<html><div style='background-color:'><DIV class=RTE> In a chapter titled "The End of the Boom and the Neo-Classical Reaction," Shutt gives the following from the OECD National Accounts Statistics and IMF International Financial Statistics: GDP was 4.3% annnual average change between 1950 and 1973 and dropped to 2.4% between 1973 and 1995; Private consumption 4.3% fell to 2.6% respectively for the two periods; Fixed Capital formation 5.7% dropped to 2.1%, and consumer prices increased from 3.4% to 6.4%.  What are figures from 1995 to 2005? That is have they recovered to the benchmarks of 1950 to 1973?  Shutt's critique of global capitalism ends with a fit of utopianism with a Sismondian cast, the need to slow down accumulation to avert a "catastrophic fall in capital asset values."  He says, inter alia, that "traditional policies of seeking indiscriminately to maximise GDP will have to be jettisoned, especially in the case of the high-income industrialized countries."  In the end, he falls back on nationalization and regulation of capital markets, etc.  These reforms have to be put in place before the "catastropic fall" results in a depression similar to 1930's with its political results of economic autarchy and fascism, etc.  His basic argument is summed up in the title of his first book The Myth of Free Trade.  That is that since the late 1970's (the end of the 1950 to 1973 boom period) "any moves towards creating a recognisably free market economy have been largely off-set by measures of enhanced state intervention in support of private business interests."  The solution to capital and labor surplus, cast off the fig-leaf of neo-classical consensus on free markets, openly avow and increase the state intervention that is taking place surreptiously anyway and use it in the interests of blunting profit maximization and create a more equitable distribution of income between and individuals and nations.  Although he references Marx in a couple of locations, he has completely ignored or misunderstood the import of Marx's introduction to the Grundrisse on the relation of distribution/exchange and consumption to production. As a critic he has uncovered some sore spots of capital accumulation, but his practical proposals don't go beyond utopian or administrative socialism. >From: Jim Devine <jdevine03@gmail.com> >Reply-To: lbo-talk@lbo-talk.org >To: lbo-talk@lbo-talk.org >Subject: [lbo-talk] underconsumption undertow (was: India: Marx invoked tobreak Lefts FDI barrier) >Date: Mon, 1 Aug 2005 15:18:30 -0700 > >I don't think Shutt's idea can be reduced to a single line of >causation (profit-promotion --> excess capital). But I don't want to >defend him, since I haven't read him. > >There's a difference between structural problems faced by US >capitalism today (what I call the underconsumption undertow) and the >short-term dynamics of the system (the business cycle). This >difference is largely because of debt accumulation. > >It's true that profit rates rose to 1997 -- but they never reached the >peak of previous decades, so the employers' offensive (i.e., the >effort to cut wages and public consumption by non-capitalists) >continued. Also, once the neoliberal policy revolution had happened in >about 1979/80, the capitalists accumulated political power and shifted >the distribution in their favor simply because they could. (You can >see this in the current feeding frenzy in Washington...) > >Given a general stagnation in wages (due to the employers' offensive), >consumption has largely been driven by debt accumulation and by >upper-crust spending (two sources which overlap). These days, debt >accumulation is based on temporary asset inflation (the housing >bubble). > >Even in the 1990s boom, consumption didn't seem to rise enough to >justify all the business fixed investment. Some of it was >over-investment (fiber optics, dot-coms, etc.) Then, in 2001, >investment fell drastically, which meant that consumption (bouyed by >the housing bubble) rose as a percentage of GDP. > >In recent years, businesses have been successful at raising profits, >as Doug notes. But I'd say that the rise in consumption has largely >been the result of debt accumulation. > >I'm ignoring the international dimensions, but I don't have the time... >JD > >me: > > >The effort to raise profit rates suppresses > > >consumer demand, which causes a surplus of capital. (cf. > > >http://www.lines-magazine.org/articles/chris.htm) > >Doug: > > Profit rates rose in the U.S. from the early 1980s through 1997, and > > the consumption share of GDP rose as well (from around 62% to 66%). > > Profit rates fell between 1997 and 2001, and the consumption share > > rose to almost 69%. Profit rates have risen since 2001, and the > > consumption share is now over 70%. > > > > Maybe this is a special case in history, and/or maybe the US is a > > special place, but the general principle needs a visit to the shop. > >___________________________________ >http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk </DIV></div></html>