[Marxism] Patrick Bond on world financial volatility

Jurriaan Bendien andromeda246 at hetnet.nl
Wed Dec 29 07:15:03 MST 2004


Bob wrote:

As Brenner and others on the left have shown, though coorporate profits have 
risen, the weight of the evidence suggests that the rate of profit 
trajectory has been downwards since the end of the long boom.If this is 
true, it would suggests that financialization has been more than a matter of 
policy choice for US capital, and that as Patrick Bond suggests we may be 
nearing the end of the present regime of debt driven accumulation.

But that really only suggests that debt levels become unsustainable for a 
segment of the population (mainly,
the lower-income group). Debt-driven accumulation could continue for quite 
some time among those groups possessing significant assets. We should also 
distinguish between corporate debt, government debt, and household debt. 
Peculiarly, there are almost no careful and comprehensive analyses of the 
structure of the total US debt by economists. I've tried to do some very 
approximate calculations in February this year to get an idea of size (I 
don't know how accurate they are):

Debt of all US households about $32 trillion (principally mortgage debt)
Debt of US business about $4.7 trillion
Debt of US state and local government about $1.5 trillion
Debt of US federal government about $3 trillion (gross federal debt
$7 trillion)
Total US debt $41.2 trillion, i.e. around 4x GDP and about a fifth of that 
owing to foreign investors)

(I suppose you could also approach it another way, by computing the total 
domestic net interest payments by category and applying an "average" 
interest rate to find an annual debt repayment volume; after all, it is the 
annual repayment volume that is critical here, because that is what affects 
the income distribution).

As against this, (2002 estimates taken from 
http://www.whitehouse.gov/omb/budget/fy2004/pdf/spec.pdf )

Government assets $6.7 trillion
Residential stock (mainly housing) $11.6 trillion
Plant & equipment of industries $11.4 trillion
Inventories $1.4 trillion
Consumer durables $3 trillion
Land $8.9 trillion
Total assets, excluding a series of financial assets (liquid funds and 
claims etc.), "human capital" and R&D capital) $43 trillion.
NB - foreigners are said to own net capital assets of about $3.2 trillion in 
the US.

So it looks to me like debt-driven accumulation can continue for quite some 
time yet; it's just that some social classes will be "squeezed" more, and 
then will be less able to spend very much.

Jurriaan








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