Dynamic Comparative Advantage and Long-run Roots of the Crisis. Institutional Marxian political economy: a basic theory of capitalism, intermediate theories of capitalist world systems, and empirical analyses
1700 1800 1850 1900 1950 2000
Periodization of capitalist world systems
(2) Liberalism: British variety of capitalism created complementary institutions, Liberalism as accumulation regime, cotton and railway industries as the dynamic industries, and foreign demand as the engine of demand growth.
(3) Imperialism: after the structural crisis, dynamic industries shifted to heavy and chemical industries and centres of economic growth shifted from the UK to the USA and Germany.
(4) Market capitalism was finally collapsed by the systemic crisis, the great depression, in the 1930s
(1) Dynamic Industries: the U.S. mass production system in the machinery and electronics industries.
(2) The Welfare State (accumulation regime): the requirements of oligopolistic firms and states established the welfare state.
Fiscal, monetary, and ITT policies.
(3) International Trade
The Bretton Woods system was designed to decrease the external constraints.
The USA changed its trade policy from protectionism to liberalism.
The USA also controlled supplies and prices of raw materials and fuel.
1) Prosperity started mainly with the increase of investment and consumption. A profit-led accumulation mechanism worked.
2) Boom: both borrowers and lenders’ expectation became progressively moreoptimistic.
3)Recession: monetary authorities tightened credit before crisis actually erupted. It reduced investment, and recession started.
4)Depression: a wage-led accumulation mechanism worked. Increase of real wages together with automatic stabilisers increase aggregate demand. Then the prosperity starts again.
Cyclical Crises reinforced the self regulating nature of capitalist economy.
(1)Uneven development and disorganizing influence on the international relations
1) It decreased the relative strength of US trade.
2) It undermined confidence in the US dollar.
3) It split fixed exchange system.
4) It raised the cost of raw materials, food and energy.
(2) Productivity growth slowdown and its disorganizing influence on domestic economic relations
1) It reduced value added per labour hour (VAL).
2) It reduced dynamic comparative advantage.
3) It changed coordinated capital and labour relation into conflictualone.
4) It paralysed Keynesian policy.
(3)Structuralcrisis (1974), Depression (1975-78) , and Structural crisis (1979-81)
(1)The Anglo-America neo-liberal accumulation regime solved supply constraints and reshaped capitalist world system after the structural crisis.
(2) Neo-liberal financial relaxation (regulatory capture, regulatory relaxation, and regulatory escape ) solved demand constraints.
(3) The second globalization: the US model of globalization encouraged investment in, and the transfer of manufacturing know-how to developing countries
(4) Boom-bust cycles after the structural crises