From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Wed Dec 18 2002 - 02:50:06 EST
>Re Paul B's [8197]: > >> Impossible for me not to note this will therefore mean that our >> discussion about the state , 5248, 5250, 5272, and especially >> your 5274, and my closure in 5280. (all over your general >> reluctance to accept state industries as 'capitalistic' ) is now >> further resolved more clearly along the lines I was > > consistently suggesting. > 5304 was interesting too. Paul B said I understood him in 5172, but this was not an argument about whether state owned enterprises are capitalist (right?) but about whether state expenditures on infrastructure (e.g., state taxing surplus value in order to pay private contractors for the construction and maintainence of canals, roads and airports) should be counted as constant capital in the sense that its value is transferred through its use to the commodity output and thereby recovered, i.e., businessmen recover their tax costs for public forms of constant capital in the selling price of their wares. Fred and Murray E.G. Smith have argued over this question as well sometime in the last, say, 6 years. Paul B argued if we do not falsely charge the state with stealing surplus value but rather understand it to be carrying out the constant capital investments which individual capitals cannot undertake, then we will not reach the unjustified conclusion that the state and private capitalists are at odds with each other. This does not quite follow because businessmen could well accede to state taxation if the state does not burn more surplus value than needed for the functioning of the capitalist system. That is, tax financed state expenditures on infrastructure could still represent a pulverization of value to which capitalists may accede out of necessity. The capitalists would thus not be at odds with the state unless it overstepped its function. Of course if huge sums of surplus value lay idle (say a trillion or two dollars in money market funds) capitalists (especially the bond dealers) may have the state create "investment" opportunity by selling bonds even if those bonds as a form of fictitious capital will ultimately have to paid back with interest through appropriation of surplus value via taxes. If the system is in immediate crisis and in throes of a downward spiral, businessmen may figure that the economy will recover in the long run to absorb the claims which the state will have to make on the private economy to honor the debt which it undertakes for short-term stabilization policy. Foreign central banks may also be willing to hold quite a bit of American govt paper just to have the dollars in reserve to defend their currencies and maintain access to the US market in an imploding world market. There could be a green light for a massive Keynesian experiment. Of course if expectations are very dim, then the long term costs of debt- finananced govt stabilization policy (future taxes, future crowding out) could well exacerbate pessimism in the present and lead to a further retrenchment of investment. There is nothing mechanical about the implementation of a Keynesian program. The state would then be forced to organize a command economy through war or socialize the investment function; otherwise capitalists will have to confront the growing army of the poor and the unemployed with the full power of the state. Yours, rb
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