RE: relevance

["Mark Jones" <jones118@xxxxxxxxxxx>]

Doug Henwood:
>
>
> Does this endless debate over the origins of capitalism have any
> relevance?

I don't think it's so much a debate about the origins as about the
destination of capitalism, and also about what kind of politics we should be
arguing for. That's why there may be consensus about nothing else on pen-l,
but there is a consensus that it's important enough to talk about, even
among people who are fond of advising others to shut up and leave the list
forever. On the general question of relevance, for some years now you and I
have exchanged views from time to time on the relative importance of oil,
natural gas and energy shortages  (not important, in your view, altho maybe
you've changed now) v. the New Economy + the US productivity miracle (not
worth writing a book about in my view, and there WAS no New Economy).
Anthony Hilton in today's London Evening Standard (a must read for folks
interested in cool britannia) says:

Safety may be valued as much as growth

IN THE past couple of days the stock market has been clutching at the
slightly more cheerful noises made by Oracle and Intel in the hope that they
signal the worst is over in technology. From this it is a short leap of
faith to say that the problems of the American economy are also coming to an
end and that prospects for the autumn and next year look much better.

Unfortunately, such an analysis is based on a significant misreading of what
went wrong in America. The huge boom of the late 1990s was not caused by a
productivity explosion in the US and still less by the technology and dotcom
manias. It was caused by a glut of cheap oil which brought in its wake a
low-price glut of all competing forms of energy.

The modern world turns on energy and the US being the world's most
profligate user naturally benefited most and showed the most dramatic
growth. But when oil prices tripled as they did at the end of the 1990s and
the effects began to feed through the system, the US economy was first to
feel the pressure.

Understanding this is important in gauging when the US will recover. Oil,
having come off its low of under $10, has remained close to $30 for almost a
year and shows little sign of falling despite the advent of summer and
slower growth on all sides. Indeed, it is provoking a collapse of corporate
profits round the world. Thus far, technology aside, it has been confined to
businesses that are leading indicators - advertising and the media, and
airlines. But more basic industries are also beginning to feel the pressure,
either directly or through fewer orders from their frontline customers.

We have, therefore, to get used to a period of sharply-reduced corporate
profitability and lower investment returns and this poses a serious
challenge for the City. Fund managers will find that generating high
investment returns will be a lot harder in the next 10 years than in the
last 10.

If most businesses are moving sideways, the indices are likely to be flat
and active fund managers might find they come to be judged again by their
ability to produce absolute returns rather than by comparison with dull
indices.

We are entering a period where safety may come to be valued as much as
growth and if fund managers are wise they will begin now to educate their
clients and customers that the astonishing returns of the 1990s were an
historical fluke.


http://www.thisislondon.co.uk/dynamic/index.html


Mark Jones