Comment on Magpie on ‘So, I Actually Hate the JG, Who Knew?’
Tom Hickey summarizes, “My view, and that of Marxian economist Chris Dillow as I recall, is that the transition to socialism will happen through the intermediary step of social democracy, leading eventually to democratic socialism. This is what the ruling elite are afraid of, and it is why they are so opposed to social democracy.”
This summary encapsulates the humongous idiocy of the representative economist. He does not know how the economy works but knows “what the ruling elite are afraid of”. He cannot get the elementary algebra of national accounting right, but he can read the thoughts of an unknown number of unknown people called the elite. Is this elite composed of the descendants of old European aristocracy or the members of organized crime or random folks on the payroll of the Oligarchy? Is Mr. Trump a member of the elite or merely the fall guy for the breakdown of the USA? We don't really know. And these ignoramuses tell us how history will eventually lead to democratic socialism.
How can they know this? Because Marx and Engels said so. The simple fact of the matter is that the two political agenda pushers never understood how the monetary economy works.#1 Neither did their mentally retarded followers to this very day.
Here are the basics. The elementary production-consumption economy is defined with this set of macroeconomic axioms: (A0) The economy consists of the household and the business sector which, in turn, consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
Under the conditions of market-clearing X=O and budget-balancing C=Yw in each period, the price as the dependent variable is given by P=W/R (1a). The price is determined by the wage rate W, which takes the role of the nominal numéraire, and the productivity R.
The macroeconomic Law of Supply and Demand (1a) implies W/P=R (1b), i.e. the real wage is always equal to the productivity no matter how the wage rate W is set or how long the individual or aggregate working time L is. Full employment is possible, the workers always get the whole product O. The workers' living standard/freedom depends ultimately on the productivity.
The condition of budget balancing, i.e. C=Yw, is now skipped. The monetary saving/dissaving of the household sector is defined as S≡Yw−C. The monetary profit/loss of the business sector is defined as Q≡C−Yw. Ergo Q≡−S.
The mirror image of household sector dissaving (-S) is business sector profit Q. The workers as a group still get the whole product. There is, however, a redistribution of output O between the workers.
The Profit Law holds for the monetary economy as given by the macroeconomic axiom set, that is, for Capitalism and Communism and everything in-between. Macroeconomic profit does NOT depend on the ownership of the means of production.
Profit depends on the deficit-spending of the household sector and the state sector.#2 In late capitalism, the business sector fully depends on the state for its survival. What the Oligarchy must fear most is NOT the proletariat but a balanced budget of the state sector. To postpone this calamity is the task of the MMT troll army.
Dear left/center/right economists, time to learn economics.#3
Egmont Kakarot-Handtke
#1 Links on Karl Marx
#2 Profit