Commentary on Political Economy

Monday 5 September 2011

Crisis, Prices, Value - from JB Clark to Schumpeter

The purpose of our recent interventions has been to show that a capitalist "crisis" is not simply one that affects "economic quantities" (GDP, employment, money supply) but it is above all one that affects the "measurement" of those "quantities" and, through them, bourgeois economic theory itself. Most people "measure" economic social resources in terms of "prices". But those "prices" themselves are set by "the market". So there are two problems that arise: first, it is impossible to know what "market prices" are except as they are determined by "the market". But second, as we have seen, whatever "the market" may be, it is now so heavily "administered" by the Crisis-State that it is simply impossible to determine "market prices" independently of the "political regulation" of the "market" by the Crisis-State.

The role of the Crisis-State is now so dominant in the "society of capital" that we must conclude that it is not a "market economy" run by "private investors" any longer except as this "private sector" may play an "ideological role" in the preservation of the present capitalist regime. What we find is that each time the role of the Crisis-State in the capitalist economy expands, the "private sector" seeks to de-politicise it by accusing it of "distorting market forces" so that the Crisis-State is "encouraged to privatize" all those areas in which it is deemed to intervene illegitimately. And whenever a sector of social reproduction gets into strife with workers and society or when it becomes "unprofitable" or "systemically risky", it is taken over by the Crisis-State.

During the Great Moderation, from the 1980s until 2007, the profits Western capitalists were enjoying through the exploitation (thanks to the Chinese 'Communist' Party) of the Chinese workforce allowed our bourgeoisies to declare "the end of history". But in fact all that was happening is that real wages were stagnating while consumption was financed through speculative loans (mainly subprime mortgages). During that time, "the private sector" enjoyed a huge revitalisation and expansion with many "privatisations". When the music stopped in 2007, it became clear that "privatisation" only increases "systemic risk" and that therefore "austerity" is the only answer - in other words, a return to the "automatism" of the "self-regulating market", away from the Labor Standard to the Gold Standard.

But it is much too late. Now the cat is out of the bag. Bourgeois economic theory with its "equilibria", marginal productivity, zero-risk rates and all that garbage is in "crisis": its "tools" no longer can "measure" accurately what is happening in "the economy" because "the economy" has metamorphosed into "society" - the "society of capital". It's the difference between the theory of capitalist economic development propounded by JB Clark who took the "marginal utility" approach - and that of Joseph Schumpeter who knew that the capitalist system does not work with "marginal utility": it works with "innovation", "creative destruction", that is the political use of "technology" so as for capital to renew its "command" over living labour, in exchange for dead labour.

And in many ways that is exactly why we have a "crisis": innovation and technology are much harder for capital to use against living labour, because the "political nature" of the capitalist economy as sheer brutal violent "command" is being exposed every day, every hour. You only have to open the financial papers and see what is happening.... "in the markets"!

No comments:

Post a Comment