[OPE-L:6112] falling profits

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Mon Oct 29 2001 - 14:54:04 EST

Antonio wrote:

In response to Fred's and Jerry's thoughts:
That would be my "guess:" that the increasing level of endebtedness (which
I believe took place) over the 80s and 90s (a long process indeed) would
explain the transfer of funds to the financial sector (and, a whole range
of other activities might be identified as relevant here) even if interest
rates did not increase. The mechanism for the redistribution of surplus
value [a subsumed class payment] here might have taken an institutional,
rather than market, form. The best work that suggests such a change
remains, to my knowledge, Henwood's Wall Street, even if his history stops
in the early 90s.
well there is suppose to be this comparison between Japanese and German bank 
led capitalism on the one hand and on the other hand the Anglo American model 
of capitalism that putatively subordinates productive capital to rentiers via 
the capital markets. That money was channeled through the capital markets, 
instead of banks,  gave rentiers greater powers to capture surplus value. Then 
rentiers ensured their returns through their hidden control over Greenspan 
whose commitment to NAIRU ideology was the expression of his pro rentier 
commitments. While some celebrated the capital markets for their greater 
freedom to extract capital from declining industries and plow it into the 
businesses of the future (Michael Jenses), Henwood insisted that the primary 
role of the capital markets had been simply to ensure that the lifestyles of 
the rentier class would not be undermined even as US industry lost its 
competitiveness. Indeed the greed of the rentiers became a contributing factor 
to the decline of US capitalism. This is certainly a provocative and at times 
brilliant analysis. 

The problem was that  Doug and others seemed to think that due to its financial 
repression the Japanese-German kind of capitalism would be superior in terms 
output levels, income growth, productivity, employment compared to the Anglo 
American model (see the intro to Wall Street). Japan and Germany were about to 
take over the world; then there was the American boom, coupled with on going 
problems in Germany and Japan.

 At the height of the American boom,  some argued that while the Anglo American 
model served the US in particular just fine, it should not be expected to work 
as well in other countries. So the strategy was no longer one of rolling back 
Anglo American capitalism but containing it.  So for example there was the 
struggle against IMF programs for financial liberalization in third world. 

Now with the fall out on the stock markets it seems that "insiders", not 
rentiers, were able to hide the costs of business in order to raise funds on 
the capital  markets by defrauding the public. Millions of people seem to have 
transferred the equity in their homes and squandered their savings on 
overpriced equities, especially IPOs. This has allowed firms to have raised 
substantial sums, and insiders were able to exercise their options in very 
favorable markets. 

So it's not clear to me that insiders have lost all power to rentiers. 



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