Well at least I didn't think it was an agreement in El Plazo. But that was the least of my mistakes--Brenner does actually attribute a big spike in profitability to the Plaza Accord dollar devaluation--pp. 203-4.
At any rate, in the latest issue of *Capital and Class* Fred Moseley makes a rather incisive argument (the best I have read) that the recovery in US profitability since 1993, the recent Wall Street Bubble, and current budget surplus have all been built partially on the foundation of a massive inflow of foreign money, i.e., on general crisis conditions abroad and the resulting flight for quality. Brenner ascribes recent macroeconomic success to the dollar devaluation and real wage assault; Moseley adds the capital inflow.
By the way, Davidson and Galbraith don't even ask the question of why there is a budget surplus--how it is tied to equity inflation, itself a product of that massive foreign capital inflow. Louis Uchitelle's "A Surplus on Brick of Income Inequality" in Sunday's NYT should be supplemental reading.
There is also a lengthy critique of Brenner by Bob Fine, et al in the latest issue of Capital and Class. Maybe we can talk about that later.
Brenner also agrees with Doug that monetarist policy did induce rationalisation and exit in the late 80s. He argues that while monetarism does help to trim excess capacity, it also dims future growth prospects and thus discourages investment in new lines. There can be scrapping without new investment in low cost capacity or dynamic new lines of production.
Most interesting in your Brenner criticisms is the insistence that there has plenty of "exit" the lack of which Brenner holds to be a major cause of the long downturn. I especially like your argument that mergers and acquistions or conglomerates more generally are the corporate form through which capital is moved from les profitable to more profitable "lines." Drawing from Chandler, David Harvey puts it thusly: "The large financial congomerate has achieved the capacity to switch capital and manpower from one line to another and from on e part of the world to another 'in the twinkling of an eye.'It can and does evolve extremely sophisticated systems for gathering and using information on proudciton techniques, market and profit opportunities. Transaction costs are minimized within the corporation, and production and distribution can be planned down to the last detail as if no internal barriers to realisation existed. It can likewise respond to many of the difficulties attendant upon increasing reliance upon fixed capital by planning for obsolescence. In all of these respects, the modern corporation has increase the potentiality to achieve an equalisation of the rate of profit *within* its confines." p. 147
yours, rakesh