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WRPE 8.4 Contents & Abstracts



CONTENTS

Articles

Political Economic Analysis of China’s Economic Trends: Reasons and Solutions for Successive Declined Growth for 5 Years
Jiang Yu and Xinhua Jian

Price Flexibility and Full Employment: Barking Up the Wrong (Neoclassical) Tree
Roy H. Grieve

The Income Effect of Minimum Wage for the Underclass: Is It Positive in China?
Fusheng Xie and Ruilin Chen

Can Global Elites Pave the Way for a New Transnational Unit of Account? A Reflection on the Numerical Nature of Money
Marc Pilkington

Financialisation and Economic Policy: The Issue of Capital Control in the Developing Countries
Kalim Siddiqui

David Harvey’s Theory of Accumulation by Dispossession: A Marxist Critique
Raju Das

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POLITICAL ECONOMIC ANALYSIS OF CHINA’S ECONOMIC TRENDS

Reasons and Solutions for Successive Declined Growth for 5 Years
Jiang Yu and Xinhua Jian

Abstract: Among the methods for analyzing China’s economic trends, both demand analysis and supply analysis have advantages and disadvantages. The correct method is mainly using theories and methods of Marxist political economics analysis while drawing lessons from the reasonable theories and effective methods in Western economics. Although it has declined for five consecutive years, China’s economy will not collapse, as the overall economic trend is going well and the economic growth has huge potential. The proximate causes of the economic downturn are oversupply and lack of effective supply, insufficient demand, weakness of investment, export and consumption, especially insufficient consumption demand resulted from huge income gap and low labor income. The deep-seated causes are imperfection of ownership system, distribution system, market system, economic management system, and so on. In addition to a series of important strategic policies implemented by the nation, such as the comprehensive deepening reform, expanding domestic demand, improving supply, and optimizing structures, China should also actively, steadily, and reasonably deepen the reform of the systems relevant with distribution to stabilize growth.

Key words: China’s economic downturn; supply side; structural reform; supply and demand analysis; political economy analysis

PRICE FLEXIBILITY AND FULL EMPLOYMENT
Barking Up the Wrong (Neoclassical) Tree
Roy H. Grieve

Abstract: This article questions the thesis (again in fashion) that, in an advanced economy, price flexibility ensures full employment. (See most standard macro textbooks.) We make the point that explanation of unemployment in terms of price/wage stickiness typified much pre-Keynesian analysis, but not Keynes’s theory of involuntary unemployment. Under uncertainty—an essential part of the Keynesian conception—no set of prices consistent with full employment may actually exist: if so, price inflexibility is not the critical obstacle to the attainment of full employment. Finally, with respect to current use of the aggregate demand/aggregate supply (AD/AS) model, we note that once-rejected ideas have returned to the mainstream and that strong arguments against the attribution of necessarily beneficial effects to price and wage flexibility, which ought to be well-known, seem now to be forgotten, Mainstream macroeconomics today is in danger of losing touch with reality.

Key words: price flexibility: neoclassical and Keynesian perspectives; the AD/AS model

THE INCOME EFFECT OF MINIMUM WAGE FOR THE UNDERCLASS
Is It Positive in China?
Fusheng Xie and Ruilin Chen

Abstract: The ongoing debates on the impact of minimum wage have largely focused on the policy’s employment effect for its theoretical implications, but the real question at stake here is its income effect, that is, whether or not it can increase the income of the underclass. Previous efforts have mostly relied on various forms of market imperfection to verify the theoretical integrity of this policy, whereas in this article we have raised another Marxian perspective, emphasizing the positive check of minimum wage on overtime work. Classical economists have long recognized the vulnerability of the working class when faced against capitalists, but only Marx has paid special attention to the complicated interaction between hourly/unit wage rates and the length of the working day, proposing that low wage rates would not only hurt workers by forcing them to work overtime, but that it would also hurt the capitalists as a class once large-scale labor degradation kicks in, endangering the very existence of a well-functioning working class for them to employ. Both the inherent conflict of interests between individual capitalists and capitalists as a class and workers’ systematic disadvantage against capital serve to call for the intervention of a “visible hand” which is the establishment of a minimum wage. A theoretical model has been proposed to formalize this wage-hour mechanism for the underclass, emphasizing the special constraints they face when making labor supply decisions. We have discussed three different types of income effect, explaining how workers’ income might increase with minimum wage and how firms might also benefit from such a process.

Key words: minimum wage; income effect; unconditional quantile regression

CAN GLOBAL ELITES PAVE THE WAY FOR A NEW TRANSNATIONAL UNIT OF ACCOUNT?
A Reflection on the Numerical Nature of Money
Marc Pilkington

Abstract: In this article, we investigate the issue of the dollar-based international monetary system. We start by listing the reasons why money has essentially become a numerical form in the contemporary world economy. After reviewing the salient characteristics of the flawed international monetary and financial architecture of the world economy, we assess whether a transnational unit of account could constitute a viable political alternative to the current international payments system. The latter scenario is envisaged both with regard to the field of international relations and with the help of a revisited definition of the transnational capitalist class.

Keywords: numerical form; dollar-based system; world money; transnational capitalist class; digital revolution

FINANCIALISATION AND ECONOMIC POLICY
The Issue of Capital Control in the Developing Countries
Kalim Siddiqui

Abstract: In analysing the availability and performance of the foreign capital in developing countries, too much attention has been given to the availability of capital and current account while far too little has been given to long-term investment, job creation and economic sovereignty. The current study centres on a critical review of available literature and a contribution to the substantive topics indicated in the title. The objective is to examine relevant empirical and theoretical studies. The study argues that following the adoption of capital liberalisation and neoliberalism, the economies of most developing countries have become more vulnerable. If China is excluded, we find that most developing economies have been unable to expand employment opportunities or reduce levels of poverty due to fear of capital flight. In recent years, capital liberalisation policy has encouraged capital flight from their economies. After 2008, the International Monetary Fund (IMF) publicly express support for capital controls as a result of the global financial crisis and as the vulnerabilities associated with capital flows.

Key Words: developing countries; capital control; financialisation and instability

DAVID HARVEY’S THEORY OF ACCUMULATION BY DISPOSSESSION
A Marxist Critique
Raju Das

Abstract: David Harvey is well known for his extensive writings on accumulation by dispossession (ABD). ABD refers to “the continuation and proliferation of accretion practices” that Marx had designated as “primitive accumulation.” Harvey has sought to update Marx’s theory of primitive accumulation to consider the ways in which dispossession occurs in present-day capitalism in its various forms. His theory of ABD is very problematic. Yet a comprehensive, critical assessment of Harvey’s work on dispossession that considers its intellectual and political problems is missing. This article considers Harvey’s ideas advanced since the 1980s to be problematic on multiple grounds. To begin, the concept of ABD itself is chaotic in the critical-realist philosophical sense: it includes processes which bear no internal relations, and it separates processes which should not be separated. He inflates the causal significance of the concept far too much, and mistakenly considers ABD to be the dominant moment of contemporary capitalism. He generally fails to connect ABD of producers to what I will call “accumulation by exploitation” of proletarians and semi-proletarians. His views on dispossession in the South with which he associates (new) imperialism are inadequate in part because he abstracts from the exploitative character of imperialism as it is rooted in production controlled by imperialist businesses. And the political implications of his theory, which significantly differ from the conclusions that Marx draws from his own analysis of dispossession in Capital vol. 1, and which have a dim view of the role of the working class in the anti-capitalist socialist movement, are reformist.

Key words: Marx; primitive accumulation; capitalism; new imperialism; centrality of the working class

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