> As I see it, the fundamental problems in Asia (and I think the world
> capitalist economy) are:
> 1. Falling rate of profit.
> 2. Excessive (unsupportable) debt burdens of firms.
> 3. Excess capacity, created by excessive competition and
> excessive borrowing.
> In the worst cases, the inability to repay debts forces firms into
> bankruptcy. But even if firms survive, as long as they face these triple
> problems, it is highly unlikely that they will invest in new capacity.
Isn't a new wave of mergers more likely than a new wave of bankruptcies?
Indeed, it was reported that the record increase in the "Dow" yesterday
was fueled by reports of a series of mergers.
Of course, it could be argued that the consequences of bankruptcies and
mergers are very similar: increased concentration and centralization of
capital and further "rationalization" (including the "slaughtering" of
capital values). On the other hand, the conseqences in terms of firm debt
are not the same for bankruptcies and mergers.
I question, though, whether such mergers and/or bankruptcies *by
themselves* could successfully fuel a new round of capital expansion.
After all, when you say that firms have "excess capacity", doesn't this
require an expansion of *demand* to resolve?
> Unfortunately, of course, widespread bankruptcies also propel the
> economy deeper into depression. And we can't be certain when, or even
> if, a new period of expansion will begin out of this "slaughtering of
> capital".
Yes, I agree with that. But, I think we should draw out the meaning of
the above. I.e. isn't it *always* the case that "we can't be certain" when
or if a "new period of expansion" will emerge? What does this then suggest
about the "periodicity" of crisis?
> Therefore, the critical question for the world capitalist economy at the
> present time would seem to be: can these preconditions for recovery be
> satisfied WITHOUT widespread bankruptcies and a deeper depression?
> 3. Government could adopt expansionary policies that result in inflation.
> This alternative would make it easier for firms to repay their debts.
> However, once again capital is not devalued and the rate of profit is not
> increased. Perhaps excess capacity is reduced somewhat by the expansion
> of demand, but it is unlikely to be entirely eliminated.
I think that's the more likely scenario in the short to medium term. Does
this mean that Neo-Liberalism is on its death bed and Keynesianism is
about to be re-born ??? !!! Or, perhaps, it might mean a marriage of
Neo-Liberalism with (Neo-Neo?) Keynesianism?
> What do others think about this? Are these the preconditions for recovery
> from the current crisis? Will one or more of the alternatives above suffice
> to fulfill these preconditions for recovery? Or, are bankruptcies and a
> depression the only way to satisfy these preconditions? Are government
> attempts to avoid the bankruptcies only prolonging the crisis?
These questions are really too important for us not to discuss. I.e. if
there is the possibility of a worldwide depression in the short-term, how
can we *not* expend a significant amount of intellectual energy thinking
about this question of immediate importance and consequence for the
international working class? And, with due respect to John, isn't that a
little bit more immediate a question for discussion than simultaneous vs.
historic calculation of the rate of profit?
I, like Fred, look forward to further discussion.
In solidarity, Jerry