From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Thu Oct 16 2003 - 12:53:14 EDT
Preobrazhensky wrote before Keynes: "Increased opportunities to sell abroad must have the effect of promoting absorption of unrealized balances...The sale of even a part of these balances...has enormous significance for the entire system. That is true not because of the absolute weight of the foreign market, which is generally insignificant...but because sales in the foreign market will make it possible, at a given moment, to halt the contraction of the production apparatus of both departments a higher level than would be the case if this reserve of capitalist capacity was not brought into play. Contrary to Rosa Luxemburg's thinking, the external market is not important in and of itself, but only because it permits avoidance of far greater contraction of that market which capitalism acquires internally. This internal market is incomparably more significant for capitalism." Moreover, as Richard B Day has put it in the introduction . the Decline of Capitalism (ME Sharpe, 1985): "in the absence of foreign sales the typical capitalist crisis was accompanied by widespread destruction of existing fixed capital. Capitalism would destroy its own internal market, spontaneously created during the stage of economic expansion. With access to relatively minor foreign markets, on the other hand, unplanned overproduction could be disposed of, making it easier to ' rise to the next level of expanded reproduction and thereby to expand the basic market, which exists within capitalism itself.' In effect Preobrazhensky discovered what Keynesians would later refer to as the 'foreign trade multiplier,' or the notion that a small increase in exports might generate a multiple expansion of domestic sales or forestall a multiple contraction." Rakesh
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