Conventional Left Account

•turning-point of recent U.S. economic history: rise of neoliberalism in early 1980s

•workers’ share of income, and real pay, declined

•causing the rate of profit to rebound

•so the economy could have grown rapidly, if the extra profit had been invested in production

• But financialization occurred: profit diverted from productive

investment toward financial speculation

so

• slow economic growth

• rising debt burdens

setting stage for financial crisis and Great Recession

Yet I found:

•the turning-point was the 1970s – before the rise of neoliberalism

•the rate of profit never recovered from the fall of the late 1970s and early 1980s

•the rate of accumulation fell because the rate of profit fell, not because of diversion of profit from investment in production

•workers’ share of income has been stable, and their real compensation has risen, during the last 40 years.

rate of rate accum- econ- of ulation omic profit (productive growth investment)

gov’t & Fed policies to counteract

debt burden

s

debt crises,burst

bubbles

generation of profit productive investment of profit

Rates of Profit, U.S. Corporations, 1929-2009(profits as % of historical cost of fixed assets)

net value added - compensationbefore-tax profit

U.S. Multinationals’ Rate of Profit on Foreign Direct Investment, 1982-2009 (profits as % of historical cost of fixed assets)

The Rate of Profit & the Rate of Accumulation, 1970-2009

% of After-Tax Profit Re-invested in Production, U.S. Corporations

net value

added – comp.

net oper- ating

surplus

before-tax

profits

after-tax

profits“Keynesianism”

“neoliberalism”

Profit Share of U.S. Corporations’ Output, 1947-2009

[(net value added – comp.) as % of net value added]

Workers’ Share of U.S. National Income, , 1960-2009

[(net value added – comp.) as % of net value added]

Growth Rates, Avg. Annual, U.S. Corporations

Prospects

• more “kicking can down road” —papering over bad debt with more

debt • continued sluggishness, recurrent

crises • as debt mounts, U.S. & other

gov’ts’ ability to restore confidence declines

• full-scale destruction of capital value• new boom, or collapse, or

revolution

• socialism

Solutions?

• emulate China?

• regulation?

• redistribution?

• debt forgiveness (jubilee)?

• nationalization / worker-management?

emulate China?

regulation?

•U.S. Savings & Loan Crisis (1980s)– caused by regulation (and inflation that Keynesian policies couldn’t stop)

•regulations always “fight the last war”

“These new regulations will fundamentally

change the way we get around them.”

Joseph Stiglitz (2008):

“The ingenuity of those in the financial markets is impressive. Eventually, they will figure out how to circumvent whatever regulations are imposed. But these reforms will make another crisis of this kind less likely, and … less severe.”

Ben Bernanke (2010):

“We should not imagine, though, that it is possible to prevent all crises.”

redistribution?

•“share the wealth” struggles face strict limits•the wealth has not been there to share •even worse problem now

•struggles to protect & enhance standard of living can succeed

•but they will cause profitability to fall further,

making the system even less stable & more prone to severe crises and

recessions

•working peoples’ fights to protect their standard of living help them but hurt the capitalist economy

debt forgiveness (jubilee)?

Will lenders keep lending after that – at same interest rates?

Or – if at all – only at much higher interest rates that reflect the risk of debt forgiveness?•major slowdown in economic growth, employment, etc.

nationalization / worker-management?

Fred Moseley: “nationalization of banks … could be an important step on the road to socialism. … government banks [would] pursue important public policy objectives, rather than profit maximization.”

Rick Wolff: “workers who also served on their own boards of directors would make different decisions …. [Their] well-being … would displace individual enterprise profits … as the prevailing objective.”

BUT …

•A state-run (worker-run) bank is still a bank

•It has to obtain funds before it can lend them out

•So it must provide a decent return to those who supply it with funds

• otherwise, they won’t supply it with funds, and it won’t survive

• So its investment decisions CANNOT be based on workers’ well-being or public policy objectives

• It must try to maximize profit, just like every other bank

• So “the workers in association become their own capitalist” (Marx)

– they exploiting themselves “

• In a capitalist system, cutting costs is the key to survival, including survival of workers’ co-operatives

• Jobs & income for unneeded workers: costly

• Produce for need instead of profit: costly

• Environmental control: costly

• Workplace safety: costly

Putting different people in “control” does not undo the inner laws of capital The inner laws of capital are what must be undone.

But what exactly is needed in order to undo them and have a viable &emancipatory socialism?