On Thu, 7 Jan 1999, Jim Devine wrote: > Ellen writes: > >Over the last few days, I have been looking over data on wages, exports, > >bankruptcies, etc. in the former so-called emerging markets. International > >capital, it seems, is really putting the screws to the laboring classes in > >Asia and South America. Asian assets are on sale at rock-bottom prices; > >commodity prices are so low, they're practically giving them away. Is this > >not the triumph of capitalism? Little wonder the Dow hit 9500. > > IMHO, the strength of the US stock market first and foremost reflects the > strength of the US profit rate, with the speculative bubble being present > but secondary. Orthodox economists tend to conflate what's good for capital > (the profit rate, a high stock market) with what's good for the people (the > GDP and its distribution, with limited negative environmental impact, etc., > etc.) So it's natural that they would make this mistake. > > The question is whether the high US profit rate will persist given the mess > that the rest of the world is in, not to mention the dynamic problems the > result when an economy enjoys (and suffers from) a high and rising profit > rate. (See my 1994 RESEARCH IN POLITICAL ECONOMY paper, on-line at: > http://clawww.lmu.edu/Faculty/JDevine/subpages/depr/D0.html or /Depr.html) > > Can the "triumph of capitalism" (or more accurately of some sectors of US > capitalism) persist? It didn't after 1929, the previous period of similar > capitalist triumphalism. So the question is: are we currently in the > historical analogy of 1929 or of 1927? It seems, though, that US capital has found ways to benefit from the mess in the rest of the world. GE, for example, made huge purchases in Asia, which it had been eyeing and organizing for some time but had found them too expensive. The capital goods are so cheap now that even if it takes years for Asia to recover, GE will make out like bandits. And their stock will continue to soar. It's the old maxim about a crisis causing consolidation of capital, but the winners and losers were already mapped out before the crisis started. If we believe that profit rates equalize across sectors, then this banditry should create rising profitability in the US by raising the opportunity cost of investing. This would not preclude shrinkage in the "real" sector; in fact, it might even encourage it. Cheers, Tavis
