http://mailman.lbo-talk.org/pipermail/lbo-talk/Week-of-Mon-20050321/006000.html
An article in the NYT on Friday mentions the excess capital that has been slushing around in the world market. It seems that this is largely because of political economic effects of China's rise. I say political economic because it doesn't seem that it is about rational, neoclassical economics where I interpret it as saying that individual economic choices are motivated by some immediate economic outcome. This is more about the potential payoff "if things keep going this way" so that there has ben a lot of overinvestment in sectors--such as automobiles--that don't promise to become profitable except in the very long term. I haven't read the rest of the LBO thread on this, but I someday when I am not buried by the field I intend to. I post it on this blog because it seems to be somewhat related to waht Arrighi mentioned in terms of financial expansions and the way that the excess capital that is created, but can't be profitably invested, is usually spent on consumption rather than investment.
This is related but seems to have a sort of contradiction because the article is also saying the opposite of Arrighi in that he says the reason there is excess capital is because the component capitalists of the structured oligopoly (Aglietta's term--not used by Arrighi) have agreed to stop competing for markets with one another and stop investing in production capacity (i.e. Division I). I am probably mucking all of this up, but I do want to note the connection for future research. But I will note that Arrighi is probably wrong about Japan being the next world hegemonic force, though it probably seemed that way in the early 1990s. The trend now points to China and/or India, both of whom are involved in an extensive material expansion, as a quick browse through the LBO archives over the last few months will show.
This is from the NYT article:
We have seen too much capital before, but not on a worldwide basis. It
flooded into Japan in the 1980's when money there was cheap and the
success of the Japanese economy obvious. Japanese business still suffers
from excess capacity. Excessive investment in telecommunications in the
late 1990's left a lot of unused fiber optic cable.
The excess of capital is bad news for wealthy economies, especially as
it is happening when aging populations in Japan, Europe and the United
States need good investments to finance retirement. But it should be
good news for economies that need capital to develop.
Capital will not remain in excess forever. Money will be spent on
consumption rather than investment, and new technologies and rising
demand will eventually create more uses for a supply of capital that
will have been depleted as low returns discourage saving. But for those
with capital, that could be a slow and painful process.
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