Borrowing paradox

This insight into how financial crises develop can be examined in the light of the Foley/Domar borrowing paradox. To recap, we have established that expanded reproduction requires borrowing on the part of the capitalist class. How then does Marx s insight, that borrowing can outstrip realization, relate to the expanded reproduction schema To answer this question... 

The conclusion drawn by Foley is that new borrowing is required to meet this shortfall. There is a paradox of borrowing, the borrowing requirement contrasting with the received opinion in Marxist circles that all investment is drawn from an existing pool surplus value.1 With B(t) defined as new capital borrowing (ibid. 89), capital outlays under expanded reproduction are met by setting... 

Second, Domar shows that there is a paradox of borrowing in expanded reproduction (an insight later provided by Foley). Capitalists cannot borrow from an existing money hoard in order to expand capital accumulation they must borrow from financial institutions. This places financial fragility at the heart of the reproduction schema, since all capital accumulation is associated with borrowing and hence, all borrowing is potentially undermined by the problem of demand. This contrasts with Marx s identification of financial instability with occasions when capital accumulation overstretches itself. 

The paradox of borrowing also has some resonance with this statement by Marx (1981 640) The final illusion of the capitalist system, that capital is the offspring of a person s own work and savings, is thereby demolished. ... 

For my private use I call the sphere of paradoxical existence, i.e., the instinctive unconscious, the Pleroma, a term borrowed from gnosticism. Our difficulty is that we understand the psyche as what we make and regulate ourselves, and we can t get it into our heads that we are the helpless victims of psychic forces. 5... 

The experiment that will be described (Nguyen-Xuan Hoc, 1987) in this section shows with more precise details the same type of result as mentioned above if the learner has to solve a familiar problem with a command device he (she) does not know well, he (she) is prone to borrow a goal structure that is relevant in the familiar domain, but this goal structure may not be relevant for the device. Thus, somewhat paradoxically, problems that are too familiar to the learner may be more difficult than problems that are less familiar. 

More recently, and somewhat paradoxically, the search for improved functionality to meet current needs has meant that long-since-abandoned natural products are being reconsidered as an alternative to more modern and successful synthetic materials. To be more exact, rather than reconsidering the natural products by themselves, this novel strategy involves the introduction of concepts borrowed from nature into future synthetic materials and systems. Indeed, relatively novel concepts in materials science, such as hierarchical organization, mesoscale self-assembly or stimuh-responsiveness, are common to many natural macromolecules such as proteins, nucleic acids or polysaccharides (or combinations of them). Indeed, the slow but relentless process of natural selection has produced materials that show a level of functionality significantly more exquisite than that reached by synthetic materials, with proteins being perhaps one of the best examples of this. 

---