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The Boom and the Bubble: The US in the World Economy
     

The Boom and the Bubble: The US in the World Economy

4.0 1
by Robert Brenner
 

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ISBN-10: 1859844839

ISBN-13: 9781859844830

Pub. Date: 11/13/2003

Publisher: Verso Books

A sustained period of significant growth in the US, however, seemed to save the day against all the odds. So impressive was the surface appearance of this rescue mission that all manner of commentators proclaimed—once again—that a ‘new economy’ or ‘new paradigm’ of unlimited and harmonious growth had been forged.

Today, as

Overview

A sustained period of significant growth in the US, however, seemed to save the day against all the odds. So impressive was the surface appearance of this rescue mission that all manner of commentators proclaimed—once again—that a ‘new economy’ or ‘new paradigm’ of unlimited and harmonious growth had been forged.

Today, as recession looms, the babble about Internet start-ups is exposed as vapid. Yet the pundits are no nearer an understanding of how or why the boom turned into a bubble, or why the bubble has burst. In this crisp and forensic book, Robert Brenner demonstrates that the boom was always a fragile phenomenon—buoyed up by absurd levels of debt and stock-market overvaluation—which never broke free from the fundamental malady of overcapacity and overproduction which continues to afflict the global economy.

Carefully dismantling the myths and hype that surround the US boom in terms of profitability, investment, and productivity, Brenner restores the properly international context to the process. He portrays the ‘zero-sum’ character of the American success, which presupposed the relative weakness of its main German and Japanese competitors: a strategy that has laid huge obstacles in the path of a ‘soft landing’ to end the current phase of growth.

A substantial new Postscript provides and up-to-date analysis of the Bush economic debacle—the crisis of manufacturing, the telecom bust, the record twin deficits, plummeting employment, and the real estate bubble.

Product Details

ISBN-13:
9781859844830
Publisher:
Verso Books
Publication date:
11/13/2003
Pages:
336
Product dimensions:
5.95(w) x 7.99(h) x 0.85(d)

Table of Contents

List of Tables and Figuresvii
Author's Notexi
Prefacexiii
Introduction: Only Yesterday1
1Persistent Stagnation, 1973-937
2American Economic Revival48
3Japan and Germany, 1980-9594
4Turning Point: The Reverse Plaza Accord128
5The Onset of the Bubble134
6A Chain Reaction of Crisis154
7Federal Reserve to the Rescue171
8The Wealth Effect and Its Limits188
9The Contours and Character of the US Boom218
10From the End of the Bubble to the End of the Boom243
11Prospects: 'It Can't Happen Here'265
Appendix IProfit Rates and Productivity Growth: Definitions and Sources285
Appendix IIMain Sources of Data290
Index295

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The Boom and the Bubble: The US in the World Economy 4 out of 5 based on 0 ratings. 1 reviews.
Guest More than 1 year ago
Brenner¿s useful study of the US economy was written before the current crisis began. He shows how from 1973 to 1995 the US economy stagnated. Then in 1995 the stock market soared, creating the biggest financial bubble in US history. The bankers and their pet politicians pretended that productivity gains were driving equity prices up, but actually it was the higher equity prices that were driving equity prices ever higher. So the financial boom did not lift the real economy ¿ there was a 25% decline in the rate of profit in manufacturing in 1997. Speculative bubbles in equities, land and building cannot drive an economy forward. Services cannot do it either. Only the vital manufacturing sector can drive an economy forward. The credit crunch is not new. In 1998, Long-Term Capital Management, a leading US hedge fund, was in crisis, so the Federal Reserve tried to bail it out. It lowered interest rates three times, trying to raise the paper wealth of companies and households, to get them to borrow more. So companies borrowed record sums for mergers and acquisitions and to repurchase their outstanding equities. This massive borrowing, by driving up share prices, also lifted top executives¿ stock options. Under current tax law, companies pay less tax on their capital gains than on dividends, they can completely write off interest payments against tax, and they can deduct the costs of stock options from their income. So many big companies pay no tax at all. Capitalism now depends more on private debt, corporate and consumer, than on our wages and therefore believes it does not need a working class to produce wealth. But this privatised Keynesianism, whereby private debt is supposed to increase demand, stimulate investment and so restore the rate of profit, does not work. Even the current record levels of corporate and household debt have not fuelled an economic recovery. Class struggle is always with us - the capitalist class wages class war by increasing their profits and attacking our wages and conditions, even if sections of the working class sometimes think they can duck out of struggle.