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The Great Financial Crisis—Three Years On: John Bellamy Foster and Fred Magdoff Thesis

The Great Financial Crisis—Three Years On: John Bellamy Foster and Fred Magdoff Thesis The advanced capitalist economies are caught in a tendency to stagnation resulting from the dual processes of industrial maturation and monopolistic accumulation.

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The Great Financial Crisis—Three Years On: John Bellamy Foster and Fred Magdoff Thesis

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  1. The Great Financial Crisis—Three Years On: John Bellamy Foster and Fred Magdoff Thesis The advanced capitalist economies are caught in a tendency to stagnation resulting from the dual processes of industrial maturation and monopolistic accumulation. Financialization is acompensating for the shift away from production to maintain the economic system that is under stress. It has become fragile as it is caught in a “stagnation financialization trap.” Although the speculative practices pushed the system to the brink, the crisis is mainly an outcome of long-term structural factors. as apparent in the secular decline in economic growth rates and the long-run increase of financial fragility and instability.    

  2. Sub-argument 1: Economic growth rates of the core- AICs -shifting into low gear for decades.   Excess money capital flowed into the financial sector seeking quick returns, Built a massive financial superstructure on top of a weakening economic base. This is resorting to speculative finance as a wealth-generation strategy Gave rise to huge artificial profits (and capital gains) with no real relation to the commodity economy.  

  3. Sub-argument 2: From 1970s, more “credit crunches.” Central banks bailed out failing financial institutions Led to growing financial fragility Problem of stagnation remained

  4. Sub-argument 3 • The financial problems are connected to the class structure of monopoly-finance capital • Levels of inequality without precedent in the advanced capitalist world • 400 richest Americans, now own about as much wealth as the bottom half of the population, some 150 million people. • United States and other rich economies are now so top heavy in wealth and income distribution • They are “plutonomies,” in which small class fractions control increasingly large portions of social wealth

  5. Sub-argument 4: • Emerging countries are not immune to the problems Core has generated. • They will be affected in the globalized economy • This is a result of the weakening of the system at its core

  6. Sub-argument 5 • Current Third Depression heightens the imperial conflict, centered especially in the Persian Gulf.

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