I intend to post soon a series of reflections on the current state of the capitalist economy and its ideological mystique called "economic science". Here is a preview of the problematic in a recent post to Gavyn Davies's blog in the Financial Times:
Gavyn Davies at his most engaging, stimulating, perceptive and, dare I say, even provocative best. This is the kind of analysis that leads straight into more "existential" matters (our friend Marcus Rongunui would surely concur) in the sense that although it starts from seemingly mundane technical issues and pragmatic solutions, it quickly directs our attention to what is the "essence" of so-called economic "science" or theory. The theoretical divide or "gap" that exists in economics between the "real" economy and its "monetary" aspect (the "monetary veil") is something that invests (pun intended) "the output gap", which refers to that level of productive activity consistent with low inflation, to the "transmission mechanism" linking that real activity to monetary policy.
The conclusions to which this sort of analysis leads may well be "explosive" where the survival of what I call "the society of capital" is concerned. In essence, my point is that we are fast approaching the point at which the wage relation or capital becomes the ultimate "barrier to production" - and therefore capital meets its own "internal" or intrinsic limit. The Greenspan and Bernanke "puts" illustrate the manner in which the wage relation can continue to subsist (the subsistence wage?) only on entirely "fictitious" grounds (what Soros has called "fictitious capital"). High time, is it not, that we began searching for alternatives, particularly in view of the alarming developments in Europe and China.
Gavyn may be aware that for a long time, even but not solely on his blog, I was warning about the existence of asset-price "inflation" (speculative bubbles) even in the absence of "measurable" inflation. I have cobbled together some analytical thoughts (in the tradition of the "critique of political economy" that dates from Marx to Minsky) that I will seek to publish sporadically and spasmodically on www.eforum21.com in the near future under the collective title of "Notes on Minsky".