It seems clear that the current US capitalist economy is no
longer capable of “delivering the goods” as was often the justification for
supporting the system even though it involved large costs on workers,
communities, and the environment. The
claim can no longer be sustained. A whole host of measures beyond the obvious –
such as growth rates and unemployment – suggest we have a system that is not
working for the larger population. We know it is working well for the 1% and
that has been the case since the 1980s and continues to be the case into and
through the great financial slump.The latest numbers are in.
One of the measures of systemic failure is the gap between
what the economy could produce if it was able to join its currently idle and
wasted human resources with its capital stock of machines, technologies, and
organizations. Estimates vary widely but
the graph below illustrates the “gap” between actual and potential output.
This reminds me of the wonderful work done by Paul Baran
back in the 1950s and 1960 when his Political
Economy of Growth was published (I read it in the 1970s/80s). He
distinguished between the potential economic surplus and the actual economic
surplus and argued that, from a Marxist perspective, the potential surplus is
unrealized because of excess consumption, loss of output from unproductive
workers, wasteful and inefficient organizations, and most importantly currently
chronic under-and unemployment. We can add financialization of the economy to
the list of factors. Bottom line under capitalism, there is no reason to bring
the potential output in line with the actual output if it is not profitable.
We now know that corporations can make megaprofits
independent of capital investment that would expand output via the financial
sector so the capitalist system no longer works for the mass of the population. So the additional claim that there is some convergence between private profit and macro-economic dynamism that would lift all boats is also no longer applicable.
If we were viewing this socio-economic dynamic in another country -- say, the former Soviet Union -- we would surely conclude that the system was a failure. The sooner we recognize that this conlusion applies to our own sacred US capitalist economy, the sooner we will start developing some real solutions that improve the lives of the 99%.
For more on this issue go here.
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