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The Persistent Fall in Profitability Underlying the Current Crisis: New Temporalist Evidence
by Andrew Kliman
with an appendix by Raya Dunayevskaya: “Capitalist Production/Alienated Labor”
This study shows that U.S. corporations’ rates of profit declined after the mid-1950s and failed to rebound after the recessions of the mid-1970s and early 1980s. The author argues that not enough capital was destroyed during those recessions to reverse the decline in the rate of profit, that this problem led to a long-term explosion of debt, and that the profitability and debt problems are crucial, though indirect, causes of the latest economic crisis.
The study therefore challenges the claim, made even by some Marxist economists, that the productive and financial sectors of the economy have become “uncoupled,” and that the crisis is a purely financial one, caused by the “financialization” of capitalism, macroeconomic difficulties resulting from it, and more immediate financial-sector problems.
The political implications of this controversy are profound. If the causes of the crisis are purely financial, we can prevent such crises from recurring by doing away with “neoliberalism” and “financialized capitalism.” We need financial regulation, Keynesian policies, and perhaps financial-sector nationalization. Yet if the crisis is a systemic one resulting from the underlying tendency for the rate of profit to fall, as this study argues, these reforms will at best only delay the next crisis. And while the immense buildup of government debt may also delay the day of reckoning, it promises to make the next crisis worse when it comes.
92 pages. $10.00
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May 10, 2010