CBO expects federal debt to double over next 30 years

[pbrower2a]

(03-10-2021, 11:29 AM)Einzige Wrote:

(03-10-2021, 10:33 AM)David Horn Wrote:

(03-08-2021, 03:11 PM)Einzige Wrote: The aggregate economy - the total capitalist world economy - is far less profitable today than in the 1900s.

Based on what?  Profits today are often hidden, but even the share totally in the open is astronomical.  Look at a company like Apple that is valued at over $1Trillion, yet manages to create this with a workforce of roughly 13,000.  No Gilded Age 1.0 megalith even comes close.

Michael Roberts has calculated the U.S. rate of profit since the War and found it to be in a pretty steady decline since the late 90s after peaking in 1963. Even if aggregate profit in raw dollars rises astronomically for the publicly visible  monopolist corporations the total profitability of the system as a whole is in massive decline.



Esteban Maito's work agrees with this, analyzing global profitability throughout the world. His work suggests a radical drop in profitability in the total world system as an aggregate since the 1800s, a profound global profitability crisis punctuated by apparent gains






A lot of what is published about profitability is just propaganda to make the capitalist system look healthier than it is.

The falling rate of profit is a well-known reality to Karl Marx. The explanation, not necessarily his, is that as capitalism matures or goes stale, more suppliers are attracted to any activity with a high profit. Manufacturing becomes more efficient as capitalists discover shortcuts that cut costs without damaging quality, and longer runs of production ensure that volume negates the need for huge profit margins. A 15% rate of profit looks adequate for staying in the business. 

The falling rate of profit has consequences. Most obviously, capitalists must keep the overall demand high. Consolidation of failing businesses might give the few survivors  a few more years of operation. 

OK, just because something used to be profitable for manufacture and sale (let us say televisions with cathode-ray tubes) does not mean that those will remain profitable. They are gone from the market. They are unwelcome even as donations at thrift shops even though they were once fully adequate for consumers. They just don't get made anymore. See also old-fashioned typewriters. See also film-based cameras and video-cassette recorders. Many of those are still operable. 

If one looks at the pattern:

1. A new product is introduced, and it has a limited market and limited sources for suppliers. Lenders are skeptical. It has few potential customers and those few people will pay a fortune. Can you imagine spending $2000 for a video-cassette recorder around 1980? Some people did! 

2. High profit marines encourage competition. Profits are high enough that entities in similar business jump in. Lenders and suppliers want in on the profitability. Profit margins shrink, but volume overpowers that. People think that they are getting a bargain when they see something with a lower price tag. Competition is still "gentlemanly", as there are early costs to recover. New firms manufacturing the item don't have those costs. 

3. Engineering resources find ways to cut cost without hurting quality. Higher technology really means doing more with less material or less-costly components. Production runs lengthen, and sales volume increases. Prices fall. 

4. As the item becomes less expensive it starts appealing to people more sensitive to price. People start buying it as gifts. Maybe newer models are technologically better, so replacements become a reality. 

5. At some point the object becomes cheap and banal. Production goes to low-cost areas (USA to China). Production costs and margins are low.  Aggressive marketing becomes the norm.   Competition makes the object a commodity instead of a luxury. The market is saturated. 

6. Emphasis likely goes from selling the object to selling complementary goods.
 
7. In the end the object becomes obsolete. The market is saturated, and new purchases are for population growth or for replacement. Meanwhile something very new and improve enters the market. Initially fiendishly expensive. the newfangled innovation remains for well-heeled customers. But that comes to its own pattern, and as that newfangled innovation follows a similar pattern, it might start supplanting the old object. OK, a company like Philips, Sony, Matsushita, or Daewoo might be behind both the one-time miracle and the increasingly-banal and cheap object now doomed because the new one is better. Costs will catch up. 

8. at some point, "product death" becomes a reality. 

What we saw with table radios, rotary-dial phones, monaural discs, wringer washers, black-and-white TV's, reel-to-reel tape, mainframe computers, and eventually gasoline-powered automobiles. Costs fall, technology improves, markets saturate, and products go from luxuries to commodities. What really is new under the sun?