Numerous attacks on the economic program offered by Bernie Sanders have be launched in the last few weeks. A letter was written to the Sanders campaign from several past chairmen of the Council of Economic Advisors (CEA). In the letter the economists claim that Sanders’ domestic economic agenda is nothing more than a bunch of hooey.
“We have worked to make the Democratic Party the party of evidence-based economic policy. When Republicans have proposed large tax cuts for the wealthy and asserted that those tax cuts would pay for themselves, for example, we have shown that the economic facts do not support these fantastical claims. We have applied the same rigor to proposals by Democrats, and worked to ensure that forecasts of the effects of proposed economic policies…are grounded in economic evidence… We are concerned to see the Sanders campaign citing extreme claims by Gerald Friedman about the effect of Senator Sanders’s economic plan—claims that cannot be supported by the economic evidence. Friedman asserts that your plan will have huge beneficial impacts on growth rates, income and employment that exceed even the most grandiose predictions by Republicans about the impact of their tax cut proposals.
As much as we wish it were so, no credible economic research supports economic impacts of these magnitudes. Making such promises runs against our party’s best traditions of evidence-based policy making and undermines our reputation as the party of responsible arithmetic. These claims undermine the credibility of the progressive economic agenda and make it that much more difficult to challenge the unrealistic claims made by Republican candidates.”
But like so much of what liberals argue about any given issue they are once again right, but for the wrong reasons. Nobel prize winning economist, and bourgeois butt-face (I’m sorry; I just couldn’t help myself), Paul Krugman linked to this letter on his blog. His input was limited to arguing that the Senator, who has worked at the Capitol for more than two decades, is “not ready for prime time” while also being unwilling to “face up to the reality that the kind of drastic changes he’s proposing, no matter how desirable, would produce a lot of losers as well as winners”.
Krugman also added that anyone who responds to this letter with a critique that believes it is most certainly relevant which kind of institutional, economic and political, interests those economists represent, then you are part of the problem. Of course Krugman admits to his true allegiance right in his own blogpost when he writes about the Sanders plan producing a lot of losers. He is speaking here, of course, of Capital. Capital loses when policies benefiting Labor are implemented. Though I guess I am just part of the problem for quoting Krugman back to himself.
All this is quite ironic coming from a political commentator who is filled with righteous fury each and every time some blockhead pundit espouses false equivalence between the Democrats and the Republicans. I suppose if one is going to offer a critique of Sanders’ plan from the Left that is not a classic case of red-baiting then one may just as well call Sanders’ a deluded amateur. Sure, he did it politely, so I suppose he gets points for that, but let us not blind ourselves to exactly what is happening here. This is a fight within the left-wing coalition, a fight between the liberal and radical factions. Given where my allegiance lies, therefore, one would be pretty shocked to discover that I agree with the analysis offered by Krugman and the former CEA economists; well, sort of.
It is often the case that a liberal is right about a particular issue, or even a multitude of issues. They just happen to be right for the wrong reasons. One wonders just how well bourgeois economists like Krugman and those formerly of the CEA really understand capitalism or economics, especially since the plan offered by Sanders is not that radically different from the kinds of plans offered by Keynesian economists such as Krugman over the last six or seven years. This is an argument over degrees, not actual policy.
These institutionalist liberal economists believe that the Sanders plan goes too far in redistributing the wealth that has been expropriated from Labor by Capital over the last several decades. Krugman and his ilk will go one television and rail against inequality, unemployment, the destruction of the social safety net and the welfare state. But when a genuine attempt is made by a candidate running for President to push down on the scales in favor of Labor they holds their hands in the air, shouting “Stop,stop,stop! Whoa, buddy, just where do you think you’re goin’ so fast?”.
Theses are economists who advocate the consumption theory of capitalism, that it is the consumer who is the real driving force of the system. Give the consumer more money and you will produce economic growth. For Keynesians, extra spending is produced by money creation, which leads to increased employment, then increases in income and economic growth and finally increases in profits. In reality, however, the capitalist economy works in exactly the opposite direction. Only when profits are high enough do capitalists have the incentive to invest, which produces higher employment, higher incomes, and increased consumption.
Therefore, using the political system to shift the balance of power back to Labor, as Sanders would do, would weaken capitalism, drive down profitability, lead to a strike of investment, layoffs, declining incomes and consumption and ultimately a recession or depression. As we Marxists argue there is no solution to the crises of capitalism within capitalism itself because it is the very crises, recessions and depressions, that are the means for the system to restore profitability. The capitalist class is not going to stand by and do nothing while it is under attack, hence the conflict between the liberals and the radicals within the Democratic Party.
Regardless, we Marxists support any attempt by the political left to implement policies beneficial to Labor. However, both the liberal and the radical factions of the Democratic Party are wrong about the ultimate solution to this crisis. The long term solution is not a moderate or even a radical challenge to capitalism in a period of low profitability. Rather, the capitalist system of production for profit has to be replaced by a system of planned investment under common ownership.