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Global capital still volatile, uneven, destructive

Patrick Bond

24 December 2006

SARPN acknowledges Patrick Bond as a source of this document.
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This month we've heard some surprisingly sanguine views from elites celebrating the fall in the value of the dollar.

New York Times economics correspondent Daniel Altman: 'The dollar's decline could continue in an orderly and relatively benign fashion. The economy could see what, under the circumstances, would be the best of all possible worlds: a lower dollar helping to support American exports, while foreign money continues to rush into the country.'

The Economist magazine: 'The world economy could well benefit from a gradual slide in the greenback. It would help to reduce global current-account imbalances and, by shifting production into America's tradable sector, would cushion the United States' economy as its housing bubble bursts.'

The World Bank: 'A soft landing remains likely? even though it may take several years beyond our medium-term projection period (2006-08) before the US current account deficit reaches sustainable levels'.

Two years ago, in a ZNet commentary - 'Crunch time for US capitalism?' - I opened by suggesting that 'the prospect of the US economic empire stumbling, tripping, and maybe even crashing is welcome indeed.' There's really no reason to adjust the diagnosis, although Washington's crisis-management techniques have kept its empire from deteriorating as fast as desired.

Recall three central aspects of our concerns about global capitalism's underlying dynamics. First, the problem of 'overaccumulation' (excess investment in relation to the demand for output) - witnessed during the 1960s-90s by declining increases in per capita GDP growth and by falling corporate profit rates (net of interest) - was displaced and mitigated, but at the cost of much more severe economic tension in months and years ahead.

Second, the temporary dampening of overaccumulation through increased credit and financial market activity - especially aimed at real estate until this year, but at other speculative markets as well - goes far beyond the ability of capitalist production to meet the paper values in the foreseeable future.

Third, geographical shifts in production and finance continue to generate severe economic volatility and regional geopolitical tensions, contributing to unevenness in currency values and markets as well as pressure from capitalist markets to penetrate non-capitalist spheres of society and nature, in search of restored profitability.

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