Commentary on Political Economy

Wednesday 3 August 2011

Barro Is A Barrel of Laughter

Normally I would not waste my precious time on old fogeys such as this rusty "barrow" - but such is the degree of numskull incompetence on display that a few words are in order.
For Barro to leave aside the most important source of the US deficit - the 'imbalances' whereby export-dependent capitalist elites were allowed to exploit their workers, above all in China and Germany and Japan, so as to dump their products in the US overburdened by a clearly overvalued dollar - is scandalous enough.
To leave out the fact that US capital was complicit in fostering this wave of exploitation and then fobbing off the proceeds to a passive US public only too happy to see its asset prices (in housing) and cheaply-financed consumption grow and swell until the entire bubble burst, all because of Finanzkapital (Wall Street) controls US investment flows - well, that is nearly criminal.
Finally, to suggest that the answer now is for US workers to tighten their belts while US corporations make hay with the loot from exploited workers elsewhere (not only the US) - why, that invites the death penalty!
What Barro wilfully forgets - such is the degree of bloody-mindedness of this most miserable of bourgeois economists - is that what works for each country taken separately does not work for the global capitalist economy: it's called "the fallacy of composition" and it was expounded by Karl Marx in Capital and much later reiterated by Keynes in the General Theory. Essentially, under the so-called "laws of competition" in capitalist society, each capitalist wants his workers to consume less and the workers of other capitalists to be paid and consume more!

So one essential consideration in deciding on economic policies is to see what role exchange rates and capital flows are playing. Right now, the obvious thing to do for US economic authorities is to drive the greenback down (benign or malign neglect) and to invest in infrastructure and other areas that shore up productivity in the US. At the same time, they should be issuing an ultimatum to the Chinese dictatorship (which is on its last legs because of Fed-induced inflation and overinvestment in fixed and capital goods, anyhow - there is only so much you can suck blood out of Chinese workers!) as well as the philo-Nazi regime in Germany that wilfully suppresses both wages and domestic demand and benefits from tying its currency to the "eurozone" (!) - yes, force that "regime" also to expand domestic demand so as to drive employment up in the US.

But here is where the problem lies! If you read our previous post on "Absolute and Relative Exploitation" you will see why there is a "limit" or barrier to production and employment under capitalism! And that barrier is.... capital itself! Cheers to all.

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