[OPE] long waves

Patrick,

The problems with long wave theory are (1) there exist no consistent
economic data series stretching back to 1800 or before that, and
reconstructions of such data (e.g. by Maddison and Bairoch) involve numerous
assumptions (2) the causal connections involved in such longterm
fluctuations are very complex - for example, there are innumerable factors
influencing profitability - and the alignment of causal forces itself
changes, (3) the models we use to understand how the economy & society works
and what the effects of policies are, are themselves timebound and subject
to ideological distortions.

This means that it is very difficult to prove anything for certain, across
such large stretches of time, and that such judgements as we might make, are
often largely "theoretical interpretations", underpinned by limited
circumstantial evidence. This being the case, there is a sense in which the
long wave discussion intrinsically cannot provide any useful orientation for
the future, politically or otherwise. All that we really know is that,
because of structural contradictions which are difficult to resolve, the
growth of capitalist production globally, judged in price terms, nowadays
tends to slow down in most places. Marx explains why: (1) it costs less
labour per unit to produce commodities, and therefore their value declines,
even if physical output increases; (2) more and more labour is devoted to
maintaining already existing assets.

What is theory? Theory consists of generalizations from experience which
cannot be fully reduced to particular experiences (because theory involves
creative conceptualizations not obtainable from external experience), and in
science we try to create a closer mesh between theory and the experiential
data, for the purpose of providing better orientation for human behaviour,
and enabling us to change the world we inhabit, for the better (we hope).
For academic purposes, it may be interesting to theorize about all kinds of
things, but for political purposes we're interested in "useful theory". Long
wave theory may be interesting and worthwhile to pursue for a scholar, but
politically it isn't all that useful. As they say, "a week is a long time in
politics".

It is certainly an eternal human preoccupation to ask the questions of
"where did we come from" and "where are we going", but we ought to be
concerned with the precise motivation for asking those questions (why we are
asking them), and with how we can usefully frame those questions. By the
time we think that we know "the general march of history which all peoples
are fated to tread", in Marx's phrase, we have really left the realm of
science, and venture into prophecy and religion.

Marxists are typically people who are supremely confident in their ability
to know things, and they make enormous epistemic claims based on a belief
that certain conceptual distinctions unlock the secrets of history.
Confidence about the ability to know things is fine and good, but (1)
question is how we go about obtaining knowledge, (2) whether the grandiose
epistemic claims really lead to more knowledge, or whether they just blind
us to reality and prevent useful knowledge in the sense mentioned.

But, actually, the ideologists of market equilibrium fare little better.
Take for example Lorenzo Bini Smaghi's explanation of the financial crisis:

"...significant imbalances were building up at various levels in the global
economy and the global financial system. Among these imbalances were
exuberant real estate prices and an ebullient securitisation business which
facilitated huge credit growth. Another important imbalance consisted of one
group of countries - Japan, China, Germany, the oil-exporting countries -
saving too much, while others - the US, Spain, eastern Europe - were
borrowing to finance consumption and investment (e.g. related to residential
and commercial construction). These developments were unsustainable and
would only need a spark to cause turmoil in the financial markets and the
world economy. In the end, the US mortgage market provided that spark."
http://www.ecb.int/press/key/date/2009/html/sp091016_2.en.html

In other words, the imbalance is explained by... an imbalance, the lack of
equilibrium is explained by... the lack of equilibrium.

Jurriaan

http://www.youtube.com/watch?v=cPQcnjlwtE4&feature=PlayList&p=059DFCEFE565BB58&playnext=1&playnext_from=PL&index=25

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Received on Sun Oct 18 09:28:16 2009