Capitalism in the advanced capitalist countries is becoming ever more based on finances and services. The idea is that the actual production of real goods can be done in less developed countries where labour costs are much cheaper. For this to work, the consumer boom in the West must be maintained permanently, otherwise who will buy the goods? Can this be maintained in the long run?
After Hurricanes Katrina and Rita have
ravaged the US coast of the Gulf of Mexico, does the fast-rising oil price presage a worldwide economic
recession? The track record of oil shocks is indeed close to perfect. In the
case of the US, each of the previous three oil shocks was followed by recession.
Official figures
reveal that US corporate profits as share of GDP have moved up from lows in
2001 to reach near record levels in 2005. But if you look over the much longer
term, US profits are still below the levels achieved in the 'golden years' of
capitalism back in the 1960s. The steady decline of the ability of capitalists
to extract profits from their workforces is revealed even more clearly when we
look at the profit figures before tax.