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The Boom and the Bubble: The US in the World Economy

Brenner demonstrates that the new economy was always a fragile phenomenon.

A sustained period of significant growth in the US, however, seemed to save the day against all the odds. So impressive was the surface appearance of this rescue mission that all manner of commentators proclaimed—once again—that a 'new economy' or 'new paradigm' of unlimited and harmonious growth had been forged.

Today, as recession looms, the babble about Internet start-ups is exposed as vapid. Yet the pundits are no nearer an understanding of how or why the boom turned into a bubble, or why the bubble has burst. In this crisp and forensic book, Robert Brenner demonstrates that the boom was always a fragile phenomenon—buoyed up by absurd levels of debt and stock-market overvaluation—which never broke free from the fundamental malady of overcapacity and overproduction which continues to afflict the global economy.

Carefully dismantling the myths and hype that surround the US boom in terms of profitability, investment, and productivity, Brenner restores the properly international context to the process. He portrays the 'zero-sum' character of the American success, which presupposed the relative weakness of its main German and Japanese competitors: a strategy that has laid huge obstacles in the path of a 'soft landing' to end the current phase of growth.

A substantial new Postscript provides and up-to-date analysis of the Bush economic debacle—the crisis of manufacturing, the telecom bust, the record twin deficits, plummeting employment, and the real estate bubble.

Reviews

  • “In this interesting and original work, Brenner examines the recent collapse of the US economy ... not merely another postmortem on the bursting of the bubble economy of the last decade. Rather, Brenner provides a historical and international context to his discussion by framing it within the global economic stagnation of the early 1990s.”
  • “Paul Krugman and Joseph Stiglitz may be celebrity economists, but it is an economic historian whose earlier work focused on the origins of capitalism in late feudal Europe who has turned out the most compelling and comprehensive account of the crisis gripping contemporary global capitalism. UCLA Professor Robert Brenner's recent work is a solidly argued and empirically impeccable restatement of the centrality of overproduction in capitalism.”
  • “An uncanny ability to map the future ... His conviction that the financial bubble that sustained the US economy around the turn of the century would be exposed as corrupt as well as misguided has now been proved right.”
  • “The best financial history of the period yet.”
  • “... as the economy continues to plummet from its historic highs in the '90s ... here's a book which explains in accessible ways why it has gone so fast and why it seems to be coming down so quickly.”
  • “Its implications are portentous.”
  • “Brenner offers a more scholarly analysis of the recent decade than most commentators who tend to overpraise or dismiss recent technological innovations ... something of a thriller with a to-be-continued ending.”

Blog

  • After Capital's Revolt: an interview with Wolfgang Streeck

    Capital could not just abolish the gains of the postwar period. It was necessary to preserve social peace. The "trick" in the 1970s consisted of using inflation to defuse the emerging conflict between labour and capital over redistribution. The money machine was used to compensate for the loss of income which resulted from the reduction in capital’s contribution to the welfare state… Evidently, that could not last. So from the late 1970s inflation was replaced with public debt, and states borrowed (rather than tax) in order to be able to keep up the level of services. Then, in the 1990s, when states began to worry about the growing weight of debt servicing as part of their budgets, and reduced their spending (and thus social services) we took recourse to private debt. In other words, we made it easier than ever for households to take on debt so that they could preserve their purchasing power, which was being cut back by these budget consolidation measures. And that led us to the 2008 catastrophe.

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  • Trump and the Present Crisis

    This piece will appear in Salvage issue 4, which can be pre-ordered here



    Donald Trump’s election to the US Presidency produced shock and disbelief for liberals, progressives, and leftists around the world. Here, in the US, it has been accompanied by a collective nausea that refuses to pass. Even many who recognize the impoverished mythos of America’s democratic perfectibility and exceptionalism mourn the passing of something they never believed. That said, there is a tendency to over-read what an election means in a backward looking way. But elections do not provide us with a diagnostic of a country; they are voter mobilization projects (conducted, in the main, by elites). The interpretation of the results, their meaning and mandate, retains a character of political positioning, even score settling, after the fact. The desire to parse and explain what enabled the disastrous outcome of a Trump Presidency with Republican Party control of the US government is understandable. Most of the early analysis, however, neglects longer term accounting for how we got here, and thus contributes to our collective disorientation.

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  • It’s Not About NAFTA


    Nissan plant, Smyrna, TN.

    The 2016 election was primarily a referendum on US trade and immigration policies. Trump’s case, insofar as one could be found amid all his bloviating, was something like the following: the US sent jobs abroad at the same time as it let workers in from Mexico, and that has been bad for most Americans. It’s worth remembering that Trump began his campaign by attacking financial elites, who, he said, had paid off the politicians to keep this con act going. Since Trump is so rich, he won’t have to take their bribes. He’ll renegotiate.

    Well, it doesn’t take a degree in political science to predict that Trump will fail to “make America great again.” In all likelihood, the real winners here will be the traditional constituencies of the Republican Party: big business and social conservatives. Everyone else will lose. Meanwhile, Trump will use the presidency to hound his enemies and expand his personal wealth. And that’s the best case scenario.

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Other books by Robert Brenner