Economics of Global Turbulence Reading Robert Brenner Jan 2008

1/15/08 - Economics of Global Turbulence - Robert Brenner
Brenner locates a crisis in capitalist development in a long downward trend of
profitability beginning some time around 1965 and continuing through today. the
cause of a squeeze on profits is endogenous to capitalist development, resulting
from the increasing globalization of production finding its impetus in relations of
uneven development. the fixed nature of capitalist accumulation working to deter
further investment in the most advanced capitalist countries and allowing less
developed regions to borrow existing technological advances while employing a work
force at much lower wages. Global manufacturing thus extends productive capacity
beyond what is necessary, leading to a decrease in the rate of profit both in a
particular sector and system wide.
The new accumulation hot-spots, the first wave of Japan and Germany, the second wave
of the East Asian tigers, Taiwan, Korea, Singapore, Hong Kong, and the current 3rd
wave of China and India, by orientating their catch-up strategies around exporting
to the US market remained vulnerable to downturn in american thirst for imports.
their attempts to extend their accumulation strategies to a wider regional market
are made difficult by the initial tight coupling of their export manufacturers to
finance and government and the defensive measures erected to incubate their
production take-off. Furthermore, a reliance on exports from their most productive
capital investments remains vulnerable to devaluations of the dollar which can
undercut its productivity gains.
Brenner follows the twists and turns of us monetary policy, its consequences for the
economy and the global capitalist context from 1965 - 2005. its a dizzying record of
policies and thier consequent adjustments for credit markets and production. whether
or not brenner's analysis of cause and effect in the economic performance is merely
the logical manipulations of hindsight or is accurate in all historical cycles of
the post-war economy, the basic line of his analysis of a crisis seems fairly
persuasive.
Keynsian demand support in the us economy had diminishing returns in econ output
from 1965-1980. As the rebuilding of the means of production, in post-war europe and
japan provided greater productivity than the older fixed capital accumulation in the
us. Us manufacture faced increased price competition. there was a resulting lowering
of the rate of profit and greater disinclination to invest those profits as
over-capacity began to be a problem.
[note: wouldn't the greater sense of global competition have required greater
investment?]
Keynsian demand support will be necessarily inflationary in those conditions where
there is over-accumulation of capital.
The Volker regime at the fed beginning with the reagan take-over in 1980, sought to
address this problem of insufficiently productive capital by inducing interest rate
shocks. At the same time, reagan continued demand support by increased military
expenditures. Demand was propped up, but to an unprecedented degree was directed
towards imports as us manufacturers lost market share to foreign competitors.