Ulhas writes:
> Yes, I agree.
>>But for these questions, it seems to me that a
>>standard (orthodox) analysis is appropriate.
> How?
I was unclear. I don't see any necessary conflict between Marx and standard economics (supply & demand, etc.) if the insights of each are applied appropriately. That is, I see "standard" economic analysis as working pretty well on Marx's volume III level of abstraction, which concerns the competition of many capitals. (That book is pretty underdeveloped and needs insight from Keynes, etc.) That doesn't say that macro-level accumulation, profit rates, etc. (the volume I and II levels of abstraction) should be ignored.
>>The US is currently
>>stimulating the rest of the world's aggregate demand, via its
>>current-account deficit.
> Why the "US is currently stimulating the rest of the world's aggregate
> demand, via its current-account deficit."?
The US is buying more from the ROW than it's selling (both of goods & services), while paying more profits, interest, royalties, etc. to the ROW than it's receiving, and making more unilateral transfers to the ROW than it receives.
>How much does this
>contribute to
>the profitability in the US based businesses?
since 1997 or so, it's hurt US profitability, especially in exporting and import-competing sectors, though things are changing.
>Why Europe and
>Japan are not
>able to show growth similar to the US or run large current
>account deficits?
big question. I think I'll leave that to Doug as an Xmas present.
>> 1. an increase in the demand for US exports and a fall in US imports,
>>encouraging the current boom(let?) to persist.
>>
>> 2. a fall in the demand for rest-of-the-world exports and a rise in ROW
>>imports, except for in China and other countries which are keeping their
>>currencies from rising relative to the US$. This encourages recession or
>>slower demand growth in these countries.
>>
>> to a large extent, on a global level, #1 and #2 cancel out, since it's
>>simply a matter of switching demand from the ROW to the US.
Ulhas:
>That may be the case in terms of demand, but what does it imply in terms
>rate of profit on the total capital employed in the US or
>globally (If we see extended reproduction as a global
>process)?
the falling dollar helps profit realization (and thus profit rates) in the US and hurts profit realization in the ROW (except those places that have prevented their currencies from rising relative to the US$). The effects on the profit rate of demand shifts only lead to profit rates rising (or falling) _all else constant_, since changes in the balance of class forces and/or in "capital intensity" can go in the other direction.
the global profit rate would be largely unaffected by the direct effects of currency depreciation, since it represents demand shifting from the ROW (less China etc.) to the US. But if future events spur a global recession, intensified competitive austerity and export-promotion, and/or debt-deflation, there would be a global realization crisis of the sort that hit in the early 1930s. This would drive the global profit rate drastically downward and block further accumulation for quite awhile.
>(Surely it's profitability rather than demand that
> matters most to capitalism.)
the two are related. All else constant, profitability drives accumulation and thus aggregate demand. But demand feeds back to affect profit rates.
Jim Devine Put the X back in Xmas, the Ch back in Chanukah, and the S back in Saturnalia!