1. Was there a social wage squeeze? What do Fred Moseley's or Anwar Shaikh & Ahmet Tonak's data show? Just because capital has eviserated the social wage since the mid 70s does not mean that the social wage was indeed redistributive and brought on the crisis/macroeconomic instability/weak accumulation.
2. Doesn't Brenner theorize crisis from the use value/material side of production only? That is, profit rate reductions and the slower accumulation therefrom result from the diversion of value into the circulating capital necessary to amortize already existing and obsolescent fixed capital. One could refer to this as a form of value destruction though it appears as a sustained, albeit slowly growing, level of material production. In short, only because capital is immobilized in this *material form* do stagnation and crisis obtain.
The point to underline here is that Brenner does not theorize limits or crises from the value side (he writes off such an attempt as Malthusian), only from the technical/material/use value side or, more precisely, from physical form of the existing capital stock inherited from the accumulation of the past.
Indeed since in Brenner's world a Schumpeterian douche would clean the system of obsolescent capital, it seems to me that Brenner is a neo Austrian in Marxian clothing. Wallerstein may be a neo Smithean Marxist; Brenner is simply a neo Schumpeterian Marxist. I think we should talk less about both of them and more about Marx and the revolutionary theory of the working class.
At any rate, why crises may not clean things up is suggested by James Galbraith:
"In a word, the rate at which technical change is incorporated into the capital stock depends on two variables: the rate of scrapping old capital and the expected rate of demand. Recessions raise the rate of scrapping and have a non linear relationship with the expected rate of growth that depends on the expected frequency of future recessions."
Once we have a theory of why capital requires or comes to expect if not more frequent but deeper and wider recessions, then we can explain why capital will find itself unwilling to scrap old capital and undertake the large scale investments in which profit enhancing technical change would be incorporated.
In order for those large scale investments to be undertaken, there may also have to be sufficient destruction of rival enterprises to ensure the investing firm the requisite market space; but as for this specific form of destructive competition and its results--the concentration and centralization of capital on a world scale as the twin dynamics at the the core of Marx's theory of the evolution of the industrial structure--I don't think Brenner really has much to say.
3. As for the govt's capacity to provide effective demand, we'll have to see if there are limits to that inherent in capital's value relations.
best, rakesh