> Doug accepts the argument, the consensus from right to left, that an
> increase in workers' power leading to the outrunning of productivity
> growth by the growth of direct and indirect wage costs brought about the
> fall in profitability between 1965 and 1973. In his words, "One school
> of thought has PERSUASIVELY blamed the decline in profitability on the
> strength of the working class worldwide in the 1960s and 1970s, which
> forced higher wages, a more generous welfare state, and tighter
> regulations on a reluctant capitalist class; this raised the costs of
> doing business, and contributed to an attitude problem among the
> workers." (p.2, col.1).(my caps).
My sense is that Doug is talking about how global finance capital *legitimated* sado-monetarism, i.e. sold a bullshit ideology to US-UK voters in a very canny and clever way, via the Reaganomics sound-bite thing.
> During most of the 1990s, US capital, virtually alone among the
> capitals of G-7 economies, has prospered. But, for the greater part of
> that period, the US recovery has come at great cost to the international
> economy, because it was secured largely through sharply increased export
> growth made possible by sharply increased competitiveness, achieved
> mainly, not by way of downsizing and layoffs or even wage repression,
> but via the deep devaluation of the dollar.
Did the US really prosper? Sure, we experienced a helluva financial bubble. But per capita growth was higher in the EU and Japan from 1990-96 than in the US. US exports have not really boomed, as our humongous trade deficits go to show; the fact that the German/Japanese share of world exports doesn't take into account foreign direct investment, e.g. Japanese transplants etc. VW is making its new Beetle in Mexico and Honda is using the US as an export base; Daimler went out and simply bought themselves Chrysler. This suggests that we need to think about *multinational* corporate competition as well as the clash of national economies.
> Since the US economic expansion has been the driving force for the
> recent international cyclical upturn, centered on Europe, its end
> promises serious problems for the world economy. The rest of the world
> is counting on the US economy to drive it. But with the US expansion
> coming to an end under the impact of the worldwide flood of
> manufacturing exports, it is difficult to see where the forces will be
> found to prevent the onset of severe recession worldwide.
But Europe is not dependent on US markets for its continued profit growth; Germany trades more with Eastern Europe, for example, than with the USA. The expansion of the 1990s was driven partly by US bubble insanity, but mostly by massive EU/Japanese debt sprees -- in the case of Japan, the spree obviously wasn't massive enough. Germany has poured $100 billion a year into the East, fuelling a mini-boom in Visegrad; if you count up all the EU subsidies, loans and other forms of creative finance, the total internal stimulus was maybe $200 billion a year. Both the EU and Japan are loaning the US money at a rate of $200 billion a year; naturally, we haven't exactly put the money to good use, preferring to finance a wild stock boom instead of investing in schools or raising real wages. But when you look at the EU's 8 trillion-euro economy, low, low 3.3% interest rates, and nascent Eurokeynesianism, and when you look at Japan's $3 trillion stockpile of accumulated liquidity, the case for a renewed Long Boom after the next recession looks mighty convincing.
-- Dennis