Saturday, August 28, 2010

a question about Keynesianism

In the comments under this post at the blaawg Lenins Tomb someone asks:

"I sometimes see leftists argue that the current bourgeoisie is destroying itself by immiserating wage-laborers. They claim that the capitalist system requires workers to buy wage-goods at a certain level, or production will be unbought and profits unrealized. But couldn't the solution be to reduce wages (and increase exploitation) and then sell more ... capital goods, government goods, and luxury goods"?

This cat is asking, what if the bourgeoisie won't realise their surplus value or allow real wages to increase? I suppose in an economy with a commodity for money, there would be permanent deflation, with effective demand being continually reduced by the hoarding of money, and a certain amount of involuntary unemployment. However, this isn't what we see in contemporary capitalism, where there tends to be unemployment and appreciable inflation.

Suppose we really had the two constraints listed above: the bourgeoisie won't realise as production the whole of the difference between feasible production and necessary production, and they won't pay wages high enough to cover the production they won't realise, could this situation be resolved by the bourgeoisie lending money to the workers?

In this case, it would be possible to achieve full employment in the short term, but to maintain it, it would be necessary for workers' net borrowing to continually exceed their repayments: effectively it would be necessary for workers' borrowing to constantly increase. Since there's a technical limit as to how much workers can repay, this isn't possible. At some point a recession must ensue.

It seems that you can generate cycles of expansion and recession, in hypothetical models, by making the assumption that the bourgeoisie impose an artificial maximum income on themselves. This would be an alternative way of generating cyclical dynamics in a model of capitalist development. It's a different way of getting a Keynes or Minsky type theory. I'm not sure it's strictly correct, though.


Actually, re comrade's trip to Bradford, isn't the EDL basically a government scheme to employ ex soldiers with Smallhausen Syndrome? to put off anyone opposed to the war?

1 comment:

catmint said...

I wrote this thing basically to note down an idea. The argument is pretty mixed up at the moment.