Academic journal article World Review of Political Economy

The Great Recession in the Us from the Perspective of the World Economy

Academic journal article World Review of Political Economy

The Great Recession in the Us from the Perspective of the World Economy

Article excerpt

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Introduction

In this article, we analyze the economic crisis of 2007-09 in the US from the perspective of its place in the world economy, using a Marxist approach. Unlike other analyses on the causes of the crisis and on the US economy, this text (1) theoretically characterizes the Great Recession (GR) and the implications that the place of the US in the world capitalist system has for the study of the crisis; (2) the meaning of the housing bubble is exposed in order to identify its impact on capital accumulation and the profit rate; (3) profitability is studied by using different indicators, both the rate and the mass of corporate profits; and (4) the characteristics and shortcomings of the profit income recorded in the System of National Accounts (SNA) are explained.

The analysis of an economic crisis requires reconciling the level of abstraction of the theory of crisis with the more concrete phenomena pertaining to the current model of accumulation. Thus, the specific aspects of the GR lie within three interconnected phenomena: (1) the absence of a truly intense accumulation process in the preceding cycle (2003-07), with implication in the composition of capital; (2) the existence of a speculative bubble associated with the most dynamic sector of investment, real estate, which led to an increase in private indebtedness; (3) the regressive pattern of income distribution; and (4) geographical and sectorial imbalances. These features pose a challenge to a characterization of the crisis from the perspective of Marx and its general laws enunciated in Capital (Marx [1867] 1996, [1894] 1998).

However, I think that the Marxist approach in fact explains not only why these kinds of particularities arise from the inner tendencies of the mode of production but also the reasons of opposing explanations, even that nowadays most of the Marxist authors have rejected the "Law of the tendency for the rate of profit to fall" (LTFRP) as the foundation of the GR (see A. Freeman 2010; Mateo 2013). Therefore, a complementary aim of this article is to contribute by linking the above-mentioned facts on distribution, finances, etc., with the general laws of motion of capitalism, showing that the Marxist theory of crisis is appropriate to characterize the GR.

In this sense, one of the implications of this type of approach lies in the distinction between the way the phenomena appear (and are quantified in the SNA) and its ultimate foundations. In reality, it is not entirely possible to make a quantitative demonstration of our Marxist explanation for the crisis, but at least to make "approximations" that combine qualitative reasoning with quantitative aspects. Given that, we harmonize the theoretical analysis with data from the US economy.

To set a time frame start for the beginning of the crisis the NBER is used, so the growth phase lasted from November 2001 (2001Q4) until December 2007 (2007Q4), while the crisis ended in June 2009 (2009Q2) (NBER, 2010).1 This article will focus on the US corporate business sector, which concentrates the basic tendencies of the capitalist production.

The article is organized in two sections. First, we start by characterizing the crisis. Then, we highlight the questions related to the US economy and its place in the capitalist world system, while in the last part of the section several theoretical aspects related to the real estate bubble are explained. Second, we analyze the dynamics of capital accumulation in the US economy, followed by addressing the emergence of the crisis, whose particularities require some comments on profits, crisis, and National Accounts in the context of the GR in the last part.

Elements for the Analysis of the World Crisis

The purpose of this section is to show the relationship between the Marxist theory of the crisis and its application to a specific area (US economy) and the current historical moment. …

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