[OPE] the troubles of our times and our own theoretical troubles/failings

> Personally I underestimated the loss of market confidence that occurred recently,

> quite possibly because I did not fully understand the incredible size which the volume

> of leveraged capital reached, especially in the last half decade or so, in other words,

> the total size of the debt overhang compared to the income that has to pay it off.

 
 
Jurriaan:
 
If it's any comfort to you, you are by no means not alone in that underestimation.
But, at least you were talking about things like consumption and derivatives when
most radical economists weren't.
 
All:
 
It seems very trendy now for Marxists to say "Aha! Marx had it right! Read what
he had to say about fictitious capital and crisis if you want to understand the
current economic crisis!". There is _some_ truth to this: much can be learned
by study of Marx's writings on political economy. But, it seems to me to be
missing a more important point: in what ways has a over-dependence on Marx's
theoretical perspective left us unprepared for analyzing the current crisis?
 
For instance, how many Marxists other than Dick Bryan and associates and
Loren Goldner were talking about the derivatives market and value theory? How
many Marxists understood the importance of and analyzed credit default swaps,
credit card debt, and futures markets? There were some, but not many.
Why was that? I will assert that it was a consequence, in part, of an over-dependence
on Marx's thought: instead of trying to grasp these new realities as something new,
too many Marxists simply re-opened _Capital_ and looked to him for answers.
This deference to authority leaves us unprepared to grasp how capitalism has
changed in some ways since Marx's time - it's an attempt to retrofit 21st Century
realities into the corpus of thought of a 19th Century writer. It represents, frankly, a
(terminal?) failure of the imagination - an inability to think for ourselves. Do you
think I am being too harsh?
 
Another example: consumer confidence. Jurriaan has talked about the importance
of this subject before - just as he talked about the failing of most Marxists to develop
a more rigorous theory of consumption in which that subject is integrated with
the analysis of capital. Now to the question: why hasn't there been more analysis
of consumption (and related questions, like consumer expectations) by Marxians -
Ben Fine excepted? Here's my tentative answer: it wasn't developed by Marx and
since too many of us take our cues from Marx we didn't analyze it. Well, it is
true that Marx had _some_ things to say about confidence on the part of _investors_,
but he didn't have much to say about consumption behavior by workers and other
non-capitalist classes. That's largely because he assumed that workers' savings
and access to credit was -0- (or close to it). This assumption, largely true for his time,
meant that consumer expectations would have little or no impact on the level of
consumption, demand, and aggregate economic activity. The importance of
consumer expectations _would have_ been a pretty easy idea for us to grasp if
we recognized some of the contributions of Keynes and Post-Keynesian writers (many
more of the latter group were able to predict the crisis, I think, than Marxian theorists).
But, Marx forbid, we attempt to integrate _anything_ into our analysis from Keynes,
"bourgeois economists" or even non-Marxian heterodox theorists..
 
So, before we get carried away slapping each other on the back, we need to give
some more thought to our own failings and how we can redress them.
 
In solidarity, Jerry
 
 

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Received on Thu Mar 12 08:52:18 2009