Commentary on Political Economy

Wednesday 20 July 2011

New "wittgenstein" post at FT's Gavyn Davies Blog

Having long fought for the recognition of the fact that "economics is a concentrate of politics", it would be remiss of me not to comment on Gavyn Davies's "opening" to political matters - especially one as "gravid" of meaning and importance as "the nation-state" - in this Blog. Even Martin Wolf felt impelled to chime in!
So I certainly welcome Davies's implicit acknowledgement that there is more to economics than what most "economists" would concede.
I would add a couple of "precis", however. The first is that one ought not to get the impression that the "political" (which includes "cultural") factors that impede a full European union are what "stand in the way" of the operation of "economic fundamentals". One gets the impression in this piece that Davies is "angling" for just such a position: "the laws of economics" are not in question; the European crisis is due entirely to "political" disagreements over how "to distribute" wealth in Europe.
Now, this would be "theoretically" the kind of Neo-Ricardian position taken by people like Kalecki and Sraffa, and even Minsky. The problem with this "position" is that it leaves intact the fact that economic "facts" relate above all to social relations (hence, yes, "politics")..... "of production"!! In other words, we cannot stop just at "distribution"; we must consider also how "wealth" is "produced"! All the old categories of "economics" are affected by this "critique".
So when we consider the European "crisis", we must be aware that first and foremost what is put into question is, yes the "politics" and the inability of the European bourgeoisie to agree to a new institutional asset to obviate the "economic disequilibria" or "im-balances" in Europe. But part and parcel of these "dis-equilibria" are precisely things such as "exchange rates" that are "fundamental" (that [!] is the word!) - "fundamental" [!] to the very "economic laws" that now come prepotently into contention!
What I am saying is that the EU started with EMU - with "fixed exchange rates", precisely because the European bourgeoisies agreed that EMU would "force them" into a "transfer union" at a later stage! If now that "the march of events" leads them to the "unavoidable conclusion" - of finally abandoning fiscal independence for their crumbling and ever more irrelevant "nation-states" - that is still an "economic" question! Indeed, it is THE economic question par excellence (at this stage any how)!
But once again, kudos and encouragement from me to Davies for displaying yet again his "ecumenical" intellectual penchant!

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