[lbo-talk] Fitch and Brenner

Philip Pilkington pilkingtonphil at gmail.com
Mon Feb 23 11:20:15 PST 2009



>
>
> I tried to show that, even if we were to assume the alleged overcapacity
> crisis is real, Brenner still hasn't presented a plausible explanation for
> how it could have caused the current crisis. You write that this shouldn't
> matter because if overcapacity is real then "pretty much every major
> economic problem" must be caused by it. Well no, you have to show how. The
> standard causal accounts of the crisis are very different; if Brenner wants
> to posit a contrarian account, he needs to show how his works. Plus,
> frankly, I was a little shocked that Brenner didn't seem to know, or make
> the connection, that empirically, U.S. wages have not been cut to the
> benefit of profits. (He claimed this happened specifically in the US,
> because he needed to explain why the debt bubble happened in the US.)
>

Hang on, maybe I'm missing something here. The standard causal accounts of the crisis seem to fit into the overcapacity problem perspective - at least in my reading of it. The overcapacity problem seems to be, for Brenner, the deus ex machina which caused all of these policy measures and institutional arrangements, both national and international, which gradually began to create a highly unstable environment (the freeing up of finance, minimising labour costs through FDI - which presumably fueled international production but not consumption, liquidation of social services etc.). My understanding was that his underlying, if under-developed idea, was that it was the basic dynamic of overcapacity which he believes he has located is necessary to understand the structural reorganisations which were necessary for this crisis.

I see your point about the wage cut in the US thing though, but I'd put forward one, if somewhat speculative hypothesis; and do tell me if I'm misunderstanding something here. You say that:

"Clearly, capitalists have *not* been cutting wages in order to restore profits. Wages of some workers have no doubt been cut to boost the pay of managers and executives. But the pay of managers and executives is not a part of corporate profits. Every dollar of extra income captured by a CEO is a dollar that *could* have gone to the shareholders' profits in the form of higher dividends, or retained earnings, but did not."

Who are the "capitalists" here? Are the people receiving the extra pay not to be considered members of the capitalist class and is it not, at the end of the day, the profits of the capitalist class that matter rather than corporate profit? What I mean is that is it not quite likely that much of these pay boosts are not going to stimulate aggregate demand, but are instead being used as capital and are being channeled into the financial sector in order to realise even higher profits? If this were the case then not only would the problem of aggregate demand not be "solved" but the very money that should be going toward aggregate demand would be being used, essentially, to further the growth of the over-inflated financial sector.



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