2017 Crisis and Sequels Capitalism and the New Economic Turmoil since 2007 edited by Thomas Martin 2019 Cover illustration: “Have you felt the bubbles melt?” A bus advert passes the Bank of England at the time of the 2008 crash. © Philip Wolmuth/reportdigital.co.uk Library of Congress Cataloging-in-Publication Data Names: Thomas, Martin (Marxist critic), editor. Title: Crisis and sequels : capitalism and the new economic turmoil since 2007 / edited by Martin Thomas. Description: Boston : Brill, [2017] | Series: Studies in critical social sciences ; 109 | Includes bibliographical references and index. Identifijiers: lccn 2017026212 (print) | lccn 2017035644 (ebook) | isbn 9789004351035 (E-book) | isbn 9789004350960 (hardback : alk. paper) Subjects: lcsh: Financial crises. | Capitalism. | Economic history--21st century. 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Contents Acknowledgements ix List of Illustrations x About the Discussants xi Introduction 1 part 1 After 2007 Introduction to Part 1 1 The Long Trends of Profijit (March 2008) 45 Discussion with Fred Moseley 2 A New Sort of Financial Crisis (April 2008) 50 Discussion with Costas Lapavitsas 3 The Crisis Depends on the Fightback (April 2008) 57 Discussion with Leo Panitch 4 An Era of Rampant Inequality (May 2008) 68 Discussion with Simon Mohun 5 The Imbalances are Unsustainable (June 2008) 72 Discussion with Trevor Evans 6 The Inventiveness of Capital (July 2008) 80 Discussion with Dick Bryan 7 A Systemic Crisis, both Global and Long-Lasting (July 2008) 89 Discussion with Michel Husson vi Contents part 2 After September 2008 Introduction to Part 2 8 The Crisis of Neoliberal Capitalism (December 2008) 102 Discussion with Michel Husson 9 The Debacle of Financialised Capitalism (January 2009) 105 Discussion with Costas Lapavitsas 10 The Level of Debt is Astronomical (December 2008) 112 Discussion with Andrew Kliman 11 The Chain Broke at the Weakest Link (December 2008) 119 Discussion with Leo Panitch 12 The Bondholders and the Taxpayers (December 2008) 124 Discussion with Fred Moseley 13 The Neoliberal Model is Bust (January 2009) 128 Discussion with Simon Mohun 14 The Economy in a World of Trouble (April 2009) 134 Robert Brenner interviewed by Seongjin Jeong 15 The Underlying Contradictions of Capitalist Finance (June 2009) 149 Discussion with Dick Bryan part 3 After 2009 Introduction to Part 3 16 The Falling Rate of Profijit (July 2011) 158 Barry Finger Contents vii 17 The Banks’ Crisis and the Left’s Crisis (August 2011) 163 Leo Panitch 18 Nationalise the Banks! (September 2011) 169 Michel Husson 19 The Endless Bail-out of Europe (November 2011) 171 Michel Husson 20 Europe: The Bankers vs the People (June 2012) 176 Discussion with Daniela Gabor part 4 After 2010 Introduction to Part 4 21 No Choice but to Change (June 2012) 184 Discussion with Hugo Radice 22 The World of Neoliberalism (October 2013) 188 Paul Hampton and Martin Thomas 23 An Alternative View on the World of Neoliberalism (January 2014) 196 Barry Finger 24 The Resilience of Neoliberalism (June 2016) 201 Discussion with Andrew Gamble part 5 After 2015 Introduction to Part 5 25 The Coming Crisis (October 2015) 212 Michel Husson viii Contents 26 Too Much Debt in Relation to Income (January 2016) 224 Discussion with Fred Moseley 27 The Situation Has Long Been Unsustainable (January 2016) 227 Discussion with Andrew Kliman 28 We Become a Hedge Fund of Our Own Lives (January 2016) 240 Discussion with Dick Bryan 29 The Globalisation of Elites (January 2016) 248 Discussion with Hugo Radice 30 The Great Recession Is Not Going Away (January 2016) 255 Discussion with Leo Panitch 31 A Protracted Transition (June 2016) 261 Discussion with Simon Mohun 32 Brazil and Neoliberalism (July–August 2016) 268 Discussion with Alfredo Saad-Filho Afterword: 2016 278 Appendices Appendix 1: Marx on Capitalist Crises 289 Appendix 2: Ruinous Competition 300 Appendix 3: The Tendency of the Rate of Profijit to Fall 310 List of Previously Published Articles 315 Bibliography 318 Index 324 Acknowledgements I owe thanks to the contributors who made time for the discussions re- corded here, and often for reworking or correcting the transcripts. I thank my colleagues on the editorial stafff of the socialist newspaperSolidar- ity and of the associated website Workers’ Liberty, where many of the texts included here fijirst appeared. I also express my gratitude toAgainst the Current and The Bullet, for permission to use texts that were previ- ously published with them. Much of the material for this book was pre- viously collected at the blog Sense of gfc (https://senseofgfc.wordpress .com/), August 2016. List of Illustrations 16.1 Economy-wide Return on Invested Capital (roic), usa, 1965–2012 161 19.1 Growth gap between countries of the South and the North of Europe 172 23.1 Corporate profijits before taxes against corporate assets valued at historical cost for the non-fijinancial sector of the us economy, 1940–2012 200 25.1 Central bank offfijicial interest rates. Germany, usa, Japan 214 25.2 Global stock of debt 215 25.3 Tendencies in growth of labour productivity 219 25.4 Rates of profijit, 2007–2015 220 25.5 Two episodes of recession in the Eurozone: Investment 221 25.6 Two episodes of recession in the Eurozone: Wage share 222 About the Discussants Robert Brenner is a professor at ucla, a member of the us socialist group Solidarity, and author of The Economics of Global Turbulence (1998 and 2006). Dick Bryan is the co-author with Michael Raffferty of a book, Capitalism with Deriva- tives (2006), and of several articles, in which he argues that the recent rise of fijinancial derivatives marks a fundamental new stage in capitalist devel- opment, and especially in the development of what functions as “money” in capitalism. He is emeritus professor of political economy at the University of Sydney. Trevor Evans is a professor at the Berlin School of Economics and Law, and has also worked in Nicaragua and other countries. He has written especially on the interrela- tion between fijinance and capitalist crises. Barry Finger is the business manager of the us socialist journal New Politics, and a member of its editorial board. Daniela Gabor is a professor of economics at the University of the West of England and an ex- pert on the economics of banking, editor (with Charles Goodhart and others) of Central Banking at a Crossroads: Europe and Beyond (2014). Andrew Gamble is emeritus professor of politics at Cambridge University and author of two books on the turmoil following 2007–8, The Spectre at the Feast (2009) and Cri- sis Without End? (2014). Paul Hampton is a trade-union researcher, a regular contributor to the socialist weekly Solidarity, and author of Workers and Trade Unions for Climate Solidarity (2015). xii About the Discussants Michel Husson is a Marxist economist well-known on the French left, author of many books including Un pur capitalisme (2008). Andrew Kliman is the author of Reclaiming Marx’s “Capital” (2007); The Failure of Capitalist Production: Underlying Causes of the Great Recession (2011); and many articles, and is a professor of economics at Pace University, usa. Costas Lapavitsas is a Marxist economist specialising in the study of fijinancial systems. His writ- ings include Profijiting Without Producing (2013), and he is a professor at the School of Oriental and African Studies in London. Simon Mohun has done extensive research on the development of productive and unproduc- tive labour (in the Marxist sense, i.e. labour which does or does not produce surplus value), especially in the usa. He is emeritus professor of economics at Queen Mary University of London, and author of Debates in Value Theory (1994) and many articles. Fred Moseley is the author of a distinctive Marxist account of the decline in profijit rates which brought crisis in the 1970s and 80s, one has spawned a whole series of further studies. He is professor of economics at Mount Holyoke College in Massachusetts, usa. His books include The Falling Rate of Profijit in the Post- war United States Economy (1991), and, most recently, Money and Totality: A Macro-Monetary Interpretation of Marx’s Logic in Capital and the End of the ‘ Transformation Problem’ (2015). Leo Panitch has been editor of the annual Socialist Register in recent years, and has written many books and articles, several with Sam Gindin, former research direc- tor for the Canadian Auto Workers Union (caw), and notably The Making of Global Capital (2013). He is active in the Socialist Project group, http://www .socialistproject.ca/, and is a professor at York University, Toronto. Hugo Radice is the author of Global Capitalism: Selected Essays (2014) and a Life Fellow of the School of Politics and International Studies at Leeds University.