>[I'd love to see some comment on this. --CGE]
>
> Crunch time for US capitalism?
> December 04, 2004
> By Patrick Bond
>
>If you are like many aggrieved people I know, the prospect of the US
>economic empire stumbling, tripping, and maybe even crashing is welcome
>indeed.
This POV ignores the collateral damage that a U.S. crash would cause throughout Asia, Latin America, and to a lesser extent, Europe. Whole economies are sustained by U.S. demand. It's not just a U.S. problem - it's a global economy problem.
>1) Overly competitive corporations, which drive down the rate of profit;
But the rate of profit in the U.S. has recovered very substantially since its 2001 low.
>2) Overconfidence within financial markets, which today act more like a
>casino than savings/investment mechanism;
When were they ever an S/I mechanism?
> 3) Overproduction of
>commodities, as a persistent reflection of inadequate consumer buying
>power;
U.S. consumers have too much buying power, which is part of the problem.
> and 4) Overaccumulation of capital more generally, a problem which
>cannot be displaced forever, but which one day must face more severe
>devaluation.
I.e., the displacement/deferral school of thought that posits an always postponed crisis that never arrives.
>Opposed to these is a Marxist position which respects the strength,
>resourcefulness and self-healing capacity within capitalism - and
>especially reflects upon the weakness of the system"s main enemy: the
>working class. Those arguing that the system is *not* facing a systemic
>overaccumulation crisis include Leo Panitch, Sam Gindin and Chris Rude in
>the new *Socialist Register 2005: The Empire Reloaded*, Doug Henwood in
>*After the New Economy* (2003) and Giovanni Arrighi (criticizing Brenner)
>in *New Left Review* last year.
Yup, that has been my posish, and I'd never want to bet against the resourcefulness of the system managers. I do think, however, that they've got a big challenge on their hands right now - how can the USG balance its books under current political constraints (meaning, we're run by a bunch of short-sighted idiots - who else could seriously contemplate Phil Gramm as Treasury Sec'y?) and how can the US bring its current account closer to balance? Something's got to give. It could be done intelligently, meaning gradually over the course of years. Or it could come in the form of a dollar crisis that could - *could* - really challenge the system's bailout managers.
>Yet the internal contradictions continue bubbling up. Globalization has
>generated economic stagnation, not dynamism. According to even the World
>Bank, the increase in the world"s annual GDP per person fell from 3.6%
>during the 1960s, to 2.1% during the 1970s, to 1.3% during the 1980s to
>1.1% during the 1990s and 1% during the early 2000s.
That masks important regional differences. Asia has been anything but stagnant. Capitalism hadn't ever seen anything like the Japan-Korea-China serial booms before 1950, had it?
>On the other hand, corporate interest payments remained at record high
>levels throughout the 1980s-90s. Subtracting interest expenses, we get a
>better sense of net revenue available to the firm for future investment
>and accumulation, which indeed remained far lower from the early 1980s-
>present, than during earlier periods, according to French Marxists Gérard
>Duménil and Dominique Lévy (http://www.cepremap.ens.fr).
Some of this strikes me as adjusting the data to prove what you want. A lower interest burden is a real relief, and can represent real improvement. High interest rates were the symptom of an imposed crisis - the Volcker crackdown designed to crush the rebellious elements at home and abroad. It worked.
What's interesting now is that profits are high (even in Europe), but investment isn't following suit. US corps are building up huge wads of cash right now. It seems like a very Keynesian moment, with fear/uncertainty/doubt leading to a great preference for liquidity.
>Duménil and Lévy also deconstruct the ways that US corporations
>responded to declining manufacturing-sector accumulation. Manufacturing
>revenues were responsible for roughly half of total (before-tax) corporate
>profits during the quarter-century post-war "Golden Age", but fell to
>below 20% by the early 2000s.
The Golden Age was an anomaly and it's time to stop using it as the norm against which the present is measured.
>And capitalism's use of "space" - geographic crisis displacement - is
>really what globalization has been about: allowing corporations facing
>falling profits to seek relief in sites where raw materials and labor are
>cheaper, where regulations are fewer, and where new markets for products
>might emerge. Hence corporate profits drawn from global operations rose
>from a range of 4 to 8% during the 1950s-60s to above 20% by 2000.
Lots of those foreign profits come from First World investment sites, not Third.
>To be sure, some of the problems faced by capitalism have not been simply
>stalled and shifted around. Some vicious hits - asset devaluations - have
>occurred in different sites over the past 30 years.
>
>These included the Third World debt crisis (early 1980s for commercial
>lenders, but still going on for most of the world's states and societies);
A great political victory for the First World, however.
>energy finance shocks (mid 1980s); crashes of international stock (1987)
>and property (1991-93) markets; crises in nearly all the large emerging
>market countries (1995-2002); and even huge individual bankruptcies which
>had powerful international ripples.
And what's the fallout been? The system keeps barrelling along.
>Most importantly, the US stock market was the site of an enormous "New
>Economy" bubble until 2000, perhaps culminating in the Dot Com crash which
>wiped $8.5 trillion of paper wealth off the books from peak to trough (in
>the US alone) - but on the other hand, seemingly reinflating in 2003-04
>thanks to the return of household investors and mutual fund flows, and
>possibly rising further in future years if Bush begins social security
>privatisation.
>
>There were crashes not only in New York, but also 1/3 declines during 2002
>in Finland, Germany, Greece, Ireland, Netherlands,and Sweden, and other
>less severe falls in most other stock markets.
Again - so? THe fallout (economic, political, or cultural) from the dot.com crash hasn't been anywhere near as severe as you might have imagined. Maybe that means there's another leg down awaiting us.
>David Harvey provides a further idea to interpret how the system responds
>to overaccumulation and financial overhang. Inspired by Rosa Luxemburg"s
>ruminations a century ago over the relations between capitalism and non-
>capitalist spheres of life, he describes new systems of "accumulation by
>dispossession", which means, essentially, the looting of the commons and
>use of extra-economic power to gain profits.
Accum by dispos is a great phrase, but I'm not convinced that it's an innovation. It's as old as capitalism. You could say that capitalism has been spreading to parts of the world (and parts of life) that it hadn't previously colonized, but how is this all that new?
>The systems of dispossession today also more explicitly attack the sphere
>of "reproduction", where exploitation occurs especially through unequal
>gender power relations.
Gender power relations are trending towards less inequality, not more, which is why we have such a cultural backlash these days.
Doug