The Political Economy of Things

1. Left-Keynesians, Presente!

The bourgeoisie have made a near-science of confusion  They've made a near-art of dressing the confusion in language of profound superficiality.  We know when they're doing it, and they do it all the time.


The near-science,of course, is political economy, or as it is more profoundly anointed, "economic theory."  The near-art, of course, is spin. 

We have "political economists," or more profoundly superficial "economic theorists" spinning ever onward to utopian capitalism where social needs are met by private initiative primarily or public intervention reluctantly,   and public/private partnerships if there's enough money in it for that hero of the bourgeois age, the entrepreneur; where profits continue to grow; the business cycle becomes an event only dimly recalled by the very old; and the assignment, parceling, distribution, of social labor time according to the dictates of value production goes on forever because it's the natural order of...things.

We have economic theorists who prove everything is a question of balance; that all failures are the results of policies improperly balanced; that all success depends on restoring proper balance.  

We have economic theorists spinning hasta la victoria siempre the tale where taxes are paid on time, with the assistance of tourists using their cellphones as body-cams; where budgets are balanced, more or less, by demanding war reparations so the reparations can be used by the country receiving them to meet its obligations on its sovereign debt which is held by the country making the reparations.  Adam Smith shake hands with Mr. last name "Monty."  First and middle?  "Three" and "Card."

We have political economists, excuse me, economic theorists, mashing up the US "New Deal" of the 1930s with the "Marshall Plan" of post WW2, ignoring that the New Deal was a failure except in its fundamental objective which was not economic, but social--namely the tethering of the working class to the destructive force of capitalism, and that the Marshall Plan was the offshoot of that destruction.

Meanwhile of course, we have the same political economist(s) urging the country from whom reparations are being demanded to undertake such a New Marshall Deal Plan as a holy crusade.
 
We have other economic theorists telling us how important Keynes is for Marxists political economists, excuse me,  Marxist economic theorists when it comes to matters of policy, which, not being a economic theorist, I take to mean matters of fiscal policy, matters of monetary policy, matters of industrial policy, matters of defense policy, matters of labor policy, when the vanguard of political economists, our Keynesevik-academics, our heroic professors, take power and administer the bourgeoisie's "economy" on behalf of the bourgeoisie.


2. Counterrevolution within the counterrevolution

C'est vrai.  Marx's work is not a work of economic theory.  Marx's work does not provide a guide to effective monetary, fiscal, industrial, defense policies when administering the capitalist economy on behalf and in the interests of the bourgeoisie. Capital is a critique of the capitalist organization of production which demonstrates that "economics" as such does not exist.  Economics pretends to be about the production of things; Marx shows that capitalism is all about the reproduction of relations, of the condition of labor. 

Accumulation of the means of production is accumulation of the means of production as capital, as value maintaining only to the extent that they are value expanding.  Value can be expanded only by "revisiting" its source in the condition of labor itself.

Marx has no interest in designing or divining policies for the administration of "the economy."  The economy does not exist apart from the class relations the compel labor power to be presented for exchange.  The subject of his life's work is the social mediation of the labor process.  His critique of capital determines that capital is a specific, historical, limited mediation.  This specific mediation creates barriers not only to the satisfaction of human needs, but through the  previous successful accumulation of capital, to the continued successful accumulation of capital.

The development of the determination of capital, labor power as value producing, is the development of the negation to capital-- the terms and prospects for its abolition, and not its administration. 


So Capital isn't really concerned with maximizing tax revenues, or stabilizing the inherently unstable relations of exchange among countries.  Capital is not a field guide to selective nationalization of industries,  seizure of "commanding heights," "peoples' banks and banking," "economic growth"-- in that no such growth exists outside the reproduction of a specific condition of labor.

Nor is Marx's work intended to guide "economic theorists" as they consider currency devaluations, arms purchases, or appropriate tactics in trade and other wars.

The point to Marx's work is quite to the contrary: namely, that whatever the policies adapted and adopted may appear to be, intend to accomplish, the policies are merely expressions, more or less imprecise, of capital's need to reproduce the condition of labor as a commodity, as value producing, as wage-labor. 

"Economic theory" is exposed as, and by, class struggle.  The conflict among capitalists, between capitalists, is the business of capitalists and their professional attendants. The overthrow, abolition, replacement of capital is the work of the class which embodies that determinate negation.

"Economics" gives way, in every sense, to history, to historical materialism.

If  you're looking for an investment strategy; if you want to assess the prospects for maintaining a common currency, or  for entering a trade association; if you want to take a position in the markets; if you want to know if you should go long or short on copper, pork bellies, emerging market debt...well all of that presupposes the reproduction of capital.  Political economy, left or right, left and right, recognizes no alternative to capitalism. 

If you're looking for the means to counter the programs and tactics of the bourgeoisie, then those means are found in the "end," in a program for the overthrow capitalism.  The strategies, tactics, actions that are deployed are practical, concrete, realistic  to the degree that they are transitions to the realization of the program, and drive the program to a greater universality-- an elaboration beyond national boundaries that can confront and defeat that "universalizing" impulse of capital itself.

So maybe Marx can't tell the Council of Peoples Commissars of Political Economy  how to collect taxes to pay the troika, but it can tell the Greek workers to repudiate the debt.  That's more than a technical distinction.

3.  And Vice Versa

Greece became the 12th member of the euro zone in 2001. In the years prior to adopting the euro, Greece's annual GDP growth was greater than the euro zone average; its GDP per capita, however, was 30 percent below the zone average.

Throughout the period prior to adopting the euro, when GDP growth rates exceeded that of the currency union as a whole, the Greece's sovereign debt always exceeded 100 percent of the GDP.

In 2001, capitalism in Greece was distinguished by the high ratio of value added in production by the agricultural sector, at 8.9 percent more than triple the rate for euro zone countries as a whole; by the disproportionately elevated role of household consumption in the economy, about 30 percent greater than the zone average, with that consumption concentrated in foodstuffs; a manufacturing sector considerably smaller in relation to GDP than that of the zone; an "under-weighted" (compared to the zone average) financial sector; and an "over-weighted" transport, trade, and communications sector (which includes tourism) accounting for 28.3 percent of the value added in the economy. 

In short, Greece's capitalism was relatively less "developed" than the other euro zone countries.  Ireland and Portugal showed some similarities to Greece in the structure of its economic output, but in both countries, the industrial sector was more significant than in Greece. 


Adoption of the common currency was intended to boost Greek capitalism's "strengths" in transport, trade, and tourism; to enhance the real estate sector, and to boost the financial sector.  That was the "economic" intent.

Developing industry, manufacturing in Greece was never the intent of the Greek bourgeoisie, nor the intent of their EU partners. From 2002 through 2008, the average annual growth rate of the value added by  manufacturing measures less than one-third of one percent.  For industry as a whole, including construction, utilities, and mining, the average annual growth in value added was about 1.5 percent.

The "political intent" of joining the currency union, couched as always in the language of competitiveness, "free markets," rationalization, productivity, etc. etc. etc. was as always to lower the wage floor, reduce pension obligations, eliminate, if possible, subsidies and support for medical care.

That is what makes up the political economy of the common currency and the European Union.   That is the political economy that Syriza insists on preserving.


In order to "qualify" for euro "membership," the Greek government had to demonstrate "fiscal responsibility" and the ability to reduce its deficits.  The Greek government did exactly that, in the time-honored tradition of the bourgeoisie everywhere and all the time.  The government cooked its books.

No big deal, capitalism wouldn't be capitalism without cooking the books.  Everybody cooks their books-- it gives the real meaning to "double entry" bookkeeping, CFOs are supposed to be iron-chefs of book cooking, and if they're not, they're gone.

So Greek governments lied about the operating deficits.  Everyone knew they lied.   Back in 2004, the European Statistical Agency (Eurostat) issued its report, revising the figures for the government deficits as a percentage in GDP.  For 1997, the government's operating deficit was revised up from 4 percent of GDP to 6.6 percent.  For 1998, the figure was revised to 4.3 percent from 2.5 percent, and for 1996, the revision was to 3.4 percent of GDP from 1.8 percent.

A significant element in the original figures was the under reporting of expenditures for military equipment.

Still, Greece's future was evaluated by those paid to do such evaluations, political economists, as rosy, sunny, positive-- with concerns for the future of course, hedging being the perfect expression of political economy.  Said the OECD's Economic Surveys: Greece 2005: 

In terms of real GDP growth, the Greek economy has performed well in recent years and has weathered the international slowdown in activity better than most OECD countries. 

But, there's always a but:

However...this has been achieved at the cost of a sharply widening fiscal deficit and rising public indebtedness.  Hence a major challenge of economic policy will be to rein in government deficits to meet European obligations and to prepare for the spending pressures that will start emerging after 2015 [!] arising from an ageing population and an actuarially unsound and unreformed public pension system.  The growing cost of the public health system...

Get the picture? Among the other recommendations, the OECD recommended:

(i)mobilising the existing large reserves of labour inputs through comprehensive labour market reforms...

Translation:  lower the wage floor by eliminating minimum wage requirements, permitting greater use of "temporary workers."

(ii)keeping productivity growth at a high level over a long period... through the removal of...government control in the economic process and the establishment of a competition culture in product markets

Translation: remove job protections, work safety rules, and environmental restrictions.

These elements, of course, have always been the back story to the glorious dream of an European Union, and the adoption of the common currency.

In its 2007 Economic Survey, the OECD wrote:

Over the past decade, Greece has progressed rapidly in closing the income gap with the best performing economies, particularly once the recent 26% upward revision to the level of GDP is taken into account.  This data revision is largely the result of improved measurement of the fast-growing services sector, while, contrary to many press headlines, the contribution from illegal activities was less than 1% of GDP.  A full assessment of growth performance is difficult..., but it is likely that growth in GDP per capita over the past decade has exceeded 4.5 per cent per annum, which would rank Greece second highest (after Ireland) in the OECD.

But, and there's always a but:

While the short-run prospects remain good, sustaining robust growth over the longer term will necessitate further market reforms..

 --removing the financial disincentives to work at older ages which are inherent in the pension system while constraining the possibilities for early retirement.

--reducing the minimum cost of labour by introducing the sub-minimum wage for you people and lowering the social security contributions for the low-paid.

--reforming employment protection legislation.  In particular re-balancing employment protection across different occupations.

--reducing barriers to entry and promoting competition in network industries. 

Sounds familiar, doesn't it?  Still, in its 2009 survey OECD was optimistic in its assessment:

Greece has initially held up better during the global economic crisis than many other OECD countries.  It is unlikely, however, to avoid a recession as confidence, tourism and shipping receipts have all fallen substantially.  The financial sector may face pressures from a contracting real estate sector and its exposure to the emerging economies of south-eastern Europe.  The authorities have responded with fiscal measures and a plan to assist the financial sector.  However, their room for policy manoeuvre is tightly restricted by the high public debt, repeated fiscal slippages and the large external and internal imbalances, which have been reflected in high sovereign interest-rate spreads since the end of 2008 as risk aversion rose.

Short version:  the trade, transport, communications, and tourism sector, which is overweighted in the Greek economy just had the snot knocked out of it.  Real estate construction, which accounted for the high level of fixed capital formation is contracting.  But things could be worse.... and will be.

The European Union to which Syriza swears its allegiance is not a "European Union" no more than NAFTA is "North America."   Both are mechanisms for increasing the exploitation of labor.  There is no more reason to participate in an union of the European bourgeoisie than there is to participate in a government with a national bourgeoisie.

4.  Deja vu all over again; it's the song, not the singer; come here often?

From The New York Times, September 30, 1981:

Public opinion polls suggest that Greece will turn left in the general elections of Oct. 18 and install the Socialist leader Andreas Papandreou in power.

Mr. Papandreou a former professor of economics at the University of California at Berkeley predicts victory this time with more than 50 percent of the vote and promises "reforms which the country has not experienced since Greek independence in 1821."

He continues to say that it is "preposterous" for Greece to belong to the North Atlantic Treaty Organization...

But sources close to him maintain that Mr. Papandreou has decided, if elected, not to move quickly to pull Greece out of NATO or close down the four American bases in the country.  They say that he is wary of possible displeasure in the military...and that he realizes there is no easy alternative source of arms supplies. 

They also say he has abandoned earlier plans to seek the outright withdrawal of Greece from the European Economic Community and has decided to move instead for a renegotiated special relationship or a referendum on Greek membership. 

From The New York Times, October 11, 1981:

On the balcony however, Mr. Papandreou, a seasoned crowd pleaser, skips over such subjects and instead concentrates on excoriating NATO, the American bases in Greece, and his country's entry into the Common Market 10 months ago.  His audiences assume that Mr. Papandreou means to disengage Greece from these involvements but when closely question, he is circumspect.

From The New York Times, November 22, 1981:

Prime Minister Andreas Papandreou will present his Socialist Government's program to Parliament on Sunday in a speech that could clarify Greece's position on key foreign policy issues such as a possible withdrawal from NATO and the European Common Market...

"Tomorrow's  policy speech will prove that Pasok is not abandoning any of its declared positions in the economy, foreign policy sectors," the official government spokesman, Dimitrious Maroudas, said today in a briefing for the Greek press.

From The New York Times, December 14, 1981:

Prime Minister Andreas Papandreou announced a series of economic measures tonight that he said would help ease the financial burden of lower income groups in Greece and revive the country's flagging economy.

At the same time, he announce prices increases for gasoline, heating oil, water, and telephone rates. 

From The New York Times, March 7, 1982:

Greece's Socialist Government, which swept into power last October with a program for socialization and neutralism, has preferred pragmatic economic recovery measures to striking out on revolutionary paths.

There is no more talk here of ambitious nationalization plans or walking out of the European Economic Community.  Instead, the Government is working on a favorable investment law, aid to ailing enterprises, support for farm cooperatives, decentralization and demands for better treatment from Common Market Partners.

Responding to...opposition comments, an official said the Socialists had noted before gaining power that the economy was in bad shape.  He said, however, that they "didn't know how bad things were."  He cited  "tax evasion, capital outflow, commissions" as the key problems.

Government sources also cited a dip in shipping revenues, saying it was caused primarily by a worldwide shipping crisis.

What was it Jimmy Ruffin sang?  No, not "What Becomes of the Broken-Hearted?" but "I've Passed This Way Before."

S.Artesian
March 17, 2015