Re: zero average profit

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Fri Jun 06 2003 - 03:32:45 EDT

Allin writes in response to me:

>On Thu, 5 Jun 2003, Rakesh Bhandari wrote:
>>  Kalecki was able to reach the false conclusion that the govt through
>>  debt financed expenditures is in fact capable of moving the economy
>>  to full employment as long as the state keeps real wage growth under
>>  control.
>On what basis do you say that conclusion is false?  It seems to me
>obviously true.

It is certainly not obviously true that if the govt pulls on the
levers of fiscal and monetary policy full employment can and will
obtain. Such hydraulic Keynesianism already went up in stagflationary
ashes in the 70s (even Bill Gerrard recognizes limits of mechanical
Keynesianism). And that course of events was predicted by Mattick, Sr
and--to some extent--Sydney Coontz. Of course there was Robert
Eisner's econometric arguments in defense of Keynesianism, yet
deficits, however measured, were even larger in the 80s even as
unemployment remained high.  The apparent failure of Keynesianism in
Japan today raises questions as well.

>  > Kalecki has nothing to say about the effects of the accumulation
>>  process itself on the constitution of class struggle in the abode of
>>  production.
>I'm not sure what you mean by the "abode of production",

I mean struggle over the length and intensity of the working day as
well over wages. In his debate with Blaug, Fred has mentioned that
these are on-going features of early and advanced capitalism which
Marx seems to have explained successfully.

It's not clear to me that Ricardian theory makes real theoretical
space for the length of the working day and thus the struggle over it.

>but Kalecki
>was quite far-sighted on the effects of accumulation on class
>struggle, particularly in his essay "Political aspects of Full
>employment".  He predicted (in the late '40s, mind you) that Keynesian
>policies would run into trouble because sustained low unemployment
>would tip the balance of forces towards the working class,

Balance would only be tipped if the govt and unions did not take
steps to limit real wage gains as would result from a tight labor
market. Which does not even mean that real wages would have to be
completely neutralized.

  Let's say, then, Kalecki's analysis is correct. What follows? Well,
say, the national union leadership finds that many of its workers are
unemployed while industrial capital is suffering from excess
capacity.  Kalecki's theory tells industrial capitals that their
profits will be higher if the govt props up effective demand and
informs the union that full employment can be achieved through
macroeconomic policy within the capitalist system as long as it
responsibly contains real wage gains.

So now you have the basis for social democratic politics. Industrial
capital provides the money for and workers the votes for a social
democratic party. Such party should be able to win over one led by
rentiers fearful about inflation.  We now have parliamentarism,
responsible unionism and gradualism.  That's not a Marxist theory or
a Marxist politics, and a Kalecki-informed social democracy may be
all the more correct for not being Marxist.

But for the sake of clarity one should underline that the theory and
its implications are in irreconciliable conflict with Marxian theory.
One person who understands this clearly is Amit Bhaduri even as he
prefers and works for a radical Keynesian solution.

Again I would be enthused if Kalecki had a deeper understanding of
the nature of capital than Marx.

But to be ad hominem in argument,  I think people are led to
Kalecki's theory because it implies that solutions are possible
through rational class compromise. If Hilferding's theory once
implied the possibility of socialism through simple and gradual
socialization of a few banks, Kalecki's theory implies today the
possibility of economic stability through class colloborationist
electoral politics. It presents a ultimately pleasant outlook on the
possibilities for the reform of our social system.

>  hence
>provoking a reaction from the ruling class that would force the
>abandonment of those policies. That is, he saw Thatcher coming.

Again the approach to full employment need not scare the ruling class
if through corporatist arrangements working class gains are prevented
from taking all the higher profits which are to result from the
propping up of effective demand by debt financed govt fiscal policy.
I don't think Sweezy denied this; he only underlined that the
capitalist class would demand not only such a corporatist arrangement
but also defense-heavy govt budget. That is, the govt could solve the
economic problem under capitalism but only in a manner which is
irrational from the point of view of socialist reason. The
contradiction, as Cogoy pointed out, then is primarily one between
(bourgeois)irrationality and (socialist) reason, not between capital
and labor in the abode of production.


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