[p2p-research] Can Marxian Economics Explain the Crisis?

Fri Jan 8 03:31:37 CET 2010

some figures here:
http://www.workersliberty.org/story/2008/03/19/marxists-capitalist-crisis-1-fred-moseley-long-trends-profit

There has not been a complete recovery of the rate of profit in recent
years. I don't want to overstate it. There are different measures of profit
rates, but according to my estimates, which are for the total business
sector of the economy, by 2006 the rate of profit was within 10% of its
earlier post-war peak.

Mid-2006 was the peak of this current profit cycle. The profit share and
profit rate have declined a bit in the last year or so, and the trajectory
seems to be down right now.

But there was a substantial recovery in the rate of profit. The rate of
profit had declined roughly 50% from the peak of the sixties to the trough
of the 80s. At least half of that previous decline - I would say, more than
half of that previous decline - was reversed. Today profits are, by almost
any measure, a lot better than they were in the 70s and 80s.

Bear in mind also a couple of additional considerations. One is that these
estimates are for the domestic US economy. They do not include foreign
profits; and foreign profits are an increasing share of total US corporate
profits. 30 or 40 years they were less than 10%, today they are 30%. None of
that gets counted in the official US government estimates of profit rates.

Some people argue that including those foreign profits is appropriate in
terms of gauging the financial strength of corporations, but if you are
talking about the impact of profits on investment in the USA, then perhaps
profits made in the rest of the world do not have much impact on US
investment spending.

Another additional consideration is that these estimates of profits also do
not include the salaries of top executives, which are going through the
roof, and could more appropriately be considered as part of profits rather
than wages.

In sum, I would argue that there has been a substantial recovery of profit
rates. Maybe not complete, and we may disagree a few percentage points on
the extent, but a substantial recovery.

Another indication with respect to the financial aspect of profits is a
substantial reduction in debt obligations in relationship to profits. Those
ratios are well down from their peaks, both due to higher profits and also
to lower debt, for some corporations, and lower interest rates. So there is
less danger of corporate bankruptcy today than ten or twenty years ago.

On Fri, Jan 8, 2010 at 7:34 AM, Ryan <rlanham1963 at gmail.com> wrote:

>
>
> Sent to you by Ryan via Google Reader:
>
>
> Can Marxian Economics Explain the Crisis?<http://feedproxy.google.com/%7Er/EconomistsView/%7E3/mHbJA88DOtk/can-marxian-economics-explain-the-crisis.html>
> via Economist's View <http://economistsview.typepad.com/economistsview/>by Mark Thoma on 1/6/10
>
> John Quiggin wonders if anyone has constructed "a distinctively Marxian
> analysis of the current crisis":
>
>  Marxian economics MIA?, by John Quiggin<http://crookedtimber.org/2010/01/06/marxian-economics-mia/>:
> The financial crisis has, justifiably, enhanced the reputation of Karl Marx
> as an economic thinker. Marx was the first economist to treat crises and
> panics as an inherent feature of capitalism rather than as an inexplicable,
> but fortunately temporary, departures from a natural equilibrium.
>
>  Unfortunately, most of his analytical effort, and even more, that of the
> school of thought that followed him, was devoted to pointless exercises in
> value theory[1]. Marx’s discussion of crisis rested mainly on the idea of
> the falling rate of profit which seemed at the time to be both a theoretical
> inevitability and an observable trend. But with technological progress,
> there’s no necessity for the rate of profit to fall consistently, and it
> hasn’t. There are other ideas in Marx that might be developed to yield a
> better theory of crisis, but nothing resembling a systematic theory.
>
>  And, in the current crisis, Marxian economics seems to be pretty much
> Missing in Action. I haven’t seen much and what I have seen hasn’t added
> much, in analytical terms, to the standard left-Keynesian analysis. Perhaps
> the problem is that just about everyone expects capitalism, in one form or
> another, to survive this crisis, contrary to the orthodox Marxist view where
> crises become ever more severe and eventually precipitate the revolutionary
> overthrow of the entire system. But it’s equally possible that I haven’t
> been looking in the right places.
>
>  Readers of my blog have pointed me here<http://www.workersliberty.org/marxists-crisis>,
> which has some good stuff, but, as I said, isn’t much different from the
> standard left-Keynesian analysis[2]. Can anyone recommend a distinctively
> Marxian analysis of the current crisis?
>
>  fn1. If I get time, I’ll write a longer post on this point. ...
>
>  fn2. Except for this piece<http://www.workersliberty.org/story/2008/07/13/marxists-capitalist-crisis-6-dick-bryan-inventiveness-capital>,
> which reads more like Cochrane or Fama with some added Marxist verbiage.
>
>
>
>
> Things you can do from here:
>
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