Re: [OPE] estimating the severity and duration of a capitalist economic crisis

From: Dave Zachariah (
Date: Tue Mar 18 2008 - 09:01:46 EDT

Jerry Levy wrote:
> How *from a Marxian perspective* can one empirically estimate the
> *range* for the length (in months) and severity (using various units of measurement) of a capitalist economic crisis?  What are *from a Marxian perspective* the most important variables that one should look at?   What assumptions should be made in the specification of the model? How would such a model differ from a "standard" forecasting model?
> Of course, if anyone on the list wants to make these questions less abstract by focusing on the current contraction, you are more than welcome to do so.  There are many millions of workers globally now who would like to know answers to these questions and they shouldn't rely only on mainstream economists for answers.

Part of the answers depend on what one considers to be a crisis. 
Clearly, a 10% unemployment rate is a crisis for the working class but 
the firms and rentiers may be doing fine.

The severity of a crisis could be measured by the fraction of capital 
(e.g. of the total fixed capital) making a loss. Thus the evolution of 
the distribution of profit rates ought to be one good indicator of the 
state of the economy. Starting with the assumptions of the labour theory 
of value one can show that the long-run movements of this distribution 
is ultimately constrained by population growth, productivity growth and 
the fraction of profits reinvested.

Moreover, a monetary system, which enables the operations of a 
capitalist economy in the first place, depends on the creation of credit 
and debt. Therefore the inability to pay debts should be another indicator.

//Dave Z

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