On Dec 1, 2008, at 7:24 AM, Patrick Bond wrote:
> You lads haven't run across the underlying evil below all this
> financial froth? (Overaccumulation of capital.)
Patrick, you always offer that as the one-size-fits-all explanation of the last four decades of economic history. I've got several problems with it. It treats "capital" as some unitary, easily measurable thing, like a yard of wool or quart of milk, when of course it isn't. It includes about four or five complete U.S. business cycles, several of which have brought about major structural transformations. Some of those have been periods of high investment (e.g., the late 1990s), and others of low investment (the early 2000s). Within these cycles, there have been major sectoral and regional devalorizations of capital - the basic manufacturing/Rust Belt ravaging of the 1980s, the tech bust that hit the Silicon Valley) in the early 2000s. Broadening beyond the U.S, there have been major devalorizations in Latin America, Eastern Europe, and East Asia (first Japan, then the first generation of Tigers). There have also been major investment booms, as in China.
This explanation reminds me of the extraordinary (not in a good sense) presentation I heard after the Asian crisis of 1997-8 by Paul Mattick Jr, in which he sought to explain the melodrama by "abstracting" from state, financial markets, and regional specificities, focusing instead on the underlying fundamentals of FROP, OCC, and overaccumulation. Therefore not a word on why the crisis happened when and where it did, or how Malaysia managed to avoid the worst of it via capital controls.
Doug