Re: [OPE-L] "Crowding-out effect" (coda)

From: glevy@PRATT.EDU
Date: Mon Oct 22 2007 - 09:55:17 EDT

> As regards
> the "crowding out effect": Laurence Harris (of Fine & Harris fame, on the
> left) does in fact discuss this in his classic book Monetary Theory
> (1981), an excellent introduction to the lengthy debate between
> monetarist and Keynesian views of money. However, this book is not
> a "Marxist" book, simply a very solid textbook on the origin and
> development of modern monetary theories.

Hi Jurriaan:

Yes, that's one of the better textbooks on the subject.  There have been
quite a few Marxists who have written about the crowding-out effect, but
they didn't really attempt a specifically Marxian critique.  One of the
best is by Meghnad Desai _Testing Monetarism_ (London, Frances Pinter
Ltd., 1981, see pp. 172-184). I think you'll like that book., even if it
is limited in its scope and somewhat dated (and out-of-print).

> In Marx's own theory, this ideology - rooted in the assumption of a
> zero-sum game between saving/investment and consumption, and a notion of
> equilibrium as a balance between them - does have a rational kernel
> however. It ultimately reflects a competition over the mass of newly
> produced surplus-value that can be distributed to owners of capital as
> income, where employers in the private sector argue that any government
> interference in markets will result in a misallocation of resources that
> does not benefit them, and consequently does not benefit economic growth.

That's a main reason Marxians should critique this perspective.  It's too
easy and mistaken to dismiss this monetarist perspective as reactionary
nonsense. Most Marxists are in a poor position to develop this critique
since with a few exceptions (e.g. Reuten-Williams) they have not attempted
a serious analysis of the relation between capital and the state.  That's
because there are so many more important topics to analyse than
competition, classes, the state, trade, the world market, etc.  For
instance, there's the TP! One must have a sense of priorities, after all.

> In the real world, the controversy is obviously much more complex and
> qualified, given the reality that the state both "giveth and taketh away"
> - the private sector is also the beneficiary of government contracts,
> cheap loans, subsidies and hand-outs.

Yes, that's a valid point.

In solidarity, Jerry

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