Looking for an Exit from the Crisis

After writing the post about Michael Spence and his proposal for the advanced countries to pursue an export-led growth strategy as way out of the crisis, I became intrigued with looking at how mainstream economics thinks exit will happen. So I have been spending time trying to find the answer to this question.

Decoding the Ideological Bullshit of a Bourgeois Simpleton (Part 2)

This is part 2 of a two part post.

To summarize the argument of Nobel Laureate and bourgeois ideologue Michael Spence from part one of this series: The goal of “economic restructuring” (or “rebalancing”) is for the advanced countries to export more of what they produce at the expense of their domestic consumption. The future expansion of socially necessary labor time (value production) and, therefore, the expansion of surplus value will depend on the growth of exports of the advanced countries into the world market. Spence proposes this can be accomplished (1) by depreciating the real purchasing power of money wages; (2) stagnant nominal wages, in turn, will reduce real wages and domestic consumption generally; and (3) the resulting “structural adjustment” will force constant and variable capital of the advanced countries to flow into sectors of production that can be exported.

It follows from this that state economic policy should be solely concerned with raising the profitability of capital by extending unpaid hours of labor in the export sector. According to Spence, if the advanced countries are to increase unpaid hours of labor, they must increase the relative size of the “tradable sector of the domestic economy”. Which is to say, in relative terms, the portion of the working day during which the working classes of the advanced countries produce its wages and state social expenditures must be reduced, while the portion of the working day that can be turned into exports must expand. The resulting “adjustment” will allow constant and variable capital of the country to flow into forms of commodity production that can be exported.

Thus the crisis can be resolved by turning the advanced national capitals into export platforms, much as has already been done with the less developed nations through IMF imposed restructuring.

Decoding the Ideological Bullshit of a Bourgeois Simpleton

This is part 1 of a two part post.

Labor theorists of various persuasions have spent a lot of time discussing the causes of the present crisis. That discussion is extremely important, because it seeks to find the causes of the crisis that result from its fundamental premises. However as important as this discussion is, it is clear the crisis continues and the capitalist class is not so much concerned about its cause, as it is about how to cure it. In this spirit, I spent some time trying to understand how exactly the capitalists think the crisis will be resolved. In an essay, published by Project Syndicate, “What’s Stopping Robust Recovery?”, Nobel Laureate Michael Spence explains why the so-called “recovery” isn’t robust and what has to be done to change this.

(WARNING: you will need to set your Marxist decoder ring to “simpleton” in order to translate this bullshit.)