Who has a better understanding of economics?

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Who has a better understanding of economics?

Is it just me or does anybody else feel that socialists have a better understanding of capitalist economics then capitalist do?

Expecially conservatives and libaterians. They seem to be in fairytale land when you talk about it.

Issues Pages: 

The matrix isn't real.


 - here's some understanding that more people need - What Happened? http://www.rudemacedon.ca/what-happened.html


I think it varies. Some socialists (like the people at monthlyreview.org) have very good critiques of the existing system. So do some libertarians. Conservatives in general are happy with the existing system and see no need to critique it.


I think Monthly Reviewers and other socialist writers are very good for the big picture. Marx was right about everything, but apparently he did not foresee the rise of financial capitalism. For Marx, the notion that financial capitalism would some day usurp industrial capitalism was inconceivable. He knew it would produce disastrous results. For Marx, what we have today with monetarist monetarism and financial capitalists running the world would be an incredibly stupid development.

http://michael-hudson.com/ is very good for understanding what's gone wrong from an insider's point of view with some Marxian analysis at the same time. Hudson is a bit of both as he understands the financial system from an insider's point of view. Hudson is also an economic historian who draws a lot from left wing analysis. Hudson tells just how they've corrupted the system in their favour over the last 4 or 5 decades, and I think he is also a master economic historian. The monetary system is the life blood of any economy, and usury and compound interest are at the root cause of what's wrecking global economies today.



wHy would the people who constructed the system and are the main beneficiaries of the system, critique it?

Like any religious dogma, the religion of parasite capitalism demands complete and unquestioning obedience.

Conform or be cast out.


I think that if we want to discuss the matter of capitalism with people who don't fully understand why it's a bad system, then it doesn't hurt to know the subject at hand in greater detail. If you're trying to persuade someone else to your point of view, and they think for a moment that you don't understand what it is that you don't agree with, then it's a moment when you could lose their trust in your knowledge of the subject. Understand what you're talking about, and you can lead many from the valley of the shadow and into the light. But some people will not be convinced by scare words and phrases alone, like "capitalist parasites" and describing them as capitalist dogs cocking hind legs up in any old port in a storm. It just doesn't do it for a lot of people for some reason.


Yes, historical understanding, is very, very important to the understanding of economics.


One of the things I'd like to touch on is economics as a theory.


Most people don't seem to understand that Capitalsim is just a theory. They think it's about having money.


They don't understand that the problem with Capitalism is that the theory leads to chaos and that people are products of their environment and it's the chaotic nature of capitalism that makes people reactionary.


When you tell them that production is globilized and socialized , but then the value created is taken and controlled by the individual. That it is two theories being used at the same time. And that it can not be resolved by lowering taxes and less government and all the other Conservative ideas.


People just don't seem to grasp what's going on.






I went to that page and did a little bit of reading. He's close but is msissing some important points.


What happened in the 70s was that be the 60s the surplus value extracted from labour power through the assmeble line; died out. Capitalisms world growth became stagnet. A new theory had to be introduced to improve profits.

After WWII the capitalists were able to prop up capitalims with Keynes theory of capitalism only because of the surplus value extracted by the American production methods. As I said, this died by the 1960s.


But also during this time, the world over the leaders of the woking class started to purge to more militant elements from their organzations.


By the 1970s World Capitalaist took on the theory of Friedman. This being, to increase profits in a world of stagnation, cut taxes and divert that money to profit, deregulate and lower wages.


By 1980 you had England, USa and Canada going full force attacking the working class and the working class leadership playing along. Just look athe Reagan and the Air Traffic Cantrollers. He fire the lot of them and were was the working class rebelion?


Well you can't have a rebelion if there are no rebels and no theory to back the rebelion up.



For a great Marxist analysis of the latest break down of capitalism read this presentation.

This guy always has a great read on the economic situation and explains it very well.



9. Let me turn now to the analysis of this crisis based on the method of Marxism. Such an analysis must be grounded on the laws of capitalist economy and an understanding of the interaction between these laws and the historical development of capitalism, that they both condition and within which they operate. The bourgeois economist Joseph Schumpeter, much in vogue these days because of his notion of “creative destruction” under capitalism, was an opponent of Marxism. But he had a great appreciation of Marx’s method of analysis and his achievements. “There is … one thing of fundamental importance for the methodology of economics which he [Marx] actually achieved,” he wrote. “Economists always have either themselves done work in economic history or else used the historical work of others. But the facts of economic history were consigned to a separate compartment. They entered theory, if at all, merely in the role of illustrations, or possibly of verifications of results. They mixed with it only mechanically. Now Marx’s mixture is a chemical one: that is to say, he introduced them into the very argument that produces the results. He was the first economist of top rank to see and to teach systematically how economic theory may be turned into historical analysis and how the historical narrative may be turned into histoire raisonnée.”[4]


10. Marx only saw the beginning of the historical development of capitalism. His method of historical analysis was deepened in a very important respect in 1921 when Leon Trotsky introduced a concept that has proved vital in developing the analysis of the historical development of capitalism, above all in assessing the current breakdown.

When making an analysis, Trotsky explained, it was necessary to distinguish between the short-term fluctuations of the capitalist economy—boom, crisis, downturn, recession, recovery—and the longer term phases of development within which they occur. In 1921, it was clear that the severe recession into which all the major capitalist economies had plunged after the conclusion of World War I was over and an economic recovery was underway. Did this mean, as the bourgeois economists of the day strenuously maintained, that the breakdown of capitalism proclaimed by the Marxists was a figment of left-wing imagination? See, they declared, capitalism has survived, it has proved its viability and there is no historical justification for socialism, least of all for the Russian Revolution of 1917.


11. Trotsky’s analysis was developed both against these conceptions and a “left” interpretation which maintained that since the breakdown of 1914, capitalism was destined to suffer a never-ending downturn. Contrary to the assertions of the “lefts”, Trotsky explained that there were clear signs of an upturn and they would strengthen. But that said nothing about the historical viability of the capitalist system. It merely demonstrated that capitalism was alive and continued to “breathe”, just as a man continues to breathe up to the moment of his death. Capitalism was still alive, but there would be no return to the phase of capitalist expansion that had preceded World War I and in fact any boom would soon create the conditions for a new and deeper economic crisis


23. The significance of this enormous disparity becomes clear when we consider what financial assets represent. They are not real wealth itself, but claims on wealth. A share in a company is not wealth as such but a property title—a claim on the profit generated by the company. Likewise a bond, whether issued by a corporation or a government. These property titles can themselves be traded, and such trading can be a source of profit. This gives rise to the illusion that money can simply beget money, without the need for any intervening production process—a kind of capitalist heaven. But in the final analysis, financial assets cannot break free from their earthly roots. They represent claims on real wealth.

What these figures point to is that these claims have now vastly outstripped their real foundation. How did this happen? It seemed that for a period of time finance capital was able to defy the laws of political economy. But only for a period. Eventually those laws asserted themselves in the same way, as Marx explained, that the law of gravity asserts itself when a house falls about our ears, that is, in the form of a crisis.


26. The title of this lecture refers to the breakdown of capitalism. I hope my remarks have made it clear what is meant by this. A breakdown does not signify that the capitalist economy simply stops. Far from it. It signifies the opening of a new period of history in which the fate of society is decided for decades to come. How does that take place? Not by legislation or regulation but through the eruption of enormous social and class struggles. These struggles will assume revolutionary dimensions: the ruling classes can no longer rule in the old ways and the working class cannot live under the new conditions that are being imposed.

bagkitty bagkitty's picture

I am still confused by the reference to economice, as in are wholesale mice more economical than retail mice? Don't want to turn this into another lame spelling flame... maybe some good-hearted moderator could swoop in and use their amazing technical wizardry to adjust the spelling on the thread title.

Catchfire Catchfire's picture

I've corrected the typo in the title!


No it was the mice in my computer playing their little games. Cause I can tell you my spelling is , top notch.


bagkitty wrote:

I am still confused by the reference to economice, as in are wholesale mice more economical than retail mice? Don't want to turn this into another lame spelling flame... maybe some good-hearted moderator could swoop in and use their amazing technical wizardry to adjust the spelling on the thread title.

- speaking of spelling - I have avoided this as not wanting to seem too petty or something, but it still kind of smacks my eye every time I read past it - thread called http://rabble.ca/babble/labour-and-consumption/extreme-loss-job-moral-wh... - apparently just a typo, as the intro spells it correctly - but why hasn't the title been fixed?


The plutarchy understands it the best as they exploit it the best.


There are a few myths that the right clings to:

1) Lower tax rates means more jobs means more taxable revenues.
This is akin to a store lowering prices. Yes, it may mean more sales, but it doesnot necessarily mean that the additional sales will offset the revenue lost from lower margins. There is an optimal price (that yields maximum profit), just as there is an optimal tax rate (that yields optimal tax revenue). Obviously, maximum tax revenue is not the only consideration.

This explains why Conservative governments are able manage the difficult feat of setting record deficits while slashing social services at the same time.

They usually perpetuate this myth by increasing government spending dramatically at the same time that they reduce taxes. This creates the illusion that it was the tax drop that stimulated the ecomony and not the $200 billion cash injection. Years later when they do their charts and graphs showing a correlation betweeen tax rates decreasing and the economy going up, the cash injection is forgotten about.

2) The free market is the best way to ensure fairness

This model assumes perfect competition, which is as imaginary as a Compassionate Conservative. There are so many barriers to entry in nearly all of the big industries. There are other factors too. If you move into an apartment, you have invested in it, making it difficult to leave, meaning that if your landlord jacks up the rent by $200 a month after you move in, it may make more sense for you to stay, than to be tasked with the cost of moving again so soon. A $40 million dollar marketing campaign may convince you that Drug B (which is pretty much the same as Drug A) is the only thing that is really safe, despite the fact that Drug B costs 10 times more than Drug A. Government does need to intervene and regulate wherever perfect competition does not exist (which is everywhere).

3) The only way we can be competitivce is to lower corporate tax rates.

Sure, that works for a short time.
Imagine two rival gas stations charging the same price. One lowers the price by ten percent and gets much more of the business.
Brilliant move right? Sure, until the other gas station lowers his price. Then they both have the same level of business that they used to have except they are both making lower margins.

In this zero-sum game, that our corporate driven nations play, we all compete for the lowest taxes for MNC's resulting in massive profits for a few, while the rest of us watch tax revcenues, and consequently social services slowly dwindle away as we chase after the dream of being competitive. Is it any wonder that we haven't had any big advancements for the last thirty years? Where is our free dental, our daycare, our help for sick parents? Instead, we're moving backwards - putting user fees on basic health services.

We need to stop letting the right perpetuate these myths, because people have been told them so many times that they actually believe them. But, to do that we need to educate ourselvces in politics and economics - not just fine arts, and psychology - or we will let them trample all over us with their lies.