[Marxism] Evidence that poverty and restricted consumption cause crisis

[Charles Brown]

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In an Interview with Robert Brenner on the Current Crisis, 

(Conducted by Seongjin Jeong on 22 December 2008, and published on 22 January 2009 in Hankyoreh, http://www.hani.co.kr/arti/society/society_general/335869.html )
 
Brenner responds to a question:


-clip-


JEONG How would you explain the long-term weakening of the real economy since 1973, what you call in your work ‘the long downturn’?

BRENNER What mainly accounts for it is a deep, and lasting, decline of the rate of return on capital investment since the end of the 1960s. The failure of the rate of profit to recover is all the more remarkable, in view of the huge drop-off in the growth of real wages over the period. The main cause, though not the only cause, of the decline in the rate of profit has been a persistent tendency to over-capacity in global manufacturing industries. What happened was that one-after- another new manufacturing power entered the world market--Germany and Japan, the northeast Asian NICS, the southeast Asian Tigers, and, finally, the Chinese Leviathan. These later-developing economies produced the same goods that were already being produced by the earlier developers, only cheaper. The result was too much supply compared to demand in one industry after another, and this forced down prices and in that way profits. The corporations that experienced the squeeze on
 their profits did not, moreover, meekly leave their industries. They tried to hold their place by falling back on their capacity for innovation, speeding up investment in new technologies. But of course this only made over-capacity worse. Due to the fall in their rate of return, capitalists were getting smaller surpluses from their investments. They therefore had no choice but to slow down the growth of plant and equipment and employment. At the same time, in order to restore profitability, they held down employees‘ compensation, while governments reduced the growth of social expenditures. But the consequence of all these cutbacks in spending has been a long term problem of aggregate demand. The persistent weakness of aggregate demand has been the immediate source of the economy’s long term weakness.



 
 

> ^^^^^

 CB:The concomitance of the 
 
decline in the rate of profit and
 real wages would be remarkable
 to Brenner only 
to the extent that he's an 
"overproductionist " . 
 "Poverty and restricted 
consumptionists" 
expect a drop off in wages 
to cause a decline
 in the rate of profit. In the 
last 4 sentences , he
does see cause in drop in demand.