Foster JB - The Household Debt Bubble

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1、REVIEWOFTHEMONTHTheHouseholdDebtBubbleJOHNBELLAMYFOSTERItisaninescapabletruthofthecapitalisteconomythattheuneven,class-baseddistributionofincomeisadeterminingfactorofconsump-tionandinvestment.Howmuchisspentonconsumptiongoodsdependsontheincomeoftheworkingclass.Workersnecessar

2、ilyspendalloralmostalloftheirincomeonconsumption.Thusforhouseholdsinthebottom60percentoftheincomedistributionintheUnitedStates,aver-agepersonalconsumptionexpendituresequaledorexceededaveragepre-taxincomein2003;whilethefifthofthepopulationjustabovethemusedupfive-sixthsoftheir

3、pre-taxincome(mostoftherestnodoubttakenupbytaxes)onconsumption.1Incontrast,thosehighupontheincomepyramid—thecapitalistclassandtheirrelativelywell-to-dohangers-on—spendamuchsmallerpercentageoftheirincomeonper-sonalconsumption.Theoverwhelmingproportionoftheincomeofcap-italists

4、(whichatthislevelhastobeextendedtoincludeunrealizedcapitalgains)isdevotedtoinvestment.Itfollowsthatincreasinginequalityinincomeandwealthcanbeexpectedtocreatetheage-oldconundrumofcapitalism:anaccumulation(savings-and-investment)processthatdependsonkeepingwagesdownwhileultimat

5、elyrelyingonwage-basedconsumptiontosupporteco-nomicgrowthandinvestment.Itisimpossibletodoassuggestedbytheearly-twentieth-centuryU.S.economistJ.B.Clark—to“buildmoremillsthatshouldmakemoremillsforever”—intheabsenceofsufficientcon-sumerdemandfortheproductscreatedbythesemills.2U

6、nderthesecircumstances,inwhichconsumptionandultimatelyinvestmentareheavilydependentonthespendingofthoseatthebottomoftheincomestream,onewouldnaturallysupposethatastagnationordeclineinrealwageswouldgeneratecrisis-tendenciesfortheeconomybyconstrainingoverallconsumptionexpenditu

7、res.ThereisnodoubtThisarticlereturnstoanissueaddressedheresixyearsago—inTheEditors,“Working-ClassHouseholdsandtheBurdenofDebt,”MonthlyReview,May2000.Itrepresentsanattempttoupdateandextendthatearlieranalysis.Althoughthetablesbelowaresimilartothoseintheearlierarticle,somechang

8、eshavebeenmadeinthepresentationofthedataduetoalterationsingovernmentstatist