Profit, accumulation, and crisis in capitalism : long-term trends in the UK, US, Japan, and China, 1855-2018

169 Pages·2020·1.363 MB·English

by  Minqi Li

Profit, Accumulation, and Crisis
in Capitalism
Karl Marx hypothesized that there is a long-term tendency for the profit
rate to fall in capitalist economies. Immanuel Wallerstein hypothesized
that capitalist development tends to drive up labor cost, material cost, and
taxation cost. This book evaluates Marx’s and Wallerstein’s hypotheses
by studying the long-term movement of the profit rate and contributing
factors in major capitalist economies. During the twentieth century,
leading capitalist economies largely succeeded in stabilizing the profit rate.
However, the current decline of the profit rate in China may precipitate
the global capitalist economy into a new major crisis. As economic growth
slows down in all major capitalist economies, Marx’s original hypothesis
may be verified by the global economic events in the twenty-first century.
Minqi Li is Professor of Economics at The University of Utah. He is the
author of The Rise of China and the Demise of the Capitalist World Economy;
Peak Oil, Climate Change and the Limits to China’s Economic Growth; and
China and the 21st Century Crisis.
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Profit, Accumulation, and Crisis in Capitalism
Long-term Trends in the UK, US, Japan, and China, 1855–2018
Minqi Li
For more information about this series, please visit: www.routledge.com/
books/series/SE0345
Profit, Accumulation, and
Crisis in Capitalism
Long-term Trends in the UK, US, Japan,
and China, 1855–2018
Minqi Li
First published 2020
by Routledge
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and by Routledge
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Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2020 Minqi Li
The right of Minqi Li to be identified as author of this work has
been asserted by him in accordance with sections 77 and 78 of the
Copyright, Designs and Patents Act 1988.
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British Library Cataloguing-in-Publication Data
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ISBN: 978-0-367-17978-6 (hbk)
ISBN: 978-0-429-05881-3 (ebk)
Typeset in Times New Roman
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Contents
List of figures vii
List of tables x
List of boxes xi
Preface xii
1 Capitalism and the profit rate 1
2 Profit, accumulation, and crisis in British capitalism:
1855–2018 19
3 Profit, accumulation, and crisis in American
capitalism: 1900–2018 38
4 Profit, accumulation, and crisis in Japanese
capitalism: 1955–2017 57
5 Profit, accumulation, and (the coming) crisis in
Chinese capitalism: 1980–2018 71
6 China and the global labor arbitrage 90
7 The past and the future of the profit rate, 1855–2050 109
Appendix A: Estimating the profit rate in the United
Kingdom, 1855–2018 130
Appendix B: Estimating the profit rate in the United
States, 1900–2018 135
vi Contents
Appendix C: Estimating the profit rate in Japan,
1955–2017 138
Appendix D: Estimating the profit rate in China,
1980–2018 141
Bibliography 145
Index 152
Figures
1.1 Share of gross world product (current US dollars,
1960–2018) 2
1.2 Business capital-GDP ratio (1855–2018) 6
1.3 Equilibrium capital-output ratio (economic
growth rate = 5%; net investment-output ratio = 10%) 9
1.4 Business net fixed investment (% GDP, 1950–2018) 11
1.5 Average annual economic growth rate (ten-year
trailing averages, 1950/1960–2008/2018) 12
2.1 Profit and accumulation (UK economy, 1851/1855–1900) 21
2.2 Profit and accumulation (UK economy, 1900–1950) 27
2.3 Interest rate, economic growth, and unemployment
(UK economy, 1900–1950) 28
2.4 Profit and accumulation (UK economy, 1950–1990) 32
2.5 Interest rate, economic growth, and unemployment
(UK economy, 1950–2018) 34
2.6 Profit and accumulation (UK economy, 1980–2018) 35
B2.1 Distribution of national income (UK economy,
1855–2018) 37
3.1 Profit and accumulation (US economy, 1900–1950) 39
3.2 Economic growth and government expenditures on
consumption and investment (US economy, 1900–2018) 41
3.3 Contribution to total domestic profit (% GDP,
US economy, 1929–1940) 44
3.4 Profit and accumulation (US economy, 1950–1990) 46
3.5 Unemployment rate and labor income share (US economy,
1960–1970) 49
3.6 Profit and accumulation (US economy, 1980–2018) 51
3.7 Contribution to total domestic profit (% GDP,
US economy, 1980–2018) 52
viii Figures
3.8 Unemployment rate and change in labor income share
(US economy, 1980–2018) 53
B3.1 US net exports of goods and services (% GDP,
2000–2018) 55
4.1 Index of per capita real GDP (% world average,
1870–2008) 59
4.2 Profit and accumulation (Japanese economy,
1955–1990) 62
4.3 Contribution to total domestic profit (% GDP,
Japanese economy, 1955–1970) 63
4.4 Profit and accumulation (Japanese economy,
1980–2017) 66
4.5 Contribution to total domestic profit (% GDP,
Japanese economy, 2000–2017) 67
B4.1 Government debt-GDP ratio (selected economies,
2007–2017) 69
5.1 Contribution to global economic growth (major
economies, 1990/2000–2008/2018) 72
5.2 The Chinese workers’ wage rates (% urban units
average wage, 2000–2018) 80
5.3 China’s class structure (% total labor force,
1980–2017) 81
5.4 China’s labor income (% GDP, 1980–2018) 83
5.5 Profit and accumulation (Chinese economy,
1980–2018) 84
5.6 Business capital-GDP ratio (Chinese economy,
2000–2018) 86
B5.1 Private non-financial sector debt (% GDP, 2000–2018) 88
6.1 China’s labor cost and productivity (as % of US
manufacturing labor cost and productivity, 1998–2017) 91
6.2 US imports of Chinese goods (% US GDP and
manufacturing value added, 1999–2017) 93
6.3 Saved labor cost through imports from China
(% US GDP and manufacturing value added,
1999–2017) 94
6.4 Labor cost per 100-dollar value added in
manufacturing (China, US, UK, and Japan,
1998–2017) 98
6.5 UK imports of Chinese goods (% UK GDP and
manufacturing value added, 1999–2017) 99
6.6 Saved labor cost through imports from China
(% UK GDP and manufacturing value added, 1999–2017) 100
Figures ix
6.7 China’s labor cost and productivity (as % of UK
manufacturing labor cost and productivity, 1998–2017) 101
6.8 Japanese imports of Chinese goods (% Japan’s GDP
and manufacturing value added, 1998–2016) 103
6.9 Saved labor cost through imports from China
(% Japan’s GDP and manufacturing value added,
1998–2017) 104
6.10 China’s labor cost and productivity (as % of Japan’s
manufacturing labor cost and productivity, 1998–2017) 105
7.1 The profit rate (1855–2018) 110
7.2 The profit share (1855–2018) 112
7.3 Labor income share and per capita GDP (1855–2018) 114
7.4 Taxation cost share and per capita GDP (1855–2018) 115
7.5 Capital consumption share and per capita GDP
(1855–2018) 117
7.6 Economic growth rate (historical and projected,
1991–2050) 122
7.7 Business net fixed investment (% GDP, 1990–2050) 123
7.8 Business capital-GDP ratio (historical and projected,
1990–2050) 125
7.9 The profit rate (historical and projected, 1990–2050) 126