Text in which the author defends ideas and reaches conclusions based on his / her interpretation of facts and data

Panic and parrhesia

Reams have been written about the crisis that afflicts us, but you have to search long and hard before you find one mention of the name of Marx

To the ancient Athenians our democracy would seem an oligarchy, since the principle of representation compromises the equality of all citizens, with the same rights and obligations. In turn, to us the Athenian system seems not particularly democratic, since it left out women, metics (resident foreigners with limited rights, a numerous class), and slaves (the bulk of the workforce).

Withal, what I miss most about Greek democracy is parrhesia, which means venturing to say all of what you think, at the risk of ridicule, cold-shouldering by mainstream opinion and the contempt or hatred of the powerful. There is always a price for plain talk, as Socrates found.

The deficient supply of parrhesia is why the majority of economists, and with them their faithful disciples, the politicians, spent almost five years without noticing something as obvious as the financial implications of the real estate bubble. And how are we to explain the fact that the immense majority of economists failed to foresee the crisis? To dare to express something that extends outside the frame of the dominant interest brings with it an immediate discredit that consigns you to invisibility, with a high cost in personal prestige and other perks - a cost one would gladly pay, if it did not also involve the loss of a platform from which to raise your voice.

One blunt example. Reams have been written about the crisis that afflicts us, but you have to search long and hard before you find one mention of the name of Marx. Yet he was the first man to describe economic crises, linking them to the capitalist mode of production. In classical economic theory they could not exist. Economic science took it for granted that the market coupled production to demand. But when crises crop up, as in fact happens, they would be due to natural catastrophes, bad harvests, social disturbances, inflation, etc. These are explanations that Marx rejects as the cause of crises. At most they can be symptoms.

Overproduction, says Marx, is the ultimate cause of crises. It is usually preceded by a period of excessive speculation, which, in diverse areas, brings a general prosperity that causes the system to produce more than the market can absorb. Crises break out in the speculative financial economy, and then spread to the productive economy; but their ultimate cause is always overproduction, preceded by a period of expansion. Pointing to an apparent paradox, Marx speaks of the "miracle of overproduction and misery, in which there may be an overabundance of products, while at the same time the majority suffer an acute shortage of elementary necessities." The combination of low wages and a huge output of merchandise, driven by high profits, means that the merchandise has to be sold below its cost of production, which is what Marx calls overproduction, typically combined with under-consumption.

The system emerges from the crisis only by a complete renovation of the productive apparatus, demolishing in order to rebuild, which enables capital to obtain profits again. The crisis ends in a resumption of the normal rate of profit, reestablishing the balance of the system. Marx compares the crisis with the vomitorium of the Romans - the room where you went, out of sight of the other diners, to throw up and make room so you could eat more. Likewise, capitalism periodically requires a good, cataclysmic puke if it is to generate profits again.

There is no space here for a full discussion of the first theory to take account of the phenomenon of crises. Its main flaw was to suppose that ultimately the system's "internal contradictions" would lead to the end of capitalism. Nor is there room for Keynes' theory, which was centered on taming crises to save capitalism. What matters here is to underline to what extent dogmatic "mainstream" economics, with its panic dread of parrhesia, refuses to admit facts of the most obvious sort.

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