Generally speaking I am leary of entering "periodicization debates"--when "capital" is in an "upswing" vs a "downswing." This is not to say that I don't find them interesting. I am in fact the only person I know who teaches Wallerstein with enthusiasm. And I don't command the breadth of historical data that sprinkle the debate betwixt you and Doug.
I must say that I was somewhat surprised at Doug's venture into this terrain because to me the notion of a "Left Business Observer" is somewhat less mega-macro-economic. Regardless of whether we are in an upswing or downswing, there are plenty of capitalist shenanigans to write about.
All these conditions aside, let me make a few observations. First, that Doug is a Marxist--in the good and bad sense of the word, meaning the hidden influence of some neoclassical positions. In classical/neoclassical/Marxist approaches, an increase in workers' benefits (i.e., the welfare state) will depress profits. The mechanism is sufficiently well known to us that the point need not be elaborated.
>From a Keynesian perspective, however, we can argue
that there is an "investment capability" that is
chronically underutilized in capitalism, for whatever
reasons, but he does point to a secular problem of
decreasing marginal propensity to consume as societies
get wealthier. Without getting into the thorny macro
problem of how to evaluate evolving MPC (I don't think
the savings rate is necessarily adequate, especially in
an environment of international investment, but it is
the obvious line of attack for Doug's refutation of
what follows), if we this line of argumentation leads
us to the conclusion that, *up to the level of full
employment*, redistsributive programs by boosting
consumption "at the bottom" may actually *solve* a
major problem for capitalism, insufficient demand.
Second, classical economics deals with "overseas investment" through such mechanisms as comparative advantage. But I have never seen *anyone* who has claimed to figure out what the *natural* rate of disinvestment (overseas investment) by major firms is in relation to some surmised excess of disinvestment spurred by onerous regulations, social welfare state, etc. Capitalism appears to disinvest at all times and in all places. I haven't seen a knockout explanation of this issue but it is germane to the economic performance of developed countries.
Third, the presence of "overcapacity" or "underconsumption" cannot, in my view, logically be imputed to the failure to shut down enterprises which happen to produce cheaper because their capital is paid off. Under competitive (even non-competitive) market assumptions, whatever is "new" has to "prove itself" by being more profitable than whatever is old. The more interesting issue is the presence of what may appear to be high production&investment/low domestic consumption ratios in Asia and Japan due to the widespread use of keiretsu style economies which employ "predatory" dumping tactiocs described in various places (Brewer's Imperialism (article on Hilferding); Hilferding; Jacob Viner; a bit in J. Robinson; and rediscovered, characteristically without citation, by Krugman in the late 80s). We would expect, under such conditions, that investment and profits might be hyper in certain sectors of the world economy and depressed--due to the nature of the export strategy--in others. However, while I think this is a "major deal" I'm not sure it is enough to explain "the world economy." But I do think that the tendency to view "overproduction" as a cause of depressed profits tends towards Keynsian-type interpretations and solutions.
In the late 20th century it is not always the case that to be a Keynesian is "reactionary" and it seems to me that underneath the debate there is a serious conflict based on dramatically different interpretations. In the end, in a Marxist type view of the world successful working class organization accelerates the crisis tendency in capitalism. In a Keynesian type world view successful working class organization is actually a recipe for the preservation of liberal society (see especially J.A. Hobson's Imperialism on this score). Given how different these views are, I'm not certain that it is possible, through the simple citation of statistics, to prove that the world is in an oveproduction crisis or a profit/accumulation/squeeze type crisis. That is because I, personally, have not reached a satisfactory of the "which is better between the two theories" question, and people familiar with my own modest opus will note that by studying the operations of the oil industry I stayed at the level of corporate and national strategies without trying to "integrate" into a "higher" level of analysis, whether upswings, downswings, Kondratieff waves, Wallerstein's A and B cycles, or whatever.
So I'll let you two slog it out; the debate is an interesting one, and if my comments help you to differentiate your positions a bit beyond the level of throwing rival statistics at one another, then I shall have been of use. If not, it won't be the first time I have rambled to no effect. -gn
-- Gregory P. Nowell Associate Professor Department of Political Science, Milne 100 State University of New York 135 Western Ave. Albany, New York 12222
Fax 518-442-5298