Al Campbell

The Effect of Neoliberalism on the Fall in the Rate of Profit in Business Cycles

In 1979, Tom Weisskopf found that the crucial late-expansion period of the business cycle, in which the output continues to expand but the profit rate begins to fall, was best explained for his 1949-1975 U.S. data as a result of increasing real wage gains higher than real productivity gains. This led to a profit share decrease that was the primary cause of the cyclical decline in the profit rate. In this work, we extend Weisskopf’s analysis through 2001 and find an important change. Although the fall in the profit share continued to be the key to the fall in the profit rate, unfavorable shifts under neoliberalism in price ratios replaced his earlier (real) wage squeeze. This result is consistent with and supports the generally accepted economic stylized fact of decreased power of workers under neoliberalism.

Participatory Economic Democracy in Action: Participatory Budgeting in Porto Alegre, 1989-2004

This paper is a case study of a particularly important and well known experiment in participatory economic democracy, participatory budgeting (PB) in Porto Alegre under the Workers’ Party. Its intention is to draw both positive and negative lessons from this experience. There are three fundamental parts to the paper. The first part sets the frame for understanding this experiment by reviewing several relevant considerations of participatory democracy in general, and then describing the institutional structure of Porto Alegre’s PB. The second part is an empirical investigation for this case of three central issues in participatory economic democracy: participation, the nature of choices, and the resulting redistribution. A third part considers a number of limitations of the PB process as it occurred in Porto Alegre from the perspective of economic democracy. JEL classification: H72, R50

The Role of Workers in Management The Case of Mondragón

Independent of whatever other advantages it might have for the workers, worker ownership has repeatedly demonstrated in the real world that it is no guarantee for worker participation in management. The participation of workers in management as a first step toward worker self-management requires institutions and practices that will both allow such participation and promote it. This paper considers, in the frame of four standard issues in worker self-management, six specific institutions and practices common to the collection of co-ops that constitute the Mondragón complex that have generated meaningful worker participation in management in this large corporation. JEL classification: J54, L29, M19

The Bush Business Cycle Profit Rate: Support in a Theoretical Debate and Implications for the Future

This paper looks at the most recent aggregate profit rate data for the United States. It then makes five arguments. First, the new data reinforce the rejection of “neoliberalism as successful capitalist restructuring that could possibly restore or surpass the pre 1970s rate of profit.” Second, when the new data are viewed together with the rest of the post-WWII data, it reinforces the appearance of the fall in the rate of profit as a one-step fall between an earlier and a later period. Third, this result argues against understanding the fall in the rate of profit in terms of an increasing organic composition of capital. Fourth, the one-step fall understanding is consistent with understanding profit rate dynamics in terms of the change of economic regimes between the “Keynesian compromise” period and the neoliberal period. These first four results are all consistent with, though certainly not broad enough to claim to be a proof of all of, the recently reformulated social structures of accumulation theory by Kotz and Wolfson. Finally, when the new data are considered together with several now widely held general beliefs about the near-term performance of the U.S. economy, this paper makes arguments about some likely characteristics of the behavior of the aggregate profit rate over the next business cycle.

The Financial Rate of Profit What is it, and how has it behaved in the United States?

This work contributes to the almost nonexistent literature on the profit rate of the financial sector. It updates the single study to include financial variables to cover the past decade, compares this profit rate to the (almost unpublished) Weisskopf and NIPA financial profit rates, compares the financial and nonfinancial sector rates, and details the procedure to construct the profit rate in the financial sector including relevant financial variables which capitalists consider to make profit-rate decisions. JEL Classification: B50, E11

Human Development and Socialist Institutional Transformation: Continual Incremental Changes and Radical Breaks

In the light of new historical experiences of popular struggle to build alternatives to capitalism, debates about the process of social change are unavoidable. Intolerable social conditions under capitalism may fuel resentment and rebellion. The development of productive forces may render possible a society in which all can share equally and freely in a decent, secure, fulfilling existence. The realization of such a society depends on human beings becoming aware of their powers and possibilities, and consciously transforming their world and themselves. Yet how can such consciousness develop under capitalism’s alienating social conditions? As Mehmet Ufuk Tutan and Al Campbell put it in their contribution: “To build the new society one needs transformed humans, but to have transformed humans one needs a new society.” They argue that this chicken-and-egg problem can be resolved dialectically, but requires an understanding of how change occurs, alternating between processes of incremental change and moments of radical rupture.

The Cuban Economy: Where It Stands Today

There is widespread discussion both within and outside Cuba concerning what direction the Cuban economy will go under its new interim president, Raúl Castro. This very short paper is intended to contribute one piece of information that is needed to intelligently discuss that issue: where Cubas economy stands today. Its intention is to compactly provide as much current statistical information on a number of longstanding contentious economic issues in Cuba, as is allowed by its short length. It concludes that the evidence supports that there indeed has been real and meaningful accelerated improvement in the Cuban economy in recent years, and at the same time, Cuba remains far from being able to meet many of its citizens economic needs in accord with its own principals of human development.

Turkey's Economic Fragility, Foreign Capital Dependent Growth and Hot Money

Despite a decade of strong growth, mainstream economists and financial markets have recently escalated their discussion of Turkeys economic ‘fragility’. Contrary to their focus on ‘excessive current account deficits’, the key to understanding Turkeys condition is the foreign capital inflows that facilitate and promote these deficits, and the extent of hot money in the inflows. This paper documents this central fragility and its current explosion. It also contributes to the debate with a detailed economic and operational definition of hot money in Turkey, not present in the existing literature.

Foreign Private Capital-Led Growth

This article maintains that after a decade as a poster-child for neoliberal growth, (1) Turkey has definitely fallen from its former impressive growth performance, (2) the cause is exactly the rupture of its foreign capital-led growth model, just as its fragility critics warned, and (3) given the state of both external and internal economic and political factors, there is very little chance of Turkey returning to its strong growth over the next several years.

Kalecki and the Determinants of the Profit Rate in the United States

The Weisskopfian approach has dominated empirical studies of the US rate of profit for the last thirty-five years. Forty-five years earlier, Michal Kalecki developed a different frame suitable for empirical profit rate studies, which had the potential to give different, but complementary, insight into the profit rate analysis based on the Weisskopfian approach. This paper first presents a development of the Kaleckian frame. It then applies this frame to the US economy and presents some preliminary empirical results.