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On 11/12/10, Serhiy Kutnii <mnkuts...@gmail.com> wrote: > > So the explanatory scheme for the current crisis that one can deduce > from this & some other papers looks like this: > > 1. The economy started in post-war period with high profit rates in > industry which led to an industrial investment boom. > 2. The boom led to overinvestment in productive sectors which created > excess capacity. These developments led to fall in the industrial > profit rates & rapid growth of finance. Glen's point 2.5, that much of the investment came from other countries, is correct. In fact, U.S. capital let its plant and equipment age without much replacement and modernization. > 3. Then, when the industrial profit rates became lower than financial > ones the situation turned into its opposite - underinvestment in > production with everyone trying to invest in finance. ok > 4. However the financial system is essentially a system of pipes that > connects different sectors of economy so the finance capital must be > invested elsewhere. That's why financial system resorted to > speculation & consumer loans, especially mortgages thus creating > bubbles. The pipe metaphor suggests that finance is supportivee of production. In part it may be, but it is mostly parasitic. The role of financial capital during this period was to strip away production processes that did not meet its very high expected rate of profit. Also, much of nonfinancial business got involved in finance. > 5. The bubbles burst and the current crisis emerged. I would say that the bubbles burst and the existing crisis became apparent. > So the most interesting question that arises is whether such a > mechanism can be considered a driving force behind the Kondratiev long > waves. Kondratieff only mentioned a periodic regularity without any explantion. I was suggesting a pattern of behavior. I would think that this has more in common with Marx, with a touch of Minksy. -- Michael Perelman Economics Department California State University Chico, CA 95929 530 898 5321 fax 530 898 5901 http://michaelperelman.wordpress.com ________________________________________________ Send list submissions to: Marxism@lists.econ.utah.edu Set your options at: http://lists.econ.utah.edu/mailman/options/marxism/archive%40mail-archive.com
