>Jim, > >The question we were discussing, I thought, was what explains the >drop in profits after 1997 (despite rapidly rising labour productivity) >and which subsequently resulted in a fall in investment initiating the >recession. Your data, at least as I read it, questioned whether the >fall in profits was initiated in production given the stable K/Y ratio. >Underconsumption was discounted because, as many have noted, >consumption expenditure has held up despite the drop in consumer >confidence. How then to explain the decline in profits if real wages >were not rising faster than labour productivity unless one were to >suggest that the intensity of labour was being reduced. > >My question was really quite simple -- could not the fall in profits >been because of a form of inability to realize profits (surplus value) >caused by competition from offshore (as claimed by CEOs to >explain why inflation was held in check despite falling >unemployment -- i.e. in their terms, a leftward shift in the NAIRU), >competition that was fueled by a) overaccumulation in competing >countries, in particular China;
why is there overaccumulation in the system as a whole? why is global investment demand not strong and high enough to realize the surplus value that remains latent in commodities? yes there is an outbreak of global competition but why? and since on the whole I would imagine that Chinese goods are non competing with US production why wouldn't such cheaper exports lower costs as much lower mark ups? Why should the consequence of big bad Chinese competition be lower profitability for US capital? Note that the solution to the crisis implied by your analysis of it points to protectionism and nationalism; you're a big free trade critic, right? > and b) the steady rise in the value of >the USD which forced down prices of domestic production in order >to remain competitive. But the strong dollar may not have only undermined the realization of surplus value; in fact realization may have been aided by the higher rate of accumulation made possible by the availability of cheaper capital as a result of the high dollar. >(ps. the references to scripture, etc. were not referring to you.) Yes, yes, I give no reasons in my posts. Rakesh
