Friday, April 9, 2010

No Way To Save An Economy (2010)

Book Review from the April 2010 issue of the Socialist Standard

No Way To Run An Economy. By Graham Turner, Pluto Press, 2009

This is the sequel to Turner’s The Credit Crunch reviewed in last April’s Socialist Standard. The book is essentially a Keynesian tome advocating quantitative easing, low interest rates and nationalisation of the banks as a way of dealing with the onset of financial crises like the most recent one.

Much that was both positive and negative about The Credit Crunch applies here too: there are some very useful graphs and statistics presented even though the general case for Keynesianism is necessarily weak. What is more interesting is that now there appears to be a partial and belated recognition of this that creeps into the analysis as the book develops. The chapter entitled ‘Structural Causes of the Recession’ in particular illustrates something of a shift in thinking to the effect that there may be something about capitalism that is fundamentally flawed in the way Marx had argued. Some of the discussion presented at this stage isn’t bad; if there is a problem it is that too much emphasis is placed on the recent decline in the share of the national product going to labour in countries like the US, meaning that allegedly consumption and profits can only be maintained in these circumstances through the extension of credit. He hedges his bets somewhat but ultimately argues that in pursuit of profits:
‘Companies are engaged in a competitive struggle, but the compression of wages will undermine the ability of consumers to buy and absorb the goods and services being produced. The contradictions with capitalism will eventually be exposed when consumers can no longer buy all the goods being produced’ (p114).
This neglects the fact that, as Marx pointed out, it is more typical for the share of wages relative to profits to rise as the boom nears its peak and that the inability of the working class to buy back all that is produced is not the cause of economic crises (if that was the case capitalism would be in permanent crisis). Ironically, Turner reproduces a key passage from Volume II of Marx’s Capital to this effect in the Notes at the end of the book, but clearly hasn’t applied or understood this point when formulating his own analysis.

Indeed, a fair part of his discussion of Marxian theories of economic crises seems to have been adapted from writers like the late Chris Harman of the SWP. This is not entirely surprising given the SWP’s own attempts to integrate aspects of Keynesian ideas within a Marxist framework, such as with the permanent arms economy argument as an explanation of the post-war boom, one which Turner seems appreciative of.

In fairness, Turner is at least starting to ask the right sort of questions in this book, though a realisation that crises within capitalism are caused by the drive to accumulate profits in a competitive environment where there is no planning between enterprises but an anarchy of production instead, would lead him to a clearer and different conclusion. This is that no amount of Keynesian intervention, monetary reform or redistribution of income can prevent the market economy’s periodic slide into chaos.

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