[Marxism] Evidence that poverty and restricted consumption cause crisis

[Charles Brown <cdb1003@xxxxxxxxxxx>]

In an Interview with Robert Brenner on the Current Crisis, 

(Conducted by Seongjin Jeong on 22 December 2008, and published on 22 January 
2009 in Hankyoreh, 
http://www.hani.co.kr/arti/society/society_general/335869.html )
 
Brenner responds to a question:


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JEONG How would you explain the long-term weakening of the real economy since 
1973, what you call in your work ʽthe long downturnʼ?

BRENNER What mainly accounts for it is a deep, and lasting, decline of the rate 
of return on capital investment since the end of the 1960s. The failure of the 
rate of profit to recover is all the more remarkable, in view of the huge 
drop-off in the growth of real wages over the period. The main cause, though 
not the only cause, of the decline in the rate of profit has been a persistent 
tendency to over-capacity in global manufacturing industries. What happened was 
that one-after- another new manufacturing power entered the world 
market--Germany and Japan, the northeast Asian NICS, the southeast Asian 
Tigers, and, finally, the Chinese Leviathan. These later-developing economies 
produced the same goods that were already being produced by the earlier 
developers, only cheaper. The result was too much supply compared to demand in 
one industry after another, and this forced down prices and in that way 
profits. The corporations that experienced the squeeze on
 their profits did not, moreover, meekly leave their industries. They tried to 
hold their place by falling back on their capacity for innovation, speeding up 
investment in new technologies. But of course this only made over-capacity 
worse. Due to the fall in their rate of return, capitalists were getting 
smaller surpluses from their investments. They therefore had no choice but to 
slow down the growth of plant and equipment and employment. At the same time, 
in order to restore profitability, they held down employeesʽ compensation, 
while governments reduced the growth of social expenditures. But the 
consequence of all these cutbacks in spending has been a long term problem of 
aggregate demand. The persistent weakness of aggregate demand has been the 
immediate source of the economyʼs long term weakness.



 
 

> ^^^^^

 CB:The concomitance of the decline in the rate of profit and
 real wages would be remarkable to Brenner only 
to the extent that he's an "overproductionist " . 
 "Poverty and restricted consumptionists" 
expect a drop off in wages to cause a decline
 in the rate of profit. In the last 4 sentences , he
does see cause in drop in demand.
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