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Economic Theory

The Stagnation of Employment

Except in times of war, capitalist economies almost never reach full employment. The mere absence of jobs for those desiring paid employment, however, is not necessarily a problem for the ruling economic interests. Unemployment and the underutilization of labor more generally—the existence of what Marx called the industrial reserve army of labor—is a necessary part of a capitalist economy, since it keeps wages low as workers are forced to compete with each other for jobs. This becomes a serious problem for the system or for the political structure when the shortfall in employment coincides with a deeper structural crisis; when aggregate demand and thus investment opportunities are hindered by low employment and low wages; and when a shortage of jobs creates a political problem, sometimes even igniting popular opposition at the grassroots of society. All three of these contradictions are apparent in 2004, setting the stage for a national debate on the question of jobs, which more than three years since the beginning of the 2001 recession is now suddenly a front page story | more…

New Economy R.I.P.

Doug Henwood, After the New Economy (New York: The New Press, 2003), 269 pages, hardcover $24.95.

In the late nineties, the San Francisco Bay Area was caught up in the mania of the high-tech, information-based “New Economy.” Venture capitalists threw money at e-commerce start-ups based on dicey premises, while loss-making companies raked in millions at their initial public offerings. In low income areas like the Mission District, dot-coms moved in, forcing out poor people whose only recourse was to organize themselves in anti-displacement coalitions and hope for the market to crash. In the fray, even a new type of gold digger emerged: women in search of nerdly adolescent millionaires with fat stock options. It was a stupefying time | more…

NAFTA’s Knife: Class Warfare Across the U.S.-Mexico Border

David Bacon, The Children of NAFTA: Labor Wars on the U.S./Mexico Border (Berkeley: University of California Press, 2004), 348 pages, cloth $27.50.

I once heard a discussion about the first sentences of books and those sentences that were among the most famous and most powerful. The opening of Gabriel Garcia Marquez’s One Hundred Years of Solitude was among the most popular. David Bacon’s first sentence in chapter one of his book must now rank among the most gripping: “NAFTA repeatedly plunged a knife into José Castillo’s heart.” | more…

A Precarious Existence: The Fate of Billions?

The number of people living a precarious existence has been increasing in many countries of the world, with hunger all too widespread. There are approximately 6 billion people in the world, with about half living in cities and half in rural areas. Between the poor living in cities and those in rural areas, a vast number of the world’s people live under very harsh conditions. It is estimated that that about half of the world’s population lives on less than two dollars per day, with most of those either chronically malnourished or continually concerned with where their next meal will come from. Many have no access to clean water (1 billion), electricity (2 billion), or sanitation (2.5 billion) | more…

Poverty and Inequality in the Global Economy

Capitalism is hundreds of years old and today dominates nearly every part of the globe. Its champions claim that it is the greatest engine of production growth the world has ever seen. They also argue that it is unique in its ability to raise the standard of living of every person on earth. Because of capitalism, we are all “slouching toward utopia,”—the phrase coined by University of California at Berkeley economist J. Bradford DeLong—slowly but surely heading toward a world in which everyone will have achieved a U.S.-style middle-class life | more…

Cuba: The Next Forty-Five Years?

This year Cuba will be celebrating the forty-fifth anniversary of its victorious revolution: a great historic achievement. And when we bear in mind that the Cuban revolution—the long sustained action of a nation of just eleven million people—survived for forty-five years against all odds, successfully confronting the declared enmity, the U.S.-dictated international political encirclement and economic blockade, as well as the ever renewed attempts to subvert and overthrow the post-revolutionary order by the world’s most preponderant economic and military power, even this simple fact puts forcefully into relief the magnitude and the lasting significance of the ongoing Cuban intervention in the historical process of our time. We are all contemporaries to an achievement whose reverberations reach well beyond the confines of the tendentiously propagandized “American Hemisphere,” offering its hopeful message to the rest of the world | more…

After Neoliberalism. Empire, Social Democracy, or Socialism

Since the early 1980s, the leading capitalist states in North America and Western Europe have pursued neoliberal policies and institutional changes. The peripheral and semiperipheral states in Latin America, Africa, Asia, and Eastern Europe, under the pressure of the leading capitalist states (primarily the United States) and international monetary institutions (IMF and the World Bank), have adopted “structural adjustments,” “shock therapies,” or “economic reforms,” to restructure their economies in accordance with the requirements of neoliberal economics | more…

Du Bois vs. Neoliberalism

What is today viewed as globalization is not in fact a new phenomenon as the writing of W. E. B. Du Bois attests. Dr. Du Bois understood the impacts of what today we call neoliberalism, its damages, its causes, the interests it serves, and the way it divides the working class and undercuts the progressive movements with horrible consequences at home and abroad. These remain our themes today, though we would add “and women” in brackets where Dr. Du Bois wrote only “men,” and we would include ethnicity and religion as part of the discussion of the color line | more…

Capitalism as a World Economy: An Interview with Harry Magdoff

Harry Magdoff sat down to talk in front of a video camera in April 2003, three weeks before the conference “Imperialism Today” sponsored by Monthly Review in honor of his ninetieth birthday. An edited version of his remarks would be shown on a large screen at the start of the conference. But Harry has much to say that will be left on the cutting room floor, not because it lacks relevance, but because the time for the video is short, and a good portion of it will be devoted to how he became a socialist. Here, then, are Harry’s thoughts on capitalism, imperialism, the United States—and Iraq. (Note: the transcript of the interview was edited in July 2003 under Harry’s supervision to fill in a number of details.) | more…

What Recovery?

Only a few years ago it was widely suggested that the capitalist economy had entered a new economic era. The rapid economic growth experienced during the brief period of the late 1990s, we were told, would become virtually endless, spurred on by rising productivity led by high technology and the New Economy. The circumstances that now confront us following the bursting of the speculative bubble could not be more different. The country is once again mired in economic stagnation. In the present “recovery”—if indeed we can call it that—new jobs remain few and far between. Of the four sources of demand that create economic activity—personal consumption, business investment, government spending, and net exports—it is mainly consumption, backed by increasing debt, that is currently keeping the economy from slipping deeper into stagnation. Indeed, many business leaders and economists fear the return of recession—referred to as the likelihood of a “double dip.” Behind this fear lies excess capacity in almost every industry, the absence of new growth stimuli, slow growth or recession in most of the rest of the world, and the aftereffects of the bursting of the speculative stock market bubble. All of this suggests that there is more at stake than the traditional business cycle. At the very least, there is reason to expect the continuation of the tendency of stagnation. | more…

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