Ellen quotes: >>BLS DAILY REPORT, WEDNESDAY, JANUARY 6, 1999 >>The prevailing view at the three-day meeting of the American Economic >>Association was that high stock prices probably reflect the economy's actual >>strength and not a speculative bubble that could burst. ... In the minds of >>many economists, the stock market serves mainly as a gauge of the real >>economy and a stimulus for spending. Ellen writes: >Over the last few days, I have been looking over data on wages, exports, >bankruptcies, etc. in the former so-called emerging markets. International >capital, it seems, is really putting the screws to the laboring classes in >Asia and South America. Asian assets are on sale at rock-bottom prices; >commodity prices are so low, they're practically giving them away. Is this >not the triumph of capitalism? Little wonder the Dow hit 9500. IMHO, the strength of the US stock market first and foremost reflects the strength of the US profit rate, with the speculative bubble being present but secondary. Orthodox economists tend to conflate what's good for capital (the profit rate, a high stock market) with what's good for the people (the GDP and its distribution, with limited negative environmental impact, etc., etc.) So it's natural that they would make this mistake. The question is whether the high US profit rate will persist given the mess that the rest of the world is in, not to mention the dynamic problems the result when an economy enjoys (and suffers from) a high and rising profit rate. (See my 1994 RESEARCH IN POLITICAL ECONOMY paper, on-line at: http://clawww.lmu.edu/Faculty/JDevine/subpages/depr/D0.html or /Depr.html) Can the "triumph of capitalism" (or more accurately of some sectors of US capitalism) persist? It didn't after 1929, the previous period of similar capitalist triumphalism. So the question is: are we currently in the historical analogy of 1929 or of 1927? Ellen, it was good to see you at the convention! Jim Devine [EMAIL PROTECTED] & http://clawww.lmu.edu/Faculty/JDevine/jdevine.html
