I have great sympathy with the Gordon’s view, but with reservations on timing. I’m not so sure that emerging capitalism cannot provide a new period of capitalist development, if the end of this long depression does not lead to the replacement of the capitalist mode of production by political action from energised working class movements. Also, it is by no means certain that mature capitalism cannot still develop and exploit new technologies, even if it has failed so far, in areas like robotics, artificial intelligence, 3d printing and nanotechnology. Indeed, some argue that US technology in developing shale oil and gas will shift the balance of economic power in energy back towards North America and the mature capitalist economies and away from the Middle East and Asia.
In the third section of Gordon’s book, he looks at why productivity growth did soar at one particularly notable juncture in the 1930s. Gordon reckons that the Great Depression was a period of innovation that “directly contributed to the great leap” in the 1940s. Gordon also points to the “high-pressure learning-by-doing that occurred during the high-pressure economy of World War II.” World War II gave America its first jet aircraft (the Bell P-59), mass-produced penicillin and nuclear power. Perhaps even more important, factories like Henry Kaiser’s shipyards taught managers and workers how to radically speed production. Something similar could happen when this Long Depression ends, as it will.
Also, capitalism could get a further kick forward from exploiting the hundreds of millions coming into the labour forces of Asia, South America and the Middle East. This would be a classic way of compensating for the falling rate of profit in the mature capitalist economies. While the industrial workforce in the mature capitalist economies has shrunk to under 150m, as unproductive labour has risen sharply; in the so-called emerging economies the industrial workforce now stands at 500m, having surpassed the industrial work force in the imperialist countries by the early 1980s. In addition, there is a large reserve army of labour composed of unemployed, underemployed or inactive adults of another 2.3bn people globally that could also be exploited for new value.
So there may be life in capitalism globally yet even if it is in ‘down mode’ right now. Or maybe this potential labour force will not be ‘properly exploited’ by the capitalist mode of production and Gordon is right. The world rate of profit (not just the rate of profit in the mature G7 economies) stopped rising in the late 1990s and has not recovered to the level of the golden age for capitalism in the 1960s, despite the massive potential global labour force. It seems that the countervailing factors of foreign investment in the emerging world, combined with new technology, have not been sufficient to push up the world rate of profit in the last decade or so, so far. The downward phase of the global capitalist cycle is still in play.
In the last few years, Robert J. Gordon, a professor of economics at Northwestern University, has persistently argued against the trendy view of the moment that robots, AI and other ‘disruptive technologies’ are about to launch the global economy into a productivity boost never seen before. I have commented before on Gordon’s series of papersdeveloping this proposition.
And very recently, Gordon presented his arguments yet again at ASSA 2016 when he critiqued a paper by David Kotz and Deepankur Basu at an URPE session.
As Gordon says succinctly in that critique: “The evidence accumulates every quarter to support my view that the most important contributions to productivity of the digital revolution are in the past, not in the future. The reason that business firms are spending their money on share buy-backs instead of plant and equipment investment is that the current wave of innovation is not producing…
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