STWR - Share The World's Resources

The mass media show attractive images of the comfortable lifestyles of the upper income earners who benefit from the cash-rich global economy. Which luxury car to drive, which championship golf course to frequent, which hedge funds to invest in, which stock brokers to consult—good questions if you’ve got the money! But behind this attractive scenery, debt, bankruptcy, and poverty are a tsunami that is overwhelming much of the world’s population, including growing numbers in the U.S.

Only two weeks after the Bank of Japan triggered an unwinding of the yen carry trade with its Feb. 21 interest rate increase, one of the largest U.S. mortgage lending companies, Century Financial, declared itself effectively bankrupt and at the mercy of its bank lenders for more credit—credit those same banks cannot afford to give. And three of those lenders—Morgan Stanley, Merrill Lynch, and Goldman Sachs—by March 3, were being rated by their own securities traders virtually as issuers of junk paper.

Stagnation and Finance

In a series of articles in Monthly Review and in Monthly Review Press books during the 1970s and 1980s, Harry Magdoff and Paul Sweezy proposed that the general economic tendency of mature capitalism is toward stagnation.* A shortage of profitable investment opportunities is the primary cause of this tendency. Less investment in the productive economy (the “real economy”) means lower future growth. Marx wrote about the possibility of this very phenomenon: