On Mar 5, 2011, at 10:46 AM, Wojtek S wrote:
> But that is exactly what Brenner argues. Contrary to what Brad
> claims, Brenner shows a secular decline in mfg profit rates (i.e.
> surplus value/capital invested) in the time period preceding
> financialization (1950s to 1970s) - and argues that financialization
> that started in the late 1970s and 1980s was the capital's solution to
> this systemic problem of falling rates.
Correlation is not causation, etc. etc., but the correlation coefficient between nonfinancial corp profitability and the ratio of financial assets to GDP since 1970 is +0.27.
Anyway, I'm not sure what you're arguing here. Who is capital and how did it launch this financialization? What exactly do you mean by financialization?
My reading is that the decline in profitability from the peak in 1966 through the 1970s led to increasing exasperation among the holders of financial assets (and their managers), capital's intellectuals (e.g., Michael Jensen), and upstarts (e.g., Boone Pickens). CEOs, however, seemed less alarmed - they were comfy in that Galbraithian way and weren't motivated to do much of anything. Financial operators (e.g., Henry Kravis) perceived opportunities - undervalued assets, cosseted workers, lazy managers - and moved in with the famous leveraged takeover/restructuring strategy that got going in the late 1970s and took off with the change in the political environment in the early 1980s. This forced a major restructuring on American business - cost-cutting, speedup, etc. It's clear that product market competition wasn't enough to do the disciplinary work - it required intervention from financial operators. And the profit margin rose steadily, even as "financialization" proceeded.
Doug