In particular the neoliberal brand associated with folks like the Clintons, is seen as costing jobs, depressing wages and shredding the safety net. Neoliberalism — austerity, privatization, free trade, deregulation, and budget cuts — have in large measure guided economic policy in the advanced capitalist countries for decades. Keynesianism, named after the British economist John Maynard Keynes, holds that increased government spending on jobs and infrastructure and lower taxes, increases demand and stimulates the economy.
It is therefore no surprise that the current paroxysm has sparked both a revival of interest in Marxism 1 and a flurry of responses by prominent Marxists. My focus here should not be taken to indicate that non-Marxist accounts are unworthy of engagement.
A number of mainstream economists have been forced, whether enthusiastically or reluctantly, to grapple with the realities of the system. The typical graduate macroeconomics and monetary economics training received at Anglo-American universities during the past 30 years or so may have set back by decades serious investigations of aggregate economic behaviour and economic policy-relevant understanding.
It was a privately and socially costly waste of time and other resources. Most mainstream macroeconomic theoretical innovations since the s…have turned out to be self-referential, inward-looking distractions at best.
Research tended to be motivated by the internal logic, intellectual sunk capital and aesthetic puzzles of established research programmes, rather than by a powerful desire to understand how the economy works—let alone how the economy works during times of stress and financial instability.
So the economics profession was caught unprepared when the crisis struck. Nonetheless, their approaches to the crisis are far from homogenous, have often been developed in isolation from each other and diverge on several points. Here I consider widely accessible accounts that have appeared in English over the past few months, appraising their strengths and weaknesses relative to each other and to the tradition associated with this journal.
The crisis has been marked by the near collapse of the banking system in several countries and began with the bursting of the subprime mortgage bubble in the US. One of the first Marxist accounts to draw attention to subprime was produced by Robin Blackburn, who wrote on this subject as early as springa few months before the real panic began: There are plenty of reasons to believe that the [subprime] fallout can largely be confined to the sector… Even the fact that so many Wall Street banks were heavily involved in the subprime sector…need not be a cause for alarm.
The exposure for any bank should be small. Typically they did not hold on to such mortgages, but packaged them up and sold them on in securitisation…securitisation is doing what it is intended to do—spreading the risk.
International Socialism published a remarkably prophetic article in summerwhich, by coincidence, came out just in time for the onset of the credit crunch.
This saw the growth of finance originating in the decline of profit rates during the post-war boom and the failure to sufficiently restore them from the low levels they had reached by the s.
This led to a scramble for alternative outlets for profits: Low levels of past profitability do not stop capitalists imagining that there are miraculous profits to be made in the future and in sucking surplus value from all over the world to be ploughed into projects aimed at obtaining them.
Many of these are purely speculative gambles in unproductive spheres, as with bubbles in real estate, commodities markets, share prices and so on… Against such a background, corporate profits will be being puffed up until they lose touch with reality, and things will seem to be going very well until overnight it is discovered they are going very badly.
Whenever money ceases to function simply as money, when it also functions as capital, it opens up the possibility of credit and financial speculation. I will begin by considering those accounts that emphasise the transformation of capitalism through finance over the recent period.
But his essays show relatively little engagement with the concepts traditionally associated with Marxist political economy and tend to consider the wider economic system only insomuch as it has been drawn into the financial world.
The financial sector can swell far beyond the scale justified by the value created in the productive economy. Finance in itself does not create new value, and eventually its profits must be obtained from the productive sector of the economy.
Of course, there are tensions within the ruling class, and these are exacerbated in crises, but the short-term interests of shareholders do not always win out. Finally, there are political implications to the financialisation arguments. According to Gowan the crisis poses a choice between two models: The overthrow of capitalism is the only way out.
Through winning such demands workers become aware of their power to collectively transform society and confident of their strength to do so.
It is not so much that real accumulation does not generate enough profitable avenues for banks to lend. Rather, productive capitals can increasingly meet their financing requirements either by retaining profits or by borrowing directly in open markets… Banks have been edged out of this business, and have to seek other avenues of profitability.
However, shifts in these figures do not seem dramatic enough to explain a systemic transformation of capitalism—from about 12 or 13 percent in the US in the s to about 10 percent through the s and then falling to about 5 to 6 percent in the current decade; and remaining at above 30 percent and around 40 percent, after slight declines, in Germany and Japan respectively.
But this runs the risk of lapsing into a determinism that seeks to explain the trajectory of the system through recent innovations in information and communication technologies: The impact of new technologies on the sphere of finance has been dramatic.
Finance might have become neither more efficient nor more productive in terms of intermediation per worker, but it has become capable of operations that were previously completely impossible. The changes are apparent in terms of the internal organisation of financial institutions, the speed of transactions, the feasibility of financial engineering, the links between financial markets, the techniques of pricing and risk management, and so on.
Not least, finance has become technically capable of dealing with huge numbers of individual borrowers. But this innovation should not be seen as an autonomous process that develops in isolation from the economy.
In particular, it is necessary to account for the flows of surplus value into different areas of the economy that spur waves of restructuring and innovation.
But whatever the causes, Lapavitsas has raised important questions about the consequences of financialisation. Traditionally Marxists have argued that the profits made by industrial capitalists and the interest earned by those who lend them money are each claims on a portion of the surplus value generated through the exploitation of workers in the productive economy.In Virginia, Blue Cross was named as the "intermediary" for Medicare, Part A (hospital services), and Blue Shield was the ''fiscal agent" on behalf of the state for Medicaid.
In some states, alternative parties are effectively banned from participation. When alternative parties do get on the ballot, their candidates often face the “spoiler” accusation. FDR did what was necessary to keep the United States from disintegrating.
Kennedy did many good things, including preventing World War III. But FDR was a better politician and president in multiple ways. The Associated Press delivers in-depth coverage on today's Big Story including top stories, international, politics, lifestyle, business, entertainment, and more.
After an initial attempt at a stimulus program between and , the European leaders chose to impose severe austerity measures in return for bailout of the indebted government. Austerity measures led to huge increases in unemployment, especially in indebted countries, to levels only comparable to the Great Depression era.
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