Final Paper - 12-25-06Term PaperIn The Economics of Global...

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Unformatted text preview: 12-25-06Term PaperIn The Economics of Global Turbulence: The Advanced Capitalist Economies from Long boom to Long Downturn 1945-2005, Robert Brenner discusses the global economy after World War II on an collective basis, instead of the usual country-by-country approach. Brenner in a tediously ill-organized, verbose, and bombastic manner argues against traditional Marxist theory and offers his own theory about the causes for the period of global economic development from the end of World War II to the early 1970s, and the immediately following period of volatility and stunted growth. He argues that the global problems of the past three decades were caused by international trade struggles, especially among the US, Japan, and Germany. Brenner singles out over-production and over-competition as causes behind the crises since the early 1970s, and demonstrates the factors behind suppressed wages and high unemployment.Brenner criticizes the classical supply-side theory of economics, the central concept of which is Says Law, which in short, says that supply in a way creates its own demand and that demand cannot exist without supply. This is because each time there is an excess of goods in a certain market, there must be an excess of demand in some other market. Say argues that products must be produced before anyone can buy it. Furthermore, one must sell something in order to obtain the means to buy something. Therefore, in theory, producing more, or increasing supply, would sell more. This is opposed to demand-side theory of economics, also called Keynesian economics, which instead argues that the key is to stimulate demand. Keynesian economics says that output and employment levels in the economy are determined not by supply but by aggregate demand, or that demand creates its own supply. Brenner also rejects the wage-squeeze theory. He discusses the theory, which says that the rise of labor unions caused increases in wages with no correspondingly large rises in productivity, thus reducing firms profitability. Brenner argues that no decline in productivity growth, however severe, is sufficient in itself to cause problems for the macroeconomy (23). Brenner offers his unique perspective on the causes for the decline in the global economy after WWII. He starts by offering a generic scenario: the introduction of a new, cost-cutting firm to a certain market. The new firm is able to produce at lower cost because of more advanced technology. Because the new firm can produce goods at a lower cost, it can offer them for sale at lower prices. The old firms with costly production methods are forced to reduce their for sale at lower prices....
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Final Paper - 12-25-06Term PaperIn The Economics of Global...

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