The Real Movement

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Tag: public debt

Keynes and the myth of the Reagan administration’s neoliberalism

Robert Skildelsky, biographer of John Keynes, has written an essay written an essay on the 80 year legacy of the General Theory in which he credits Keynes with inventing macroeconomic policy and for showing how government could employ means at its disposal to offset economic depressions.

For all the genius of Keynes’ General Theory, its importance has not always been acknowledged by mainstream economics. By the 1980s, according to Skidelsky, most of mainstream economics came to reject many of the ideas first proposed by Keynes, particularly his argument capitalist economies were inherently prone to chronic underutilization of both capital and labor.

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Can SYRIZA be fixed? Can Greece?

If this Jacobin article, Becoming Syriza Again, is any indication, even the remaining radicals within SYRIZA have no idea why it is failing.

The writer acknowledges that the debate over Greece leaving the euro, which raged within SYRIZA for a period of time before the split, was an oversimplification. However, even now he proposes no alternative economic program that would allow SYRIZA to achieve its stated aim of bringing austerity to an end while avoiding Grexit.

He proposes a 5 step solution in which SYRIZA must:

  • Hold onto power;
  • Stop fighting with KKE and other Leftists;
  • Eliminate opportunism in its ranks;
  • Reconsider staying in the eurozone; and,
  • Put forward a new vision that inspire the country.

Here is my problem with this essay.

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Everything you think you know about fascist state deficit spending is wrong (2)

To summarize my argument in part one:

The present crisis arises from the fact that there is a mass of superfluous capital that cannot, under any circumstances, become real capital — that is, cannot produce surplus value and, therefore, profit. This mass of superfluous capital poses the constant threat to the mode of production of a general devaluation of the existing capital as a whole. If a general crisis of devaluation is to be avoided, the state must run deficits, i.e., it must spend more than it takes in in tax revenue. State deficit spending is, therefore, not determined by the needs of society (and, in particular, by the needs of the social producers), but by the needs of the owners of capital, who, if they are to avoid a nominal (FILES): This 04 June 1998 file photo shdevaluation of this superfluous capital, must hand it over to the state to be consumed unproductively in return for interest payments.

The purpose then for the fascist state to borrow the excess capital is to avoid a nominal devaluation of capital. Avoiding this nominal devaluation of capital does not mean the capitalists avoid a real devaluation of their capital. Which is to say, the real means of production and labor power of society is really consumed by the fascist state in the form of unproductive expenditures. But, in this real devaluation of capital, the nominal value of the capital, expressed in some currency, is replaced by the fascist state in circulation by valueless tokens, by treasuries, which represent it only symbolically and which take effect as such. The real capital consumed is, therefore, replaced by fictions of capital in the form of promissory notes issued by the state and on which it pays interest.

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Everything you think you know about fascist state deficit spending is wrong

Part One: The owners of capital compete for the opportunity to lend their capital to the fascist state

In a recent lecture, Paul Krugman explained why, in his thinking, the US is not Greece. (Hint: almost nothing to do with language differences or geography.) Krugman lecture obama-debt-4_3is an argument for why a country borrowing in its own currency cannot experience a Greece-type crisis, where bond buyers force the country into default by refusing to advance it further credit:

“Are Greek-type crises likely or even possible for countries that, unlike Greece and other European debtors, retain their own currencies, borrow in those currencies, and let their exchange rates float?”

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