The Pen is mightier than the sword, but the Pen must sometimes move the sword against corruption if the corrupt are not moved by the pen.. An idea without an implementer is useless. "The Rulers do not carry the sword in vain"Rom 13:4

Thursday, January 2, 2014

Marx and the Trade Cycle. (A solution?)

Background to this post is twofold at minimum.  First this profound and informative lecture by "Lapsed" Marxist Dr John Buchanan of Sydney University Economics faculty, and secondly this partial article in JSTOR about the same topic. (Image below has a quote from it).

If you don't do the backgrounding, you may as well stop now and read something else, because what follows will not seem to 'connect' otherwise.

I draw the readers attention to the phrase "cannot make a lasting one" in the image above.

There is also a helpful (but, according to Wikipedia needs some polish) article here that informs us as follows:

Sismondi and his contemporary Robert Owen, who expressed similar but less systematic thoughts in 1817 Report to the Committee of the Association for the Relief of the Manufacturing Poor, both identified the cause of economic cycles as overproduction and underconsumption, caused in particular by wealth inequality. They advocated government intervention and socialism, respectively, as the solution.

Unfortunately for Sismondi and Owen, their solutions fall into the category of Bohm-Bawerk of 'not being lasting'. They were reactionary, somewhat like an un-thought out chess move which leaps upon an offered pawn, only to find the Queen suddenly puts you in checkmate by a crafty and unexpected move further away on the board. (you know now how I spent my holiday!).

The 'Cycle' according to Marx is: overproduction leading to surplus's which in turn lead to putting workers off. Overproduction comes from higher efficiencies in a factory.  It can be (and is) argued that lack of demand causes surplus's. The solution to lack of demand, according to Keynsian economists is... lower prices, raise wages. (Walter Reuther of the  UAW advocated this for GM, Ford and Chrysler)  Personally, I think this approach ingores the fact that there are only so many cars people can buy before they reach saturation or satisfaction point, so trying to increase demand this way, will only forestall the same layoffs and surplus by a period of time.  Keynes was right, but only for a short term solution  I feel, as per Bohm-Bawerk above.."not lasting".

The solution offered by Robert Owen and Sismondi, are also short term, temporary and ultimately unworkable because government control will not only stifle innovation and enterprise it will place them on a cold slab in the morgue of failed ideas.

Having just consigned "Government Control" to the waste paper basket, let me retrieve it for a moment of optimistic reflection.  A Marxist/Communist type of government control is based on the paralyzing plague of trying to match production to consumption, and not to have any wasteful surplus. Then there is the fundamental characteristic of Marxism that wants every one to have fulfilled, happy lives at the expense of being unable to pay for it. (remember that 'short term' reference above?)  I think reason alone tells us that a happy life is a sustainable one? For this reason, the issue of Government 'control' might be better put as Government 'guidance' and needs to have the right foundation and inherent value system.
China is an example of how positive government guidance can result in astromonical economic growth. It's also an example of how the main beneficiaries of such growth depend on their connection to those with power in the party. So we should reject the Chinese approach on that level, but perhaps after purging it of the nepotism and graft, it does have some lessons for us.

One lesson which must not be lost however, is that the growth of China (and Vietnam and other former communist countries) is primarily based on cheap labor, and that is not a lasting foundation for economic success because as China is discovering, wages need to be improved for people to stay motivated.

HONG KONG—Wages are rising in China, heralding the possible end of an era of cheap goods.

For the past 30 years, customers would ask William Fung, the managing director of one of the world's biggest manufacturing-outsourcing companies, to make his products—whether T-shirts, jeans or dishes—cheaper. Thanks to China's seemingly limitless labor force, he usually could.

Now, the head of Li & Fung Ltd.  says the times are changing. Wages for the tens of thousands of workers his Hong Kong-based firm indirectly employs are surging: He predicts overall, China's wages will increase 80% over the next five years. That means prices for Li & Fung's goods will have to rise, too.

"What we will have for the next 30 years is inflation," Mr. Fung said. "A lot of Western managers have never coped with inflation."(source)

So in this report, we can see evidence of the internal business 'cycle' in China, but considering China in global terms, there is a mega/uber global cycle at work where, instead of a company within a nation experiencing this cycle, the world will experience it via China. (and India)

If you take all of these bright sparks mentioned above, they all seem to fail to recognize that work and enterprise are really about the same thing,- 'survival' in a primal world. In none of these theoretical approaches do I see any reference to a fundamental problem of the human heart. *Sin* to be exact. Now don't you get excited, roll your eyes, gasp and reel back in shock that someone (me) would link failed economic and social systems to something theological?   The alternative to honestly facing the true condition of mankind, is, to quote the Good Book "Go after the gods you have chosen" spoken by God (Presumably through the Priestly Levites) when the Israelites cried out to Him.. "We have sinned......we have gone after other gods". (Judges 10:14)  Amazing isn't it how foreign oppression or local depression focuses the mind? FDR once said "the money changers have stepped down from their high seats in the temple of our civilization, now we can restore more ancient truths"

Even if you regard the story of Adam and Eve as representatively symbolic or absolutely literal, the account of Cain and Abel is telling. The two sons of Adam and Eve could be regarded as analogous of humanity at large. Abel was the 'goody two shoes' and Cain was the selfish primal savage. In the end, primality won the day, because Cain came out victorious by killing Abel. "Might is right". That wasn't the end of the story of course, but it certainly is instructive. For a full bottle, magna cum laude dose of reality, just try reading the books of Joshua and Judges, oh ----my-----.... it's pretty heavy stuff. But the most pertinent mega observation is simple. When people abandoned their connection to YHWH-God...and degenerated into idolatry and fertility god worship....things went very bad for them. They stepped out from the providential protection of the Almighty and into the frying pan of subjection by other tribal entities and confederacies.

It's not just the position of the Israelites that shocks, it's their pernicious persistence to return to idols just after they've been saved by the likes of Gideon, or for the feminists out there, Deborah! (who preceded Gideon).  Here is a relevant passage.

The Israelites did evil in the eyes of the Lord, and for seven years he gave them into the hands of the Midianites. 2 Because the power of Midian was so oppressive, the Israelites prepared shelters for themselves in mountain clefts, caves and strongholds. 3 Whenever the Israelites planted their crops, the Midianites, Amalekites and other eastern peoples invaded the country. 4 They camped on the land and ruined the crops all the way to Gaza and did not spare a living thing for Israel, neither sheep nor cattle nor donkeys. 5 They came up with their livestock and their tents like swarms of locusts. It was impossible to count them or their camels; they invaded the land to ravage it. 6 Midian so impoverished the Israelites that they cried out to the LORD for help. (Judges 6)

The words "the LORD" are quite significant.  They did not cry out to the idols Baal or Ashteroth that they had been worshipping. (Fertility gods)... they knew deep down that the only one who had previously delivered them was YHWH who had brought them out of slavery in Egypt. Their problem was that this real God, was a pest...he tended to require personal holiness and obedience to His laws which prevented a lot of bad social conduct. But these Israelites on a normal day preferred the Miley Cyrus twerking approach to individuality and freedom.

Gideon was told by God to break down the symbols of Israel's spiritual rebellion, the Baal and Ashtoreth idols, but when he did, they wanted to put poor old Gideon into a terminal mosh pit of death. It seems they wanted to keep their decadent cake and eat a bit of Godly health food just until they were free again to splurge on their spiritual waywardness. Perhaps we can call this 'spiritual bulemia' ?

So how in this wide world did we get from Marx's trade cycle to Gideon and his exploits? Well..I guess I'm just a tricky character who likes to 'bait and switch' ? Or.. perhaps I see seriously valuable truth in pulling back the layers of Marxist shallowness to reach the real source of our problems?
Ultimately, we must 'tend our own garden' (Candide, Voltaire) but we must do so in a harmonious social contract (Rousseau), we need strong protective leadership (Hobbes) but to avoid life being "endless pain with a painful end" (Shopenhauer)  or  "A crust of bread and a corner to sleep in, A minute to smile and an hour to weep in, A pint of joy to a peck of trouble, And never a laugh but the moans come double; And that is life!" (Dunbar);  we need a stronger connection to the eternal.

I don't mean the remote vague deistic eternal that the so called enlightenment  philosophers held to, I mean one where eternity has visited us and made known a greater truth,

 "The Word became flesh and made his dwelling among us. We have seen his glory, the glory of the one and only Son, who came from the Father, full of grace and truth." (John 1:14)

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