Marx on Keynes
Source Jim Devine
Date 11/05/03/18:17

IN BROADLY-DEFINED MARXIAN theory, as far as I can remember, the main
problems with Keynesian policy include:

1) capitalist political opposition to anything that competes with the
"private" sector, so that only military-type government spending or
pyramid building-style waste is acceptable (Baran & Sweezy). Of
course, if working-class organization and consciousness are strong
enough, this kind of political opposition can be trumped (at least
temporarily), producing social democracy of the sort that prevailed
after WW2 in W. Europe. The US warfare/welfare state is a milder
version of that system.

2) the capitalist opposition to persistent full employment because it
strengthens labor (Kalecki). Of course, if labor relations can be
changed, persistent FE can be tolerated. This can involve fascist
force (as in Kalecki's article) or social democracy (as in Sweden for
a long time). Again, that requires working-class political action.

3) the capitalist problem of over-accumulating fixed capital, which
reduces the rate of profit (Kalecki, Mattick). Keynesian policies can
raise the rate of profit by decreasing the turnover time of
commodities (see CAPITAL, volume 2 if you dare!), realizing profits,
and raising the Profits/Income ratio but there are limits there. If
fixed capital has been over-accumulated, that depresses the
income/fixed capital ratio. In turn, when the economy is at potential,
the rate of profit (Profits/fixed capital) is cannot be raised further
and so remains depressed. What's needed is the destruction of the
excessive fixed capital either by allowing a deep recession to occur
or via war.

(this is based on my article in the JEBO, in which it is synthesized
with the next one.)

4) under capitalism, persistent full employment tends to lead to
increasing financial leverage and fragility (Minsky). This would
require either allowing financial crises to occur or significantly
regulating finance. Given the massive political power of the
financiers these days, again massive counter pressure is needed. (Was
Minsky a "Marxist"? It doesn't matter, since his theories can be fit
into a broadly Marxist framework without losing anything.)

5) capitalism is a global system, so that Keynesian policies must be
global. The world state -- a.k.a., U.S. hegemony -- seems strong
enough for now to impose fiat money (the US$), but it's not strong
enough to engage in fiscal or monetary policy.

None of this says that Keynesian stimulus can't happen or won't work.
(In my JEBO article, such stimulus can deal with deep depressions. But
it fails to solve the business cycle, as in Mattick and Minsky.)

But it's unlikely. Given the fact that the capitalists dropped social
democracy like a hot potato once the Soviet Threat went away, #1 and
#2 seem extremely unlikely without a lot of hard political work.

Allowing crises to happen (one response to #3 and #4) simply fits with
Marx's view of capitalism as inherently crisis-prone. So does the idea
of solving problems via war. Strict financial regulation seems
unlikely unless there some political counter-force to neuter the
financiers' power. It might be industrial capital, but that's pretty
weak in the U.S. these days and we'd likely have to have an even
bigger version of 2008 to get it mobilized politically against finance
capital. They would likely need massive working class unrest to give
them backbone.

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