How Monopoly-Finance Capital Leads to Economic Stagnation
(Page 13 of 19)
Yet the stimulus provided by financialization has not prevented a multi-decade decline in the role of investment in the U.S. economy. Thus net private nonresidential fixed investment dropped from 4 percent of GDP in the 1970s to 3.8 percent in the ’80s, 3 percent in the ’90s, and 2.4 percent in 2000–2010. At the heart of the matter is the declining long-term growth rate of investment in manufacturing, and more particularly in manufacturing structures (construction of new or refurbished manufacturing plants and facilities).
Even with declining rates of investment growth, productivity increases in industry have continued, leading to the expansion of excess productive capacity (an indication of the overaccumulation of capital). This can be seen in a chart showing the long-term slide in capacity utilization in manufacturing. High and rising levels of unused (or excess) capacity have a negative effect on investment since corporations are naturally reluctant to invest in industries where a large portion of the existing capacity is standing idle. The U.S. automobile industry leading up to and during the Great Recession (like the worldwide industry) was faced with huge amounts of unused capacity — equal to approximately one-third of its total capacity. A 2008 BusinessWeek article underscored the global auto glut: “With sales tanking from Beijing to Boston, automakers find themselves in an embarrassing position. Having indulged in a global orgy of factory-building in recent years, the industry has the capacity to make an astounding 94 million vehicles each year. That’s about 34 million too many based on current sales, according to researcher CSM Worldwide, or the output of about 100 plants.
The decreasing utilization of productive capacity is paralleled by what we referred to in 2004 as “The Stagnation of Employment,” or the growing unemployment and underemployment that characterizes both the U.S. economy and the economies of the Triad in general. According to the alternative labor underutilization measure, U6, of the Bureau of Labor Statistics, a full 14.9 percent of the civilian workforce (plus marginally attached workers) were unemployed or underemployed on a seasonally adjusted basis in the United States in February 2012.
In these circumstances, the U.S. economy, as we have seen, has become chronically dependent on the ballooning of the financial superstructure to keep things going. Industrial corporations themselves have become financialized entities, operating more like banks in financing sales of their products, and often engaging in speculation on commodities and currencies. Today they are more inclined to pursue the immediate, surefire gains available through merger, acquisition, and enhanced monopoly power than to commit their capital to the uncertain exigencies associated with the expansion of productive activity. Political-economic power has followed the financial growth curve of the economy, with the economic base of political hegemony shifting from the real economy of production to the financial world, and increasingly serving the interests of the latter, in what became known as the neoliberal age.
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