This paper argues that Marx’s economics leads us to a deeper understanding of our current crisis than do either mainstream, Keynesian or ‘mainstream Marxist’ economics. First, Marx explains how a tendency for the rate of profit to fall in boom manifests in the generation and speculative investment of ‘surplus’ capital in the financial system/fictitious capital, providing a tendential basis for, rather than an accidental account of, financial bubbles/crises. Secondly, Marx’s understanding that crisis is absolutely necessary to restore the profit rate, and so return the economy to boom, explains why developed countries’ governments’ attempts to postpone or limit crises since the 1970s have merely prevented a decisive enough crisis to restore the profit rate. Persistently low profitability has simply caused the world economy to stagnate, with persistently surplus capital taking many disruptive, adventurous paths. Finally, I consider how Marx’s identification of when lending is ‘lending’, and when it is simply ‘usury’, can help us understand how the nature of the financial system has changed over the last forty years.
Michael Heinrich's recent Monthly Review article claims that the law of the tendential fall in the rate of profit (LTFRP) was not proved by Marx and cannot be proved. Heinrich also argues that Marx had doubts about the law and that, for this and other other reasons, his theory of capitalist economic crisis was only provisional and more or less in continual flux.This response shows that Heinrich's elementary misunderstanding of the law--his belief that it is meant to predict what must inevitably happen rather than to explain what does happen--is the source of his charge that it is unproved. It then shows that a simple misreading of Marx's text lies at the basis of Heinrich's claim that the simplest version of the LTFRP, "the law as such," is a failure. Marx's argument that increases in the rate of surplus-value cannot "cancel" the fall in the rate of profit is then defended against Heinrich's attempt to refute it. Finally, the paper presents evidence that Marx was indeed convinced that the LTFRP is correct and that he regarded the crisis theory of volume 3 of Capital as finished in a theoretical sense.
Examines Eastern Europe’s struggle to privatise since the end of Communism; in particular reports on the experiences of Poland, Czechoslovakia and Russia. The danger of fast privatisation without restructuring is demonstrated by Czechoslovakia’s experience. Poland shows the importance of employing tight budget constraints. Russia demonstrates that privatisation in chaos is unlikely to produce real change.
If we accept the logic of mainstream free-market ideology-based macroeconomic theory, the European Central Bank should, to maximise economic efficiency, be independent of political influence. It is easy to forget that such an understanding of the economy was discredited by the great 1930s slump and banished from government policy in the``Golden Age '' of capitalism, between 1950 and 1973. Proposes to move beyond the free-market/monetarist/new-classical consensus to consider if the row over who should head the ECB is as trivial as it seems. First considers the work of Michal Kalecki, which typically represents the Golden Age's prevailing ideology of positive state intervention. Next considers how Europe's post-war economic performance can be consistently explained by Kalecki's work. Then moves on to consider the development of the Single European Currency project with the insight that an alternative economic ideology provides.
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