Wednesday, 25 March 2015

Why I'm not a Marxist or a 'cold-hearted' Keynesian

As a sort of part II to my earlier post, which you can find here, I will now address one of the marxists with whom I engaged in a few discussions over twitter - he is guilty of great ignorance in regard to the monetary system (double-entry bookkeeping) and operational reality.
But with the claims he makes in this article, it seems to me that he is either really uninformed or deliberately engaging in strawman tactics.
I replied to him, saying: The economic downturn of the 70’s is NOT the fault of Keynesian policies. Quite strange to hear a Marxist arguing that governments caused stagflation whilst pursuing full employment aims. I then gave him a relevant paragraph from Bill Mitchell's article here.
Surprisingly then, he replied I think you misunderstood me: I said Keynesian policies caused the stagflation of the 1970s, not the depression of the 1970s. Although you don’t make a distinction, I do. In any case, monetarism is only a variant of Keynesianism.

My reaction to that was this: That is also untrue. Supply side inflation is NOT the fault of keynesian policies. Again, a neoliberal would make such a false claim, not a socialist/marxist. Alternatively, a nr of government buffer stock policies were being scrapped around the same time. Monetarism is NOT a variant of what Keynes suggested for governments to do. Monetarism is an invention of the corrupt establishment that used exogenous factors (of geopolitical nature) to sabotage the New Deal legacy of post-WW2 – it’s a travesty, just like modern-day republicanism is a travesty of its original ideology, just like modern-day labor is a travesty of what it once was.
I’m all in favor of exposing strawman arguments when I see them made, regardless of the side who makes them.

Labor theory of value aside, what many marxists don't understand is how the monetary system works. More than that, the person in question with whom I debated, even went so far as to claim that barter is a myth (that it never existed). In turn, I pointed out that the mainstream view that money evolved out of barter is false, not barter itself. Indeed, barter is secondary to money - private individuals issued their own IOUs, governments issued public IOUs. Furthermore, the person in question went to argue that the sectoral balance (S-I)+(G-T)+(X-M)=0 contains 2 unnecessary sectors (foreign and domestic private). I then replied saying that, governments are not households, and households are not governments. And that, unless you have world government, and your country engages in trade with the rest of the world, there's going to be a foreign sector.
Then he went on to say that the sectoral balance is just an illusory artifact created by the capitalists. I then replied, no matter the political-economic system you'll have in place, you're going to need a method of accounting in order to keep records of transactions (a score keeping system).
Then the person in question went on to claim that all forms of government intervention in the economy - which regulates market and creates employment etc - can be considered fascist, including state capitalism, socialism, social-democracy (in the contemporary sense of the word), nazism et all. I then asked him, why are you labeling fiscal policy means to a particular political ideology? I received no reply to that question.
1 point of disagreement I have with marxists is that they constantly yell out "crisis of capitalism" every time there's a recession going on. For the love of the gods, negative economic growth caused by private debt deflation and pro-cyclical government fiscal policy is NOT the breakdown of capitalism. The solutions, empirically proven time and time again throughout history (from ancient to contemporary times) is that if you spend enough to offset shortfall in private sector spending, then the economy will pick up - spending translates into earnings, that translates in sales, sales translate into production and employment - then the automatic fiscal stabilizers (working always counter-cyclically) will inevitably bring down the fiscal deficit. More than that, they seem to be unaware of the difference between microeconomic problems and macroeconomic problems - and that macroeconomic solutions are only able to solve macroeconomic problems. No, this isn't a "capitalist invention", marxists, it's a scientific argument. Just like you cannot extrapolate behaviors of physical factors from a closed system to an open system or vice-versa, you cannot solve macroeconomic problems with microeconomic solutions or vice-versa. Neoliberals/Monetarists don't understand this, neither do the marxists.
Now, to some marxists, all of what Post-Keynesians and MMTers and Institutionalists are saying might seem as "cold-hearted or heartless"; that the aforementioned don't understand the quality side of Labor Theory of Value. Ok, finer points, got it. I will end this post with another claim made by the marxist in question with whom I debated.
He went on to tweet that the abolition of the state, of labor, and of capital is the way to go - the greatest goal to be achieved. Once again, respectfully, I asked myself, what the fuck does that mean? I'm all in favor of robots taking over man's toil, but you can never abolish labor completely. Labor, be it physical or mental, will always be something people will engage in - for their own interests or curiosities. That is what characterizes the human race, human creative reason. Secondly, how the hell are you going to abolish capital (land, money, machine tools, food, clothes etc)? The only way you're going to abolish labor and capital is if humans will evolve into immortal ethereal beings.
PS: A small comment of mine on post-scarcity theorists. Until things like water, food, warmth, and clothes will be in the same supply and ease of access as air - you're going to need a monetary system (a score keeping system) through which to facilitate economic activity.

5 comments:

  1. *Hello.*

    '1 point of disagreement I have with marxists is that they constantly yell out "crisis of capitalism" every time there's a recession going on.' *Well, that is pseudoscientific logic right there. If you make a prediction enough times, it will (probably) become true at some point. Then again that means you will be wrong over 9000 times prior to that.*

    'Now, to some marxists, all of what Post-Keynesians and MMTers and Institutionalists are saying might seem as "cold-hearted or heartless"; that the aforementioned don't understand the quality side of Labor Theory of Value.' *I wonder how would these guys react if they knew that Technocracts consider their "Labor Theory of Value" to be burgueois trash.*

    'He went on to tweet that the abolition of the state, of labor, and of capital is the way to go - the greatest goal to be achieved. Once again, respectfully, I asked myself, what the fuck does that mean?' *It means that Marxists are obsessed with their endgame "scenario" but have no freaking clue of how to actually get there.*

    'Once again, respectfully, I asked myself, what the fuck does that mean? I'm all in favor of robots taking over man's toil, but you can never abolish labor completely. Labor, be it physical or mental, will always be something people will engage in - for their own interests or curiosities. That is what characterizes the human race, human creative reason.' *That is a bit of semantics at play there, though - on both sides. I (probably others as well?) would not consider pursuing hobbies labor, and things like teaching in such a society would occur because people want to teach - more out of passion than for a paycheck. You still have to maintain the machines and the social mechanism, but the effort involved would probably be negligible when compared to the eight-hour workday of today. Much of that maintenance would probably be automated, too. More comparable to pushing buttons than farming the fields "by hand".

    The state abolished, however, does not seem realistically applicable. For machines, you need centralization and automation which is the opposite of the anarchic-marxian dream.*

    'Secondly, how the hell are you going to abolish capital (land, money, machine tools, food, clothes etc)? The only way you're going to abolish labor and capital is if humans will evolve into immortal ethereal beings.' *That depends on the definition of "capital", though. These word tends to mean different things to different people.*

    'PS: A small comment of mine on post-scarcity theorists. Until things like water, food, warmth, and clothes will be in the same supply and ease of access as air - you're going to need a monetary system (a score keeping system) through which to facilitate economic activity.' *That is easy though, implement a Technate #CheapShot

    But I do get what you are trying to say. Most of the Post-Scarcity crowd - particularly Venus Project/Zeitgeist sympathizers - have absolutely no idea of even the basic things in Science. V.P./Zeitgeist are specially facepalm worthy because they believe in a warped form of globalism - that is to say, they believe that once you achieve abundance in an area that same area has to keep producing stuff and giving it for free to the rest of the world. Which means that if the other areas want to exhaust your physical resources they are completely free (and encouraged) to do so by your own system.*

    ReplyDelete
  2. I agree ^_^
    I found a good article that analyzes the recurrent emergence of energy theory of value, aka. what the Technocrats argued for - it mentions Howard Scott and the Technocracy movement directly. The paper is by Ernst R. Berndt 1982
    Well worth a read, since it's a critical paper.
    http://dspace.mit.edu/bitstream/handle/1721.1/2023/SWP-1353-09057784.pdf

    ReplyDelete
    Replies
    1. That was an interesting read, thank you.

      Delete
  3. "More than that, the person in question with whom I debated, even went so far as to claim that barter is a myth (that it never existed)."

    Strange position for him to take. When we break it down, wasn't the gold standard era just a "fancier" version of a standard barter system?

    ReplyDelete
    Replies
    1. I thought it strange also, and I agree with you about the Gold Standard. And to point out further that barter is secondary to money, here's the composition of the Money Supply at the end of the 19th century and beginning of the 20th century. http://socialdemocracy21stcentury.blogspot.ro/2013/03/the-classical-gold-standard-era-was-myth.html
      -1885 Total Credit money 67%
      -1913 Total Credit money 85%

      Delete