Crises: the conventional and Marxist explanations
A doctrine of William Jevons, the English economist, statistician and philosopher (1836-1882) is considered as an example of such a natural-and-physical approach to the explanation of periodic crises. According to his opinion, the factor of the cyclical development is a processes connected to movement of spots on the sun (that, by-turn, influences the condition of the agriculture, further the scientist arranged a chain of cause-effect relations which explained the changes of all sides of the society life).
By the way, Alexander Chizhevsky (1897-1964), our domestic scientist, is much more known in Russia as one of the representatives of this approach. Moreover, he was not an economist but a bio-physicist. According to Chizhevsly, the solar activity has a definite amplitude of oscillations meeting about the 11-year amplitude of oscillations of the industry.
The subjective - psychological approach is not less popular during the last two centuries. The point is the factor of all changes in the economy are the changes in the mood of a man (optimism, despondency, disappointment, panic etc.).
For example, Arthur Pigu (1877-1959), the English economist, believed that the crisis was caused by the “mistakes of optimism” accumulation. Pigu explained those ideas in 1929 in his work Industrial Fluctuations.
John Keynes (1883-1946), a known English economist, also saw a repetition of the economy development in the changes of psychological moods of people and used such concepts with little in common with the exact science ideas as “inclination for savings”, “inclination to investment” etc. The Keynes`s “Psychologism” is reviewed in relief in his major work General Theory of Seizure, Interest and Money.
The reasons of demographic order are often called as the reasons of the crisis of overproduction. The logic of the reasoning of “demographic determinists” is such: production of goods (service) grows until the demand saturation in the market of the given goods (service). The market capacitance, according to them, is specified, first of all, by the population of the country. However, the given reasoning explains nothing. First, because it can help to explain only the stoppage of further growth of production but not its fall and cycling progressing. Secondly, because it is absolutely not clear why we need the permanent growth of the economy if all needs of the society in the goods and services are satisfied? Basically, the production should grow in the economy with saturated demand but it should meet demographic growth but no more.
Analysis of tendencies of the economic growth and demographic processes demonstrates that the paces of the increment of gross income for the 20th century as a whole over the world is approximately by an order higher than the rate of the population increase. It proves only that the economic dynamics (at least in the modern economy) is not determined by the demography. Such a rapid development of the economy in the 20th century differs from a medieval society where the demography and economy had very similar trajectories.
Probably, it is possible and necessary to study the links between the economy dynamics and demographic tendencies but you should mean that а) the economical dynamics and demographic tendencies can have even different directions (for example, the economical recession can occur in the conditions of the rapid growth of the population); b) in link “economy - demography” the business cycle is primary, and the demographic processes are second, the economy dynamics is derivative (but not on the contrary). Particularly, the economy recession causes unfavorable demographic processes; the economy expansion improves the demographic processes.
By one word, explaining the economy cycle by changes in the demography, the “demographic determinists” confuse a cause and effect.
A large group of economists consider crises as an inadvertent “payment” for the engineering and economic progress of the mankind. The cyclicity is put in the development of the science, engineering, productive strengths. It is so-called technocratic approach.
The technocratic ideas about the crises nature prevail among the modern economists. For example, the theory of “wave development of the economy” of Nikolai Kondratiev (1892-1938), our domestic economist, is very popular. So-called “Kondratiev`s long waves” are explained by a certain mysterious mechanism of development of science and technology: periodically (once 50-60 years) there are discoveries causing the revolutionary changes in the engineering and all productive strengths of the society. However, the similar ideas were popular in the 19th century when the West faced the first crises of overproduction. Here we can remember the theory of ‘the economy cyclical development” by Karl Marx (1818 - 1883); the older and middle generations remember this theory very good due to the capitalism political economy textbooks. The length of the Marx`s “cycles” is much shorter than the length of the Kondratiev`s “cycles”.
In the West, the works of Josef Shumpeter (1883-1950), the Austrian economist, are widely known among the works on the explanation of the economy cyclical development. First of all, it is the work published in 1939 Business Cycles.
All technocratic theories, despite of the difference in the language used, cycle length estimation, amount of the cycle phases and some other parts have likeness in the major. Their authors turn the reasons of the economy cyclical development (and accordingly, the crises periodicity) to the “technological advances”, more exactly to the cyclicity of processes of displacement of the capital funds with a new engineering basis. By different variations the authors of similar theories mark out the following phases of the cycle:
1) booming the production based on new technologies and large-scale investments in the “locomotive” industries;
2) the market expansion and heightening the effective demand in all industries (the money resources from the “locomotive” industries spread all over the economy);
3) the multiplicative increase in all industries at the expense of increasing aggregate effective demand;
4) the exhaustion of the multiplicative effect and the production decrease (crisis of overproduction, recession) with all the consequences (difficulty in sales of products, smash of business, redundancy, landslide of prices for the goods and assets etc.).
The “technocrats” like Kondratiev have little concern in anthropological, social and political aspects of the economical activity, and their logical structure is like astrological or cabbalistic sketches. Such authors, voluntarily or not, attribute some mystical properties of the “cyclical”, “wave”, “spiral” development to the science, engineering, productive forces as though the speech is about sunrises and sunsets or season changes. This mysticism a bit resembles the pantheism – a philosophy and religious conception of the existence of a certain impersonal God identified with the nature.
The paradox is in the fact that before the mankind transferring to the capitalist civilization the economy really had a seasonal nature of progressing since it was predominantly agrarian. But in that economy there were no cyclical crises of overproduction (sooner the crises of underproduction as a result of droughts and other natural disasters). In the capitalist civilization, the man labor activity was concentrated in the industry, i.e. it got significantly rid of influencing the seasonal factors. However, since that very time the society has experiencing the cyclical crises in the economy, and with surprising periodicity.
For the “professional” economists following different approaches to the explanation of crises (technocratic, subjective, psychological, monetaristic etc.), the moral and spiritual measuring of the economic life appear beyond their theories. Accordingly, the “constructive” proposals of such “professionals” are combined to correct the current (capitalist) model, not touching the spiritual and moral foundation of the society. For example, to boost or, on the contrary, to loosen the state regulation of the economic activity. Or to correct the money policy by means of increase of money supply (or, on the contrary, to withdraw a part of money from its movement). Or to substitute paper money for gold (metal). And so on. However, such “cosmetic” measures can just soften the crises at the best. A bit later, the economy illnesses return even more acute. The symptoms are very different and called differently: inflation or disinflation, unemployment, overproduction or undeproduction, recession, depression, stagnation, stagflation, bankruptcy, bank panic, default etc.
Return of illnesses under their different names means that the diagnosis and the methods of treatment have been specified incorrectly.
Political economy by Marx: capitalism definition
Separate representatives of the technocratic approach have the nuances which detail and supplement the technocratic explanation of crises with social, psychological and even political factors. There is reasonable to enlarge upon the Karl Marx theory which had been the “only right theory” in our country for 70 years. Moreover, in the conditions of the current crisis we can watch the Marxism Renaissance, many search for the explanation of the reasons for the current (the first for about a hundred years in our country) crisis in Das Kapital – the principal work of the classic.
Certainly, Marx as a philosopher is a brightly expressed technocrat, as he searches any public life variations in productive force variations, and productive forces he, first of all, reduces to means of production, i.e. machinery and technologies. But in Das Kapital the technocratic approach appears as-if in the middle distance, and the political economy approach forges. Figuratively saying, Marx in Das Kapital rose to a higher step: the political economy approach stipulates the analysis of human relations but not all and only those which relate to the economy. The economic relations under Marx are the relations among people concerning production, interchanging, distribution and consumption of products of labour (goods, services). In fact, Marx looks at the man as Homo economicus. When translated it means the “economic man”, i.e. a creature with a simple set of needs and instincts (Marx calls it as “economic concerns”). Something like an animal or a machine with the reactions known beforehand to one or another “signal of the market”.
To explain the Marx`s theory of cyclical progressing, we should even briefly tell about the “classic” understanding of some key categories. First of all, the “capitalism” category. You see, he affirms very definitely that the cyclical crises are characteristic only for the capitalism. The capitalism is that we today bashfully call as the “market economics”. From the very name “capitalism” it follows that it is such society's organisation where the main objective of human activity is accumulation, augmentation of capital but not production of goods and services for satisfaction of vital needs of all members of the society.
Let`s turn aside for a moment: the word “capitalism” uncovers the whole sense and purposes of that civilization which we have got used to calling so. The matter is that in relation to capital accumulating the elite of this society has even “higher” purpose which during all the history was hidden and continues to be hidden.
Dialectic of riches and power
I am referring to the world supremacy, world power. The riches are the power over things. And there is the power over people. If we speak about the power over the human body, its capacity to create any comforts, it is a simple slaveholding. It already was in the history. But there is the power over the soul of the man, “soulholding”. The elite of that society which we mechanically call “capitalist” also tends to this highest goal. When the power over the soul of the man is reached, there will be the power over his body, and all material values on the Earth.
In relation to this highest goal, the milliard riches appear only means. Only the “selected” and “initiated” in the elite of so-called “capitalist” society, the usurers, understand it and are guided by it, and we will speak about them later. These “selected” are not vulgar materialists at all, they have the higher “ideals”, “spirituality” and “religion”. From the point of view of Christianity, it is insanity, spirituality with minus sign, aiming of a man to occupy a place of God and to dominate over the nature and people like God. It is like the spiritual cloudiness happened to Lucifer, the God's angel (2 Crusts. 11-14) who wished to be like God, and appeared to be prostrate and turned into Satan known as Lucifer. It is notably that many “selected” and initiated” conscientiously worship Lucifer.
I think, that even from their point of view, Marx`s doctrine on “capitalism” is rough materialism, vulgar treatment of the civilization, the “intellectual product” intended for plebs. Those who studied Marxism and its doctrine of socio-economic formations cannot understand till now the spiritual - political sense of the modern history and those events which Russia experiences today.
As we in due time were explained by the Marxism-Leninism teachers based on the Marx`s theory of socio-economic formations, that “capitalism comes to change feudalism”. Actually, this standard phrase hides the major change of the mankind earth history: a new civilization under a code name “capitalism” comes to change the Christian civilization (which was masked under indistinct “feudalism”). To mask its spiritual nature, the classic reduced everything to the “capital”, “surplus value” and “profit”. The matter is this civilization denies and overcomes the Christianity. Max Weber (1864-1920) told about it approximately in half-century after issue of Das Karital in his known work Protestant Ethics and Spirit of Capitalism.
Capitalism is an antichristian civilization
Today the process of the capitalism “overcoming” the Christianity has gone so far that any unprejudiced understands that the antichristian civilization is hidden behind the “capitalism” signboard.
The correct definition of that public system which began a few centuries ago allows us to decrypt that “higher” goal which the elite of the “capitalist” society is approaching. This goal is arrival of Antichrist. Only Devil, an enemy of the mankind, knows in full about this “higher” goal. The usurers think that they will own all the world. Actually, they just clean the Devil way, are his forerunners. They use usurers “on the quiet”. We are not going to uncover spiritual delicacies of the civilization with the code name “capitalism”. You can read what its structure, spiritual - religious “core”, the development pathway etc. are in the recently published book by O. Zabegailo Spiritual Understanding of the History (see the reference list at the end of the chapter).
But we shall return to the problem of crises. The classic enters into the schema of cyclical progressing an economic concept of “limited payable demand” which, in his opinion, is an organic “defect” of capitalism. To save the reader from extremely difficult and tiresome retelling of Das Kapital, where Marx by the language of professional Talmudist tries to explain the cyclical character of development of the capitalist economics, we shall say shortly: the factor of “limited payable demand” in the Marx`s model “overlays” the factor of “cyclical progressing of the fixed capital” (upgrading, ageing and displacement of the obsolete fixed funds), creating a periodical powerful negative synergetic effect as destructive crises of overproduction.
The Marx`s doctrine: half-truth or half-lie
According to Marx, there is an incurable conflict of capitalism - between limited payable demand and offer of goods and services. The limited payable demand (demand of the population for consumer goods and services, and companies - on machines, equipment and other investment goods, raw, energy), decays and stagnation of the economics is the “standard” of capitalism. It is illness which “comes out”, and everybody can see the “rotting” of capitalism. The illness can be “inside” only for a short time - at the phase of economic expansion. As the critics of capitalism witty note, in such social system the stagnation is a standard of the society economic state, and progressing and growth are short periods between the stagnation periods.
According to Marx, delay of payable demand (i.e. demand provided with money) from the offer of goods and services is caused by the capitalist exploitation. This exploitation is exhibited, first of all, in appropriation by a capitalist (the plant owner) the basic created by a worker product (new cost) - so-called “surplus product”, or “surplus value”. The worker has only “remains” of the recreated cost as so-called “indispensable product “. Such “remains” cannot provide necessary payable process, especially taking into account the foregone process of property polarization of the society and accumulation of capital in the hands of capitalists-businessmen. Marx called that process as the “universal law of capitalist accumulation”.
Abovementioned provisions of the classic are popular enough, and well known for not only professors of economics. Today, in the conditions of crisis we observe a certain Renaissance of Marxism when Das Kapital became a demanded book again. Really, many provisions of the classics well “overlay” the today's actuality. However, what Marx told about the cyclical progressing of economics and limited payable demand, as we will show further, - only half - truth. The creator of Das Kapital does not finish the most important saying. He speaks that the chronic delay of payable demand from the offer of goods is caused by capitalists, the capitalism class. And actually, that capitalist goes to the foreground who received a surplus value, i.e. a manufacturer, industrialist, plant owner. And here Marx mixes the truth and lie, he makes a cocktail called “half-truth”. And the half-truth is sometimes worse than a fraud, as the “pure” lie can be got to the core more easily. The abovementioned explanations of crises (even supplemented with political economy explanations) are surface, they do not touch the “springs” of the capitalist civilization operation.