>May I rebut? I think the best way to argue this is that
>overaccumulated capital has been building up in various ways over
>the past 30 years, and that instead of profits being reinvested in
>productive plant/equipment the way we saw during the 1950s-60s, the
>80s-90s had dramatic downturns in investment/GDP, with profit streams
>(and surpluses more generally) instead being channeled into
>financial asset inflation (which, via the private-sector credit
>bubble, actually translates as deferred payment for current
>consumption, not deferred consumption).
In the U.S., nonresidential fixed investment rose from about 10% of GDP in the early 1990s - the low of the Bush slump - to almost 14% in 2000; equipment investment rose from around 7% to over 10%. We can argue that a lot of this investment was wasted - trading rooms and the dot.com infrastructure - but investment did rise in the expansion.
Profits also rose - from around 7% of GDP in the early 1990s to 10% at the end of the decade - so the investment was internally financed, as usual. A lot of corporate borrowing went to fund stock buybacks and takeovers, which did channel money into the stock market.
You'd also have a hard time making the argument for "dramatic downturns in investment/GDP" after looking at this table:
U.S. NONRESIDENTIAL FIXED INVESTMENT % of GDP, period averages
total structures equipment 1929 10.6% 5.3% 5.3% 1930s 6.5% 2.6% 3.8% 1940s 6.7% 2.4% 4.3% 1950s 9.4% 3.7% 5.7% 1960s 9.8% 3.7% 6.1% 1970s 11.1% 3.9% 7.2% 1980s 12.1% 4.3% 7.8% 1990s 10.8% 2.9% 7.9%
I don't have the EU and Japanese figures at hand, but I don't think they show "dramatic downturns" either.
> At the same time, the
>necessary (so far partial) "devaluation" of overaccumulated capital
>gets moved around (spatially and temporally), and price inflation is
>just one of many forms of deflation.
Devaluation maybe, but deflation is a pretty different beast from inflation, as any debtor or creditor could tell you.
> And sure, it could certainly
>emerge again as a preferred ruling-class mode of devaluation (as in
>late 1970s when the Fed was run by an industrialist not a neolib),
He didn't last long, old G William Miller. One dollar crisis and one talk with David Rockefeller, and Carter suddenly discovered the virtues of Paul Adolph Volcker.
>but I would bet against it, given the continuing hegemony of
>international finance over policy-making in Washington and most other
>capitals. (Look for a big financial crash plus contagion into real
>sector instead.)
We'll see....
Doug