by Bruce Wallace
[Editor’s Note: This article was first published on May 7 in Wallace’s blog, Marx Returns from the Grave: Bruce’s Blog on Marxist Theory. We republish it here with the author’s permission.]
D. P. Gumby the arts
‘Oh accountancy was in my blood and so I ran away one day. Scribble away, balance the books and sing an accountancy shanty.’
Quote mining creationists
Rate of profit to fall deniers come in many shapes, sizes and political persuasion http://126.96.36.199/~brucieba/2013/04/26/stephanie-flanders-and-marxs-theory-of-crisis/. Some are in a complete state of denial i.e. they are unaware they are denying it and just don’t know it but amongst them underconsumptionists are the most active conscious rate of profit to fall deniers of all. They take the biscuit in their use of creative accounting and selective data presentation to back up their argument that anything, absolutely anything, can cause a capitalist crisis other than the tendency for the rate of profit to fall. They claim to be Marxists through the use of out of context selective quotations from Marx’s work, some of which are doctored through editing, which are usually either very general, obscure, opaque and unspecific that can have a variety of interpretations. An obscure footnote in Volume II of Capital added by Engels from a fragmentory note by Marx is a hardy perenial. Quote mining is a sacred rite of passage for this lot and is also the stamp of fundamentalist christian creationists. ‘Fundamentalist’, perversely, usually being a common term of abuse thrown at classical Marxists by underconsumptionists.
In my last post I dealt with the exceedingly slim case made by the Monthly Review school for the argument that the capitalists are not investing in industrial production due to an excess of industrial capacityhttp://188.8.131.52/~brucieba/?p=560&preview=true. In this post I am going to focus on the second pillar of the underconsumptionist creed; that another major contributor to capitalist crisis is low and declining wages or inequality leading to a lack of consumer demand.
Numbers do matter
I must say here that before I begin my exposition, or is it expose’, that part of my background is in social science research methodology. I just love poring over data looking for bias, misinterpretation, selectivity, misuse, abuse and downright fraud because all bourgeois social ‘science’ is littered with it. The dismal science of economics is no exception. If you believe this to be a rather boring or inane topic think again?
Last week the US bourgeois economists Carmen Reinhart and Kenneth Rogoff were mired in controversy and the main item in every economists blog and the financial media because they had produced a study “Growth In A Time Of Debt,” in 2010 ‘proving’ that countries with a debt to GDP ratio of over 90% had lower growth rates. The ‘research’ by the eminent economists had been widely cited by international bourgeois politicians to justify brutal austerity budget cuts. What an abarassment that a lowly PhD student tried to replicate their results only to find that their data was completely wrong including a ‘goofy’ excell spreadsheet mishap. Who would have imagined that Chess Grandmaster Rogoff (he came 3rd in the world junior championship in 1976) could have made such a schoolboy error?!!! Rogoff can execute a deliscious kill with the English opening but can’t even count! The eminent duo are now backing off the austerity brigade with scarlet blushes. So numbers do matter in both economic and political affairs.
Here is a speech I saw by Rogoff last year where he says the data sets he and Carmen were working on were ‘absolutely amazing’. Indeed they were and in the speech Rogoff insightfully mentions that ‘well in the world economy there is always something deeper going on.’ This must also include the depths of his brain! http://www.youtube.com/watch?v=2yIzfIXIoDU
Much less well known than the erroneous Grorwth in a Time of Debt study the flat earth Monthly Review published an article by Professors Fred Madgoff and John Bellamy Foster interestingly titled ‘Class War and Labour’s Declining Share’ in March. I’m sure I’ve seen a very similar title in another article somewhere else? http://www.socialismtoday.org/165/wages.html. This produced data showing there had been a persistant decline in US worker’s wages and that this was another pillar of their analysis of the Great Recession.
Anyway the basic idea is that US worker’s wages have been progressively declining as a share of Gross Domestic Product (GDP) for decades while capitalist profits boomed as they directly stole a greater share of income from the working class according to the Monthly Review article . This forced US workers to use their credit cards to maintain their consumption piling up personal debt on top of more debt. This was paralleled by a ballooning of government and business debt. Eventually the debt mountain destabilised the financial superstructure and the US housing bubble popped when toxic sub-prime mortgages crashed infecting the whole system in 2007-2008. Hence the credit crunch and financial panic that gripped the US in September 2008 that was precipitated, at root, by the masses attempt to maintain their consumption through debt. The decline in worker’s real income was an underlying factor or ‘tendency’ that led to the crisis and global slump The Great Recession was therefore primarily an irreducibly financial crisis which then hit the ‘real economy’ like the backwash of a Tsunami but its cause was a lack of consumer demand.
This has come to be known as the ‘conventional left account’ of the crisis but is also held by a number of radical Keynsians and prominent bourgeois economic pundits. Oh and Socialism Today.
However a lot of Marxists don’t buy into this one dimensional account which tends to sit within the existing orbit of bourgeois economics even if it has a ‘left’ tinge.
One sharp, if not the sharpest, critic of this explanation is the Lieutenant Colombo of Marxist economics
Kliman is an unsung hero of Marxist economics who has spent the past three decades at least in defending the theoretical validity of the whole of Marx’s Capital against numerous bourgeois attacks. His first book Reclaiming Marx’s Capital: A Refutation of the Myth of Inconsistency (2007) is the account of how he restored the scientific validity of all three volumes of Marx’s Capital against the epigones who argued that Capital was logically incoherent and of no modern relevence accept as a failed attempt at a scientific critique of capitalism. It is a difficult read but has been widely acknowledged as a scientific breakthrough which finally proves the completeness and logical coherence of Marx’s project. Even those mildly critical of his work have suggested he should receive an alternative Nobel Prize for this achievement. Every Marxist owes Kliman a debt for this and it is quite a story but some Marxists have not even heard of it.
However Professor Kliman welcomes questions and querries and most of his research papers are available for free on his personal website. http://akliman.squarespace.com/