Tag Archives: Political Economy

Mavroudeas S. (2022), ‘The adventures of Economic Policy within Mainstream Economics’ in Essays in Economic Theory and Policy in Honor of Professor Stella Karagianni, Athens: Gutenberg

Economic Policy covers the aims and the instruments of state economic interventionism. As a broad problematique it existed from the very birth of the science of the economy. However, as a special subject-area it was inaugurated in the interwar era and formalized by the beginning of the post-World War II era. Since then, Economic Policy faced serious ups and lows within economic analysis and policymaking. Particularly within Mainstream Economics (the nowadays dominant tradition within the science of the economy), Economic Policy – and especially its ‘hard’ versions of active fiscal policy, discreet industrial policy and planification – moved from the initial highs of the interwar and Keynesian era to the lows of the Neoliberal period. During the latter Economic Policy was dehydrated from crucial tools and downgraded as a subject because it was castigated as prone to labour demands and popular concessions that suppressed capital’s profitability. Since the beginning of the 21st century – and as a result of the blatant failures of the Neoliberal deregulationist movement – a return of active Economic Policy is on the cards. However, this return within Mainstream Economics is both belated and very problematic. The contemporary orthodoxy of New Keynesianism attempts rather ineffectively to marry an activist economic policy with its neo-conservative insulation from popular pressures for better wages and working conditions. This paper analyses the adventures of Economic Policy within Mainstream Economics from the standpoint of Marxist Political Economy.

https://www.academia.edu/93722290/Adventures_of_Economic_Policy_Karagianni_festschrift

https://www.researchgate.net/publication/366594313_ESSAYS_IN_ECONOMIC_THEORY_AND_POLICY_IN_HONOR_OF_PROFESSOR_STELLA_KARAGIANNI_The_adventures_of_Economic_Policy_within_Mainstream_Economics

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‘The Political Economy of the COVID-19 pandemic’,S.Mavroudeas

Selected and revised papers from the proceedings of the ICOPEC 2021 Conference have been published by IJOPEC Publications in a collective volume titled ‘The Impact of COVID-19 pandemic on societies and economies’.

I was an invited speaker at the conference and I contributed a paper titled ‘The Political Economy of the COVID-19 Pandemic’, which is included in this collective volume.

The links to my paper are the following:

https://www.academia.edu/67434478/The_political_economy_of_the_covid_19_pandemic_IJOPEC_2021

https://www.researchgate.net/publication/357636344_The_political_economy_of_the_covid-19_pandemic_PAPER_-_ICOPEC_2021_FINAL

The whole e-book can be assesed at IJOPEC’s website: http://www.ijopec.co.uk/wp-content/uploads/2022/01/2021_08.pdf

ONLINE CONFERENCE: ‘Social Consequences of Covid-19 Pandemic in Turkey and the World’ (Wednesday, December 8th), EURAS

EURAS organises an online conference (Wednesday, December 8th) on the ‘Social Consequences of Covid-19 Pandemic in Turkey and the World’.

I will present a paper on ‘The Political Economy of the COVID-19 Pandemic’.

‘The Economic and Political Consequences of the COVID-19 Pandemic’ by S.Mavroudeas – INTERNATIONAL CRITICAL THOUGHT

In the recent issue of INTERNATIONAL CRITICAL THOUGHT it is included an article authored by me and titled ‘The economic and political consequences of the COVID-19 pandemic’.

It can be assesed, downloaded (and even listened to through the LISTEN button) via the following link:

https://www.tandfonline.com/doi/full/10.1080/21598282.2020.1866235

Research Article

The Economic and Political Consequences of the COVID-19 Pandemic

Stavros Mavroudeas Received 11 Jun 2020, Accepted 28 Jul 2020, Published online: 03 Feb 2021

ABSTRACT

The COVID-19 epidemic has triggered a twin (health and economic crisis). The first is caused by the “metabolic rift” (capitalism’s uncontrollable and insatiable commodification of nature) that leads to the modern “emerging epidemics” of zoonoses. The economic crisis was already simmering but lockdowns triggered and aggravated its eruption. Furthermore, it argues that socialism is better equipped to confront health crises due to its superior state economic capacity, better co-ordination mechanisms and focus on the well-being of the labouring classes’ majority of society. Additionally, this commentary explains that this twin crisis will aggravate the current state of intra-imperialist conflicts and will intensify the process of “de-globalisation.” Confronting this situation the Left and the Communist movement should not become subservient to intra-bourgeois conflicts (as anti-neoliberalism argues) but pursue class politics against capitalism and at the same time fight so as the burden of the crisis is paid by capital and not labour.

Additional links:

https://www.academia.edu/45049218/The_Economic_and_Political_Consequences_of_the_COVID_19_Pandemic

https://www.researchgate.net/publication/349029121_The_Economic_and_Political_Consequences_of_the_COVID-19_Pandemic

The political economy of the COVID – Michael Roberts talks to Prof. Stavros Mavroudeas

Michael Roberts has been publishing a series of very interesting videos in his YouTube channel.

I participated in one of them and gave a talk on ‘The Political Economy of COVID-19″.

Below are (a) the links for the video of the talk and (b) the powerpoint of my talk

 

https://www.scribd.com/document/466531494/The-Political-Economy-of-the-Covid-19-Pandemic-Roberts-Video

https://www.researchgate.net/publication/342360301_The_political_economy_of_the_covid-19_pandemic_-_Roberts_video

https://www.academia.edu/43405916/The_political_economy_of_the_covid-19_pandemic

The impact of Covid-19, Interview with Stavros Mavroudeas – CASS (Chinese Academy of Social Sciences)

 

Following is an interview for a course conducted by the Chinese Academy of Social Sciences (CASS). It will appear in a chinese publication.

The impact of Covid-19

Prof. Yu Haiqing, CASS

 

Interview with Stavros Mavroudeas (Professor of Political Economy, Panteion University, Athens, Greece)

 

  1. It is said that the COVID-19 epidemic is the most prominent systemic risk test in the field of public health that the world has faced since the Second World War, highlighting the contrast between the capitalist countries and Socialist China in the state capability (in Fukuyama’s words). What do you think of this contrast? What advantages and disadvantages do you think the two systems has in dealing with dangerous accidents breaking out suddenly?

 

The COVID-19 epidemic, and more generally the new ‘emerging epidemics’ that appeared after 1975, bring forth again the need to contrast the ability of capitalism compared to socialism in confronting such public health crises.

The COVID-19 epidemic caused a health crisis for the whole world. At the same time, the global economy was entering a recessionary path that is now characterized as economic crisis. Thus, the COVID-19 epidemic is related to a twin crisis: health and economic. This is recognized by all sides of the spectrum of economic thought (Orthodox, Heterodox and Marxist). Of course, there is a major difference on the causality between the health and the economic crisis. Orthodox and Heterodox views maintain that it is the health crisis that caused the economic crisis; implying that in the absence of the former the latter would not have occurred. Marxist views, on the other hand, argue that the advanced capitalist economies were already entering a recessionary path leading to an economic crisis (Mavroudeas (2020a), Roberts (2020)). The COVID-19 epidemic acted as a trigger that accelerated and aggravated the trend towards the crisis. Several recent reports on the state of different economies give support to the Marxist argument. For example, the recent report by the US NBER (https://www.nber.org/cycles/june2020.html ) declared that the US economy was entering recession in February 2020, before the hit by the COVID-19 epidemic. Similarly, many other reports from other countries – especially for the manufacturing sector (e.g. Germany) but also for the whole economy – point out to the same direction. Hence, Marxism is correct in pointing out that the capitalist economies were already heading towards an economic crisis and that the health crisis brought forward and worsened this tendency.

A health crisis of the type f the COVID-19 epidemic has serious economic repercussions of its own. In order to confront epidemic diseases, it is necessary to suspend social and economic activities (lockdowns, restrictions of factory and other productive activities etc.). These lockdowns are especially necessary when there are no medical tools immediately available (vaccines, medicines etc.) to cure the disease. This restriction of social and economic activities helps to constrain the expansion of the epidemic and gives time to the health system to gather resources for confronting the health crisis. At the same time, this restriction of economic activities depresses the economy. If this happens in times when the economy is already trending towards recession, then the lockdowns accelerate this trend.

This situation poses a critical dilemma for policymakers. When facing a twin crisis (health and economic) and the policy measures required to confront the one crisis aggravate the other, then policymakers must decide to which crisis they will give priority. In Gourinchas’ (2020) pertinent description, ‘policy measures flattening the health crisis curve steepen the economic crisis curve’.

There are fundamental differences on how confronts such a dilemma the capitalist and the socialist economy.

The capitalist economy is based on the private sector and the public sector operates as a support of the former. The private sector works for profit; thus, it engages into activities procuring profits and abstains and/or withdraws from non-profitable activities. Furthermore, the capitalist economy in order to surpass health and economic crises needs to mobilise primarily the private sector (as this is the dominant sector of the economy). This requires using the public sector in order to subsidise the private sector by giving to the latter sufficiently profitable incentives. This is an indirect mechanism that (a) it is not sure that it can work and (b) it wastes time in taking place. Thus, policy measures are slow and fuzzy in a capitalist economy.

On the contrary, the socialist economy operates on the basis of economic planning and its dominant sector is the public sector. Thus, it can have non-surplus producing activities and even loss-making activities if this is decided by social planning. Non-surplus producing activities are viable as socialist enterprises do not operate on the basis of profit-making. Loss-making activities are also viable since they are designated as such by social planning and are structurally subsidized by the other economic activities. Additionally, when faced with an urgent contingency, it can mobilise resources on time and in sufficient numbers as this is a direct mechanism operated by the planning authority. Hence, it is certain that (a) it will take place and (b) be punctual.

For these reasons the socialist economy is better equipped to face contingencies like a health crisis. The capitalist economy can withstand a shorter economic lockdown compared to the socialist economy or even state capitalism. As D.Trump put it for the US economy, ‘it is not built to be shut down’. The fundamental reason is that capitalist enterprises operate for profit; or else they have no reason to exist. Consequently, they cannot operate at a cost of production level and moreover with losses. Unless someone else subsidises them to keep operating, they are going to close. On the contrary, a socialist economy can survive without achieving surplus (profits) by simply covering production costs. For the same reasons it can survive longer even with economic losses. Also, the socialist state can bear much greater burdens than its counterpart in capitalism as the former has much greater economic size and power.

From the previous point follows that socio-economic systems based on a public health sector are better able to cope with the epidemic problem. By analogy, capitalist economies that have a large and efficient public health system face the problem better than those that have a weak public health system and rely mainly on the private health sector (e.g. the US).

 

  1. What kind of impact will the outbreak of this epidemic have on the world configuration?

The COVID-19 epidemic has a profound impact on the world configuration. The world system was already in upheaval before the epidemic. The 2008-9 global capitalist crisis has ended the era of the so-called ‘globalisation’ and ushered a period of increased imperialist rivalries. After the collapse of the Eastern bloc, the main Western imperialist powers inaugurated the ‘globalisation’; that is an era of increased internationalization of capital (for a more detailed analysis see Mavroudeas (2019)). The preachers of ‘globalisation’ argued that it was a completely new era, unforeseen before and that this radical change is here to stay forever. Moreover, they argued that it signified the end of national economies and of national conflicts and wars and the spread of (western) democracy all over the world. Within Marxism, the ‘globalisation’ supporters even declared the end of imperialism. None of these ‘stylised facts’ stand up to empirical scrutiny. First, a similar era of increased internationalization of capital existed at least during the 19th century. And this era collapsed after the first global capitalist crisis of 1873-5 and was replaced by a period of increased ‘nationalisation’ (that is return to the national centres) and economic and military conflicts. Second, national economies (and their policies) never ceased to matter. All the main Western imperialist powers conducted their ‘globalisationist’ policies on the basis of their specific national interests and whenever was required the heavy hand of the national state was applied without scruples. In a nutshell, ‘globalisation’ really meant the weakening of most less developed economies and their opening to their exploitation by the main Western imperialist powers. This internationalisation of capital functioned as a typical counter-acting factor to the falling profitability of the more developed capitalist economies; thus, supporting their profitability and their capital accumulation at the expense of less developed economies.

This era run smoothly for the Western imperialist powers till the beginning of the 21st century. However, soon the fundamental contradictions of capitalism resurfaced as the internationalization of capital’s counteracting ability was exhausted. This was exemplified by the weakening of the main Western imperialist super-power, the US. The US economy, despite the benefits of the ‘globalisation’ policies, started to stagger. Similar trajectories emerged in all other major Western imperialist powers and Japan. The eruption of the 2008-9 global capitalist crisis signified the end of the ‘globalisation’, the return to overtly and explicitly national policies and the aggravation of intra-imperialist rivalries. The US Trump administration is the blatant declaration of this process; which however had begun implicitly before.

The COVID-19 epidemic intensifies the ‘de-globalisation’ process. It has become an ideological, political and economic battleground for US’ attempt to bring the People’s Republic of China to its knees. But, more fundamentally it intensifies the dismantling of the ‘globalisation’s’ international value chains; that it the internationalised structures of production and exchange that were constructed during the ‘globalisation’ era. International productive and commercial chains are disrupted due to the lockdowns and the prohibition of movement of people and products from country to country. This leads to a rearrangement of international economic relations along new alliances and on the basis of more overtly national policies. This tendency had begun before the COVID-19 epidemic (see, for example, the BREXIT) but the latter strengthens it further.

 

  1. From the point of this epidemic, how do we discern the future development of world socialism? what kind of impact and changes will come out ahead? How should we respond to them?

For the Communist Left and the working-class’ movement, the period marked by the COVID-19 epidemic poses serious challenges. The capitalist world is in deep problems, but the alternative of socialism is not obvious as it is still suffering from the 1989 collapse of the Eastern bloc. Moreover, the majority of the Western Left has been lost in cultural wars and political-correctness, neglected class politics and become a fellow-traveler of bourgeois reformism. The latter is trying to make a come-back in the form of anti-neoliberalism; after its total discredit when it wholeheartedly capitulated to neo-conservative policies in the 1990s. However, this new anti-neoliberalism is simply a façade behind which new conservative policies are being hidden.

First, it is nowadays clear that Neoliberalism has failed miserably. In economic policy, the notion that the market is self-equilibrating and the state should withdraw from the economy has succeeded in increasing the degree of labour exploitation (that is, the rate of surplus value in Marxist terms) but it has failed to cope with the over-accumulation of capital. Thus, the profit rate has not recovered sufficiently. Additionally, its dogmatic view that economic crises are exogenous makes Neoliberalism particularly incapable of formulating economic policies for overcoming crises. By analogy, regarding the health sector, its attempt to privatize public health systems (either directly or indirectly by fragmenting them and creating competition between their segments and by reinforcing public-private partnerships) has seriously damaged them.

The obvious failure of Neoliberalism in the wake of the 2008 global economic crisis marked its substitution by the social-liberal New Macroeconomic Consensus. This is a blend of mild neoliberalism with New Keynesianism. More formally, it is an approach that is Keynesian in the short-run and New Classical in the long-run. The current crisis makes this succession even more evident. Since the first signs of the coming crisis governments not only adopted lax monetary policies but also expansive fiscal policies. In the case of the EU, the coronavirus epidemic led to the disengagement of public spending and deficits from the constraints of the Stability and Growth Pact. Even more striking is the relaxation of restrictions on the countries of the eurozone that are bound by austeriterian economic adjustment programs (e.g. Greece).

Indeed, as the long-run use of monetary policy has led to its exhaustion, the center of gravity of economic policy shifts to fiscal policy as extensive fiscal support packages are announced. Moreover, something unthinkable in the neoliberal times is happening: official voices contemplate the nationalization of strategic sectors of the economy (e.g. Alitalia in Italy).

Additionally, industrial policy is returning explicitly, and in a very active and discreet manner. Indicatively, in the context of the epidemic crisis large sums of money are directed to the health sector; and corresponding vertical industrial policy is not only praised but practically implemented. It should be noted that while Neoliberalism abhors industrial policy in general, its successor (the New Macroeconomic Consensus), at least initially preferred only horizontal industrial policies. Now its pendulum is moving towards vertical industrial policies.

Secondly, there are increasing signs of the forthcoming failure of the New Macroeconomic Consensus as well. The policies it promoted – with the return of a bashful state interventionism and the systematic anti-cyclical use of all state policies – may have averted the catastrophe on the eve of the 2008 global crisis but it failed to rectify the very deep contradictions and problems of the capitalist economy. These problems are already evident in the inability of its economic policies to avert the economic crisis that is being triggered by the coronary epidemic.

The Communist Left and the working-class’ movement should not be the fellow-travelers of the new anti-neoliberal bourgeois orthodoxy. Instead, they should reassert the advantages of socialism over capitalism. They must use this crisis to explain that it is capitalism that creates crises, misery and more frequent pandemics and that replacing it with a planned and democratically run economy would alleviate the living standards of the labouring majority of modern societies.

Apart from this strategic goal, the forces of the Communist Left and the workers’ movement must demand that the burden of the twin crises should be paid by capital. Also, the public health system and in general the public welfare system – that again proved to be the only one able to cope with the epidemic – should be strengthened after years of underfunding and privatisations. Social medicine, emphasis on primary health and universal provision of health and welfare benefits should be the guidelines for these systems.

 

  1. Severe infectious diseases are the enemies to all mankind. In your opinion, how did the epidemic highlight the core of a community with a shared future for mankind?

Epidemics are enemies of all mankind but often they are not the product of all mankind but of specific socio-economic systems and the classes that dominate them.

During the last 30 to 40 years, capitalism has become more and more prone to epidemics, in contrast to the prevailing belief that the advances in medicine and the creation of universal and developed health systems had put an end to such phenomena. Especially after 1975 we have the appearance of the ‘emerging epidemics’, i.e. dozens of new diseases, mainly due to viruses, with a frequency that has no analogue in history. These new epidemics are mainly zoonoses, i.e. animal viruses transmitted to humans.

The general explanation of this phenomenon lies in the Marxist thesis on the ‘metabolic rift’, that is, in the realistic argument that capitalism drastically worsens human-nature relations as it blindly promotes the commodification and exploitation of the latter, ignoring natural limitations and social consequences. This thesis does not imply accepting various outrageous ecological views on the return to nature and de-growth, which ignore the fact that (a) all human socio-economic systems intervene and metabolize nature and also that (b) this metabolism is necessary for ensuring even the basic survival of large sections of the human population. But it does mean that capitalism is uncontrollably expanding this metabolism as its central motive is the profitability of capital, which operates with a blind logic (‘après moi la deluge’: I do not care about the system’s survival so long as I get my profit).

But this general explanation does not suffice to explain this increase of epidemics during the last 30-40 years and needs to be supplemented with historical conjunctural determinations. We can reasonably identify the following factors. First, the uncontrolled growth of (otherwise necessary) industrial agriculture has led to the use of problematic hygienic methods that, however, enhance capitalist profitability and has already caused significant problems (e.g. salmonella). Secondly, due to the internationalization of capital (the so-called ‘globalization’), increasing competition internationally imposes the dominance of these production methods as they involve lower costs. Third, the uncontrolled growth of the capitalist agro-industrial complex dramatically limits virgin areas and brings humanity into contact with diseases and viruses that were previously restricted there and concerned small indigenous communities. The latter had either acquired relative immunity to them or the epidemics were limited to these communities and did not spread significantly. Fourth, the internationalization of capital with the proliferation of transport and communication routes between remote areas of the world facilitates the rapid transmission of epidemics throughout the world, while in the past was more limited and therefore more controllable. Fifth, the commodification of the use and consumption of exotic species enhances zoonotic diseases.

Most of these new epidemics (a) do not have strict class barriers but (b) have class asymmetric effects. They do not have strict class barriers because they are transmitted through consumer goods (in the diet) and social gathering and therefore classical methods of class segregation cannot be easily applied (e.g. ‘letting the plebeians die in their ghettos’). However, they have asymmetric effects as workers are more exposed to infections (e.g. ‘front-line workers’), have more unhealthy working and living conditions (e.g. buying cheaper and worse quality consumer products) and of course inferior health care.

This specific character of the new epidemics highlights the necessity to revitalize the socialist movement and struggle to defeat the dominant imperialist powers.

 

REFERENCES

Gourinchas P.O. (2020), ‘Flattening the Pandemic and Recession Curves’ in Baldwin R. & Weder di Mauro B. (eds.), Mitigating the COVID Economic Crisis , London: CEPR Press

Mavroudeas S. (2019), ‘De-globalisation and the Return of the Theory of Imperialism’, σε Kaoru Natsuda K. et al (eds.), Globalisation and Public Policy, London: IJOPEC http://www.ijopec.co.uk/wp-content/uploads/2019/10/2019_13.pdf .

Mavroudeas S. (2020a), ‘The coronavirus pandemic and the health and economic crisis’, https://stavrosmavroudeas.wordpress.com/2020/03/25/4383/

Mavroudeas S. (2020b), ‘Working Hypotheses for the Political Economy of Modern Epidemics’, https://stavrosmavroudeas.wordpress.com/2020/05/27/the-political-economy-of-modern-epidemics-by-s-mavroudeas-marxist-studies-york-university/

Roberts M. (2020), ‘The Virus, Capitalism, and the Long Depression’, interview with Michael Roberts, Spectrezine March 24, https://spectrejournal.com/the-virus-capitalism-and-the-long-depression/

 

https://www.scribd.com/document/466222920/The-Impact-of-Covid-CASS-Interview

https://www.academia.edu/43384075/The_impact_of_Covid_-_CASS_interview

https://www.researchgate.net/publication/342305938_The_impact_of_Covid_-_CASS_interview

The Political Economy of Modern Epidemics by S.Mavroudeas – MARXIST STUDIES, YORK UNIVERSITY

Marxist Studies in a Global and Asian Perspective (MSGAP) is a research initiative within the York Centre for Asian Research: https://ycar.apps01.yorku.ca/msgap/

Working Hypotheses for the Political Economy of Modern Epidemics

Working Hypotheses for the Political Economy of Modern Epidemics

By Stavros Mavroudeas

1. During the last 30 to 40 years, capitalism has become more and more prone to epidemics, in contrast to the prevailing belief that the advances in medicine and the creation of universal and developed health systems had put an end to such phenomena. Especially after 1975, we have the appearance of the ‘emerging epidemics’, i.e. dozens of new diseases, mainly due to viruses, with a frequency that has no analogue in history. These new epidemics are mainly zoonoses, i.e. animal viruses transmitted to humans.

2. The general explanation of this phenomenon lies in the Marxist thesis on the ‘metabolic gap’, that is, in the realistic argument that capitalism drastically worsens human-nature relations as it blindly promotes the commodification and exploitation of the latter, ignoring natural limitations and social consequences. This thesis does not imply accepting various outrageous ecological views on the return to nature and de-growth, which ignore the fact that (a) all human socio-economic systems intervene and metabolize nature and also that (b) this metabolism is necessary for ensuring even the basic survival of large sections of the human population. But it does mean that capitalism is uncontrollably expanding this metabolism as its central motive is the profitability of capital, which operates with a blind logic (‘après moi la deluge’: I do not care about the system’s survival so long as I get my profit).

3. But this general explanation does not suffice to explain this increase of epidemics during the last 30 to 40 years and needs to be supplemented with historical conjunctural determinations. We can reasonably identify the following factors. First, the uncontrolled growth of (otherwise necessary) industrial agriculture has led to the use of problematic hygienic methods that, however, enhance capitalist profitability and has already caused significant problems (e.g. salmonella). Secondly, due to the internationalization of capital (the so-called ‘globalization’), increasing competition internationally imposes the dominance of these production methods as they involve lower costs. Third, the uncontrolled growth of the capitalist agro-industrial complex dramatically limits virgin areas and brings humanity into contact with diseases and viruses that were previously restricted there and concerned small indigenous communities. The latter had either acquired relative immunity to them or the epidemics were limited to these communities and did not spread significantly. Fourth, the internationalization of capital with the proliferation of transport and communication routes between remote areas of the world facilitates the rapid transmission of epidemics throughout the world, while in the past was more limited and therefore more controllable. Fifth, the commodification of the use and consumption of exotic species enhances zoonotic diseases.

4. Most of these new epidemics (a) do not have strict class barriers but (b) have class asymmetric effects. They do not have strict class barriers because they are transmitted through consumer goods (in the diet) and social gathering and therefore classical methods of class segregation cannot be easily applied (e.g. ‘letting the plebeians die in their ghettos’). However, they have asymmetric effects as workers are more exposed to infections (e.g. ‘front-line workers’), have more unhealthy working and living conditions (e.g. buying cheaper and worse quality consumer products) and of course inferior health care.

5. The neoconservative capitalist restructuring of the past four decades weakened the public universal health systems as it has privatized (mostly indirectly) parts of them and their functions, reduced their funding and strengthened the private health sector. But the public universal health systems are only who can bear the large costs of treating the whole population during epidemic waves because this task is too expensive and non-profitable to be undertaken by the private health sector. That is why the latter, in the face of such epidemics, withdraws and remains only in ‘fillets» that promise significant profitability (extra profits), e.g. research in treatments, drugs and vaccines.

6. Dealing with any new epidemic—and until therapies and vaccines are found—requires restrictions on social and especially economic activities. These restrictions cause a recession or even a crisis in economic activity. This poses a crucial dilemma for capital: which curve to flatten? Meaning that it oscillates between dealing with the health crisis (which aggravates the economic crisis) or vice versa.

7. At the same time, however, capital treats this situation not only as a risk but also as an opportunity. In this way, it is experimenting more and more intensely with the creation of a ‘new’ economic and social normality that will strengthen its profitability and dominance.

8. At the social level, the ‘new normality’ means the imposition of ‘social distancing’ literally as a new dystopian way of life. However, it has a significant benefit for the capitalist system as it intensifies individualization and acts as a deterrent to collective popular mobilizations. Epidemic outbreaks produce mass social psychologies of anger and fear. The first leads to rebellion against the system that leaves society helpless. The second leads to submissiveness towards state power. For the Left, it is crucial to rely on the former and turn it from a blind emotion to a logical understanding (consciousness) and a program of struggle. At the same time, it must not underestimate the latter as there are objective health risks; but without accepting the dystopia of ‘social distancing’. This contradiction has a class dimension that is also manifested differently in countries with diverse levels of capitalist development. The working classes, under the threat of unemployment and poverty, often choose to return to work (even under the threat of an epidemic) in the face of ‘social distancing’: the dilemma of ‘dying of hunger or the virus?’. In contrast, middle-class strata with relative reserves of wealth and obsessions with the ‘quality of life’ become fanatical supporters of the most extreme forms of restriction of social and economic activities and even admirers of literally fascist control measures. Correspondingly, in developed capitalist economies, these layers are stronger and strongly influence developments. In contrast, in less developed capitalist economies (or in politically backward countries such as the United States), the working and popular strata are pushing for a return to work—as long as they have no political conscience to articulate their demands more fully and direct them against the capitalist system.

9. At the economic level, the ‘new regularity’ means extensive experiments with teleworking. The latter offers advantages but also poses problems for capital. Among the advantages are ability to limit and streamline production costs (particularly regarding wage and non-wage costs). Regarding wage, telework can lead to many categories of employees. Especially in the service sector and less in manufacturing, some jobs can be done through telework at home. Here two possible cases appear. In the first, tele-workers belong to the company but are paid lower wages. In the second, tele-workers may be formally independent and employed under a piecework pay system (a method of remuneration that increases surplus-value extraction). In both cases, there is a reduction in wage costs and savings in fixed capital costs. A consequence of all this experimentation is the rapid rise in unemployment (the augmentation of the reserve army of labour), resulting in further wage compression. The problems concern the ability to exercise managerial control and exert continuous pressure to increase productivity. Tele-work can cause difficulties in both these intertwined fields. In the case of piecework pay, the pressure to increase productivity can be facilitated by demanding higher production. But the downside is that there should be even a small increase in pay. In the case of typically waged tele-work productivity increases benefit more easily capital. But the exercise of managerial control is more difficult; and, thus, continuous productivity increases are more difficult to be achieved. That’s why management experiments extensively with cameras, recording operations, multiple teleconferences etc. However, all these processes of controlling and intensifying work require significant time loss and are also costly.

10. In contrast to these experiments by capital, the labour movement and the Left must demand the use of computer and telecommunications tools in order to reduce working time and increase work-sharing. Thus, instead of increasing, to reduce unemployment. At the same time, the use of these tools can only be helpful if they enhance human cooperation and interaction and, of course, help (instead of purging) human contact and collective processes.

————————————————–

This piece will appear as a commentary in the forthcoming issue of the Greek journal Marxism Textbooks.

Stavros Mavroudeas is Professor of Political Economy in the Department of Social Policy at Panteion University, Greece. (s.mavroudeas@panteion.gr)

 

https://www.researchgate.net/publication/341684298_Marxist_Studies_in_a_Global_and_Asian_Perspective_MSGAP_is_a_research_initiative_within_the_York_Centre_for_Asian_Working_Hypotheses_for_the_Political_Economy_of_Modern_Epidemics

 

‘Economic Crisis and the crisis of Economics: Political Economy as a realistic and credible alternative’ – video lecture by S.Mavroudeas

I have been invited by the ISEPA’19 conference (organised by the Dicle University) to speak atheir conference.

Since I could not make it due to other obligations I was asked for a video lecture.

Its subject is ‘Economic Crisis and the crisis of Economics: Political Economy as a realistic and credible alternative’

Nikos Zappas did an excellent job in recording and editing the video.

The link for watching the video is below:

 

  • The abstract of the lecture is the following:

 

INTERNATIONAL SYMPOSIUM ON ECONOMICS, POLITICS AND ADMINISTRATION

ISEPA’19

‘Rethinking the Economy and Politics: Current Solutions for New Problems’

10-12 October 2019, Dicle University, Diyarbakir

 

‘Economic Crisis and the crisis of Economics:

Political Economy as a realistic and credible alternative’

 

Stavros Mavroudeas

Professor of Political Economy

Panteion University

Dept. of Social Policy

e-mail: s.mavroudeas@panteion.gr

 

ABSTRACT

This video lecture focuses on the current crisis of Economics and the relevance of Political Economy as a realistic and credible alternative. The last global capitalist crisis of 2008 reopened discussions on the issue of economic crisis; an issue long forgotten by the dominant tradition within economic theory, Economics. Economics (that is the study of the economy in abstraction from social and political relations, as a ‘play’ between individuals and not between social classes) has failed, in both its Mainstream (Neoclassicism) and Heterodox (Keynesianism) versions to forecast, comprehend and confront the 2008 crisis. This is a repetition of Economics’ dismal record against almost all previous major economic crises. Its Mainstream version considers capitalism a perfect system where crises erupt only because of deformations of the ‘normal’ functioning of the market. Its Heterodox version maintains that capitalism – because of its anarchic nature – is prone to crises but the existence of an overseer (in the form of the state) can secure the avoidance of such sad episodes. Both versions have failed utterly as the crisis hit both deregulated and regulated economies. On the other hand, Political Economy – the other major tradition in economy theory – proposes a more realistic and credible understanding of the economy. The latter is not an ‘play’ between individuals but between antagonistic social classes. This class struggle within the economy has an inherent social nature and is necessarily linked with politics. Thus, Political Economy argues for a unified analysis of the economy, the society and politics. Within Political Economy the Marxist tradition argues that capitalism is a system that passes from periods of booms to periods of bust. This is the normal functioning of the system as it exhibits cyclical fluctuations (economic cycles). Thus, crises are not an aberration but a normal characteristic. Moreover, state intervention can affect the eruption and the evolution of crises but it cannot extinguish their existence. This analytical framework has greater explanatory power that Economics.

 

  • The main points of the talk are the following:

The subject of this video lecture is the current crisis of Economics and the relevance of Political Economy as a realistic and credible alternative to the former.

Historically, economic thought is divided between two main alternative approaches: Political Economy and Economics.

The following table summarises the fundamental differences between these approaches.

 

 

Table 1: Main alternative economic approaches

 

POLITICAL ECONOMY

 

 

ECONOMICS

Agents social classes

the economy is a social ‘game’

individuals

the economy is a ‘game’ between individuals

Primary focus production circulation (and only that involved in market exchange
Analytical framework Dual system:

(labour) values detn. prices

Single system:

prices detn. prices

Analysis of the economy in relation to society and politics in a unified framework separately

 

Economics is the study of the economy in abstraction from social and political relations, as a ‘play’ between individuals. There cannot be social groups as each individual is different from the other. However, these totally different individuals obey miraculously the same behavioural norm (minimize cost while maximizing utility).

On the contrary, Political Economy considers the economy as a social process; thus it is a ‘play’ between social classes. There is antagonisms between them (class struggle). And also they are different behavioural rules for different social classes.

Each of the two main alternative economic approaches is sub-divided two currents, as shown in Table 2.

 

Table 2: Sub-divisions of the Main alternative economic approaches

 

Since the end of the 19th century, Economics have become the dominant approach. Thus, it constitutes the Orthodoxy or the Mainstream. Political Economy continues its existence (mainly in the form of Marxist and Radical Political Economy) but it is relegated to the ‘underworld’, excluded from the commanding heights of economic policy making.

However, because of its a-social nature and its unrealistic fundamental assumptions (perfect markets etc.), Economics has been scarred by internal strife. These problems are particularly evident during big and prolonged economic crises. Thus, there appears within Economics also a Heterodoxy. The latter is practically a heresy: it shares several articles of faith with the Orthodoxy but it disagrees in some others.

Since the mid-1980s economic thought and policy has been increasingly dominated by very dogmatic and conservative types of Neoclassical theory (usually branded as Neoliberalism). Rational Expectations, infatuation with mathematization without considering its realism, belief in the perfect functioning of markets are its main features. Keynesianism – the previous Orthodoxy – became a Heterodoxy.

However, Neoliberalism – because of its unrealistic assumptions – has serious problems in instructing economic policy. Thus, even before the 2008 global capitalist crisis, a new Orthodoxy was created. This is the New Macroeconomic Consensus, which is a hybrid between a mild Neoliberalism and the conservative New Keynesianism. In a nutshell, the New Macroeconomic Consensus Orthodoxy is Keynesian in the short-run (accepting the existence of frictions and disequilibria and thus the efficacy of economic policy) and Neoliberal in the long-run (believing in Rational Expectations and self-equilibrating markets).

Nevertheless, the 2008 global capitalist crisis and its aftermath tore apart the credibility of this Orthodoxy and show once again the blatant inability of Economics to understand, forecast and confront economic crises.

There is ample evidence of this failure:

New Classicals have pronounced the end of economic cycles.

On a more practical level, the IMF declared in October 2007 that “in advanced economies, economic recessions had virtually disappeared in the post-war period”.

And then there was astonishment:

Nobel Prize winner and top Chicago neoclassical economist Eugene Fama declared: “We don’t know what causes recessions. I’m not a macroeconomist, so I don’t feel bad about that. We’ve never known. Debates go on to this day about what caused the Great Depression. Economics is not very good at explaining swings in economic activity… If I could have predicted the crisis, I would have. I don’t see it. I’d love to know more what causes business cycles.”

The failure of Economics (both in their Orthodox and Heterodox versions) to comprehend the economic crisis stems from their very methodology.

Table 3 summarises the way the main schools of economic thought approach the issue of economic crisis.

Table 3: Schools of economic thought

& the economic crisis

 

Essentially, Neoclassicism believes that capitalism is a perfect system (a Swiss clock) that never fails (and falls into crisis). Crises occur because some agent does not follow the normal market behaviour (hence it distorts the perfect functioning of the market). Capitalism is perfect and self-equilibrating.

 

Keynesianism believes that capitalism may fall into crisis (possibility theory of crisis) because its anarchic nature permits agents to function irregularly. However, a wise state supervision can either avoid crises or solve them. Capitalism is the best but it has to be saved from its own contradictions.

 

These approaches have failed not only in the last crisis but also in the previous ones. Their failure stems from their common foundations of Economics:

  • Understanding of the economy as a ‘play’ between individuals fails to grasp its social dimension and particularly the role of class struggle. It fails also to link economic and social and political processes.
  • Their belief that capitalism is the best socio-economic system leads to either ignore its fundamental deficiencies and contradictions or think that they can be rectified.
  • Their emphasis on the sphere of circulation ignores that the basis of the economy is the sphere of production. Thus, both Neoclassicism and Keynesianism ignore the critical role of profitability (the rate and the mass of profit) in the capitalist economy. Consequently, they cannot discern how a falling profitability leads to economic crisis.

 

Contrary to both of them, Political economy proposes a more realistic and credible understanding of the economy. The latter is not a ‘play’ between individuals but between antagonistic social classes. This class struggle within the economy has an inherent social nature and is necessarily linked with politics. Thus, Political Economy argues for a unified analysis of the economy, the society and politics.

 

Within Political Economy the Marxist Political Economy tradition offers a very realistic, sophisticated and coherent theory of crisis. It argues that capitalism is a system that passes from periods of booms to periods of bust. This is the normal functioning of the system as it exhibits cyclical fluctuations (economic cycles). Thus, crises are not an aberration but a normal characteristic. Moreover, state intervention can affect the eruption and the evolution of crises but it cannot extinguish their existence.

 

The main points of the Marxian theory of crisis can be summarized as follows:

 

  • Economic crises are part of the normal functioning of the capitalist system (that is, they have endogenous [systemic] causes).
  • This implies that crises are a usual and frequent event (that is they are a systematic phenomenon).
  • This does not imply that capitalism is in continuous crisis; neither than that it is destined to collapse due to simply an economic Rather, that capitalism passes from periods of boom (growth) to periods of bust (recession). This succession causes the fluctuations of economic activity (economic cycles) and is expressed both in the short-run economic cycles and in the long-run ones.
  • The systemic causes of crises derive from the dominant sphere of production (and are subsequently expressed in the others and not vice versus). They express the contradictions of capitalist accumulation and they operate even without the effects of class struggle (i.e. crises appear even without workers’ militancy).
  • Τhe basic determinant (systemic cause) of both the shοrt-run and the long-run economic fluctuations is the profit rate (and the linked to it mass of profits). The profit motive is the aim and, hence the determining factor in the operation of the capitalist system. Therefore, its fluctuations determine both the short-run and the long-run fluctuations of the accumulation of capital (grossly expressed in the fluctuations of investment and the GDP).
  • The basic rule that determines the movement of profit is the Law of the Tendency of the Rate of Profit to Fall (TRPF). It provides the central direction. It co-exists in continuous struggle with a number of counter-acting tendencies. Their interplay causes both the long-run fluctuations (alteration between ‘golden eras’ of strong growth and deep structural crises) and the short-run fluctuations (alterations between growth and slump).
  • Intra-capitalist competition takes place in view of rates of profit (each capitalist eyes his adversaries) and is crucially shaped by the firms’ technical structure. Therefore, technical change is the main determinant of competitive advantage. This crucial role attributed to technical change differentiates Marx from both A.Smith (he considered technical change but not in relation to the rate of profit) and D.Ricardo (he did not considered technical change in relation to the rate of profit)
  • The crisis is both an expression of the problems of the capitalist system and a rectification mechanism.
  • Problems: the very success of the system (its overaccumulation of capital) causes its failure (the inability to continue to accumulate). Its overextension leads it to surpass its social and technical limits (in the given period).
  • Rectification: a process of destruction and reconstruction. Part of the system must be destroyed (e.g. bankruptcies) in order to leave space for its

 

This analytical framework has greater explanatory power than that of Economics as the debate on the recent global crisis proved.

 

“Financialization Hypothesis: A Creative Contribution or a Theoretical Blind Alley?”, S. Mavroudeas, 22nd November 2018, 5.30 pm – Queen Mary University of London

OPEN LECTURE SERIES YEAR III – Academic year 2018/2019

 

Political Economy and Health

“Developing a Dialogue Between Political Economy and Public Health”

 

22nd November 2018| 5.30 pm

Michael Mason seminar room, Yvonne Carter Building (Whitechapel Campus) 58, Turner Street E1 2AB

Stavros Mavroudeas: “Financialization Hypothesis: A Creative Contribution or a Theoretical Blind Alley?”

The  financialization  hypothesis  has  been  interpreted  in  varying  ways.  Mavroudeas  argues  that  it  misrepresents  contemporary developments in capitalism and fails to understand the function of fictitious capital in times of prolonged crisis and stagnation.

 

 Stavros Mavroudeas is a Professor in Political Economy at the University of Macedonia in Thessaloniki-Greece. He holds a Ph.D in Economics from Birkbeck College. He is an expert in Marxist Political Economy and has published extensively on Macroeconomic Policies, Regulation Theory, and Labour Theory. His research interests are in Political Economy, History of Economic Thought, Development Economics, Labour Economics, Economic Growth.

All lectures are free and open to the public.

 

 

For any query, please contact the organising committee of IHPEH Open Lectures:

 Arianna Rotulo (a.rotulo@qmul.ac.uk),

Dr Jonathan Filippon (j.g.filippon@qmul.ac.uk) and

Dr Elias Kondilis (e.kondilis@qmul.ac.uk)

 

 

 

 

 

 

The video of ‘The Political Economy of the early Soviet Union’

Stavros Mauroudeas: “The Political Economy of the early Soviet Union: policies and problems”,
Conference «Russian Revolution Centenary: Reflections on the 21st Century», 26th -29th October 2017 Corinth, Greece
FRIDAY 27TH OCTOBER