to remind people that 1 in 3 children born on Tuesday were born into poverty(280 Posts)
because there is no demand due to high levels of debt.
Say, I had £20,000 I would like to invest. I need to make a return on my investment. I won't take silly risks but calculated ones. However, right now, I know you can't afford spotty gnomes and garden fountains, so I won't invest in manufacturing these things. I will wait until I find something else, something that will be less risky and is more likely to give me the return I want. Meanwhile you have no gnomes, no money and no job!
Its called the "Capital Absorption Problem"
It presents in two key ways: individual capitalists can't find areas of low risk to invest and so don't, as described above.
and: in Marxist terms as "Harvey points out, that a healthy capitalist economy must expand at a rate of about 3 per cent per annum. This means, of course, that more and more capital surplus must be absorbed. If we are to return to 3 per cent compound growth today, $1.6 trillion in surplus capital would need to be profitably invested. If sustained growth returns, the world economy will need to absorb some $3 trillion in surplus capital by 2030 This, Harvey remarks, is a very tall order There simply must come a point where capital accumulation outstrips the capacity of the world economy to absorb the growing capital surplus.
Mini, but wouldnt you say that the world is so large, 7 billion and counting, that of course there are areas of growth? Have to be if you ask me.
There are always areas of the world growing, even now. Perhaps say 50 countries out of 250 or whatever are currently growing.
And those canny investors certainly know whaich areas those are. That is part of their job.
I would agree, the world is large and much of it undeveloped.
This area is much contested. I am inclined to think that because capitalism relies on economic inequalities & at the root of it is exploitation of labour and the engine that drives it on accumulation (capital absorption problem). Historically we became the most industrialised nation, exploiting cheap labour in the acquisition of resources. Resources that were exported to us and we then manufactured. By the early 20th century our internal market was good for at least a good percentage of what we created. By the 70's investment was already being exported and because of things like containerisation, manufacturing was off-shored but we still consumed. But this consumption was built on the back of access to credit and because of the exploitation of much cheaper labour elsewhere.
We are now in decline (I think we are in a new phase) whereby much of world is still undeveloped but their internal markets are weak with little consumer demand. There is some internal demand within china now and to a much lesser degree india. But this is only from the portion of the populace that is wealthy (capitalists themselves)
Because of the labour theory of value, the workers can never create demand for all of the goods/services they create. Some marxists would say that capitalism self sustains demand within an internal market or even at a global level because capitalists make up the short fall in consumption.
But do they? because right now there is very little demand. So the rich do not make up the difference and do not stimulate the economy on the back of their spending.
In short, capitalism thrives on inequality, creates inequality and then eventually implodes because of.......too much inequality. We will never get to a point where we have actually developed the entire globe. Exploit it and damage the environment but never equal levels of development and living standards.
There are roughly 190 countries in the world. I somehow thought you would quote China and India, because they are in the headlines. But that still leaves 188 countries. Yes, most of Europe and USA and some others can be discounted.
A list of just some of the countries around the world experiencing economic growth in 2012
Join the discussion
Registering is free, easy, and means you can join in the discussion, get discounts, win prizes and lots more.Register now
Already registered with Mumsnet? Log in to leave your comment or alternatively, sign in with Facebook or Google.
Please login first.