Failure of capitalist production underlying causes of the great recession

255 Pages·2012·4.536 MB·English

by  Kliman, Andrew

The Failure of Capitalist Production
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The Failure oF CaPiT alisT
ProduCTion
underlying Causes of the Great recession
Andrew Kliman
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First published 2012 by Pluto Press
345 archway road, london n6 5aa
www.plutobooks.com
distributed in the united states of america exclusively by
Palgrave Macmillan, a division of st. Martin’s Press llC,
175 Fifth avenue, new York, nY 10010
Copyright © andrew Kliman 2012
The right of andrew Kliman to be identified as the author of this work has been
asserted by him in accordance with the Copyright, designs and Patents act 1988.
British library Cataloguing in Publication data
a catalogue record for this book is available from the British library
isBn 978 0 7453 3240 6 hardback
isBn 978 0 7453 3239 0 Paperback
library of Congress Cataloging in Publication data applied for
This book is printed on paper suitable for recycling and made from fully managed
and sustained forest sources. logging, pulping and manufacturing processes are
expected to conform to the environmental standards of the country of origin.
10 9 8 7 6 5 4 3 2 1
designed and produced for Pluto Press by Chase Publishing services ltd
Typeset from disk by stanford dTP services, northampton, england
simultaneously printed digitally by CPi antony rowe, Chippenham, uK and
edwards Bros in the united states of america
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In memory of Ted Kliman (1929–2009)
and Chris Harman (1942–2009)
For Jesse
For Anne
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Contents
List of Tables viii
List of Figures ix
List of Abbreviations xi
Acknowledgments xii
1 Introduction 1
2 Profitability, the Credit System, and the “Destruction
of Capital” 13
3 Double, Double, Toil and Trouble: Dot-com Boom and
Home-price Bubble 28
4 The 1970s––Not the 1980s––as Turning Point 48
5 Falling Rates of Profit and Accumulation 74
6 The Current-cost “Rate of Profit” 102
7 Why the Rate of Profit Fell 123
8 The Underconsumptionist Alternative 151
9 What is to be Undone? 181
Notes 208
Bibliography 227
Index 234
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list of Tables
2.1 Non-Linear Effect of Falling Profitability on Business
Failures 17
4.1 Growth Rates of Real GDP Per Capita 53
4.2 Sovereign Debt Defaults and Restructurings,
1946–2005 57
4.3 Debt and GDP, U.S. 61
5.1 Rates of Profit, U.S. Corporations, Selected Trough
Years 82
6.1 Rates of Profit and Equity-market Rates of Return 117
7.1 Rapid Depreciation of Computer Equipment 142
8.1 Real Income Growth, U.S., 1979–2007 160
8.2 The Final Part of Output and Economic Growth 163
8.3 Initial Situation 169
8.4 First Ten Periods 172
8.5 Worldwide Growth of Real GDP since 1600 174
8.6 Investment and Growth, 1965–92 Averages 176
9.1 Pay, Exports, and Economic Growth in the U.S.
and China 187
viii
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list of Figures
2.1 Distributions of Rates of Profit 18
3.1 Mortgage Borrowing and Real Home Prices, U.S. 29
3.2 Relative Increases in Liabilities and Assets, U.S.
Households 30
3.3 Net Lending or Borrowing by U.S. Households 31
3.4 TED Spread, August 2008–January 2009 35
3.5 S&P 500 Index 39
3.6 Nonfarm Payroll Employment, U.S. 41
3.7 Nominal and Real Federal Funds Rates 42
3.8 Federal Funds Rate and Home Mortgage Borrowing 43
3.9 Excess Savings as Percentage of World GDP 45
4.1 Growth of World GDP Per Capita 52
4.2 Impact of China on Growth of GDP Per Capita 53
4.3 Gap between Actual and Potential Real GDP, U.S. 54
4.4 Growth Rate of Industrial Production, U.S. 55
4.5 Growth of Industrial Capacity, U.S. 56
4.6 Outstanding Debt as Percentage of GDP, U.S. 60
4.7 Change in Debt, All U.S. Domestic Nonfinancial
Sectors 62
4.8 Changes in Debt of U.S. Treasury and Households 63
4.9 Individual and Corporate Income Taxes, U.S. 64
4.10 U.S. Treasury Debt as Percentage of GDP, Actual vs.
Hypothetical 65
4.11 Gap between Actual and Potential Labor Force, U.S. 67
4.12 Average Duration of Unemployment, U.S. 68
4.13 Real Hourly Compensation of U.S. Employees 69
4.14 Changes in Income Inequality among U.S. Households 70
4.15 Growth of Government Structures, U.S. 71
5.1 Rates of Profit, U.S. Corporations 76
5.2 U.S. Multinationals’ Rate of Profit on Foreign Direct
Investment 79
5.3 Effect of Inventories on Before-Tax Rate of Profit 81
5.4 Inflation-Adjusted Property-Income Rates of Profit 83
5.5 Inflation-Adjusted Before-Tax Profit Rates 84
5.6 Adjusted and Unadjusted Rates of Profit 85
5.7 Effect of Alternative Adjustments on Rates of Profit 87
ix
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