The Crisis of the World Finance System

Elmar Altvater

The ANNALS of the American Academy of Political and Social Science, 1987, vol. 492, issue 1, 36-48

Abstract: Unemployment has become a structural feature in all industrialized countries because a worldwide decline in the profit rate has reduced the speed of economic growth. This decline has been due mainly to the decreasing productivity of capital in the course of ever increasing capital intensity of production. The crisis is perpetuated by two additional factors: (1) the decay of the order-maintaining capability of the United States; and (2) the expansion of uncontrolled international credit, as funds were diverted from relatively unprofitable real investment to profitable financial investment. The need to service the debt, which was thus accumulated, keeps up the demand for fresh credits and prevents interest rates from becoming low enough not to discourage real investment. To overcome the crisis, debt would have to be written off, which in turn requires some form of consensus on how to distribute the resulting losses.

Date: 1987
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Persistent link: https://EconPapers.repec.org/RePEc:sae:anname:v:492:y:1987:i:1:p:36-48

DOI: 10.1177/0002716287492001004

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