In the second chapter of his “General Theory of Employment, Interest, and Money,” Keynes summarizes the theories of the “classical economists.” Keynes uses the same terminology that Marx uses and indeed borrowed the terminology from Marx. However, Keynes referred to the “classics” of marginalism, or rather, he lumped together the marginalists with the classical economists in Marx’s sense of the term.
The Origins of Keynes’s Views
Keynesian economics represented a major retreat from economic liberalism by bourgeois political economy under the blows of the Depression of the 1930s. But what was the doctrine that Keynesian economics reacted against?
Keynes and the Attempts to Mitigate Capitalist Crises of Overproduction
The Ideas of John Maynard Keynes
The ideas of the English economist John Maynard Keynes achieved their greatest influence during the 1960s and early 1970s. Keynes was widely credited by his followers among the economists and others in those days for saving capitalism.
Gaza Genocide Resumes as U.S. Wages War on Yemen
On March 17, the Gaza genocide resumed, first the blockade and then the bombing. It appears we are back where we were under Genocide Joe Biden. Up until then, Trump was better for the Palestinian people in one sense. After his election, negotiations paused the genocide. The pause began on January 19, the day before he became president.
Now the only difference is that, in theory, the Biden administration supported the so-called two-state solution that had been Washington’s official policy since 1993, with the Oslo Accords. The West Bank and the Gaza Strip would form a separate Palestinian state, while the rest of historic Palestine would belong to the Zionist entity, the Jewish State of Israel. Biden insisted that Gaza’s Hamas administration be replaced by the rule of the notorious collaborationist Palestinian Authority, under Mahmoud Abbas, who has acted as a Zionist agent. The Biden administration, like its predecessors, opposed anything like (bourgeois) democratic rule in Gaza.
Though he supported this approach in his first administration, Trump has now junked it. He’s made it clear that all Palestinians will have to leave Gaza, promising they will enjoy a wonderful life somewhere outside Palestine. In addition, the U.S. would own Gaza, transforming it into some kind of hotel casino resort, owned by U.S. capitalists that would include the Trump Organization itself.
Ricardo’s Theories of International Trade Challenged by the Crises of 1825 and 1837
In 1825, shortly after Ricardo’s death, the first global crisis of overproduction swept over Britain. A second global crisis erupted in 1837 with far more devastating results. It was followed by years of industrial depression and mass unemployment. Stormy class struggles broke out, from which came the Chartist movement, the first mass working-class political party. It was during the depression that followed the 1837 crisis that Marx and Engels were themselves radicalized.
The Ricardian Theory of International Trade
Our examination of the laws governing international trade begins with David Ricardo’s theory of comparative advantage. This theory has dominated bourgeois political economy as regards the theory of international trade for the last two centuries. It has survived the transition from his theory of value based on the quantity of labor socially necessary to produce a commodity of a given use value and quality to the modern marginalist theory of value. It has also survived the transition from the gold standard to the universal use of so-called fiat money.
Value, Price and Crisis
Marx noted that in the boom phase of the industrial cycle — the introduction of technical advances — state-of-the-art machinery will reduce the price of production while the general price remains stable or even rises. So prices tend to rise.
The Decline of Imperialist Democracy
As explained last month, Donald Trump kept his promise to end the genocidal military assault by the Zionist entity against Gaza. I will not call this a war. He then unveiled his own plan for “post-war” Gaza. Trump plans the permanent removal of 100% of the Palestinians from Gaza.
Who will replace them? Trump indicates that the U.S. itself would own Gaza, not Israel. Trump did not explain what this ownership means. Does it mean that U.S. businesses (including Trump’s family businesses) would build hotels and casinos to take advantage of Gaza’s beautiful Mediterranean climate? Or would Gaza become some sort of U.S. territory? He also implied that U.S. forces would replace Israeli forces, though he later walked that back claiming U.S. forces wouldn’t be needed in a Palestinian-free Gaza. (1)
Trump claimed Gaza Palestinians would be resettled at some beautiful place nearby, such as in Jordan or Egypt, though there were some stories it might be distant Indonesia. The governments of Jordan and Egypt expressed strong opposition to any forcible resettlement in their countries. His plan also raises questions about the future of West Bank Palestinians. Many of them, as in Gaza, are refugees from other parts of Palestine. Even before Israel began its genocide in October 2023, the Zionist entity was putting pressure on the West Bank — will the next step be to drive Palestinians out of there as well? Will the U.S. own the West Bank as well as Gaza?
World Trade and Crisis Theory
In the last few chapters, we examined an ideal capitalist industrial cycle. To simplify, we assumed the capitalist world was a single country with a gold-bullion-standard currency system. Based on these assumptions, we saw that once capitalism developed to the point where it acquired the ability to carry out sudden expansions of industrial production, an industrial cycle with all its phases of crisis, depression-stagnation, average prosperity, and boom emerged.
The Boom Phase
The boom phase of the industrial cycle is of particular interest for crisis theory. It is only during a boom that capitalist expanded reproduction develops with anything approaching full force. But because it is developing vigorously, so too do its contradictions grow until they again find vent in a crisis.