C. Coins and Tokens of Value
Keynesians, and Neo-Keynesians accepts Smith's absurd dogma, as much as do other orthodox economists that the value of commodities/national output resolves entirely into revenues, and from it, Say's Law that supply creates its own demand. I have referred previously to Michael Roberts' statement applying that theory.
Roberts stated,
“The demand for goods and services in a capitalist economy depends on the new value created by labour and appropriated by capital. Capital appropriates surplus value by exploiting labour-power and buys capital goods with that surplus value. Labour gets wages and buys necessities with those wages. Thus it is wages plus profits that determine demand (investment and consumption)”.
That's impossible, because wages plus profits explains where the fund/demand for personal consumption and capital accumulation/savings comes from, but, as Marx points out, where, then, does the fund/demand for the replacement of the consumed constant capital (materials, wear and tear) come from?! The demand for the largest and growing element of output is missing from Roberts' account.
This is why these bourgeois economists saw the recent inflation as “transitory”, because they thought it was caused by a combination of rapidly rising aggregate demand, as consumers engaged in a splurge of spending, once released from lockdowns, combined with restrictions on expanding supply to meet it, as a result of the same lockdowns that closed down production, and introduced a range of restrictions that created bottlenecks in the supply chain. They argued this was the case long before Russia invaded Ukraine, and even before NATO began boycotting Russian oil, gas, food and other primary products.
But, its obvious that this cannot explain inflation, any more than the bourgeois theory that the interaction of supply and demand is the explanation for the prices of individual commodities. As Marx points out, in relation to the individual commodity, excess demand can explain why the price rises, but, then, when that demand falls back, or when supply rises, so that they are in balance, what then is the explanation for the actual price? Similarly, if inflation were explained by an imbalance of supply and demand, once that imbalance is corrected, shouldn't prices fall back to their previous level?
In other words, just as temporary fluctuations in market prices, around an equilibrium point/price of production, inevitably means periods both above and below it, shouldn't periods of inflation be equally countered by periods of deflation, in which aggregate supply exceeds aggregate demand? The latter is, of course, what central banks have sought to do by raising their policy rates, to try to cause a recession, but Marx's analysis show why the consequence of that will be stagflation rather than the ending of inflation.
What is seen is not alternating periods of inflation and deflation, because social productivity is on a more or less constant upward curve, with periods in which it moves sharply higher driven by technological revolutions, designed to end relative labour shortages, by introducing new labour-saving technologies (intensive accumulation). The consequence of that is that the aggregate supply curve moves steadily rightward, meaning that the costs of production fall, and because economies of scale means that, as supply rises, there are increasing factor returns, if aggregate demand and supply were in balance, then this rightward shift of the aggregate supply curve should mean that the general level of prices falls, every year, i.e. a continual deflation of prices.
Bourgeois economics fails to theorise this properly, because it does not consider value as objectively determined, or separate from market prices, and because it fails to understand what money is, or that prices are exchange-values expressed in the standard of prices.
No comments:
Post a Comment