Reflections

...Much else in Marxist doctrine may need to be revised or rejected, but any economic analysis that does not begin by recognizing the validity of that central theme is bound to wallow in confusion, incapable of offering a practical solution to our problems...

...Department of Commerce, says, "Everything depends on the consumer...

...Our crisis is enduring and recurrent...

...The Vietnam war, in particular, played an important part in bringing our economy to its current sorry state...

...It's exactly what has been happening these last three years...

...When the wealthier classes have finished siphoning off their profit, rent, and interest, the working class is left short...

...now Reagan Administration economists predict a "recovery" by 1987 with a "normal" unemployment rate of 7 per cent...

...Other factors have also contributed to our economic disarray, of course...

...But who are these indispensable consumers...

...I can't understand why...

...Its cost, which reached an annual $30 billion at its peak, was met by deficit spending, and the consequences are still being felt...

...Volcker, on the other hand, fears that such artificial stimulation could lead to a new round of inflation and a new crisis...

...Robert Ortner, chief economist for the U.S...

...Few still insist that making the rich richer, so that they will produce more goods, achieves anything except making the rich richer...

...it subsidizes more than five million workers in the arms industry, as well as three million uniformed and civilian personnel...

...This huge expenditure, which produces nothing of value, means all of us must work harder and earn less to take up the slack...

...For the most part, they are America's 100 million workers and their families...

...The military budget is, in effect, our biggest unemployment compensation program...

...What has kept our capitalist economy from dealing with them is the deeper sickness identified by Marx—the structural flaw that makes depressions unavoidable...

...Periodically, therefore, capitalists can't find markets for all of their merchandise...

...it can't buy back what it has produced...

...Sooner or later we will enjoy a brief respite from the current recession/depression, only to plunge into an even deeper one in a short while...

...All this pathetic floundering endows Karl Marx—or should endow him—with new respectability...

...Nothing less will do...

...They've taken their frustrations out on Paul Volcker of the Federal Reserve, blaming him for not lowering the discount rate or manipulating the money Sidney Lens, The Progressive's senior editor, is a veteran labor organizer and peace activist...

...With lower interest rates, Volcker's critics insist, business would borrow for capital expansion, consumers would borrow to buy goods, and the economy would flourish...

...Does all that sound familiar...

...Twenty years ago, an unemployment rate of 3 per cent was considered "normal...

...supply to bring interest down more rapidly...

...They haven't been buying because they can't afford to buy...

...Stated in its briefest and necessarily most simplified form, Marx's labor theory of value holds that depressions occur when workers are unable to buy back all the goods they produce...

...In that context, to ignore the Marxist formulation is to ignore reality...

...Our mainstream economists begin with the assumption that the system we have is the one we must keep in perpetuity, with minor adjustments at best...

...The traditional economists' own performance has, after all, been a dismal flop...

...Millions of unemployed workers are unlikely ever to return to their jobs...

...their earnings don't permit them to purchase all they produce...

...Economists in and out of government, liberals and conservatives, concede that "things won't get better until the consumer starts buying...

...Monthly predictions of imminent economic recovery have made officials of the Administration, from the President down, look foolish...

...Their predictions about unemployment rates and recovery trends have been incredibly wide of the mark...

...In recent times," says Robert Lekach-man, an economist who is not in the mainstream, "economists have been so seldom correct that the suspicion is abroad in the land that something must be seriously awry with economics itself...

...When we are ready at last to cure the sickness of our economy, we will have to do so by instituting structural change—national decentralized planning, a redistribution of income in favor of the less affluent, social control of the economy and ownership of basic industries, and the introduction of what we have always preached but never practiced— government by the consent of the governed...

...So are the results of the 1973 war in the Middle East, the Arab oil embargo and the huge increase in oil prices, the revival of international protectionism and trade wars, and the mounting indebtedness on the part of individuals, businesses, and national governments...

...His Nineteenth Century explanation of the causes of depressions seems brilliant when compared to the muddled musings of today's mainstream economists...

...An important one is the almost three trillion dollars in military expenditures since World War II, which have saddled us with a trillion-dollar national debt and an annual $100 billion in interest payments...

...Perhaps that is why they refuse to acknowledge Marx's essential contribution—his description of the inherent defect and inherent injustice of capitalism...

...None of them foresaw the phenomenon called "stagflation"—simultaneous stagnation and inflation...

...REFLECTIONS Sidney Lens Making Marx Respectable When mainstream economists gather to rehash their theories about the causes of our current economic distress, the worst in more than forty years, one line of speculation is unlikely to figure in their deliberations: Whether they call themselves conservatives or liberals, they studiously avoid any analysis based on the work of Karl Marx...

...Milton Friedman won a Nobel Prize for his monetarist theories, but two nations that rigorously applied his free-market and monetary-control doctrines have suffered calamitous consequences: Chile has 50 per cent unemployment, and Israel has 100 per cent inflation...

...None anticipated the sort of severe and intractable economic decline we are now experiencing...

...The supply-side economic doctrine for which the Laffer Curve provided the rationale has also fallen into richly deserved obscurity...

...Warehouses are overstocked, factories are forced to cut back production or shut down entirely, companies go bankrupt, workers are laid off...

...most thought, in fact, that no such thing could happen...

...Arthur Laffer, whose famous Curve was supposed to demonstrate that reduced tax rates on business would stimulate production and ultimately generate more than enough revenue to offset the lower tax rates, is hardly mentioned any more...

...All these, however, are problems of the sort that a capitalist economy ought to be able to deal with...