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Social Structures of Accumulation, the Rate of Profit, and Economic Crises (Thomas Weisskopf Festschrift Conference Paper)
David M. Kotz | 5/24/2013
Abstract:

David Kotz argues that the Social Structures of Accumulation approach developed by Bowles, Gordon and Weisskopf was too narrowly focused, because it considered factors that could cause a crisis only in terms of a declining rate of profit. Kotz develops an analysis of capitalist crises within a circuit of capital framework. As Kotz writes, his approach “has the advantage of effectively integrating within a single framework severe crisis tendencies in capitalism, including those not based on profit rate movements.”

Kotz observes that the 48 percent decline in the average profit rate in the U.S. economy from 1965 – 81 was the main factor causing the crisis from the mid-1970s to early 1980s. By contrast, beginning with the neoliberal SSA in the early 1980s, the profit rate did not fall prior to any subsequent economic crisis, including the period immediately prior to the Great Recession of 2008-09. Rather, during this neoliberal era, Kotz argues that capitalists overinvested precisely because profit rates were robust. This created a crisis of insufficient demand to purchase the products that this excessive capacity was capable of producing. Kotz concludes that “crisis analyses should consider possible realization problems as well as profit rate problems if they are to be adequate for explaining the variety of ways that capitalism produce crises.”

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