The recent spike in profitability is due to factors such as rationalization of existing investments (that is, downsizing and thereby raising labor productivity), eating up seed capital so to speak, financial industry profits from the carry trade enabled by Fed policy, and profits from foreign operations bolstered by a weakening dollar. Profitability (or anticipated profitability) on new or marginal investments has not risen. Capital will not achieve a real boost in profitability without a reduction in capital costs first and foremost through centralization and a rise in the rate of exploitation. That will make debts manageable and stimulate new accumulation, but the centralization that it will take to reduce capital costs and create the unemployment necessary for raising the rate of exploitation may well prove to be socially intolerable. The safety net has been shredded.
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