I wrote:
>In fact, under the right conditions, such as those of the 1950s and
1960s n the U.S., it can pull up wages (relative to labor productivity) and thus consumer demand, preventing underconsumption problems (without it
being necessary for consumers >to get into severe debt).<
Ulhas asks: Would this correspond to capital accumulation largely founded on the relative surplus value?
me: it could correspond to that regime, but need not do so. Capitalism has been engaged in relative surplus-value extraction for more than 1 1/2 centuries. It's only some eras and countries where the supply of labor-power is inelastic enough so that wages rise in step with the effect of relative surplus-value, i.e., labor productivity growth.
>But under historically-specific conditions such as those of the 1920s
or the 1990s, where accumulation doesn't pull wages up much relative to
labor productivity and there's a world-wide "race" (or creep) to the bottom, there's an underconsumption undertow. The one-sided class struggle against labor -- combined with competitive austerity and export-promotion -- keeps consumer demand growing very slowly.<
Ulhas: Is this the strategy of accumulation grounded in the absolute surplus value?
me: in some ways, it's similar, in that real wages fall relative to labor productivity. But Marx used the term "absolute surplus-value" to refer to speed-up (more work per hour) and stretch-out (more hours of work for a given paid day of labor) without changing the technical conditions of production.
>But that doesn't mean we can't have economic booms like that of the
late 1990s (again in the U.S.) Accumulation can speed ahead. In fact, it
did so, but it had to speed up more than in the 1950s or 1960s, to make up for the baleful pull of the undertow. And consumption boomed, but almost completely based on a truly dramatic increase in indebtedness. Both of these booms corresponded to a rapid increase in U.S. external indebtedness. So the "solution" to the undertow created new problems, new imbalances, with which we are still living.<
Ulhas: I don't know much about the US economy, but the popular perception about the US economy is the US lives beyond its means. US savings rate is low. US economy has a massive balance of payments deficit combined with a huge fiscal deficit (except perhaps for Clinton years) Thus, the US would
seem to be characterised by overconsumption, rather than an underconsumption undertow. How do we reconcile the hypothesis of undertow with the appearance of profligacy?
me: Yeah, the US as a whole spends like crazy, as indicated by rising debt and falling savings rates. This is over-spending relative to income, though not all of the over-spending is consumer demand, so it's not exactly over-consumption. On the other hand, there's been under-consumption in the sense that wages have are mostly stagnating in the US (relative to productivity) so that without the debt accumulation, consumption would have fallen rather than risen relative to GDP. The underconsumption represents a structural problem -- an undertow -- that isn't always manifested.
(I should mention that the low unemployment of the late 1990s meant that wages started rising, including those of the poor. Thus working-class debt-accumulation slowed. But the "middle class" continued to borrow to spend, assuming that the temporary stock-price spike was permanent.
(It's possible in theory that the accumulation surge of the late 1990s could have gotten rid of the undertow. But given the world "race to the bottom," it would have been very difficult, if not impossible. In any case, it didn't happen.)
an accounting quibble: it's not a balance of payments deficit, but a current-account deficit balanced by a capital-account surplus, where the latter implies that the US national net worth is falling.
BTW, government indebtedness is quite different from private-sector indebtedness, at least for the US, since the US government isn't likely to go broke in the near future. Private-sector indebtedness can lead to waves of bankruptcy, depressing the economy.
Jim
