Abstract
This special issue of the Review of Radical Political Economics consists of papers presented at the 6th Annual Forum of the World Association for Political Economy (WAPE), held on May 27-29, 2011, at the University of Massachusetts Amherst. The theme of the forum, which URPE co-sponsored, was “Responses to Capitalist Crisis: Neoliberalism and Beyond.” WAPE, registered in Hong Kong, China, is an international academic organization founded by Marxian economists and related groups around the world.
The forum drew 94 papers, with a total of 112 authors or co-authors, representing 16 countries in Asia, Europe, North America, and South America. Presenters at the forum were invited to submit their paper for this special issue. Sixteen papers from the forum were submitted, which all went through the regular RRPE review process. Out of the sixteen submitted, eleven were accepted for publication and appear in this issue.
The first two papers are fully, or partly, about China. “Can Socialist Market Economy in China Adhere to Socialism?,” by Fusheng Xie, An Li, and Zhongjin Li, is a highly topical paper about the current debate in China over state-owned enterprises (SOEs). Neoliberals in China, both in academia and party and state positions, have been pressing for privatization of the remaining SOEs which, while no longer the source of the majority of China’s economic output, still have a significant presence in the economy. Some recent attempted privatizations of SOEs have provoked militant protests by their workers, and most leftists in China have defended the retention of large SOEs in state hands while seeking to avoid the implication that SOEs simply represent socialism. This article analyzes the current debate, arguing that it represents a class struggle in the political and ideological spheres. They propose reforms of China’s SOEs to move them toward “truly socialist public ownership.”
The second article, “Climate Change and the Limits to a Growth-oriented Model of Development,” by Chiari Piovanni and Minqi Li, considers the implications for the development strategies of China and India of the need to take steps to avert major climate change. They question the claims of leaders of both governments that the pursuit of rapid economic growth is consistent with a responsible environmental policy. They present empirical estimates suggesting that rising energy efficiency and clean energy cannot sufficiently counteract the carbon-emission-increasing effect of continuing rapid growth in those countries. They conclude that a new development model is required, one that focuses on raising living standards for the majority through achieving a more equitable distribution of income and wealth as well as improved environmental conditions, rather than a continuing pursuit of rapid economic growth.
The next four articles concern neoliberalism and/or the economic crisis it has produced. “Neoliberalism at Work: A Case Study of the Reform of the Emergency Services in the UK,” by Roger Seifert and Kim Mather, offers a critique of changes in work practices in police, fire, and ambulance services in the UK that have been inspired by neoliberalism. They argue that the introduction of market principles lowered costs by increasing management’s authority, reducing worker rights, and undermining effective provision of these public services. The latter effect is of particularly great concern in emergency services.
In “The Cyclical Decline of the Profit Rate as the Cause of Crises in the U.S. (1947-2011),” Sergio Camara Izquierdo enters the debate about the causes of cyclical economic crises. Utilizing a methodology developed in a widely cited article by Thomas E. Weisskopf in the 1970s, he disputes the commonly held view that cyclical crises are always caused by a decline in the profit rate. He finds a falling profit rate to be a plausible cause only for six of the ten cyclical crises he considers. He also finds, contrary to some other studies, that the short-term cyclical dynamics of the profit rate do not appear systematically different in the neoliberal era from those in the Keynesian period in the U.S. economy.
“The U.S. Economic Crisis: From Profitability Crisis to Indebtedness Crisis,” by Fred Moseley, views the current economic crisis in the United States as the eventual result of a long decline in the rate of profit from the late 1950s to the early 1980s. The capitalist class adopted strategies after about 1980 that reversed this decline, but, while the strategies drove down workers’ wages, this did not succeed in reaching previous profit rate highs, producing a sluggish rate of capital accumulation. The system responded by creation of a growing volume of household debt, which figured prominently in the economic crisis. The article points out the problems with several possible reforms aimed at reducing household debt, concluding that the only way to do so while avoiding another descent into severe depression would be a transition to a democratic socialist system.
In “Increasing Inequality and Financial Instability,” Peter Skott considers the view, widely held among heterodox economists, that rising income inequality in the neoliberal era may have been a cause of the emergence of asset bubbles in that period. The article uses a mathematical model to demonstrate rigorously that, under certain assumptions, rising inequality indeed leads to an asset bubble. The model finds rising inequality leads to a stock market bubble, which is consistent with the experience of the U.S. economy in the second half of the 1990s. This finding is significant, given the important role of asset bubbles in economic crises in the neoliberal era, including the crisis that began in 2008.
The next three articles concern economic alternatives to the current system of neoliberal global capitalism. In “Commercio Justo and Justice,” Tamara Stenn analyzes the concept and practice of “fair trade” by the criterion of whether it promotes justice. Focusing on Amartya Sen’s work on the concept of justice, the article endorses a “realization-focused comparative approach … which involves the examination of actual institutions and their outcomes.” Fair trade is contrasted to “free trade,” which the author argues has in practice led to increasing injustice. Fair trade is held to be a more promising approach to promoting justice.
In “Mature Socialism: Design, Prerequisites, Transitions,” David Laibman conceptualizes post-capitalist society as a series of three stages: precursor socialism, mature socialism, and full communism. The article rejects the view that central planning and markets are two “poles” of socialism that must be balanced properly, instead arguing that the relation between the two should be seen through the lens of development through stages. In the first stage, top-down central planning coexists in tension with a private market sector. After some period, this stage undergoes a transition to mature socialism, in which private ownership gives way to “indivisible public ownership” and a system called “multilevel democratic iterative coordination” is established. The article explains how this system would work and considers how a transition from the first to the second stage might occur. The analysis of “full communism” is left to future works.
In contrast to Laibman’s contribution, Marie Duggan, in “Taking Back Globalization: A China-U.S. Counterfactual Using Keynes’s 1941 International Clearing Union,” considers an alternative past rather than an alternative future. The article reviews Keynes’s proposal for an international clearing union (ICU), a plan for the postwar international trade and financial system that Keynes was unable to bring to life due to its rejection by U.S. officials. The article presents a case that, had the ICU been adopted, China’s pattern of export-led growth would have been consistent with avoidance of the de-industrialization in the United States. The article concludes that growing international trade need not erode the living standards of U.S. workers if suitable institutions are in place.
Each of the last two articles in this issue takes on a traditionally important topic in heterodox political economy, one the exploitation of labor and the other the economics of racism. In “Exploitation of Labor and Exploitation of Commodities: A ‘New Interpretation,’” Naoki Yoshihara and Roberto Veneziani tackle the question of whether it can be demonstrated that the exploitation of labor plays a unique role in the origin of capitalist profit, as Marx argued. The article notes that several previous articles have provided models in which not just labor but any basic good can be shown to be “exploited,” seemingly depriving labor of any special status in the analysis of profit. Utilizing the “new interpretation” of Marxist value theory originally proposed by Gerard Dumenil and by Duncan Foley, the article develops an alternative model in which profit is shown to be equivalent to exploitation of labor but not to commodity “exploitation,” lending support to Marx’s claim of a special role for exploitation of labor.
In “Racism, Resistance, and the Designed Rate of Unemployment,” Alan Day Haight constructs a model of the interaction of racism (or “intolerance”) in the working class and the capitalists’ use of unemployment to discipline the working class. The model takes account of the positive effect of unemployment on intolerance as well as the existence of an upper limit to capitalist benefit from unemployment due to the effects on the profit rate of decreasing capacity utilization and the possibility of working class upheaval if the unemployment rate rises too high. The article finds that a higher degree of working class intolerance results in a higher equilibrium unemployment rate. The equilibrium unemployment rate can be raised by inculcating patriotism among the workers, by right-wing control of the media, and other factors, while it can be reduced by exposure to cultural diversity that reduces intolerance.
The eleven articles in this special issue illustrate the diversity of topics and approaches among heterodox political economists today. This special issue highlights the presence of heterodox economics in many parts of the world. While recent history has demonstrated the harm that can result from unrestricted movement of goods and capital across national boundaries, this special issue reminds us that international exchange of ideas is a wholly positive force: a classical positive sum relation in which we all benefit from the interaction.