A debate on Marx’s theory of crisis

latuff-us_bank_crisis

For those interested, a debate has unfolded (last year really) between Michael Heinrich, Fred Moseley and others in the Monthly Review on the tendency of the rate of profit to fall and is available here.

Crisis Theory, the Law of the Tendency of the Rate of Profit to Fall, and Marx’s Studies in the 1870s Michael Heinrich

Response to Heinrich—In Defense of Marx’s Law by Shane Mage

Critique of Heinrich: Marx did not Abandon the Logical Structure by Fred Moseley

A Critique of Heinrich’s, ‘Crisis Theory, the Law of the Tendency of the Profit Rate to Fall, and Marx’s Studies in the 1870s’ by Guglielmo Carchedi and Michael Roberts

Heinrich Answers Critics by Michael Heinrich

Graph/Table of the Week

Again after a brief hiatus a new graph. Below the Conference Board measure of labor productivity.

productivity

The measure is the GDP per person employed in 2013 in dollars and adjusted to Purchasing Power Parity. The colored countries are (from left to right), the US, then Russia and Mexico, followed by Argentina and South Africa and Brazil and China. The last one is India. The range is from around 115,000 in the US to 10,000 in India, with Brazil and China close to 20,000 and the others above 30,000 and below 40,000. The database is available here. Click on the figure to enlarge.

Graph/Table of the Week

fredgraph

If anything this recession is atypical because of the lack of growth in government expenditures. After the initial stimulus, as can be seen in the graph above, the rate of growth of spending drops to zero. The slow recovery shows that lack of Keynesian stimulus, or austerity, does NOT work.

Özgür Orhangazi on Venezuelan Economic Policies after Chávez

The last issue of the Review of Radical Political Economics (go here; subscription required) has an interesting paper by Özgür on the anti-Neoliberal policies of the Chávez Bolivarian Socialist government of Venezuela. The paper is important since, as noted by Mark Weisbrot (here), there is a lot of misinformation in the Western media about the nature of the Venezuelan society.

The paper can be downloaded in its Working Paper version here. From the abstract:

As neoliberal policies failed to fulfill their promises and instead produced various financial and social crises, one after another, left-oriented leaders took power in Latin America and began, to varying degrees, seeking alternatives to the neoliberal orthodoxy. Venezuela went further than others in reversing neoliberal policies, nationalizing key industries, reintroducing extensive social programs and promoting alternatives to the capitalist organization of production. While the view on Chávez’s politics and his government’s policies varied from seeing him as an authoritarian caudillo with populist tendencies to the leader of 21st century socialism, more recently several scholars discussed the radical nature of the economic policies implemented.
This paper contributes to this growing literature by analyzing the economic policies of the Chávez government. These policies mark, in general, a significant departure from the neoliberal orthodoxy with a focus on greater national autonomy, a return to some of the macroeconomic policies of the earlier eras, and increased state involvement in the economy through interventions and social programs; and have resulted in improved social indicators such as declining poverty rates, increasing literacy rates, declining unemployment and so on. These policies, at the same time, provided space for a set of ‘transformative’ initiatives, including experiments with worker co-management, cooperatives and participatory planning, all of which seek alternatives to the capitalist organization of the economy, even though these ‘transformative’ attempts so far have been limited in terms of scope and success. Although the Venezuelan experience could be considered sui generis, especially with its dependence on oil and the resultant rentier economy and culture, a critical evaluation of the policies implemented in Venezuela can contributes to both discussions on the alternatives to neoliberal policies as well as to the question of what shape a 21st century socialism could take.

It should be noted that the greatest achievement of the Natural Resource Nationalism, which is the essence of Bolivarian Socialism, is the redistribution of the rents associated with natural resource extraction. Not surprisingly income inequality has decreased in South America in the last decade, against the global trend. However, it should be noted that there are risks in a development strategy that puts excessive emphasis on commodity exports. For a discussion of the limits of the current Latin American development strategy see here.

Graph/Table of the Week

Democrats are often seen as Big Government, tax and spend liberals, while Republicans are generally cast as small government libertarian/conservatives. The graph below shows federal spending, revenue and the fiscal balance (as % of GDP) since the Clinton administration (2014 is an estimate, and 2013 might be revised).

fiscalresults

It is clear that the traditional representation makes little sense. Spending and deficits have decreased with Democrats (Clinton and Obama). The brief surplus period at the end of the Clinton era vanished, not only as a result of the 2001 recession, but also because revenues continued to decrease (until 2006), in part following tax cuts mostly for the wealthy, with increased spending, a good deal of that caused by increased defense spending.

Since the recession, and the inherited 2009 budget, Obama has reduced spending, while revenues have been recovering with the rest of the economy (i.e. slowly). This year the federal deficit should be back in what could be considered normal levels. But that’s not necessarily good, from a Keynesian perspective.

Graph/Table of the Week

Back after a few weeks hiatus. Map below (from this old post by The Economist) shows that Mississippi where conservative McDaniel rants against deficits and government assistance to the needy is among the States that receive the most in fiscal transfers.

20110806_WOM959_0

Note that transfers to Mississippi by the Federal government are around 250% of the State’s GDP, and they are consistently in deficit all the time. In absolute terms, New York is the State that transfers the most to other members of the Union. In relative terms (with respect to the State’s own GDP), Delaware is the most generous State in the Union.