Nobelist Michael Spence at Project Syndicate "the sensible conclusion is that this is not just a cyclical recovery, but rather the beginning of a delayed process of structural adaptation to a rapidly shifting global economy, to emerging economies’ growth and shifting comparative advantage, and to powerful technological forces. While these changes are difficult to think about with any degree of precision, that doesn’t make them unimportant.
Of course, no one would deny that there are cyclical elements in the downturn of 2008. But they were accompanied by structural imbalances that had been building over at least 15 years, and that are at the heart of the US economy’s inability to bounce back in a normal cyclical way. Skeptics might well question why, if these alleged structural imbalances are now impeding GDP and employment growth, they did not appear before the crisis. The answer is that they did, but not in growth and employment figures. Other signals were missed, ignored, or deemed unimportant. A short list of these signals would include excess consumption (now gone) and deficient savings, based on an asset bubble and high debt; a persistent and growing current-account deficit (signaling that domestic consumption and investment exceeded income and output); and negligible net employment growth (over two decades) in the economy’s tradable sector. With domestic aggregate demand in short supply, the only functioning growth engine, external trade in goods and services, is not an employment engine. Missing all of these signals produced the pre-crisis illusion of sustainable growth and employment, and helps explain why the crisis, rather than its causes, is viewed as the culprit. The crisis, however, merely exposed the underlying imbalances and unwound some of them." Of course structural change should be understood under the category of countertendencies to falling profitability as theorized JS Mill, Marx and Grossma). Spence is calling for the revamping of structures and institutions for renewed profitability the previously weak signals of its objective drop having been missed by those who focused on reported profits and sales. But the weak signals were always there for those who could get themselves to look. A good Marxist has a weak signal mentality. LR
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