The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China

264 Pages·2012·53.65 MB·English

by  John Bellamy Foster and Robert W. W. McChesney

How Monopoly-Finance
Capital Produces Stagnation
and Upheaval from the
USA to China
The Endless Crisis
The Endless Crisis
How Monopoly-Finance Capital Produces
Stagnation and Upheaval from the U.S.A. to China
by JOHN BELLAMY FOSTER
and ROBERT W. McCHESNEY
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©
Copyright 2012 by John Bellamy Foster and Robert W. McChesney
All rights reserved
Library of Congress Cataloging-in-Publication Data
Foster, John Bellamy
The endless crisis : how monopoly-finance capital produces stagnation
and
upheaval from the U.S.A. to China / by John Bellamy Foster and Robert W.
McChesney.
p. em.
Includes bibliographical references and index.
ISBN 978-1-58367-313-3 (cloth : alle paper)
1. Capitalism. 2. Stagnation (Economics). 3. Economic development. I.
McChesney, Robert Waterman
HB501·F6592012
332'. 041- dC23
2012021925
Monthly Review Press
146 West 29th Street, Suite 6W
New York, New York 10001
www.monthlyreview.org
Table of Contents
Charts and Tables
Preface
Introduction
Monopoly-Finance Capital and the Crisis
1.
2. The Financialization of Accumulation
3. Monopoly and Competition in Twenty-First-Century Capitalism
4. The Internationalization of Monopoly Capital
5. The Global Reserve Army of Labor and the New Imperialism
6. The Great Stagnation and China
Notes
Index
Charts and Tables
CHARTS
1.1. Average Annual Real Economic Growth Rates, the United States,
European Union. and Japan
1.2. Industrial Production Index
1.3. Share of GOP Going to Finance. Insurance, and Real Estate (FIRE) as a
Percentage of Total Goods-Producing Industries Share
1.4. Growth Rate of Real Investment in Manufacturing Structures
1.5. Manufacturing Capacity Utilization
1.6. U.S. Current Account Balance
2.1. Net Private Borrowing and Net Private Fixed Investment
3.1. U.S. Manufacturing Industries in which Four Firms Accounted for 50
Percent or More of Shipment Value
3.2. Revenue of Top 200 U.S. Corporations as a Percentage of Tata! Business
Revenue
3.3. Gross Profits of Top 200 U.S. Corporations as a Percentage of Total
Gross Profits in U.S. Economy
3.4. Net Value of Acquisitions of Top 500 Global Corporations as a
Percentage of World Income (GOP)
3.5. Revenues of Top SOD Global Corporations as a Percentage of World
Income (GOP)
4.2. Share of Foreign Affiliates in the Assets. Sales. and Employment of the
World's Top 100 Non-bank Multinational Corporations
5.1. Distribution of Industrial Employment
5.2. The Global Workforce and the Global Reserve Army
6.1. Percent Change from Previous Year in Real GOP
TABLES
3.1 Percentage of Sales for Four Largest Firms in Selected U.S. Retail
Industries
4.1 Top 18 U.S. Nonfinancial Multinational Corporations Ranked by Foreign
Affiliate Assets
6.1 Percent Contribution to China's GOP
Preface
TIlE WORLD ECONOMY AS a whole is undergoing a period of slowdown. The
growth rates for the United States, Europe, and Japan at the center of the
system have been sliding for decades. In the first decade of this century these
countries experienced the slowest growth rates since the 19305; and the
opening years of the second decade look no better. Stagnation is the word that
economists use for this phenomenon. In human terms it means declining real
wages, massive unemployment, a public sector facing extreme budget crises,
growing inequality and a general and sometimes sharp decline in the quality of
life. It produces all sorts of social and political crises, and these crises and their
consequences will likely be the defining events of the coming generation. For
the vast majority of the population- excluding the big winners at the top- it
feels like an endless crisis. "The trouble with normal," singer and songwriter
Bruce Cockburn tells us, "is it always gets worse."
The Great Financial Crisis of was itself linked to this slowdown
2007- 09
in the "real economy," referred to by some as the Great Stagnation. China and a
handful of emerging economies have continued to expand in recent years, but
they too are not immune to the general crisis, and are showing signs of a
downward shift and increasing instability. In an increasingly globalized
economy the fates of the various nations within it are more and more
intertwined.
But while there is a growing acceptance among business leaders and
policymakers, not to mention everyday people, of economic stagnation as the
state of contemporary capitalism, there is little explanation for the state of
affairs. Conventional economics, which cheered on deregulation of financial
markets and then slept through the financial meltdown, provides some insights
but it has not proven well-suited to the task. Like first-time parachutists
grasping their ripcords, most economists cling tightly to the conviction that
capitalism's natural state is full employment and rapid growth, so eventually
the market will work its magic.
In contrast, we argue that this is an endless crisis, because it flows
inexorably from the functioning of what we term monopoly-finance capital.
There is no reason to expect growth to improve markedly and for a sustained
length of time based on the internal logic of the system, and the existing range
of legitimate business-approved options before policymakers. Hence, the
normal state of a mature capitalist economy dominated by a handful of giant
monopolistic corporations is one of stagnation. This has been true for nearly a
century (if not longer) and the Great Depression of the provides, no pun
1930S
intended, a depressing example. For decades thereafter a variety of
mechanisms- generally through government action- allowed the system to
stave off stagnation and provide growth, but these mechanisms tended to have
deleterious side effects; their usefulness dissipated or was eventually
undermined. The most important, and most recent, was the massive increase in
debt from which propped up the economy but was unsustainable
1980- 2008
and eventually led to the Great Financial Crisis. The factors that induce
stagnation are greater today, and globalized, so the future for the economy is
gn• m.
Our objective is not to produce a polemic, or a manifesto; the aim is rather
more ambitious and more modest. It is to provide a coherent evidence-based
explanation for stagnation, and why it is an endless crisis. Although we believe
the evidence points strongly in one political direction- if people want to get off
the downward spiral of stagnation and growing human misery, it will require
radical change in the economic system- there is no litmus test for who may
read this book. We intend that it be of value to anyone, whatever their
background or political values, who wishes to understand what may be the
central political-economic issue of our lifetimes. We want to do what we can to
encourage a broad public debate on the matter, and then participate in that
debate. For a crisis of this magnitude, we need all hands on deck.
The book was written between and although the research has
2009 2012,
been done throughout our careers and is the product of discussions that we
have had for more than thirty years. The chapters originally appeared in
Monthly Review, the magazine John Bellamy Foster edits and to which Robert
W. McChesney frequently contributes (and was for a time co-editor).
We have many people to thank, whose assistance has been foundational to
the book's existence. First and foremost, we must acknowledge the important
contribution of R Jamil Janna. As we were researching and writing the three
articles that now comprise chapters three, four, and five of the book, we quickly
realized we needed assistance with gathering data, and using the data to
prepare charts and tables for the articles. Jamil, who is the webmaster for
Monthly Review and a doctoral candidate at the University of Oregon
specializing in political-economic research, did such an extraordinary job that
he joined us as coauthor of the three articles. His role is acknowledged in each
of these chapters below. However, responsibility for the overall conception and
analysis in these three chapters, as in the book as a whole, remains ours.
A number of other people have been crucial in the development of this
book. Fred Magdoff has helped with every chapter, and particularly with the
charts in the Introduction and chapter six. John Mage originally suggested
developing this short book based on ongoing work we were doing (part of a
bigger project) and we are indebted to him for inspiration and advice. We have
benefited throughout from his keen sense of financialized accumulation.
William E. Foster helped with the research in chapters five and six, finding key
materials. Hannah Holleman, as an MR research assistant, helped with the
research, fact-checking and proofing in relation to nearly every chapter. Ryan
Wishart also helped in proofing some of these chapters and providing us with
materials.
Spencer Sunshine and Susie Day, as MR's assistant editors while this book
waS in production, did the initial copyediting and frequently had specific points
that improved the writing. Much of the clarity of this book, despite the difficult
topic area, has to do with their immense editorial skills.
Martin Paddio, Michael D. Yates, John J. Simon, Brett Clark, Scott
Borchert, and Yoshie Furuhashi at MR helped in too many ways to be
mentioned. Martha Sweezy has provided unfailing encouragement.
We are also grateful to the large number of heterodox political economists
and critical scholars with whom we have had interchanges and/ or drawn
inspiration in this period. We would especially like to mention Gar Alperovitz,
Elmar Altvater, Samir Amin, Beatrice Appay, Amiya Kumar Bagchi, Riccardo
Bellofiore, Walden Bello, Michael A Bernstein, Robert A Blecker, Daniel Buck,
Paul Buhle, Paul Burkett, Val Burris, William K Carroll, John Cassidy,
Sundiata Cha-Jua, Anita Chan, Ha-Joon Chang, Vivek Chibber, Lim Chin,
Noam Chomsky, Keith Cowling, Herman Daly, Mike Davis, Michael Dawson,
Doug Dowd, Michael Dreiling, Richard B. Du Boff, Larry Elliott, Gerard
Dumenil, John W. Farley, Thomas Ferguson, Nancy Folbre, Duncan Foley,
James K Galbraith, Susan George, Jayati Ghosh, Sam Gindin, Cy Ganick,
Joseph Halevi, E. K Hunt, Martin Hart-Landsberg, David Harvey, Doug
Henwood, Edward S. Herman, Andrew Higginbottom, Makoto Itoh, Fredric
Jameson, Steve Keen, Naomi Klein, Gabriel Kolko, Joyce Kolko, David M. Kotz,
Greta R Krippner, Paul Krugman, Mark Lautzenheiser, Michael A Lebowitz,
Kari Polanyi Levitt, Dominique Levy, Minqi Li, Michael Lim Mah-Hui, Bill
Lucarelli, Joel Magnuson, Jerry Mander, Istvan Meszaros, Branko Milanovic,