> Previously, I made the case that the financial meltdown was basically
> a delayed response to the severe neglect of investment in plant,
> equipment, and infrastructure. I also explained the cause of this
> neglect.
>
> http://radicalnotes.com/content/view/73/39/
>
> Here, I'm going to discuss the financial side of the crisis, which,
> while secondary, is still important.
>
> This crisis has been nicely described as a Minsky moment, but it may
> just as well be described as a Marx moment. Marx's term fictitious
> capital and the more conventional discounted present value are not
> entirely different, but Marx's expression emphasizes the fact that the
> future is both unknown and unknowable.
>
> more at
>
> http://michaelperelman.wordpress.com/2009/01/31/marx-before-minskymarx-before-minsky/
>
By my calculation, US manufacturing output per capita has risen by 98% since 1980 - i.e., almost doubled. Total output per capita *excluding* finance has risen roughly 228% - i.e., more than tripled. I don't know how much investment in plant, equipment and infrastructure is supposed to be enough, but clearly it's been sufficient to produce a very healthy long-term secular rise in useful output. The roots of the present crisis lie (partly) in the fact that *on top of* all that output produced domestically, we've consumed a rising amount of additional output imported from overseas and financed the purchases with debt. Also, it's not true that there's been much in the way of redistribution from wages to profits. There has been a redistribution from the wages of low-paid workers to the wages of high-paid workers - a phenomenon that Marxists can't find much analysis of in Marx, so they've tended to talk about it as if it were a question of wages versus profits, which it's not. In my view, the elephantization of finance, in addition to laying the groundwork for the crisis, is probably also at the origin of a lot of the redistribution - as leverage has expanded, net revenue per employee in the financial industry has risen, permitting enormous pay increases for high-end workers, which then spread to other sectors of the economy through competition for educated workers as well as through social norms. As income polarized, people on the sagging end of the distribution tried to keep up with the consumption patterns of those on the rising end, financing the extra consumption with debt (which, in turn, further fueled the expansion of the financial industry and the pay packages there). Marx isn't of much help here - though Veblen is, as is Minsky.
SA