The Resumption of the Fifth Wave
As I have argued since 2010, the actual slowness of the recovery from that point stems from the deliberate imposition os measures of austerity to reduce aggregate demand, and put downward pressure on wages and interest rates, so as to reflate asset prices. It stems from the policy of QE to underpin those reflating assets, and thereby divert money-capital, and indeed, revenues, away from the real economy, and real capital accumulation, again in order to inflate those asset prices. Policy did not fail to bring about a faster recovery, because policy never was designed to bring faster recovery. It was designed to restrain recovery, and inflate asset prices, the main form of wealth of the bourgeoisie, and now the chosen metric of progress, as speculative capital gain replaced, profit, rent or interest, which again underpinned the change in cultural mindset.
The bourgeoisie sucked up speculative capital gains, as share, bond and property prices hyper-inflated, financed by central banks. The working-class and underclass hoped for speculative gains from the Lottery, scratch cards and slot machines. On pages 97-99, Paul provides charts for the growth of money-supply, income inequality, and the growth of financial profits that also support the argument I have presented above. On page 100, he provides a chart showing the growth in foreign direct investment, which again shows a clear spike from 1999 until 2008, with a sharp dip between 2000-2003. A further graph on, page 101, shows the same clear pattern. It shows that GDP per head of population rises sharply, across the globe, starting in 1999-2000. For the world, it rises from around $5500 to $10,000 in 2012. For former Stalinist states the rise is even more stark. It rises from around $1500 to around $9,000, whilst for developing economies. It rises from around $1500 to $4200.
But, Paul, to support his thesis of the prolongation of the fourth wave, focuses on the data for the period after 1989, rather than 1999. For the former Stalinist states, GDP per head understandably falls between 1989-2000. But, even for developing economies, GDP does rise more notably between 1989-2000. For the world, GDP does rise more notably between 1989-2000, but, even here, whilst it rises by about third, from $4000 to $5500, that is much less than its near doubling, from $5500 to $10,000 between 1999-2012.
Even so, contrary to the pronouncements about secular stagnation and so on, as Paul says,
“It is this that prompted the British economist Douglas McWilliams, in his Gresham lectures, to nominate the last 25 years as the 'greatest economic event in human history'. World GDP rose by 33% in the hundred years after the discovery of the Americas, and GDP by 5%. In the fifty years after 1820, with industrial revolution underway in Europe, and the Americas only, world GDP grew by 60%, and GDP per person by 30%. But, between 1989 and 2012 world GDP rose from $20 trillion to $71 trillion – 272% - and as we have seen, GDP per person increased by 162%. On both measures, the period after 1989 outpaces the long postwar boom.” (p 101)
And, the fact is that, in the last two years, the strength of the long wave boom has started to reassert itself, once more. More than 90% of the world's economies are currently growing above their trend rates of growth, many economies are growing at paces equal to those of the early 2000's.
Paul also provides a further interesting chart that illustrates the point made earlier about stagnant wages for many workers in developed economies. His chart, on page 102, shows a massive rise in income for those at the lowest levels of income, across the globe, reflecting the process of industrialisation of developing economies. It shows a similar rise for the world's top earners. But, it shows a large drop for those in between, which represents all of those workers and middle classes within the developing economies. It represents a significant element in the inevitable collapse of neo-Liberalism.
In support of this, Paul cites the work of Richard Freeman that I have also referenced, in the past, showing that the global working-class doubled between 1980-2000. A large part of that comes from the industrialisation of Asia, particularly China. In fact, as I have also described, the global working-class rose by a third in the first decade of this century, and interestingly the growth in the service sector at least matches that in industry.
Paul also notes the same point that I have made, which is that a lot of this development in the developing economies, has proceeded on the basis of extensive rather than intensive accumulation. However, he points out, as these cheap labour supplies start to get used up, and wages rise, the scope for additional profits from offshoring begin to dry up.
Paul sees these conditions interrupting the wave, as productivity gains decline. However, I still see the potential for expanding the mass of simultaneously employed labour further. Unemployment and underemployment is still high in places. As the boom resumes, many zombie companies will collapse, releasing their capital and labour, much of the fake self-employment will also disappear. And, there are still large supplies of labour in Asia and South America, not to mention the world's latest, and most rapidly developing economies in Africa.
Paul concludes the first part of the book with a number of questions.
“What emerges from this shattered dream? The new technical and economic system will have to be built from the materials to hand. We know it will involve networks, knowledge work, the application of science and a large amount of green technology investment.
The question is: can it be called capitalism?” (p 106)
I will now follow him in examining those questions.
No comments:
Post a Comment