From: Patrick Bond <pbond-AT-wn.apc.org> Date: Wed, 18 Dec 1996 21:09:30 +0000 Subject: Re: M-I: Rate of Profit Says Doug: > ...Financial and > industrial investment are done by different people employed by different > institutions. GM managers didn't wake up one day and say, "The hell with > this car stuff, let's play games with the baht-ringgit exchange rate." They > still make lots of cars, and make lots of money making cars. During the 1980s (when I was paying a bit more attention), weren't they making more money from GMAC and First Nationwide assets, since they could redirect profits that otherwise would have been reinvested in the glutted auto market into high-yielding mortgages? > Second, profit > rates are up from 1970s lows in almost every OECD country except Japan. > Third, the average OECD rate of return is over 16% - over 18% in the U.S. - > which is twice the long-term average return in the U.S. stock market, and > three times the long-term return on government bonds. Can you break this down a bit more? Are corporate treasurers and portfolio managers investing for the long-term, or instead (as you suggest next regarding shareholder control) for the short-run impact on the quarterly statements? How has the short-term Dow performed in relation to fixed capital investments? > Fourth, the rise in > financial power has to be analyzed as the increasing assertiveness of U.S. > and other institutional shareholder, an assertiveness that has come with > their increasing dominance of the financial markets, replacing the > dispersed shareholders of yore. I would have said that the power shift from productive to financial circuits was discernable first in the form of greater spatial mobility (stemming especially from the 1960s liberalisation of the Euromarkets and then the 1970s recycling of Petrodollars), and then in the form of Volcker's 1979-80 interest rate ratchet, with all that it implied for financial power over debtors everywhere. And only then, came Wall Street's ascendance. No? > Fifth, productive capital is a surprisingly > light user of external credit, financing almost all its investment > internally - so this "temporal fix through credit" needs to be fleshed out > a bit more. Just because capital's ideologues treat financial capital as > the sole representative of the breed, we needn't accept that. > It's all relative, eh? Productive capital is more in hock to financiers than in previous decades (having not entirely worked off the junk bond, LBO and general rise in debt from the 1980s); and is more prone to substitute financial acquisitions and treasury room operations for investment in plant and equipment than was the case in earlier decades; and is also more reliant upon increasingly-indebted states and consumers (and other firms) for customers than was the case previously. All debt indicators are up substantially from the early 1970s, right? So referring to the the temporal fix offered by finance is another way of saying you can mop up overaccumulation today by consuming but putting off payment (and hence further surplus value extraction) until another time. Wouldn't you say that this has been a valuable tactic for global K to displace crisis tendencies? Ciao! Patrick Bond National Institute for Economic Policy PO Box 32848 Braamfontein 2017 South Africa (2711-403-3009 * fax 339-6395) or 51 Somerset Road Kensington 2094 South Africa --- from list marxism-international-AT-lists.village.virginia.edu ---
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