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Analysis of the origin of the economic crisis in the labor capital interests imbalance

Author: ChengShiYong From: www.yourpaper.net Posted: 2010-04-23 02:02:00 Read:
The global economic crisis is highly developed capitalist stage of economic development and industrial context of financial globalization and industrialization of high-end, and its impact on the world economy and the pattern of interests is inevitable and major crisis in the beginning of the last century as far-reaching. Therefore, the analysis of the crisis will help further deepen the understanding of conflict of interest from institutional mechanism and capital levels.

Neo-liberalism and the real economy, the imbalance in the structure of labor and capital interests

(A) neo-liberal strengthen the power of capital, weakening the power of as main effective demand laborers.
Compared with 50-80 years of the 20th century, the traditional Keynesian, more chasing the rights of capital into the dominant neo-liberal market advocate full market competition and free market. Neoliberal view, the traditional Keynesian emphasis on long-standing union power increased the cost of capital, has become the shackles of expansion capital rights. Dominant neo-liberal philosophy, government and businesses through a variety of forms to weaken the power of unions. Power of trade unions in the United States gradually lost the right to fight for workers' wages and benefits. From 1953 to 1996, union members dropped significantly increased from 35.7% to 10.2%. With the decline of the bargaining power of labor and capital, the share of more than 60% share in the capital of the U.S. economy. The imbalance of forces of capital and labor both directly in the economy is reflected in a decline in overall spending power of the average consumer.

(B) the international industrial transfer leading to the decline of the U.S. manufacturing sector, and a huge loss of jobs of workers.
From the 1870-1970 period has been the manufacturing sector as the main symbol of the real economy, the American middle class jobs. But the two oil crises of the 1970s rising manufacturing costs significantly. At the same time as the capacity of the interest groups in the United States a strong bargaining power of trade unions, the cost of workers' wages in the United States is much higher than in Germany and Japan. International industrial competition, the status of the U.S. manufacturing sector has been challenged. The U.S. manufacturing sector in the national economy proportion significantly reduce, increase the value of finished industrial products to GDP ratio declined by 56% to 30% in the 1970s, leading to the decline of the manufacturing industry can accommodate a large number of jobs. Service-oriented industry, the rapid development since the 1990s. Third sector mainly in the real estate and financial services industry led, in 2007, the real estate and financial leading tertiary industry accounted for 78.6% of GDP, because it belongs to the capital-intensive and knowledge-intensive industries, very limited capacity to absorb labor. Moreover, the real estate and financial services industry is a high-risk high-return investment industry is very sensitive to the rate of investment and labor positions demand changes in the magnitude of changes in the economic boom.

(C) as the main consumer shrinking middle class in capitalist society structural imbalance.
In terms of the stability of the social structure, the the spindle social structure, the middle class is the leading force of society. Inherently dominated social structure of the middle class, we can form a strong consumer demand and promote the sustained economic growth of the dynamic mechanism. Neoliberal strong force under capital, the result, as - Paul Krugman said, "the American middle class disappeared. "Spindle-shaped" social structure is a gradual transition to a "dumbbell-shaped" social structure of the hidden conflict and crisis. Future since the Reagan administration, the U.S. government has taken a series of measures to tax cuts and cuts in benefits, the social divide between rich and poor continues to expand. Gini coefficient increased from about 0.4 in the 1960s to 0.49 in 2007. According to statistics, the income of senior management or CEO of a listed company with the average worker income gap is widening. For nearly 40 years, the multiples of both the income gap rose from 25 times to nearly 300 times. The interests of labor and capital within the capitalist system structural imbalances inevitably lead to insufficient aggregate demand. But as the representative of the United States developed capitalist countries in order to maintain the balance of the world economy, through complex financial derivatives innovation inherent contradictions of consumption within the capitalist system through over-consumption in the form of this alienation manifested.

Imbalances in the real economy, the dollar hegemony and credit mismatches the crisis

Structural contradictions in the system and financial system of dollar hegemony mask conflicts of labor and capital within the capitalist system, but the financial assets of the supply and demand of credit mismatch ultimately imbalances in the real economy are ultimately reflected in the form of a crisis.

(A) the financial product innovation and financial liberalization the supply of dollars to the global excess liquidity.
The one hand, through the innovation of financial products, the formation of the dollars return of the capital account. Since 1993, the U.S. current account deficit as a percentage of GDP continued to expand to more than 6% of GDP in 2006. In order to maintain the balance of the capital account and a sufficient supply of domestic capital, it is necessary to attract foreign financial innovation (Japan, China and the Middle East), a large number of U.S. dollar reserve assets re-flow will be the United States. Since the decline of the traditional industries in the United States since the late 1970s and the 1990s tech bubble, by traditional industry competition has not attract dollar reflux. It is in this context, the United States Government Bonds and financial innovation, U.S. bonds held by foreign investors and increasing the size of the financial products, to form a capital of $ reflux. It is also the capital account of the dollar reflux, has played an important role in pulling the U.S. consumer and to maintain economic equilibrium. On the other hand, financial liberalization led to the expansion of the global financial capital. 1980s, due to the impact of neo-liberalism, the supervision of financial institutions in the long gradual relaxation of the financial sector gradually shifted mixed operation. The financial industry in a significant increase revenue while also accumulated a large number of structural risks. ISDA statistics, as of 2007, the actual foreign exchange transaction volume is 60 times that of international direct investment and commodity and labor international trade. A lot of international capital flows in the financial sector in the field has been out of production. The nominal value of the derivatives of the equity asset class has increased six-fold from 2002 to 2008. (B) the supply and demand of financial products and credit mismatch ultimately led to the economic crisis.
The point of view of supply from the dollar, affected by dollar hegemony, of a large number of the issuance of the greenbacks, the formation of the U.S. dollar denominated and dollar pricing system, leading to further deviate from the virtual economy to the real economy, so that the world economy have accumulated greater risk. Some economists accordingly even questioned the rationality of financial derivatives. But this is not the main aspects of the problem. Venture capital and high-tech industrial development of the capitalist countries, the financial derivatives play an indispensable role. From the steel and chemical industries, the rise in the early 19th century, the growth of new industries to the end of the 20th century computer, bio-engineering, should largely due to the capital markets led to financial innovation. Capital markets and venture capital market selection mechanism linkage, innovation and development of high-tech industries provide a steady stream of power, such a positive feedback mechanism is the the benign interaction model of the supply and demand of financial assets. The original sin of the crisis is not financial derivatives, mainly caused due to the financial derivatives, credit mismatch of supply and demand, which is induced by the financial crisis, the most direct reason. Mismatch credit, a lot of demand for financial products, the main body is not in the venture capital and high-tech industries. Related investment entities of the financial crisis, the main demand for financial products is the lack of tolerance for risk subprime body and the real economy, the financial derivatives can not be an effective risk transfer. This high-risk, low efficiency of financial products, credit mismatch is caused by the direct cause of the economic collapse.

Conclusion: the interests of the state interventionism capital and labor within the capitalist system coordination

The fundamental reason for the system of global economic crisis is not financial ineffective supervision, but the interests of capital and labor is determined by the inherent nature of the capital movement imbalances. Over-consumption myth of capitalist economic support in the crisis and contradictions within the capitalist system, the level of the basic system does not change the fundamentals. The dollar hegemony consumption patterns of alienation and not long-term to maintain economic equilibrium. Although the United States has the world's coinage rights, has the most complex financial engineering and credit system, but relying solely on over-consumption mode does not solve the fundamental economic and social problems in the United States propped up excess liquidity and financial instruments.
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