Scenes From the Global Class War

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triciamarie
Scenes From the Global Class War

 

triciamarie

There is a fascinating essay by Michael Hudson on counterpunch.org today:

quote:

On Friday, October 24, the pound sterling dropped to just $1.58 (down from $1.73 earlier in the week, an enormous plunge by foreign-exchange standards), and the euro sunk to just $1.26, while Japan’s yen soared by 10 per cent. These shifts threatened to disrupt export markets and hence industrial sales patterns. Global stock markets plunged from 5 to 9 per cent abroad, and there was talk of closing the New York market if stocks fell more than 1,000 points. Pre-opening trading saw the Dow Jones Industrial Average down the maximum limit of 550 points (largely on foreign selling) before bounding back to lose “only” 312 points as the dollar soared against European currencies.

Friday’s currency turmoil and stock market plunge was a case of the chickens coming home to roost from the class-war policies being waged by European and Asian industry and banking squeezing their domestic consumer markets – that is, labor’s living standards – in favor of export production to the United States. The internal contradiction in this industrial and financial class warfare is now clear: To the extent that it succeeds in depressing labor’s income, it stifles the domestic consumer-goods market. This disrupts Say’s Law – the principle that “production creates its own demand,” based on the assumption that employees will (or must) be paid enough to buy what they produce.

This has not been true for many years in Europe and Asia. But production has been able to continue without faltering because of an international deus ex machina: consumer demand in the United States.


I'll buy that.

George Victor

quote:


This has not been true for many years in Europe and Asia. But production has been able to continue without faltering because of an international deus ex machina: consumer demand in the United States.


Say's law is from a classical economics that had never bothered to really explain distribution, whether to workers or to the underclass that is constantly added to by owners to ensure wages do not rise without a struggle.

U.S. financial circles had to be really inventive to create an objective for the rising savings looking for an outlet in pensions. See the work of FIRE (see Janzen in February, 2008, Harper's mag) in which he says such bubbles as the real-estate one, which followed on the dot com one, have replaced business cycles, and must continue to be created to keep system from permanent collapse.

MOre an engineered situation than deus ex machina?