Crisis Formation: Inflation, Monetary Policy and Surplus Capital.

[Oswy]

I've noticed elsewhere that libertarians are blaming monetary policies and inflation for the recent financial crises, at least from the Dot.Com bubble onwards. Marxists such as Callinicos and Harvey have instead highlighted what Harvey calls the 'surplus capital absorption problem', i.e. that too much money is generated under capitalism itself, regardless of monetary policies, that cannot be easily reinvested in obviously productive or profitable activities. In short, these Marxists suggest that capitalism means a cycle of too much money chasing too little realisable investment.

I'm not an economics student and would be very interested in counter-arguments to those rightwingers who blame state policies - which they claim generate inflation - and that it is inflation, not capitalism per se, that is causing crises. I'm sure there's an good rebuttal, I'm just not familiar enough with the subject matter.

[ckaihatsu]

I've noticed elsewhere that libertarians are blaming monetary policies and inflation for the recent financial crises, at least from the Dot.Com bubble onwards. Marxists such as Callinicos and Harvey have instead highlighted what Harvey calls the 'surplus capital absorption problem', i.e. that too much money is generated under capitalism itself, regardless of monetary policies, that cannot be easily reinvested in obviously productive or profitable activities. In short, these Marxists suggest that capitalism means a cycle of too much money chasing too little realisable investment.


Exactly. The entire bourgeois order is -- ironically -- weakening *its own* material position in accordance with the dynamic of capital accumulation (and the tendency for the rate of profit to decline) as it turns against its own supporters. Just like 10-year-old technology, the capitalist system itself is in its twilight, and is forced to remain competitive by intentionally debasing its own value, even at the expense of built-up capital holdings.





I'm not an economics student and would be very interested in counter-arguments to those rightwingers who blame state policies - which they claim generate inflation - and that it is inflation, not capitalism per se, that is causing crises. I'm sure there's an good rebuttal, I'm just not familiar enough with the subject matter.


In psychological terms this would be called 'displacement' -- that the blame is being shifted away from the *real*, correct cause of the problem -- capitalism -- and onto a body not nearly as culpable, but that can be acceptably scapegoated by the right-wing.





6. Psychiatry A psychological defense mechanism in which there is an unconscious shift of emotions, affect, or desires from the original object to a more acceptable or immediate substitute.

5. (Psychoanalysis) Psychoanal the transferring of emotional feelings from their original object to one that disguises their real nature

transference - (psychoanalysis) the process whereby emotions are passed on or displaced from one person to another; during psychoanalysis the displacement of feelings toward others (usually the parents) is onto the analyst

http://www.thefreedictionary.com/displacement


The professional disclaimer here is that I don't give a fuck about any bourgeois sensibilities over the casual use of professional terminology -- I'm using it in the furtherance of a scathing political critique of libertarians, et al....

I started watching some of Zeitgeist III but had to stop because its entire line consists of the whining of asset owners over the shrinking value of their holdings, thanks to the prevailing monetary policy that sides with trying to jump-start the engine of the economy by pumping the gas pedal over and over. Needless to say the engine has long since been flooded.

(This would correspond to Keynesianism / deficit spending / de-valuation / export-orientation / desperation for foreign markets / desperate undercutting of foreign competition for sales abroad by cheapening entire national basis of manufacturing value / desperately "monetizing" whatever political capital the U.S. has left through an expansion of national debt -- getting U.S. dollars to be accepted abroad.)

So the asset holders can't very well admit that their own economic system has gone Frankenstein and jilted them -- instead they say "the butler did it" -- the state -- since it is forced by objective circumstances to keep the estate going in one way or another, even if it means selling off assets, loaning outsiders the money with which to buy its production, putting neon displays on the mansion, etc.

But the "butler" / the state remains the whipping boy and takes the blame for the inflationary policies it *has* to implement, further shrinking the island on which it resides.

The *danger* -- to us, and to the rest of the world -- is that as ownership's holdings shrink in value, so too does their sense of self-worth and self-identity, and they compensate for it by resorting to more egoistic, protectionist, militaristic measures, seeking to maintain some semblance of their past position and curtail the rising power of the up-and-comers like China and Iran. Hence the ongoing clash of currency regimes and rising threat of warfare in a rearguard action, Cold War-style.