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57 of 59 people found the following review helpful:
5.0 out of 5 stars
Deep, yet illuminating, December 5, 2006
This review is from: The Economics of Global Turbulence (Hardcover)
First of all, a book on economics that gets thumbs up from both The Nation & The Wall Street Journal should get a wide readership. In the field of economics, where neoclassical and neoliberal dogmatism is dominant to the point of being stifling, it is important to open the windows to let fresh air in. The book's main thrust is to provide an alternative hypothesis to explain the postwar economic boom, and the long downturn (relative to the boom) starting in the 1970s. In the orthodox neoclassical/neoliberal account, the long downturn is explained as the result of organized labor successfully fighting for high wages, which squeeze profits, which in turn reduces investment, which slows growth. (This is an explanation that works well in economic models consistent with neoliberal ideology, but not so well in explaining empirical realities.) In Prof. Brenner's account, the downturn is due rather to an inherent feature of capitalism: a tendency to overproduction. Capitalism has indeed unleashed unparalleled productive forces, but the lack of planning inherent in currently existing capitalism has resulted in overproduction and economic stagnation (in the face of, I should mention - this is not part of Prof. Brenner's account - millions of deaths worldwide from starvation and easily preventable diseases). To summarize one further stage of the book's main argument, what has occurred in global capitalism is this: one nation's businesses make large capital investments in the most advanced technology to date; later, businesses in a different nation seeking to catch up make investments in more advanced, more productive technology, allowing its factories to produce more at lower cost, forcing the first nation's businesses to reduce prices and give up on profit in order to hold on to market share. In this manner, factories in the first nation do not generate the return on capital expected by their investors, and profits are squeezed due to competition with technologically advanced newcomers, reducing investment and growth. (The same pattern occurs within nations as well.) It is this underlying pattern, in Prof. Brenner's account, that has caused the long downturn. Since WWII, we have seen this pattern play out with the US taking the lead, Germany and Japan catching up, then Korea and the East Asian tigers catching up, and now we are watching China, Brazil, and maybe India and Russia catch up. But catching up will be increasingly hard to do without a large increase in aggregate demand, since with the entry of late developers - China especially - overproduction is increasing apace. This has been a short, rough summary of Prof. Brenner's argument. His argument is advanced through a very detailed trudge through mountains of statistics - there is very little reliance on the opinions of economic commentators and academics. This may intimidate the general reader, but do not worry - you may have to devote more attention to this book than a book popularizing the neoclassical school of economics' fairy tale mathematical models and methodologically-unsound theorizing, but this book is illuminating and rewarding. I highly recommend it.
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26 of 26 people found the following review helpful:
5.0 out of 5 stars
New Capitalism, the engine of progress?, February 8, 2007
This review is from: The Economics of Global Turbulence (Hardcover)
From the Afterword: "Above all, financial speculation has produced a real estate mania that is unprecendently global and that has driven up the value of housing in historic fashion. The total value of residential property in developed economies rose by more than $30 trillion dollars over the past five years, to over $70 trillion, an increase equivalent to 100 percent of those countries' combined GDPs. Not only does this dwarf any previous boom in housing prices, its 25 percent bigger than the global stock-market bubble of the 1990s, which entailed an increase in equity values of 'only' 80 percent of the countries combined GDP in five years. 'In other words,' says The Economist, 'it looks like the biggest bubble in history.'" If you want to understand the deep roots of this crisis in worldwide capitalist manufacturing over-capacity, read the book.
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7 of 13 people found the following review helpful:
4.0 out of 5 stars
A brave attempt, January 8, 2009
This review is from: The Economics of Global Turbulence (Hardcover)
Whatever happened to the Golden Age? While the latest credit crunch is grabbing everyone's attention, even the heady days of the late 90s (or the early 00s for Antipodeans like myself) barely returned productivity, wages and employment growth to the average rates of the "Les Trente Glorieuses" following World War II. Brenner demolishes the usual suspects: union militancy, the welfare state, the abandonment of Keynesianism, catch-up from the Great Depression and WWII, and a spontaneous slowing down in technological growth. These do a terrible job of explaining the size and timing of the slowdown both within and across countries. His alternative explanation, though, is almost equally unconvincing. Starting from the surprisingly little-known observation that private sector profit rates have actually fallen substantially, particularly in manufacturing, he argues that the cause of the slowdown is chronic overinvestment and excess capacity in manufacturing, caused by first Europe and then Asia catching up with the US within the unplanned, anarchic capitalist system. While the focus on profit rates is original and interesting, it completely begs the question of what a more rational (socialist?) order would or could have done to avoid the slowdown, or how the period in question could plausibly be described as one of inadequate adjustment. The last few decades have seen massive amounts of 'creative destruction', the introduction of new technologies, and the opening of huge new markets. It could even be seen as a sign of greater efficiency that manufacturing and non manufacturing profit rates have drawn closer together. At least he has tried. Hopefully. others will be inspired to follow.
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