>Could you explain what you mean by "an underconsumption undertow"? Is
this different from usual underconsumptionist arguments?<
The usual underconsumptionist argument -- as analyzed in Michael Bleaney's excellent UNDERCONSUMPTION THEORIES -- sees (1) consumer demand as the only important part of aggregate demand (so that it constrains capitalist accumulation, but maybe not government spending); and (2) the economy as always sinking into stagnation, when counter-acting influences aren't present, usually because wages are always falling behind labor productivity.
I disagree strongly with (2), since there are eras and places when underconsumption tendencies don't play a role. I see the 1950s and 1960s in the U.S. as an example where underconsumption didn't play a role. This differs radically from Baran & Sweezy's classic underconsumptionist theory in MONOPOLY CAPITAL but is similar to some versions of the French "Regulation theory." I see the lack of an underconsumption undertow during that period as due to the fact that wages were pretty high then. Other crisis tendencies kicked in, a version of the "tendency for the rate of profit to fall," what I call "over-investment relative to supply."
I also disagree with (1). Capitalist accumulation is not constrained by consumer demand. Instead, it speeds ahead, driven by competition and class antagonisms, independent of consumer spending. In fact, under the right conditions, such as those of the 1950s and 1960s in the U.S., it can pull up wages (relative to labor productivity) and thus consumer demand, preventing underconsumption problems (without it being necessary for consumers to get into severe debt).
But under historically-specific conditions such as those of the 1920s or the 1990s, where accumulation doesn't pull wages up much relative to labor productivity and there's a world-wide "race" (or creep) to the bottom, there's an underconsumption undertow. The one-sided class struggle against labor -- combined with competitive austerity and export-promotion -- keeps consumer demand growing very slowly.
But that doesn't mean we can't have economic booms like that of the late 1990s (again in the U.S.) Accumulation can speed ahead. In fact, it did so, but it had to speed up more than in the 1950s or 1960s, to make up for the baleful pull of the undertow. And consumption boomed, but almost completely based on a truly dramatic increase in indebtedness. Both of these booms corresponded to a rapid increase in U.S. external indebtedness. So the "solution" to the undertow created new problems, new imbalances, with which we are still living. I think they'll keep the U.S. down for quite awhile, even without a double dip, unless of course there's a major war.
thanks for asking.
Jim
