jeudi 5 février 2015
Negative Interest Rates: Capital's Reproduction Problem
Posted on 12:06 by nice news
The Great Financial Crisis lingers. The fact that the world economy continues to grow does not change that fact. There are different lenses from which one can view the crisis and seek to understand its implications.
We are drawn to a lens that was central to the political economic discourse from the middle of the 19th century through the Great Depression. It was the idea that capitalism was so terribly successful that it generated a surplus in excess of what it could profitably invest.
Charles Conant, a journalist-cum-presidential adviser in the late-1800s, and early 1900s recognized a limited range of possibilities. Anticipating Mad Men by half a century, Conant understood that increased consumption could absorb the surplus. There was a certain plasticity to consumer desires. Still wedded to the character-building concept of scarcity, Conant saw limitations to this course.
Conant realized the surplus could be redistributed. He accepted some movement in this direction but thought that too much would undermine the work ethic. Conant knew war could destroy the surplus, but he was not war-monger. He rejected this option on humanistic ground.
The alternative he advocated was to export it. However, he also recognized that the other industrialized nations faced similar "capital congestion". The US surplus could not go there, but rather it would directed toward the emerging markets of the era. Conant wanted the surplus capital to build infrastructure, including railroads. This would absorb the surplus savings and help integrate those regions via trade in goods and services.
The Great War destroyed tens of millions of people and the capital stock of Europe and Japan. The idea of surplus capital, a central thesis, moved to the margins of the economic and policy making circles. However, by the late 1960s and early 1970s, Europe and Japan were rebuilt, and the excesses began growing
We are drawn to a lens that was central to the political economic discourse from the middle of the 19th century through the Great Depression. It was the idea that capitalism was so terribly successful that it generated a surplus in excess of what it could profitably invest.
Charles Conant, a journalist-cum-presidential adviser in the late-1800s, and early 1900s recognized a limited range of possibilities. Anticipating Mad Men by half a century, Conant understood that increased consumption could absorb the surplus. There was a certain plasticity to consumer desires. Still wedded to the character-building concept of scarcity, Conant saw limitations to this course.
Conant realized the surplus could be redistributed. He accepted some movement in this direction but thought that too much would undermine the work ethic. Conant knew war could destroy the surplus, but he was not war-monger. He rejected this option on humanistic ground.
The alternative he advocated was to export it. However, he also recognized that the other industrialized nations faced similar "capital congestion". The US surplus could not go there, but rather it would directed toward the emerging markets of the era. Conant wanted the surplus capital to build infrastructure, including railroads. This would absorb the surplus savings and help integrate those regions via trade in goods and services.
The Great War destroyed tens of millions of people and the capital stock of Europe and Japan. The idea of surplus capital, a central thesis, moved to the margins of the economic and policy making circles. However, by the late 1960s and early 1970s, Europe and Japan were rebuilt, and the excesses began growing
Negative Interest Rates: Capital's Reproduction Problem
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