The November 2008 issue of the Statistical Supplement to the Federal Reserve Bulletin is now available online.at: http://www.federalreserve.gov/pubs/supplement/2008/default.htm . The bulletin provides the Fed's estimates on industrial production and capacity use for the first two quarters of 2008 and compares them to the 2007 numbers.
If you look deeper into these numbers and compare them to historical data available in in Fed G.17 reports, available at http://www.federalreserve.gov/releases/g17/, you can discern the following:
Industrial Output: The Fed is using 2002 as its baseline for indexing growth and rates of growth in 2007 and 2008. 2002 was near the trough in the last recession, which only shows the Fed is scraping the bottom of the barrel in more ways than one.
In 2000, industrial output measured 116% of output in 1997.
In 2002, industrial output measured 110% of output in 1997.
In 2008, industrial output measured 111% of output in 2002, equivalent to 122% of 1997 output.
Industrial output in 2008 is approximately 4.5% greater than output in 2000.
2. Not Sweet
Now look at growth of industrial capacity.
First you will notice, unless you're an economist or a hedge fund manager, that annual capacity growth increases averaged about 4.6% per year for 1997, 1998, 1999, 2000.
In 2001, capacity growth declines to 1.7 % above the 2000 mark.
In 2002, capacity growth declines to 1.1 % above the 2001 mark.
In 2003, capacity growth remains at 1.1% above the 2002 mark.
In 2004, capacity growth "improves" to 1.6% above the 2003 level.
In 2005, capacity growth remains 1.6% above the 2004 level.
Now comes the uptick with increased capital investment.
In 2006, industrial capacity grows 2.4 percent.
In 2007, the capacity growth rate falls to 1.8 percent.
In 2008, FRB estimates are that industrial capacity growth slows again to 1.6 percent.
Rates of return on capacity investment had peaked in 2006, and once again were showing themselves to be more cost than benefit to profits.
All in all, output increases approximately 4.5% between 2000-2008, while capacity increases amount to approximately 13.5 percent.
These are the circumstances of overproduction that Marx described in Volume 3 of Capital:
Overproduction of capital never signifies anything else but overproduction of means of production-- means of production and necessities of life--which may serve as capital, that is serve for the exploitation of labor at a given degree of exploitation; for a fall in the intensity of exploitation below a certain point calls forth disturbances and stagnations in the process of capitalist production, crises, the destruction of capital...
...there is periodically a production of too many means of production and the necessities of life to permit of their serving as means of exploitation of the laborers at a certain rate of profit...
...there follows swindle and a general promotion of swindle by frenzied attempts at new methods of production, new investments of capital, new adventures, for the sake of securing some shred of extra profit, which shall be independent of the general average and above it.
3. And Down Low
It certainly is not the case that the "real economy" was/is healthy and that the disturbances are the result of speculation, overextension of credit, fictitious capital, irrational exuberance, excess leverage, poor savings by consumers, etc. etc. The condition and terms of finance are determined by the condition of the real terms of production.
With output and investment so restrained by the bourgeoisie after the 2000-2003 period, finance's access to the revenue stream of industrial production through corporate lending, corporate bond underwriting, etc. was severely restricted.
If as Marx put it, overproduction is the overproduction of the means of production that cannot be deployed to exploit labor power at a required, sufficient, intensity, then finance capital's focus on the securitization of consumer debts, of mortgage payments, of student loans, represents the attempt to divert revenue away from wages, from the V component of capitalist production; to in effect, reduce wages.
Finance capital represents, not a vampire feeding on the body of so-called real capital, but the attempt to generate a sufficient intensity of exploitation of labor by means other than increased output and capacity growth. Financialization proves itself the most modern expression of the most primitive expropriation of surplus value by demanding and instigating the absolute reduction in the value of wage-labor.
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