Ok, I think I've got a reply to all the points, comrade Doug, but if I've left something out, shout...
> 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.
Actually, it's not merely "wasted" per se, it reflected a shift of investment trends towards fundamentally speculative -- not immediately (or even realistically medium-term) value-extractive -- activities... simply because that's where short-term-oriented investors felt they could realise a higher capital gains (until March 2000 they were right).
> Profits also rose - from around 7% of GDP in the early 1990s to 10%
> at the end of the decade
But a) can you disaggregate the alleged profitability upturn to take into account the problem of profits derived (even in "manufacturing firms" like Ford, GM, GE) from merely financial or otherwise non-value-productive activity; and b) doesn't this upturn still fall far short of Golden Age profitability? (And didn't it leave the rest of the world behind during the late 1990s volatility and general slowdown?)
>- 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:
I have different data.
If you check Wall Street (new edn), pp.73-77, you find that new capital spending by US nonfinancial corporations declined from levels in excess of 8.5% of GDP during the 1950s-60s, to less than 7% during the 1970s, to 4.7% during the 1980s, before recovering slightly to 5.3% from 1990-97. Meanwhile, profit rates plus salaries in the US Financial, Insurance and Real Estate sector (as a percent of gross investment) soared from 20-30% returns during the 1950s-70s up to the 35-45% range during the 1980s-90s. And the `rentier' share (i.e., interest plus dividends) of the US corporate surplus (i.e., pretax profits plus interest) rose from levels of 20-30% during the 1950s to 30-40% during the 1960s-70s, to 50-70% during the 1980s-90s.
As for the replacement of internal revenue streams for debt more generally, the US ratio of all forms of credit market debt to GDP was fairly stable, in the 130-150% range from 1950-1975. It then soared to 250% over the next two decades. And that credit bubble emerged notwithstanding dramatic increases in the price of money (real interest rates), again showing how financial returns were up over a period of relatively low (compared to 1950s-60s) profit rates derived from surplus value extraction (`productive' activity, which doesn't show up well in your excessively aggregated profit stats, Doug, as I've pointed out to you on the e-debate list):
Returns on financial assets: Decade Real i Stocks Bonds 1940s -3.2 4.9 -1.1 1950s 1.0 14.2 -4.1 1960s 2.2 4.4 -2.7 1970s -0.2 4.2 -7.4 1980s 4.8 10.2 7.4 1990s 4.1 11.0 9.2
> > 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.
"Pretty different" from the standpoint of devalorisation of overaccumulated capital? Not really. Deflations can do it quickly and sharply, and inflation in a slow and differentially painful way. But these are both forms of devalorisation, aren't they not? (Check Harvey's Limits to Capital on this for a more profound argument.) I appreciate your interest in correcting me, Doug. But there are still holes in your critique.
Let me sum up. My argument (which I think is consistent with Das K) is that financial and commercial circuits of capital move devaluation of overaccumulated capital around spatially, thus serving as the catalyst for much of the contemporary globalization of capital. And simultaneously, overaccumulation is addressed temporally, through hastened speed-up processes and, crucially, by expanding a credit system which permits traded goods to be purchased today but paid for later, on the assumption that future streams of surplus value can be extracted and realised. Thus as overaccumulation persists and devaluation is shifted, labour, women (as workers and in the labour reproduction process) and the environment are all more frenetically exploited. This happens more to the South than the North, thanks to territorial power differentials, though virtually no corner of the earth has been exempt. The contradictions intrinsic to capitalism are, however, not resolved in the process. They are instead moved, delayed, and ultimately amplified. Which is why I think a crash is probably the only basis for clearing away the economic deadwood represented by the overaccumulation problem.
Patrick Bond (pbond at wn.apc.org) home: 51 Somerset Road, Kensington 2094 South Africa phone: (2711) 614-8088 work: University of the Witwatersrand Graduate School of Public and Development Management PO Box 601, Wits 2050, South Africa work email: bond.p at pdm.wits.ac.za work phone: (2711) 717-3917 work fax: (2711) 484-2729 cellphone: (27) 83-633-5548 * Municipal Services Project website -- http://www.queensu.ca/msp * to order new book: Cities of Gold, Townships of Coal -- http://store.yahoo.com/africanworld/865436126.html