Louis,
This is an interesting article. I'm glad that Grossman was not the
sort who believed that capitalism would drive itself (without active
help from the working class) into total collapse or even into
socialism and that he instead had a more cyclical vision of capitalist
dynamics, where capitalist over-accumulation in effect fouls capital's
own nest. I must read Grossman some time.
Other theories of crisis have a somewhat similar story of
"financialization." Paul Sweezy, Paul Baran, and Harry Magdoff's
_Monthly Review_ or Monopoly Capital school saw financialization as
resulting from stagnant profits in production which in turn result
from the system's inherent tendency to return to Great Depression-type
conditions (absent countervailing forces). (Sweezy, however, seems one
source of the view that Grossman was an "end is near" alarmist.) It's
the question of the inherent underconsumption tendencies of monopoly
capitalism that makes Sweezy different from Grossman, who instead
believed in the tendency for the organic composition of capital to
rise and thus (all else equal) for the rate of profit to rise. While
Sweezy emphasized the demand side, Grossman emphasized the
supply-side, in depressing profit rates.
My view is somewhat like a synthesis of these two views, since it
involves a two-step process. The first step is a bit like Grossman's
theory, while the second is a bit like the MR school view. ("a little
bit country and a little bit rock'n'roll?)
In the 1960s and early 1970s, in a "strong labor" period,
over-accumulation squeezed profit rates by pulling up wages and raw
material costs. A falling output/fixed capital ratio (the rough
equivalent of a rising organic composition) contributed to this
process, but in a relatively minor way. (Falling profit rates spurred
stagflation.) This process is what I call "over-accumulation relative
to supply."
The fallen profit rate (and the stagflation) led to the employers'
offensive that started in the 1970s which in turn led to the
neoliberal policy revolution (starting in 1979 in the US, with the
ascent of Paul Volcker).
This, along with the general tendency toward globalism that had been
happening in the background, finalized the shift from a "strong labor"
period to a "weak labor" period, in which the rate of surplus-value
(and the property income share of national income) tends to rise in
economic booms, except perhaps at the very end. This led to the
historically-specific phenomenon of what I call the "underconsumption
undertow," which tended to drag down profit rates. Cutting wages
(relative to labor productivity) makes this problem worse. So the main
way that the economy grows on the demand-side is through large
financial bubbles (late 1990s, 2003-7).
The general stagnation of profit rates also encourages the
financialization which allows the bubbles to occur, as does the shift
to laissez-faire finance (part of the neoliberal program).
Over-accumulation still happens, but nowadays it is "relative to
consumer demand" rather than "relative to supply." Accumulation can be
vigorous in its magnitude, but in the cyclical upswing it becomes
increasingly fragile, since it relies on relatively flaky kinds of
spending such as fixed investment, luxury spending, and credit-based
working-class consumption.
Louis Proyect wrote:
http://louisproyect.wordpress.com/2008/04/12/the-end-is-near/
--
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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