Giovanni Arrighi on Brenner 3/2003

Brenner's history of the global economy from boom to bubble, a posteriori attempts to delineate a endogenous logic in world capitalist development. inter-capitalist relations are structured on a logic of uneven development leading to overproduction constantly threatening to lower the rate of profit, leading to the long downturn of development from 1973-1993. Government features as the one exogenous actor functioning to try to stem a destruction of low-profit captial.
Arrighi questions Brenner's choice of remedy to the capitalist crisis in the destruction of capital through a prolonged depression. Is this ever a politically possible option for the world's economies? Brennar seems to criticize efforts by government to deflect the destruction of high-cost, low-profit capital which would end in depression, but which Brennar maintains is the only means to restore adequate profits.
"The central thesis underlying all Brenner’s contentions is that the persistence of relative stagnation in the world economy at large over the last thirty years has been due to ‘too little exit’ and ‘too much entry’—too little and too much, that is, relative to what would be required in order to restore profitability in manufacturing to the level it had attained during the long boom of the 1950s and 1960s. As we have seen, Brenner traces this tendency to the mutually reinforcing action of the behaviour of higher-cost incumbent firms and the policies of the governments of the world’s three largest economies."
Arrighi posits that recovery from the era of stagnation can be expected to follow a pattern not dissimilar to that which brought about the belle epoc at the turn of the 20th century after a similiar period of capitalist stagnation from 1873-1896.
"As argued in detail elsewhere, and further specified in a later section of this article, this upturn can be traced to a response to system-wide intensifications of competition that has characterized world capitalism from its earliest, pre-industrial beginnings right up to the present. This response consists of a system-wide tendency, centred on the leading capitalist economy of the epoch, towards the ‘financialization’ of processes of capital accumulation. Integral to the transformation of inter-capitalist competition from a positive- into a negative-sum game, this tendency has also acted as a key mechanism for restoring profitability, at least temporarily, in the declining but still hegemonic centres of world capitalism. From this standpoint we can detect resemblances, not just between the great depression of 1873–96 and the long downturn of 1973–93, but also between the Edwardian belle époque and the US economic revival and great euphoria of the 1990s"
Arrighi in comparing the long downturn of the late 19th century to that described by Brenner as occuring between 1973-1993, points out that the earlier period was dissimilar in that capacity remained high and prices consistently tended lower, whereas in the latest downturn inflation has been a problem accompanying unused capacity. Sweezy and Magdoff in their analysis of the 70s and early 80s found the cause of this discrepancy among the 2 periods in the appearance of monopoly capital, which made price cuts unnecessary. currently econ analysis does not make use of monopoly production conditions to explain price levels. globalization is accepted as having made monopoly control of markets unusual. nevertheless, monopoly conditions in raw material extraction would seem to be an exception with its undeniable direct effect on price inflation.
A survey of effects of the global surge in commodity prices.
a. inflation of raw material costs will strain the bottom-line of less efficient capitals, threatening their destruction.
b. raw material prices are approaching heights which may allow more sustainable alternative supplies to be economically competitive. e.g. organic produce, solar energy,...
c. the boom in commodity prices is approaching that threshold which can make viable alternative, more sustainable production.
d. the cost of labor power must follow the rise of raw commodities. the days of cheap exploitation of the earth's resources is drawing to a close.
e. commodity producers will face increasing demands for nationalization. not just oil any longer, but bauxite, coal, copper, even wheat and corn.
f. the rising price of commodities will require that governments allocate subsidies for life's necessities. alternatively, incomes must rise to offset commodity prices.
among the most serious misgivings i have regarding another clinton presidency is the tendency to continue to praise bill's balanced budget idolotry and to criticize greenspan's interest rate cuts. of course, one could not have existed without the other. without greenspan's push of lowered interest rates, recession would have hit the US severely before 2001. the stock market boom helped then to enable a balanced budget.