Since the mid-1930's mainstream (bourgeois) economists have overwhelmingly held the position that the (capitalist) state can 'manage' economic crises through the (judicious) use of fiscal and monetary policies. This is a position shared by Keynesians, monetarists, and supply-side economists. Doesn't the experience of the current economic crisis suggest limits to which the state can 'manage' markets? For example, in the U.S. the Fed decreases and decreases and decreases interest rates. What happens as a result? Not much. And there was a (supply-side) tax cut in the U.S. promoted by the Usurper Bush Jr.. Result? One might argue that such a policy will take more time to see its net effect. Yet, I don't think it's too early to say that the 'tax cut' will have a very marginal effect on the economy. What is going on? Well, there seems to be general agreement that a _part_ of what is happening has to do with the *expectations* of capitalists and workers. Thus, when the Fed cuts interest rates, capitalists anticipate such cuts even before they happen and when they do happen the effect in terms of stock market activity, and in terms of real investment, tends to be marginal or even negative. Keynes might have said: "I told you so". Yet, the current experience not only highlights the role of expectations (which, of course, was emphasized by Keynes) but *also* the _ relative inability of the state to alter expectations through government intervention in the economy_ (which wasn't emphasized by Keynes). There are some interesting questions here: 1) how *precisely* can/are expectations incorporated within Marxian theory? I think one can make the case that expectations tend to reinforce a tendency for commodities to be sold below their value during the slump and above their value during the expansion. Yet, I don't think that Marxians have really developed this 'intuition' into a theory of capitalist cyclical behavior. Can anyone cite any Marxian sources where the role of expectations in cyclical behavior has been emphasized and explained? 2) another additional explanation for what is happening in the US economy concerns the _relative cynicism of capitalists and others re state policies_. Of course, in the U.S. the fact that the 'government lies' has penetrated working-class consciousness at least as far back as the Vietnam War and Watergate. Now it seems that capitalists also understand this motto and discount whatever is said by the government, including the Central Bank, about the economy. Doesn't this suggest that state fiscal and monetary policies are _less_ able to bring about 'real' changes in the macroeconomy than during the later half of the 20th Century? Would the following analogy be far off-base? In the 1930's and since the capitalist state have tried to administer 'magic bullets' (state fiscal and monetary policies) to help the patient (capitalism) recover from economic 'illnesses'. Yet, now the patient has developed, it appears, an increasing *resistance* to such medications. Where this analogy breaks down, perhaps, is that it doesn't incorporate the role of expectations, and social and class psychology, into the effectiveness of the medicine. Yet, most doctors realize that the 'state of mind' of the patient(s) has a major effect on the effectiveness of many medical treatments. If state pronouncements are viewed strictly as propaganda, though, then whatever they (the 'doctors') say is discounted by all economic classes. Thus, are the economic 'patients' increasingly mistrustful of government analyses? (Or is this a really bad analogy and should I go back to sailing?). 3) Given some of these circumstances, how do you think that the contemporary economic crisis will be resolved? How specifically will the working class be impacted by the manner in which the state attempts to resolve the crisis? Doesn't the current crisis suggest that there is a "fallacy of control" re the capitalist state? I.e. while the state can to some (a decreasing?) extent 'influence' capitalist behavior isn't it a fallacy to believe that they can control capitalism? In solidarity, Jerry
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