Export: Keynesianism
October 06, 2010
– Comments (11)
I am surprised so few people realize that America's main export product is not legal services, Barbie dolls or even software. No, its main export product is Keynesian services of market-making, that is, making a market for consumer goods other countries need to dispose of.
The way it works is this: Asian tigers live in the classical capitalist world of the 19th century that was described by Marx. As a result, because their leaders never read Keynes, they just let everyone do with his money as one pleases and predictably, wages stayed at subsistence minimum while the enormous surplus value accrued to the capitalists who hadn't a slightest idea how to sell the millions of IPods produced to people working for a bowl of rice a day. We all know how this works out in an isolated country: either the elites refuse to change and the classical Marxist crisis of overproduction takes the economy back to stone age (cases in point: entire Africa, Latin America, poorest parts of Asia, and now Russia), or they open Keynes's book, tax themselves progressively, and work together on restoring aggregate demand (cases in point: USA, Western Europe, Canada, Israel, Australia, and New Zealand).
But for better or worse, the Asian tigers can postpone this choice because they are not isolated. And this is where America comes in. America has made the right choice long ago so now it no problems with aggregate demand: American proletarians will happily consume as much as you let them to. And the Asian ruling classes are like our extreme right-wing Republicans: clinging to every yuan squeezed from their workers and their paranoid greed won't allow them to let go of at least some of these yuans even when logic tells them that this small sacrifice would make them much richer than they are now. So they sit on their pile of unsold goods, victims of their own greed, and agonize over their choice, unable to sell them and still unable to help their consumers buy them. They are so desperate that if some Chinese peasant offered them yuans which they knew were probably counterfeit they would still accept it as payment, just as long as it would help them move the inventory and then they would hope to unload the counterfeit yuans on someone else. But unfortunately, Chinese peasants are very financially conservative and won't consider this thing, which Chinese capitalists crave subconsciously but refuse to admit it even to themselves. And the pile of unsold goods grows.
Enter America. It tells the Chinese: "We'll purchase your pile, and we'll pay you with a hundred billion USD which I printed yesterday". The boneheaded Chinese capitalists scream with delight, hug and kiss the new-found consumer, and jail their lone dissident economist who tells them to inspect these paper bills more closely. They don't want to inspect these bills because they are too afraid to face the conclusion such an inspection would bring. And because they all choose to keep trading with their eyes wide shut, the improbable trick works. And what it the result of this? They have arrived at the very same Keynesianism which they so loudly detested. But because they were both too greedy and too stupid to manufacture Keynesianism at home, they had to import it from abroad. And in the grand scheme of things it doesn't matter much, if you consider Chimerica as a single entity.
But if you consider China separately and America separately, you must see this outcome in a different light. Because imported Keynesianism is not the same thing as domestically grown one even if it helps keep the factories running. The difference is that the American consumer has occupied the place that could and should belong to the Chinese consumer in the same way as the cuckoo offspring that get a free ride in other birds' nests. The US trade deficit with China to the tune of $250 B annually gives you the value of Keynesian services rendered.
If the Chinese Central Bank took the $250 B it uses every year to purchase Treasury paper and used it instead to purchase the cargo intended for export just before the boat left Shanghai, and distributed the stuff among its peasants for free, the end result would be exactly the same, plus some money would be saved on shipping expenses.
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