[lbo-talk] Austerity In The Face Of Weakness

Patrick Bond pbond at mail.ngo.za
Tue Sep 7 04:11:49 PDT 2010


Ted Winslow wrote:
> Do you mean that "overaccumulation" leads to saving in excess of investment which then leads to "financial bubbling" when this excess is redirected into financial markets? In other words, in a simple illustrative system in which consumption and investment constitute the only two forms of exprenditure, do you mean that total total saving in a period (total income minus total consumption expenditure) can be in excess of total investment expenditure in that period with the excess being redirected into financial markets?
>

Ted, here's a first crack at an (unsatisfying) answer. The relationships you seek are not readily transposed onto a Marxian schema, in my experience, especially investment. The crucial missing distinction to be made is whether capitalist investment - which economists measure without reference to value - is capable of expanding surplus value extraction and hence the system's overall reproduction and expansion. In theory a price system should lead to such investments, but the underlying problem in capitalism is that investment markets distort prices and send reinvestable capital off into circuits which are not generative of surplus value.

So once overinvestment in value-producing economic activity sets in and new productive investment slows - usually signalled to capitalists when inventories pile up - then investable funds tend to be redirected into a variety of non-value-producing activities, including financial markets (think Ford/GM/GE turning to mortgages and financial services as a primary profit center in the 1980s). Some of these activities can be quite destructive of the potential for surplus value extraction, and can lead to deindustrialization far faster than markets would normally accomplish through marginalist supply/demand signalling (e.g., financier-driven asset-stripping of industry has been very common in the US over the past quarter-century).

So Ted, making that distinction is the first task, which requires moving very quickly beyond available national accounting statistics, especially the confused categories of consumption, savings and investment. And no, there aren't all that many data sources for Marxian categories, so the analysis one picks up in works, e.g. by John Bellamy Foster for MR last year or by Dumenil & Levy or Brenner, for instance, relies upon broad-based categories (profit rates cleaned for interest earnings/payments) that are quite imperfect. But the prevailing trends can usually be discerned.



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