Fred M. writes: > I agree completely that the causes of this recession have
little to do with consumption (at least so far), and have mostly to do with
falling profits and investment. This is the main point I have been arguing
in my discussion with Jim D.<
actually, it's not an "argument" in the sense of a "quarrel" (and definitely
not a "contradiction" à la Monty Python). It's a discussion. (In this
thread, I had a argument with someone else. Or was it a contradiction?
Whatever, it was a waste of time.)
>Greenspan emphasized again in a speech last week that "weak profits and
investment" is a reason for continuing concern about the economy. <
Hasn't he also said that consumer spending is what's been holding up the
U.S. economy? My point -- and that of Godley & Izureta, who also go beyond
surface appearances to think about the determinants of private-sector
spending -- is that this prop can't last. Similarly, England's economy is
doing well in the current world recession due to the role of consumption --
but this can't last.
Michael Perelman writes:>I am having a problem with this discussion. Marx,
for me, is wholistic. To say that profits, consumption, or investment causes
a crisis seems problematical -- since all are interconnected and enmeshed
with expectations.
>Am I missing something?<
I agree with Michael: the capitalist economy, as Marx pointed out, is
holistic. Pointing out one factor as a shock to the system (e.g., the fall
in the rate of profit seen since the 1960s) is no substitute for a holistic
theory.
That's why I referenced my simple (Harrod-Domar) version of Marx's
reproduction schemes, which brings the various components of aggregate
demand and the full-capacity profit rate into a single equation.
Now, no single equation could ever be a substitute for a holistic
political-economic analysis, but I'm sketched that too: I view capitalism as
having an inherent tendency toward over-accumulation. This abstract tendency
is expressed differently on the concrete (empirical) level according to the
regime prevailing ("strong labor" vs. "weak labor"). Given the state of the
world economy these days -- an important part of the picture that's easy to
forget if we focus on the U.S. non-financial corporate business rate of
profit -- I believe that the "weak labor" regime prevails and thus affects
the expression of the abstract tendency toward
Jim Devine
