“It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we’re just taking advantage of that. So we can’t lose,” China Investment Corp Chairman Lou Jiwei said, August 28, 2009.
According to Okishio 1961 and Van Parijs 1980, stabilizing the falling rate of profit and staving off snowballing economic crisis depend on:
1) opening new labor-intensive sectors (requires increasing rate of innovation, so it’s not feasible in the long run);
2) increasing division of labor and specialization of firms; and
3) holding back/reversing pace of technological change, via takeovers, patent laws, large reserve armies of labor.
None of this works very well when wages are stagnant.
Of course, geographer David Harvey reminds us that production can also be shifted around the globe, in effect spatially juggling buying low and selling high, and so staving off profit rate decline. This seems to have been effective throughout capitalist history, but it seems like a complex strategy over time, and possibly destabilizing. What happens if, in staunchly depressing wages and production in affluent Region A, and only insufficiently increasing wages and consumption in Region B, you lose a quantum level of aggregate demand? I’d imagine that’s possible, due to the complexity of the system.
A lot to look forward to!