World in crisis CONTENTS CONTRIBUTORS PREFACE INTRODUCTION PART I - THE US ECONOMY CHAPTER 1 - THE LONG ROOTS OF THE PRESENT CRISIS: KEYNESIANS, AUSTERIANS, AND MARX’S LAW 1. Profit Calls the Tune 2. The Keynesian Diagnosis 3. The Keynesian Prescription State-induced pro-labor redistribution State-induced investments and the Marxist multiplier Would monetary policies help? 4. Austerians versus Keynesians Appendix: Sources and Methods References CHAPTER 2 - THE OLD IS DYING BUT THE NEW CANNOT BE BORN: ON THE EXHAUSTION OF WESTERN CAPITALISM 1. Some Basic Concepts 2. The Empirical Validation of the Labor Theory of Value 3. Monopolies and the ARP 4. The ARP with Variable and Constant Rate of Exploitation: Why an Increase in Exploitation Cannot Hold Back Crises 5. The Conversion of Money into Value and the Measurement of Value before Exchange 6. The Exhaustion of the Present Historical Phase of Western Capitalism 7. Crises and Recoveries 8. Rising or Falling Profitability before Crises? 9. Rising OCC versus Falling Capital Productivity 10. The First Countertendency 11. The Second Countertendency 12. The Third Countertendency 13. Financial Crises 14. Capitalism Is on a Collision Course with Itself. 15. The Impotence of Pro-labor Redistribution 16. The Keynesian Multiplier versus the Marxist Multiplier 17. The Destruction of Capital 18. The Old, the New and the Decline of Western Capitalism Appendix: Statistical Sources and Methods Notes References CHAPTER 3 - INVESTMENT, PROFIT AND CRISES: THEORIES AND EVIDENCE 1. Introduction 2. General Aspects of Crisis Theories 3. Investment Leading the Cycle: Kalecki and Keynes 4. Investment Leading the Cycle: The Keynesian School 5. Profits Leading the Cycle: Marx and Mitchell 6. Empirical Evidence Descriptive statistics Rates of growth of income flows Regression analysis: profits and investment Granger-causality tests: profits and investment 7. Discussion 8. Concluding Remarks Notes References PART II - THE INTERNATIONAL DIMENSION CHAPTER 4 - THE TENDENCY OF THE RATE OF PROFIT TO FALL SINCE THE NINETEENTH CENTURY AND A WORLD RATE OF PROFIT 1. Introduction 2. The Rate of Profit 3. Movement of Capital and Rate of Profit 4. The Rate of Profit from the Mid-nineteenth Century The core countries The peripheral countries The world rate of profit (1955–2010) 5. Concluding Remarks Appendix A: Statistics Appendix B: Methodology Notes References CHAPTER 5 - JAPAN’S “LOST” TWO DECADES: A MARXIST ANALYSIS OF PROLONGED CAPITALIST STAGNATION 1. Introduction^1<#bookmark333> 2. Low Growth in Investment Leading to Prolonged Stagnation 3. Restrained Investment Brings About Recovery in the Rate of Profit The N/C ratio (the inverse of the OCC) Share of surplus value (or the rate of surplus value) 4. The Contradictions of Japanese Capitalism The role of crises in capitalism Strong state intervention in the era of neoliberalism Ineffectiveness of current economic policies A “virtuous cycle” for big capitalists 5. Concluding Remarks: The Fundamental Contradiction and the LTRPF Appendix: Sources Notes References CHAPTER 6 - THE UK RATE OF PROFIT AND BRITISH ECONOMIC HISTORY 1. Marx’s Law 2. The Evidence for the United Kingdom The secular decline from 1855 Four counteracting periods Depression of the 1880s The 1914–21 industrial collapse The postwar period Decomposing the rate of profit British capitalism: from workshop to financial center 3. Conclusion Appendix: Sources and Methods References CHAPTER 7 THE LONG DEPRESSION IN THE SPANISH ECONOMY: BUBBLE, PROFITS, AND DEBT 2. Theoretical Elements of the Analysis The theory of crisis Real estate speculation 3. Profitability and Accumulation in Spain Profitability of capital Debt and socialization of losses Technical change, productivity, and distributional pattern 4. Internal Restructuring of the Spanish Economy 5. Conclusions Appendix: Key Notes References CHAPTER 8 - SURPLUS VALUE, PROFIT, AND UNPRODUCTIVE LABOR IN THE GREEK ECONOMY, 1958-2013 1. Introduction 2. Productive Labor, Unproductive Labor, and Marxian Categories 3. Empirical Results: The Law of the Falling Rate of Profit in the Greek Economy, 1958–2013 4. Conclusions Notes References CHAPTER 9 THE PROFIT RATE IN BRAZIL, 1953-2008 1. Introduction 2. Brazilian Economic Growth, 1953–2008 3. Analytic Framework and Definition of Variables 4. The Evolution of the Profit Rate and Its Determinants Empirical results Explaining the behavior of the profit share Explaining the behavior of the productivity of capital 5. Conclusion Appendix: Sources and Methods Notes References 1. Introduction 2. An Analysis of the Chinese Investment Rate: A Too-Strong Investment A productivity problem The essential social side of public investment in China An overproduction problem 3. Reasons for This Huge Investment, and Solutions The role of regional bureaucracy The necessity to lower the interest rates and to expand the national market 4. The Falling Rate of Profit in China The capital productivity evolution^2<#bookmark530> Calculating the rate of profit The labor productivity increase and the falling rate of profit 5. Conclusion Notes References PART III - CREDIT, FICTITIOUS CAPITAL AND CRISES I. Introduction 2. It’s Private Sector Debt 3. The Leap in Sovereign Debt as a Result of the Great Recession 4. Debt Matters 5. Awash with Cash? 6. Not Really … 7. Deleveraging and the Depression Notes References Notes References 1. Introduction^1<#bookmark601> 2. The Rate of Profit and the Crisis of Global Capitalism Marx’s law of the tendency of the rate of profit to fall (LTRPF) Marx’s value categories, the temporal modes of value, and the LTRPF The controversy surrounding the LTRPF^7 <#bookmark612> Theoretical issues in empirical measurement The LTRPF and the historical-structural crisis of capitalism 3. The Specification of Marx’s Value Categories and the Origins of the Current Malaise 4. The Rate of Profit, the Rate of Surplus Value, and the Composition of Capital in the US Economy, 1950–2013 5. Concluding Remarks Appendix: Sources and Methods Notes References 1. Introduction 2. What Are Derivatives? 3. Market Risk and Capitalism’s Need for Price Insurance 4. The “Real World” Demand for Derivatives 5. Speculation and Hedging 6. Profitability and the Financial Form of the Crisis 7. Finance, Derivatives and Crises Pension funds and commodity markets Bank profitability, CDOs and CDS Sovereign debt crises and derivatives 8. Derivative Dynamics and Regulation 9. Conclusions Notes References 1. Introduction 2. The Intellectual Underpinning of HFT 3. Arbitraging “Equivalent Positions”: Rise of Program Trading 4. Program Trading and Market Crash 5. The Rise of HFT Notes References PART IV - THE CRISIS AND THE EURO Appendix: Statistical Sources Notes References CHAPTER 17 - THE EURO CRISIS IS A CRISIS OF CAPITALISM 1. Introduction 2. The Euro Project 3. The Policy of Austerity 4. Emigration: The Safety Valve 5. The Keynesian Solution 6. Greece Cannot Escape 7. Germany: The Success Story 8. Spain’s Inquisition 9. Italy Deep in Stagnation 10. The Tiny Members Suffer Most 11. Will the Euro Survive? Notes References