Hayekianism Plus Some Original Errors...
That, the late Rudi Dornbusch might have but did not say, appears to be the current state of Marxian crisis theory.
Matthew Yglesias directs us to Benjamin Kunkel and notes his allegiance to the Boehner-McConnell-Hayek-Hoover-Mellon-Marx axis on economic policy:
Karl Marx, Real Business Cycle Theorist: Kudos to Benjamin Kunkel for trying to present an accessible Marxist account of the current financial crisis. I was struck reading the piece, though, by how similar the Kunkel/Harvery/Marx account of the crisis is to linguistically and ideologically quite different accounts from the right.... [T]he Marxist and the real business cycle theorist are united in the view that these things happen and mass unemployment and prolonged periods of immiseration are just what happens in a market economy. The RBC stops there while the Marxist looks forward to the construction of an entirely new system.... The range of views associated with John Maynard Keynes and... Milton Friedman... says... no. A transient period of somewhat elevated unemployment could reflect a change in tastes.... But a prolonged period of widespread mass unemployment paired with a collapse in overall spending reflects something else. People haven’t decided they want fewer apples and more pears, they’ve decided they want fewer goods and services and more safe liquid financial instruments. What has to happen in response is that governments need to create more safe liquid financial instruments—more dollars, more euros, more Swiss & British sovereign debt—until people decide they’ve had enough and want to increase their demand for goods and services.
Here is Benjamin Kunkel:
How Much Is Too Much?: The deepest economic crisis in eighty years prompted a shallow revival of Marxism.... [T]he elements of a Marxian crisis theory, one never fully articulated by Marx himself, lie... scattered throughout Theories of Surplus Value, the Grundrisse and above all the posthumous second and third volumes of Capital.... To date, a revived Keynesianism has formed a left boundary of economic debate.... Not until now, with David Harvey’s Enigma of Capital, have we had a book-length example of Marxian crisis theory addressed to the current situation....
Harvey adds new features to a simple model of the ‘overaccumulation of capital’.... [O]veraccumulation remains... the fount of all crisis. The term may seem paradoxical: what could it mean for capital to overaccumulate, when the entire spirit of the system is, as Marx wrote, ‘accumulation for accumulation’s sake’? How could capitalism acquire too much of what it regards as the sole good thing?
Overaccumulated capital can be defined as capital unable to realise the expected rate of profit.... Imagine an economy consisting of a single firm which has bought means of production and labour power for a total of $100, in order to produce a mass of commodities it intends to sell for $110.... As Harvey explains in The Limits to Capital, effective demand ‘is at any one point equal to C+V, whereas the value of the total output is C+V+S. Under conditions of equilibrium, this still leaves us with the problem of where the demand for S, the surplus value produced but not yet realised through exchange, comes from’... ‘the creation of what Marx calls “fictitious capital” – money that is thrown into circulation as capital without any material basis in commodities or productive activity’... an anticipation of future value without which the creation of present value stalls.... Inevitably, the risk is that a given territory... comes to prosper thanks to a stream of finance that one day flows elsewhere. A devaluation of the abandoned land along with its ‘overaccumulated’ workers, industries and infrastructure will ensue. This harsh sequel to the spatial fix Harvey calls a ‘switching crisis’....
The more the forces of geographical inertia prevail, the deeper will the aggregate crises of capitalism become and the more savage will switching crises have to be.... Local alliances will have to be dramatically reorganised (the rise of Fascism being the most horrible example), technological mixes suddenly altered (incurring massive devaluation of old plant), physical and social infrastructures totally reconstituted (often through a crisis in state expenditures) and the space economy of capitalist production, distribution and consumption totally transformed. The cost of devaluation to both individual capitalists and labourers becomes substantial. Capitalism reaps the savage harvest of its own internal contradictions....
[I]t is the broader and more systematic Marxist perspective that ultimately and properly contains Keynesianism within it, and a crude Marxist catechism may be in order. Where does an excess of savings come from? From unpaid labour – for example, that of Chinese or German workers. And why would such funds inflate asset bubbles rather than create useful investment? Because capital pursues not ‘high social returns’, but high private returns.... Not only Americans and Britons but the Irish, Spanish and Emiratis live today among the ruins of a broken spatial fix....
Harvey doesn’t spell out why growth must have a stop, and the outlines of an ecologically stable and politically democratic future socialism remain as blurry in his later work as they do almost everywhere else. At the moment Marxism seems better prepared to interpret the world than to change it. But the first achievement is at least due wider recognition, which with the next crisis, or subsequent spasm of the present one, it may begin to receive.
The original errors are that the divorces between exchange value and use value and the wedges between private profits and social returns have absolutely nothing to do with overaccumulation crises--Hayek and company, after all, manage to construct a perfectly coherent and functional model of overaccumulation crises without them at all.
