the economy will recover in the 
long run to absorb the claims which the state will have to make on 
the private economy to honor the debt which it undertakes for 
short-term stabilization policy.

Foreign central banks may also be willing to hold quite a bit of 
American govt paper just to have the dollars in reserve to defend 
their currencies and maintain access to the US market in an imploding 
world market.

There could be a green light for a massive Keynesian experiment.

Of course if expectations are very dim,  then the long term costs of 
debt- finananced govt stabilization policy (future taxes, future 
crowding out) could well exacerbate pessimism in the present and lead 
to a further retrenchment of investment. There is nothing mechanical 
about the implementation of a Keynesian program.

The state would then be forced to organize a command economy through 
war or socialize the investment function; otherwise capitalists will 
have to confront the growing army of the poor and the unemployed with 
the full power of the state.

Yours, rb

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