The Rate of Profit and the Problem of Stagnant Investment: A Structural Analysis of Barriers to Accumulation and the Spectre of Protracted Crisis

Abstract

AbstractThis paper situates the subprime crisis in the context of the performance of the American economy over the last twenty-five years. The restructuring of the US economy is briefly reviewed, followed by an examination of some of the contradictions of the neoliberal model. Particular emphasis is placed on understanding the reasons behind stagnant investment, and how the US finance-led accumulation-régime has become dependent upon, and threatened by, credit-creation delinked from the financing of fixed-capital formation. I argue that while the defeat of the remnants of the New-Deal/Civil-Rights liberal-democratic coalition has provided the political context for the bold re-assertion of the prerogatives of capitalist owners, the neoliberal model has not provided a path out of problems of stagnation and growing debt-dependency that presently plague the US (and global) economy. Further, I argue that evidence suggests that the post-1982 restoration of profitability that underpinned the relative improvement of US economic performance has peaked, and that compelling historical and theoretical reasons exist to expect that the profit-rate will decline in the coming decade. This will introduce additional stresses on the current debt-structure of the US economy, triggering a period of prolonged crisis and economic dislocation. The conclusion is that the US economy faces the spectre of a protracted crisis associated with the reassertion of the falling rate of profit.