On the Causes of Investment Decline in the US Economy (A Reply to Hartmann-Wolff)

I think this analysis is really important and is relvant the Australian context also. Here,the opposition to the Federal government and Business Council austerity prescription for the economy, is strong but it is built on the assumptions of Keynesian economics. In the past week I have had brief and friendly exchanges with union comrades who hve been praising Keynesian journos and commentators. I understand why: in Australia we are constantly desperate to find and promote those who oppose the barrage of neoliberal / austerity capitalist dogma that is our daily bread. Any port in a storm, so to speak. But, this is not good enough. Analysing the interactions between investment, profit, incomes etc – but at last foussing on investment is a gap that must be filled.

Jack Rasmus

Is the chronically stagnant US economic recovery since 2009 (predicted in my 2010 book, ‘Epic Recession: Prelude to Global Depression’), the result of insufficient income growth for most households—that is then necessary to stimulate consumption demand that, in turn would result in real investment that would create jobs? Or has the escalation of financial asset prices since 2009—itself the consequence of $10-$15 trillion of Fed and central bank liquidity injections— resulted in lower real investment in the US and thus the failure of job and income growth?

To restate more simply: does the lack of wage and income growth determine real asset investment; or are the expanding opportunities for more profitable financial asset speculative profits globally driving the decline of US real asset investment (and thus jobs, wages, and income growth)?

Which is the more primary causal relationship? If one believes lack of income is the primary cause of declining…

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I am a retired left wing and labour movement activist. Before that I worked for a long time in the Australian union movement in union education, Australian and international solidarity and organising. I am also active in Cuban solidarity, the SEARCH FOUNDATION, and promoting discussion, debate and action about green socialism based on workers control and social ownership.

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