These “Last Letters” were written by Baran and Sweezy in late February and early March 1964 and concerned “Some Theoretical Implications,” a chapter that Baran had drafted in 1962 and that they were then revising for their book Monopoly Capital. The discussion was cut short by Baran’s death around two weeks later.… They are published here for the first time. | more…
Paul Baran and Paul Sweezy dared, and were able, to continue the work begun by Marx. Starting from the observation that capitalism’s inherent tendency was to allow increases in the value of labor power (wages) only at a rate lower than the rate of increase in the productivity of social labor, they deduced that the disequilibrium resulting from this distortion would lead to stagnation absent systematic organization of ways to absorb the excess profits stemming from that tendency.… This observation was the starting point for the definition that they gave to the new concept of ’surplus.”… I have always considered this bold stroke as a crucial contribution to the creative utilization of Marx’s thought.… but [Baran and Sweezy] refused to stop, like so many other Marxists, at the exegesis of his writings.… Having, for my part, completely accepted this crucial contribution from Baran and Sweezy, I would like, in this modest offering for the special issue that Monthly Review is devoting to honoring their work, to put forward a ’quantitative metric” of that surplus. | more…
The ’GDP Illusion” is a fault in perception caused by defects in the construction and interpretation of standard economic data. Its main symptom is a systematic underestimation of the real contribution of low-wage workers in the global South to global wealth, and a corresponding exaggerated measure of the domestic product of the United States and other imperialist countries. These defects and distorted perceptions spring from the neoclassical concepts of price, value, and value added which inform how GDP, trade, and productivity statistics are devised and comprehended. The result is that supposedly objective and untarnished raw data on GDP, productivity, and trade are anything but; and standard interpretations conceal at least as much as they reveal about the sources of value and profit in the global economy. | more…
Austerity is now ’in fashion,” as governments respond to the revenue shortfalls of the crisis through deficit reduction plans and fiscal stability pacts, and economists blame it on the profligate spending of households and countries. Consumers, they say, bought houses they could not afford and countries consumed more than they produced, while loose monetary policies made this spending possible. Governments ’got prices wrong,” keeping interest rates too low for too long, and while increases in government spending might alleviate current employment problems, this deficit spending is inflationary, and in any case will not help in the long run as budget deficits raise interest rates, ’crowding out” business and household spending. It is as if we have stepped back in time, to the depression years of the 1930s, when monetary theories of the cycle were dominant, the ’overinvestment” of the boom blamed for the downturn, and effective fiscal actions proposed by Keynes and others blocked by preoccupation with the public debt and its burdens.… The analysis here is concerned with the systematic rejection of Keynes’s and Kalecki’s revolution in economics and the resurrection of Say’s Law (supply creates its own demand) of pre-Keynesian economics in all but name—a view that underlies today’s austerity economics. | more…
By any measure, Adrienne Rich lived an exemplary life. When she died last March 27, aged eighty-two, she was acknowledged by many critics as perhaps this country’s foremost poet.… Throughout her writing life, Adrienne Rich’s vision of a better world was clear. In her 2008 collection A Human Eye: Essays on Art in Society Rich claimed Che Guevara, Karl Marx, and Rosa Luxemburg as defining heroes. It did not matter if she was speaking to a room full of undergraduates or, having made the long painful climb up the hill to the Women’s Correctional Facility in Bedford Hills, New York, to teach poetry to its inmates, Adrienne’s voice was trenchant. So it was not surprising that when the commercial media ran obituaries of her, they sanitized her life and work, giving more emphasis to her awards than her work, characterizing her as angry rather than radical. At MR however, we preferred to hear her words: “Responsibility to yourself means refusing to let others do your thinking, talking, and naming for you; it means learning to respect and use your own brains and instincts; hence, grappling with hard work” (from “Claiming an Education,” 1977). | more…
When I consider the concept of harmony in the context of humans, their societies, and the environment I have a particular understanding of the concept. It refers to all people living together peacefully without exploitation of one person by another, each able to reach his or her full human potential, in a society in which everyone has their basic material and nonmaterial needs satisfied, feels secure, safe, happy, and fulfilled as human beings. In addition, the concept also implies harmony between people, the environment, and the other species we share the planet with.… [But] there is an overriding issue when considering harmony as I have briefly described it. Harmony in the world—among its people and between humans and the rest of the ecosystems—is not possible in the context of capitalism. Capitalism…has shown that it fosters interpersonal relations and metabolic interactions with the earth that are detrimental to achieving a harmonious existence. | more…
The question “Why Stagnation?” has a rather special significance for me. I started my graduate work in economics exactly fifty years ago this year. The cyclical downturn which began in 1929 was nearing the bottom. Unemployment in that year, according to government figures, was 23.6 percent of the labor force, and it reached its high point in 1933 at 24.9 percent. It remained in the double-digit range throughout the decade. Still, a recovery began in 1933, and it turned out to be the longest on record up to that time. Even at the top in 1937, however, the unemployment rate was still 14.3 percent, and it jumped up by the end of the year. That also happens to be the year I got my Ph.D. Can you imagine a set of circumstances better calculated to impress upon a young economist the idea that the fundamental economic problem was not cyclical ups and downs but secular stagnation? | more…
The Great Financial Crisis and the Great Recession began in the United States in 2007 and quickly spread across the globe, marking what appears to be a turning point in world history. Although this was followed within two years by a recovery phase, the world economy five years after the onset of the crisis is still in the doldrums…. The one bright spot in the world economy, from a growth standpoint, has been the seemingly unstoppable expansion of a handful of emerging economies, particularly China. Yet, the continuing stability of China is now also in question. Hence, the general consensus among informed economic observers is that the world capitalist economy is facing the threat of long-run economic stagnation (complicated by the prospect of further financial deleveraging)…. It is this issue of the stagnation of the capitalist economy, even more than that of financial crisis or recession that has now emerged as the big question worldwide. | more…
Two poems by , author of eighteen poetry books, most recently The Hunger Moon: New & Selected Poems, 1980–2010 from Knopf. Her most recent novel is Sex Wars (Harper Perennial) and PM Press has just republished Vida and Dance the Eagle to Sleep with new introductions. | more…
For decades we have been arguing in Monthly Review that stagnation is the normal state of the mature monopoly-capitalist economies. Today the reality of stagnation is increasingly gaining the attention of the corporate media itself.… For those accustomed to thinking of the capitalist economy as either growing rapidly or occasionally falling into a severe crisis (from which it quickly bounces back), long-run stagnation is a difficult to understand phenomenon. [A stagnating economy] neither collapses into a full (or “classic”) crisis, which would allow it to clear out (or devalue) its overaccumulated capital, nor is it able to achieve a full recovery. Instead, it remains caught in a stagnation trap, limping along at a low rate of growth, with high unemployment and excess capacity. Under the circumstances—and without the help of some external stimulus like a major war, a financial bubble, or an epoch-making innovation—the capital accumulation process is unable to move off dead center. | more…
The United States is in the midst of its quadrennial presidential election, a process that now extends so long as to be all but permanent. The campaign is also drenched in more money given by a small handful of billionaires than has been the case in the past. Since the 1970s the amount spent on political campaigns has increased dramatically in almost every election cycle. It has led to the formation of what we term the “money-and-media election complex,” which has a revenue base in the many billions of campaign dollars donated annually, and has effectively become the foundation of electoral politics in the United States. Moreover, the rate of increase in campaign spending from 2008 to 2010, and especially from 2008 to 2012, is now at an all-time high. | more…
Economist Edwin Dickens has written a series of significant articles analyzing the minutes of the meetings, dating back to the 1950s, of the Open Market Committee of the Federal Reserve Board. (The Committee is the main policy-making body of the Board.) Dickens’s research shows convincingly that the Federal Reserve’s partisan behavior is designed to tilt the economy in the direction of the wealthy by making workers more compliant.… A recent study formalized Dickens’s work by attempting to distinguish whether the policy actions of the Federal Reserve were responses to inflation or to low unemployment. The study concluded that “a baseless fear of full employment,” rather than the prevention of inflation, was the guiding principal of the Federal Reserve. The conclusion of this study should come as little surprise to people familiar with the Federal Reserve’s obsession with the danger of high wages. | more…