Brexit Britain's Bridge To Nowhere - Part 20 of 27

During the 1990's, this position of Japan was replaced by other Asian economies, such as South Korea, Taiwan, Singapore and Malaysia, as well as, of course, China and Hong Kong. Japan had seen its own asset price bubble burst in 1992. As the global economy moved out of the stagnation phase of the long-wave cycle, and towards the prosperity phase in the late 90's, it saw, the start of the end of the long secular downward trend of interest rates. In 1994, the US suffered a bond market crash at the hands of the bond vigilantes. In 1997 and 1998 came the Rouble Crisis and Asian Currency Crisis, as those countries that had borrowed heavily to finance a more rapid industrialisation, were hit by these rising global interest rates.

In the US, Long Term Capital Management went bust, and was bailed out. As the world economy entered the expansion phase, in 1999, and the demand for a series of primary products surged, causing their prices to rise, the Federal Reserve, in anticipation of any problems arising from the Millennium (including the Millennium Bug) pumped billions more Dollars into circulation, further fuelling the asset price bubble, particularly in technology stocks. Two months later, as the real economy expanded, and interest rates rose, the bubble burst, with the NASDAQ falling 75%.

The movement of large amounts of production to China, and other Asian economies, as well as to Eastern Europe, following the collapse of Stalinism, was not only one of the means by which the crisis of overproduction of capital of the 1970's was resolved. It was also beneficial to the ruling class owners of fictitious capital, who from the 1980's onwards, became dependent on capital gains from those assets. In previous long wave cycles, for example, in the periods between 1843-65, 1890-1914, 1949-74, the period of prosperity moves, in a matter of a few years, into a regime of extensive, rather than intensive, accumulation. This means that the demand for labour rises quickly, facilitating a rise in wages and strengthening of workers' position.

By moving large amounts of production to these newly industrialising economies, with vast latent reserves of labour-power, in the 1980's, capital muted that effect. The production shifted to these economies was of mature products, where large amounts of fixed capital was used, and replaced skilled and semi-skilled labour. What was required, was large amounts of cheap, unskilled, machine minding labour, with more that could be continually drawn in from rural areas. The potential for this demand for labour-power leading to higher relative wages was, therefore, remote. These economies could expand considerably, and the living standards of their workers increase hugely, without any such constraint.

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. Indeed, it was that which sucked into them large amounts of loanable money-capital to finance that expansion, which led to the Asian Currency Crisis, when global interest rates began to rise. For comparison, in the former Stalinist states, GDP per head understandably fell between 1989-2000, whilst for developing economies, GDP rises between 1989-2000. For the world, GDP rises, between 1989-2000, by about a third, from $4000 to $5500, which is much less than its near doubling, from $5500 to $10,000 between 1999-2012, as the new long wave expansion got underway.

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