A few years back at a Leftish gathering a group of self-described Marxist economists channeled liberal Democrat Paul Krugman’s explanation of the Great Recession without apparently knowing of Mr. Krugman’s thesis. Basically, a self-perpetuating recession had a grip on the economy, Wall Street was a catalyst of the crisis but ultimately only a bit player, money is economically ‘neutral,’ and government spending could raise demand and end the recession.
This is all standard fare in liberal economics. Within the circular logic of the genre, it circles just fine. What was odd was hearing it from self-described Marxists. Since Wall Street created the money that fueled the housing bubble and bust through predatory lending, how was its role not (1) pivotal and (2) political? If money is ‘neutral,’ why have financial asset prices responded so favorably (for their owners) to asset purchases by global central banks? And finally, where is the class analysis?
In similar fashion, UMASS Amherst economist Robert Pollin arguedrecently that capitalist economic production is necessary to maintain social wellbeing. The object of his disparagement is the suggestion that a planned reduction in economic growth (‘degrowth’) is the most probable way of resolving climate crisis. For the uninitiated, the contention that challenges to capitalist production will hurt ‘the little people’ has been a rhetorical tactic of capitalist economists for at least a century now.
Graph: Real (inflation-adjusted) Per Capita GDP is more than double today what it was in 1970. In the U.S. in 1970 mass starvation was notably absent. So people could conceivably not only get by if U.S. GDP were halved, but could thrive. The problems with doing so are (1) social complexity has been built into the political economy and (2) unwinding this complexity requires planning and the political will to do so. However, climate crisis poses the threat of unplanned degrowth of similar or greater magnitude. Source: St. Louis Federal Reserve
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