From: Jerry Levy (Gerald_A_Levy@MSN.COM)
Date: Thu Mar 23 2006 - 09:07:07 EST
Hi Jurriaan, > In the end, the system is > fiduciary, and it relies on people having the idea that they have an > obligation to pay and repay, forcibly, or because of moral feelings of > guilt, shame etc. But as long as it is operative, and it works, you can > "stretch out" or alternatively truncate economic processes to a > considerable > extent, affecting the very perception of short-term and long-term. The > important thing is, that people keep believing. It's when they stop > believing, that you have problems. But that also means a crash is more > difficult to predict - beliefs can, after all, change quickly or persist > due > to innumerable different circumstances. This however moves us beyond > economics - it takes experience and insight into the condition of a people > to be able to judge at what point previous beliefs are shattered, and what > new beliefs fill the vacuum. Does it move us beyond economics? I guess that depends on how narrowly economics is understood. Keynesian economics, for instance, emphasizes the importance of expectations. But, Keynesians don't inquire too deeply into how expectations are formed and can vary. The examples that you give should tell us that expectations are, in part, culturally constituted and specific. Thus, when we look at the possibility of crisis in a concrete social formation, the expectations of classes and collectivities are a factor that should be recognized. These expectations are not merely a 'given' -- they are a variable. This is not a question merely of individual beliefs and feelings. It is a matter of _social_ psychology -- a subject that should not be entirely beyond our grasp if we desire to concretely comprehend conjunctural developments in capitalist economies. This is a big topic and as I don't have much time now to write, I will only make a few suggestive comments at this time. 1) Crises and crashes are not caused by this, but historically are often associated with PANIC, as a _moment_ in the unfolding of crises. A panic, is a sort of trigger which forms a step in the way crises often occur. 2) Inquiring about how panics occur and the underlying social psychology of panics is relevant for comprehending the specific way in which a crisis develops. But, this doesn't mean that our comprehension of an individual economic crises can be _collapsed_ into an understanding of the making of a panic. 3) The _state_ can affect and change (at least to a limited degree) the formation of expectations and hence the way in which investors respond to a specific situation. (This is something that politicians understand well: this is one reason for the way in which they optimistically 'spin' economic developments. I.e. they recognize that what they say and do can -- to some extent -- alter expectations and hence change the course and pace of developments.) 4) There probably are some cultural differences in different capitalist social formations which affect the course and pace of crisis. This is a topic which would needs to be addressed more specifically and concretely. (Side note: I recall hearing the other day -- I can't remember where -- that there was a study which found in the US that losses in savings and equity were viewed significantly differently by *gender*). In the context of the US, it is not unusual for surveys to show that the economic performance of the economy is often viewed quite differently by income groups and classes. In solidarity, Jerry
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