|In my 1980 UCB dissertation and articles since then (e.g., 1994
RESEARCH IN POLITICAL ECONOMY), I've developed a notion of
1. capitalists are not just driven ahead by their comparisons between
the rate of profit (or rate of return) and the cost of credit. There
is also a persistent cost of _not_ accumulating that drives individual
2. The cost of not accumulating differs from the benefit of
accumulating in that the cost does not go away due to the
accumulation, while (on the other hand) the capitalist may actually
realize the benefits. That's because the cost of not accumulation is
structurally-based, rooted in the social system in which capitalists
operate. It does not go away without getting rid of capitalism.
A. the first comes from competition among capitalists. Except in the
extremely-exceptional perfectly competitive market, if a capitalist
does not accumulate, he or she falls behind in the struggle of
competition. (BTW, like PC markets, pure monopoly is the exception.)
B. the second comes from the persistent class antagonism within
production. Investing in new methods to control the labor process
produces only temporary results, so that new investment is again
needed later on.
C. combining these two, the third comes from the internal tension in
the "middle layers" of a corporate bureaucracy (the members of which
combine some aspects of being competitors with the capitalist
management and some of being proletarians). It is easier to "keep the
peace" and get the job done if the company keeps on expanding.
3. this process is encouraged by the elasticity of credit under
capitalism, absent strict financial regulation.
4. when this process leads to recession (or whatever), it requires
"under-accumulation" as a way to purge imbalances from the economy and
the re-establishment of the conditions needed for accumulation to
proceed again in a somewhat normal way.
The form that over-accumulation takes depends on the specific
institutional environment of the era. In the 1960s "strong labor"
situation, over-accumulation showed up mostly as "over-accumulation
relative to supply," with accumulation pulling up wages and
raw-material costs, which squeezed profits (and encouraged
stagflation). (This over-accumulation involved some depression of the
output/capital ratio, too.) On the other hand, in the 1920s "weak
labor" situation, excessive accumulation appeared as high profit rates
and profit-led growth (which I've called "bootstrap growth" and the
"Tugan-Baranowsky path"). It looked good for awhile, but it was an
unstable and ultimately unsustainable bubble in the real economy (a
kind of Minsky financial fragility, but based primarily outside of
I think that the US economy has been transitioning from "strong labor"
dynamics back toward "weak labor" dynamics for the last 30 years or
so. That does not mean that we'll see a replay of the Great
Contraction of 1929-33, since the US still has "automatic stabilizers"
and Military Keynesianism (cf. Iraq), not to mention a dominant role
in the world system. Nonetheless, the immediate future does not look