Monday, August 9, 2010

Seymour breaks down Harvey's argument in Limits of Capital

An oldie, but a goodie.

Angus Maddison has provided some figures which give a sense of the scale of this. In 1820, $694bn circulated through world markets (on 1990 dollar values). In 1913, it had risen to $2.7tn dollars. By 1950, it was $5.3tn. By 1973, it was $16tn. By 2003, it was $41tn. The current World Bank report puts total world output in current dollar values at $56.2tn. The average compound growth rate has been around 2.2% per annum since 1770. The current position of Gordon Brown and Barack Obama is that they want to restore the world economy to a growth rate of roughly 3%. But while 3% growth may seem feasible when you're talking about a productive system thriving in a few industrial centres of the UK and a few places beyond in 1750, it looks like a different bargain altogether when you have a capitalist system operative in the Middle East, Asia, Latin America, Africa, North America, and all of Europe. Three per cent growth on current output means that the system needs to find profitable investment opportunities for $1.5tn. In twenty years time, the system will have to find profitable investment opportunities for $3tn. This leads to the "capital surplus absorption problem". Where will all this capital go?

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