Wednesday, May 25, 2011

Book Review: The Boom and The Bubble

I realized that I have repeatedly referred to the global crisis of overproduction, yet I do not think I have ever discussed the concept of overproduction in any detail.  To start, I recommend the book The Boom and The Bubble:  The U.S. in the World Economy by Robert Brenner.  Brenner traces the history of the current crisis of overproduction and describes the way in which it has proceeded throughout the past few decades.  I find that it is a very useful resource for understanding recent economic history.  However, Brenner neglects any consideration of overproduction from a theoretical standpoint.  That is what I plan to accomplish in my next post.

Just in brief, though, I will summarize a couple of Brenner's main points.  First, he argues that the position of the U.S. in the world economy is such that its patterns of deficit spending and high levels of internal consumption have been the lynchpin of global economy.  Enervated by overproduction, the economy has come to depend on U.S.-manufactured demand to prop up the demand side of the supply-demand equation.  Second, Brenner contends that the global economy, as a whole, has been stagnant since the late 1960s.  Apparent economic growth in any given country has only come in the form of bubbles, and directly at the expense of other countries, via manipulations of currency value, exchange rates, interest rates, etc.  In essence, there has been no real economic growth for four decades.

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