[Marxism] Surprising U.S. economy
rrubinelli at earthlink.net
Sat Oct 8 15:39:06 MDT 2005
JE produced an interesting post on the US economy referring to its
"surprising" vitality despite vulnerability, a vulnerability symptomatic
in dollar decline, foreign funds flows, current account deficits.
I would like to offer that this vitality isn't really much of surprise.
It may appear as a surprise to those who were hoping, reckoning for the
replacement of US capitalism by either/both/all the capitalism of the
EU, China, emerging countries, regional initiative like Mercosur or
continental integration. But expecting any or all of those to occur is
wasting time. I also don't think that refinancing of the US housing
market can alone explain the "float" of the US economy.
Regarding foreign funds flows-- a couple of things. In contrast to
predictions that foreign funds inflows, and security purchases of US
instruments would diminish and reverse-- nothing of the sort has
happened. FDI in the US in 2004 increased to $96 billion from $57
billion in 2003.
Purchases of US securities continue to increase as the petroleum
exporters pump their earnings back into the financial markets.
Estimates are that in 2005 oil exporters will net almost $400 billion,
twice the inflation adjusted 1980 peak (hah! now there's the right use
of the term) of $197 billion.
Mideast oil producers increased their holdings of US instruments from
$84.5 billion in June 04 to $121 billion in June 05.
And not just the US's trusty allies in the Gulf. Norway doubled the
amount of dollar denominated issues in its special reserve fund. Russia
quadrupled, year to year, its dollar assets.
Like I said, if OPEC didn't exist, the US would have had to invent
But wait there's more-- because manufacturing profits have held up
pretty well in the US. And the basis for this? Well, after years of
reducing unit labor costs through continued disemployment and "capital"
substitution for labor, US manufacturers have turned to reducing unit
NON-labor costs-- by retiring/refinancing debt and reducing
depreciation charges. And how do they reduce depreciation charges? By
restraining capital investment of course-- so that the value of existing
productive plants are not immediately brought to near zero by
replacement, and so that with less new investment there is less
"capital" value that must be written down through scheduled
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