Arresting the Freefall rather than a Blueprint for the ‘Good Europe’: The Modest Proposal defended against C. Flower’s powerful critique

C. Flower paid me the complement of penning a critique, entitled New Bottle , Old Keynesian Wine, of my Shellbourne Hotel talk (14th September 2011) as well as of the essence of our Modest Proposal. I reproduce this critique  here in its entirety, followed by my reply. Before anything else is said, let me thank C. Flower for taking the time to script what is a hugely important critique.

C.Flower’s  post:

[E]ssentially, for all [of Varoufakis’] stance as critic of mainstream economists and of the ECB and EFSF, his own viewpoint is still that capitalism can be made to work, by adopting the right technical solutions. He advocates an ECB 20 year bond to clear all debt above the level of the Maastricht agreement, along with ECB-backed investment bank that raises the quantity of finance put in to European firms. I recommend his talk, which gives a Marxist-influenced historical account of the development of finance capital that is well worth reading, as it shows the various means by which capitalism has borrowed from the future and produced fictitious capital in an attempt to sustain a severely ailing, terminally sick system which has reached the end of its historical tether. 

[BUT] I’m forcibly struck by what Varoufakis leaves out of his analysis. He describes well the way that a massive credit bubble has been created, in an attempt to sustain the system, and is now collapsing, leaving every bank in Europe bankrupt. He also describes well the panic and bewilderment of EU financial “leaders”. But there is no reference to the shift of manufacturing to the east and to the enormous increase in global productive capacity and increased costs of production that have come with technology. Fundamentally, the world economic crisis is one of overproduction and depressed average rate of profit, not of underinvestment. A couple of Chinese factories, the size of large towns, can produce enough mugs for the entire needs of the world, in short order. But there is so much highly competitive production, so many companies driven out of business, that on average, very little if any profit is made. Capitalism also constantly moves money from the many to the few, with greater and greater inequality, and this also chokes up the economy as the majority of people have less and less to spend. But redistribution by taxation, on its own, can’t overcome the problems of overproduction and reduced profit rate. And while capitalists are in power, they will resist any such redistribution. Because profit comes from peoples’ labour (physical and mental), the only way that capitalism has of raising the rate of profit is to cut wages and make people work harder (reduced retirement age, longer hours, intensified work rates). We are seeing this being applied across Europe and the US. We have immense global productive capacity, and an anarchic and crisis-ridden means of financing and organising it.

So at the very historic point at which feeding, educating and housing everyone appears to be attainable, huge numbers of previously well-off people are being thrown into poverty. The answers lie not in the issuance of more debt and in the financing of more and more competitive investment. Before minding banks, we need to safeguard production, and peoples’ skills. Production needs to be organised and distributed so that enough is produced to meet everyone’s needs – if that can be done in a two or three day working week, people should be able to head off and play with their children, play sports and music, go back to education or whatever they need. For this to happen, the main means of production – factories and land, and mineral and oil resources – need to be in the control and ownership of the majority, and developed in the interests of the majority. 

This is something I’ve never seen Varoufakis say and I’m pretty sure I never will.

Utilising my right-to-reply, I shall start by conceding that neither my Shellbourne Hotel speech nor indeed the text of our Modest Proposal puts emphasis on capitalism’s chronic ills. Having said that, it is not true that I have not said (or never will say) anything on the subject. As proof, below I offer a small, extremely eclectic, anthology of relevant quotes that absolve me, I trust, of the alleged sin of omission. So, why is it that in my Shellbourne Hotel talk I left most of these, strongly held, thoughts out, confining them to the margins of my musings?

The answer is: Because these are not revolutionary times. Some may think that we have arrived at the moment in history when it is incumbent upon progressives to issue a clarion call for capitalism’s replacement by a rational, and thus fairer, way of organising social production. That a revived socialism’s moment has come. It is not my view.

Why not? First, because the Left remains defeated, following 1989. Our vision of that more rational socio-economic system with which to replace really existing capitalism remains blurred and unconvincing. Secondly, and crucially, because a period during  which capitalism is in freefall is not a period kind to progressive projects. The only forces that can gather pace, organise and conquer are the forces of xenophobia, discord and regression. That was what 1929 taught us.[1] It was also a lesson that many of us learnt, the hard way in the UK, during the late 1970s and early 1980s when the rise of debilitating unemployment (under Mrs Thatcher’s able guidance) wiped out all social opposition to the spivs-in-power and to a massive financial-real estate bubble that effected an equally massive redistribution of income under the disguise of modernisation and ‘rationality’.

If I am right, the human cost of allowing capitalism to shoot itself in the foot (the way it is doing today) will be enormous and, in the end, when the dust has settled, there will be too little energy left among those who could effect progressive change to get on with it.

For this simple reason, I have become an advocate of the importance of saving structures that I disdain; e.g. the eurosystem. For if the euro collapses today, a post-modern 1930s beckons during which the nastiest part of Europe’s underbelly will prevail. In short, I feel it in my bones that, just like during the Second World War progressives and enlightened conservatives had a common task (to unite against Nazism), so too now we need urgently to build a broad coalition that arrests the freefall. Once it is arrested, and this is precisely the purpose of the Modest Proposal, we can then resume the debate amongst members of that coalition, even our feuding, regarding what comes next; what the Good Society ought to look like.

In summary, the Modest Proposal is not a blueprint for a better, rational Europe. It is rather a blueprint for arresting the freefall into a black hole at the bottom of which only xenophobia and aggregate misery lies. It seeks to utilise existing, often ludicrous institutions (e.g. the EFSF, even the chronically regressive ECB) to that purpose. I may be wrong in my estimation of what needs to be done. But, in my defence, it is not for wont of ignoring capitalism’s inherent irrationalities.

The promised short anthology of my views on capitalism’s inherent flaws follows:

  • In 1991 I published a book, Rational Conflict (Blackwell), devoted to the argument that conflict, inefficiency and illiberty are the inevitable (and thus rational) outcomes of capitalism’s fundamental irrationality.
  • In 1995 I concluded a paper in Science&Society (entitled “Freedom within Reason“) thus: “Of course we have all oppressed and we have all been oppressed at some stage of our lives. But the crucial point is the presence of systematic patterns of exploitation built into relatively primitive social relations. The structure of such social relations feeds into the constituents of unfreedom rendering constitutional, or axiomatic, liberty symbolic of what is unattainable under the existing socio-economic organisation. If Reason is the product of History, as Hegel would claim, then capitalism sets limits within which Freedom and Reason cannot breathe.”
  • In my 1998 book Foundations of Economics: A beginner’s companion (Routledge) I argued (see Chapter 10) that the social democratic ambition to civilise capitalism runs into a brick wall because “… attempts to temper capitalism’s hunger for inequality damage the machinery of capital accumulation which keeps it going. Thus they will never succeed in civilising the beast because the State’s interventions will simultaneously be too feeble as a counter-weight to the systematic exploitation which goes on and too much since they will be hindering the natural self-correcting mechanism of capitalism (i.e. the periodic surges in unemployment and the resulting inequity/poverty).”
  • Further into the same 1998 book I wrote: “[International capital’s] continuing capacity to extract … ‘rents’ depends on a patchwork of highly industrialising  formerly underdeveloped countries which coexist with massive Third World immiseration as well as the de-industrialisation of the older industrial regions of the First World. Through this prism, international trade is one of the planks of an international capitalist system which thrives on exploitation and wastes monumental proportions of the world’s human and natural resources.”
  • In another essay also published in Science&Society (2008) and entitled “Capitalism According to Evolutionary Game Theory“, I wrote: “The notion that capitalism is efficient but unfair is dismissed angrily, replaced by the portrait of a social system which is one evolutionary stage behind the productive capacity of the machinery that it, itself, brought into being. Due to this ‘evolutionary backwardness’, capitalism wastes human resources (in the form of chronic and fluctuating unemployment), devalues humanity (by reducing our relations to commodity fetishism), restricts real liberty for most, and requires human sacrifices upon its altar (e.g. war) in order to maintain some degree of compatibility between (i) what the economy can produce and (ii) what consumers have the purchasing power to absorb.”
  • Building on this argument, Chapter 4 of our recent book Modern Political Economics: Making sense of the post-2008 world (Routledge, 2011, co-authored with J. Halevi and N. Theocarakis), claims that: ” No one designed capitalism. It simply evolved, liberating us in the process from more primitive forms of social and economic organisation. It gave rise to machines and methods that allowed us to take over the planet. It empowered us to imagine a future without poverty where our life is no longer at the mercy of a hostile Nature. Yet, at the same time, just like Nature spawned Mozart and HIV using the same indiscriminate mechanism, capitalism also produced catastrophic forces of discord, alienation, and environmental degradation. It generated acute crises (as the next chapter will illustrate) and produced, in the same stride, new forms of wealth and of deprivation. In evolutionary terms, capitalism, and in particular the way it hinges production onto the labour contract, is too primitive a system. As the next chapter will argue, calamities like the Crash of 2008 and the collapse of the 2009 Copenhagen Conference on climate change are the tip of the melting iceberg. Less well seen is capitalism’s wastefulness of human and natural resources, as well as its encroachments on genuine liberty. The main reason? Because capitalism is one evolutionary stage behind the productive capacity of the amazing ‘machinery’ that it, itself, brings into being. Humanity’s current task is, thus, to do that which a virus cannot: To design our continued evolution and steer its path in a direction of our choosing, if only for the planet’s sake.”
  • Finally, in my latest book, The Global Minotaur: America, the True Origins of the Financial Crisis and the Future of the World Economy (Zed Book, 2011), I wrote (see Chapter 2): “[I]f value requires human agency, then we just spotted a major source of instability buried deep in the foundations of our market societies: The more successful corporations are at replacing human labour with magnificent machines, and at disciplining human labour to perform with machine-like efficiency, the lower the value that our societies will be producing. They may churn out huge quantities of goods and shiny artefacts that we all crave. Only the value of this avalanche of goodies will be tending to zero, just as the machine economy in The Matrix is a value-free zone, despite the vast output produced by its mechanised workforce.”

[1] Let it also be said that I reject the simplistic view that 1929 and 2008, the two major crises of capitalism, can be adequately explained as the outcome of the falling rate of profit. Not wishing to bore you here more than I have already done, interested readers can refer to Chapter 5 of Modern Political Economics: Making sense of the post-2008 world, Routledge, 2011


  • I can offer two questions and some comments.

    What does a “euro collapse” means precisely? A sudden and simultaneous arrest in all the countries of the EMU of inter and intra banks payments?


    There are other scenarios, not so extreme, that could also be described as a collapse. And there are also conceivable scenarios that would not mean a collapse but rather a unwind.

    The situation would be hilarious if it wouldn’t menace to become tragic. Making all the eurobanks solvent is a task for a morning’s work at the ECB. Just tap in the computers an increase in all banks reserve accounts so that their assets match their liabilities. What use could the banks make of all this money? None. Except making the credit write-downs they are so anxious about in a relaxed way. What use could people make of the (much smaller amount of) money they would be free not to repay to banks? Answer: counter deflation and recession. What amount of inflation could result from such a move? Answer: 0.

    As an aside I must say that I agree that times when capitalism contradictions explode furiously are not the best ones for meaningful social evolution. And if that evolution happens after all, much greater pain, losses, risk and uncertainties will be incurred than if times are good.

    • Fair play for replying Yanis. It’s an interesting exchange and a debate that needs to be had – if only there was a larger audience to engage with but alas we can’t have everything.

      I was at the meeting in the Shelbourne. It was unfortunate that the room was too small and people were turned away. I found it a bit dispiriting that the age profile of the audience was quite old.

      In your reply above, unless I am mistaken, you don’t deal with Flower’s point about production shifting to China and elsewhere. In “23 Things…” Ha-Joon Chang has a chapter arguing that we’re not living in a post-industrial world for there is still someone somewhere making things but we do however, have post-industrial countries with heavily financialised economies that make less stuff or no stuff. You talk about the need for investment and surely there’s a need for a debate on this.*

      I’m not sure I agree with you that we’re not in revolutionary times, mind you for what it’s worth I wouldn’t subscribe to that particular view that revolutionary times consist of a big momentous revolution to overthrow capitalism – how do you overthrow a production system?!.

      Stuart Hall wrote of the “long march of the Neoliberal Revolution” –
      And in quite an impassioned speech, Cornel West said we are indeed in revolutionary times but, “the counter-revolution is winning”.

      *Here in Ireland it makes the headlines when a few jobs are announced at some accountancy or financial firm and there’s a big woohah about how great it is that there’ll be a few more corporate profits making a stopover in our global village of economic acrimony that is the IFSC.

  • Well articulated Yani.

    Indeed the current urgency has nothing to do with ideology; rather it has to do with the quick optimization of the system at hand.

    Reinventing the wheel can wait until later time.

    • I agree. As seen in the case of Greece right now, the social model the ruling classes of the world are instituting, with the crisis as an excuse, is that of Mexico, Russia, or Pakistan, with ‘the strong doing as they will, and the weak suffering as they must’ in a war of all against all –an insulated oligarchy on the one hand, and a civil society riven apart by destitution, instability and crime on the other. We need to stop this from happening first, then we can go about constructing capitalism’s replacement.

      By the way, has anyone noticed the historical irony that the first place where Europe is going about destroying the modern welfare state is the birthplace of European civilization?

  • A pragmatic view.

    I have a dis agreement with the concluding part of the thesis of C.Flower:
    ” For this to happen, the main means of production – factories and land, and mineral and oil resources – need to be in the control and ownership of the majority, and developed in the interests of the majority. ”

    We have seen that when the majority gets its hand on the ladle, in the end the distribution goes to cronies etc and it does serve the interests of the majority, but this is the interest for their own enrichment and power. And since usually the “majority” in power represents really less than 50% , the real majority is suffering deprivations with respect to the ones holding the ladle. And nobody watches the iceberg coming.

    Greece is a prime example of this, “power to the people”, “give the people what they want”. Like the soviet paradise, an enormous bureaucracy resulted leading to hand shakes instead of productivity and crony power instead of people power.

    Such social engineering does not take into account the human propensity for greed and power. In my opinion the only thing that keeps in check the majority of people is good policing. I have seen a study but cannot find it, which quantifies that EU people have 18% tax evasion whereas Greece has 40%, and we know about policing in most EU states.

    An anecdote. Travelling by train from Geneva to Italy in the 80’s, there were strict notices at the windows of what happens if one threw garbage out the window. The country side was clean, one knows about Swiss policing after all. After we crossed the border the sides of the track were full of garbage. An Italian friend of mine said: “of course, no danger in Italy”. Maybe it has changed now.

    • Oh…. you know better.
      There are parents who beat their children but, would you support universal and compulsory birth control?

      Look how Norway manages the resources and revenues from their oil exploration.

    • @Estrangeiro . Of course not. I am making an observation that we know that power to the people does not work, and that people are kept in line by policing, not advocating it as a solution.

      A possible solution in this day and age might be peer pressure, which can be exercised by the great number of communication channels . Together with greed, shame is a strong component of the human psyche. An open system might keep people on the straight and narrow much better than policing.

    • I’ve no idea where you are coming from (from Soviet paradise as you talk so confidently about it) but there are many examples of countries with highly efficient public (majority-owned) sectors, Austria and France being recent examples.

      As of notices about dismemberment and other extravagant punishments for those who throw garbage out of train windows (are you not an American or US-related species by any chance?), then that’s total nonsense. People don’t behave well because they are forced to, people behave well because that’s how they were brought up. Folks in different societies behave differently. And overall Italy is far cleaner (never mind that is so much nicer place) than the USA and Britain. Combined.

  • Very interesting Monday morning read, thanks for that! I would like to contribute a few thoughts of my own.

    I never saw the modest proposal as a solution to cure the ills of a chronic, perhaps terminal patient, but rather as a very short term solution, immediate pain management if you will. – Constant pain is a strange thing, you get used to it to a degree, but it does change the psyche, now substitute psyche with social fabric and it becomes obvious in my view that these ‘pain inducing forces’ are about to change exactly this thin and fragile layer of social fabric! –

    C. Flowers made very important points in my view, and I would encourage the diligent observer of the historical events unfolding to keep a close eye on the mining and production of raw materials, this is were one of the main powers in this game is located, and the increased power concentration in the past few years is substantial. I would like to remind to Glencore as a striking example in this context.

    In the past few weeks I was watching and reading material from the roaring twenties, a time that was also ‘credit financed’ to be precise, to refresh my own memory on the events. From the Dawes-Plan to the Young-Plan, the Hoover Moratorium, Lausanne, Bruening and so on, one thing stood out for me all the time and sadly it confirms my own observations.

    The loss of democracy!

    As flawed and abused the current european democratic foundation may be, it is the only one we have.

    The crash of 24th October 1929 was direct result of surplus capacities in productivity and equally credit financed mass speculation. The following for years of recession caused a massive credit crunch.

    The economical beneficiaries of this crisis were the major banks, or in our sound bites world of today, too big too fail got bigger. Banks at this time were intrinsically connected to the success of industrial production. When one of the big Industrialists came into troubled water, it’s ripples could bring down a Bank as happened with Danatbank in 1931.

    The election in September 1930 and the crash of Austria’s Credit Institution, Louis Rothschild, the largest Bank in central Europe at this time, triggered the collapse and capital flight.

    It was Bruening who introduced Banking Regulation, it was enshrined in the KWG (Kreditwesensgesetz) law in 1934, and perhaps astonishing to some readers, only with Basel II in 2007, they attempted to strengthen Regulation.

    It is Basel III that makes me think that we probably will witness the same outcome that history has taught us, the economical winners of the banking crisis 1931 were, surprise, surprise, the Banks! The political winners, the Nazi’s.

    So perhaps this is a good time to state the obvious and to take the liberty to address some fellow german readers who may have stumbled across Yanis’s blog here. Your money that is proposed as ‘bail-out’ does not ever reach Greece, Ireland or other peripheral EU countries in distress, the destinations are German and French banks that created losses in the ‘parasitic economy’, not the real economy.

    The real economy’s output was something in the region of 50 trillion globally. Parasitic economy is estimated around 10 times as high, and I also call it parasitic (Roland Benedikter – Social Finanance, Social banking) as it’s losses are used to suck capital from the first the real economy, simple as that. Then we have the murky waters of currency exchange (Forex), here the figures are even more jaw dropping.

    According to BIS ( Bank for International Settlement) Triennial Central Bank Survey from 09/2010 the global foreign exchange market average daily turnover was around 4 Trillion!

    This would be a good time now to say ‘I rest my case’, but the insight alone that the centuries old pathological greed of Bankers, rich and super rich elitist families, is a reality, does not explain the structures that allow them to repeat history at this point in time.

    If we look at the foggy and insufficient plan that Basel III consists of, then it is here that we need to ask the hard questions and ideally assign political accountability as well.

    If we are to strive for a EU wide fiscal consolidation in one way or the other, then it is de facto and morally wrong to deliberately neglect the system inherent regulatory problems that allowed for a socialisation of private losses in the first place.


  • I would like to add here a more well founded criticism to Modest Proposal that comes indirectly from prof. Richard Wolff ( who at the same time, comes to “defense” of Mr. Varoufakis’ attempt to propose something that just “arrests the freefall” instead of proposing something that will replace capitalism with another (non-problematic?) system.
    What do I mean?
    Mr. Wolff has proposed, in order to “get rid” of capitalism and its systemic nature of producing one crisis after the other, a system of democracy in the business, i.e. that businesses must be owned by their employees.
    But at the same time, Mr. Wolff has recognized that the Left in the US are not organized and therefore have not the power to push the US economy into the system of organizing the production that he proposes. So as to deal with the current US economy crisis Mr. Wolff urges for a heavy taxation on the rich and the large corporations to fund public projects and also the social benefits (unemployment benefits, employee wages, social security and more) in order to reduce the unemployment and increase the demand. He claims that, because the US debt it very high, the classic keynsian economics that propose a “run on sovereign deficit” to stimulate the economy by borrowing more are inadequate because the huge US debt cannot be sustained in that way.
    So, on one hand Mr. Wolff’s thinking is compatible to Mr. Varoufakis’, i.e. propose something that arrests the freefall of US/EU economy (to avoid the devastation on the mass of people) before attempting to deal with the systemic problem of capitalism.
    On the other hand, Mr. Wolff criticizes keynsian approaches to arrest the freefall because a big debt cannot be sustained with borrowing to fund investments, and instead he proposes heavy taxation on the rich and large corporations.
    And here rises my question to Mr. Varoufakis regarding the Modest Proposal: why do you propose borrowing (ECB eurobonds + EIB bonds, Policy 3 of Modest Proposal) to fund investment in EU and not taxation on the rich and large corporations?

    • The rich aren’t beyond the reach of the tax offices in places like Denmark with where their tax revenue is about 55% of GDP.

      The countries with the highest debt problems, slowest economies are also the ones with the lowest taxation revenue.

      Surely it doesn’t take a “global revolution” for countries like Ireland to increase taxation. Or is it that bad? Have democracies really been blown open so wide that Goldman Sachs are the men who rule the world?

  • Hi Yanis, How are things?. Hope it’s as hot in Athens as it is in Dijon, France today. I am on C.Flower’s rapidly growing Irish site, so I was interested in her reply to your recent talk, and your equally interesting reply to her in turn. I also believe that C. Flower did simplify the crisis somewhat, though she was correct in her analysis of the falling average rate of profit in my view. This of course leads to falling wages, and increased austerity(or to use a less imperialist term which you might consider adapting, state extortion) as the running dogs of the imperialist system that are bosses and politicians then race together to catch the rabbit by the neck and squeeze the life out of society.

    I feel that Private property itself and it’s numerous global boom/busts in the last 40 years, the flow of untaxed invisible hotmoney which is theoretically worthless yet practically systemic to neo liberalism, have accelerated the demise of imperialist economics. I do not believe that capitalism existed. Perhaps it never truly existed because there have always been oligopoly like structures as far as I can tell from the relatively intermediary economics that I have so far studied. The baker over the street job(or theory if you like, sorry I forget I am not speaking to other Irish people sometimes) offering cheaper bread than his 2 local rivals is literally if you watch Michael Moores capitalism a Love story, straight out of a MCarthyist US propaganda film.

    I don’t believe we should look at preserving a failed and evil economic system for the sake of fearing a return of Nazism. Firstly to imply that the only possible alternative to imperialism is Nazism is an insult to progressives and revolutionaries all that they stand for, or at least it can come across as relatively dismissive of a better more democratic way of owning the means of production. I use the term revolutionaries because we do, in the view of millions of people around the world, live in revolutionary times. Yanis’s own country is probably the most revolutionary one right now-obviously I am saying this as a total outsider but I believe that the demands of increasing numbers of Greek protesters are Direct Democracy and a revolutionary economic system under the political will of the people, just like the people currently occupying Wall Street, marching across Israel and Palestine and elsewhere in the Middle East, and the hundreds or even thousands who will hit Brussels on October the 15th for the 15.O Democratic protest against the undemocratic and inequal nature of the imperialist EU system. I think that perhaps I will join them as I am 6 hours from Brussels by bus, if I can find anyone who wants to tag along.

    Not only does democracy not exist in my view, but nor does capitalism. I believe we live in an imperialist system. That is why 99% of the western world’s banks since 2008 have been kept alive merely for the sake of a few brown envelopes and in my view, because German Bondholders such as certain Irish finance ministers, might have been Irish banking bondholders themselves-and considering that the Greek Prime Minister sold 1.3 bn in CDS’s that are now worth about 30bn USD a few years back, I would guess that this is politicians simply saving themselves and their mates in the banks and big developers as well, rather than capitalism(hence why they have created the imperialist system-not a system of risk and reward with inherent inequality, poverty, mass death when medecine could easily be afforded if it were made public to all, and war, but rather one of low tax breaks at all costs, and bailing the running dogs that are the different vested interests of the bourgoisie-mates of politicians more or less-out of the kennel).

    I am sorry if I did not have the eloquence and detailed quotes that your replies respectively deserved. Finally might I add, that we Irish have a word for the bourgeois. It’s called a Gombeen, which comes form the Irish word Gombin. During the great hunger of the 1840’s and 1850’s in Ireland, Irish and English elites(many of them Irish too) loaned to the impoverished sections of society at unaffordable rates to buy food, basically making slaves out of a fifth-half(or more, who knows the real figures. officially a million and a half died or left) of the country’s population. Hence the word Gombin/Gombeen which means a shady dealer who is borderline evil that profits out of the suffering of others. If the globalisation of gombeenism that is not enough of a reason to revolutionize against imperialism, I don’t know what is.

  • Please, can you summarize your arguments against the idea that the key to the crisis is the declining rate of profit of productive economy, due to technological advance? I’d love to read your ideas about that.


  • Watching your last interviews , i feel the need to thank you for your efforts throughout the year in setting things in an appropriate scale , your devotion to seeking the truth and respect to the different opinion .

    My way , from this point and on , would be to support in action : solidarity , group organization to protect our selves and respect to human life .

  • Sorry for resurrecting an old post. Obviously such academic ponderings faced with the horror of the weekends latest spectre of the Greek state merrily imposing yet more idiocy on the Greek people are perhaps out of place….

    Anyway, the final comment about rejecting the simple “falling rate of profit” explanation of the 1929 and 2008 crises (is that the plural?) is tantalising. I am almost tempted to buy the book to check out chapter 5.

    From my currently unread position (having tried to read some reviews of the book online), my understanding is that the reason for doing this is the famous “transformation problem” within Marx. I was wondering if any thought had been given to the refutation of this as a problem by Andrew Kliman and others [em]Reclaiming Marx’s “Capital”: A Refutation of the Myth of Inconsistency[/em]. An amusing youtube video which deals with this is here:

    Interestingly, Kliman’s more recent book is precisely an explanation of the present crisis as due to profit being squeezed.

    I am not enough of a theoretician to know who is right in this debate. Perhaps will have a better view after reading chapter 5 as you suggest….


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