The purchasing managers indexes (PMI) are key “grow-or-die” measures of the health of the capitalist economy. They show that it is in serious trouble.
August surveys of the purchasing managers who work for the global corporations in manufacturing, construction and services show the relentless logic of capitalist contraction that behind the clouds of financial storms.
With any figure above 50 indicating expansion – the growth which is the heartbeat of the profit economy – and any number lower indicating a widely-feared contraction, the overall index compiled by JP Morgan fell to the brink from 50.7 in July to 50.1 in August.
It is no wonder that stock markets went into freefall earlier in August as those in the know rushed for the exits.
In the UK, the world's most indebted nation, where the Coalition is dependent on rapid growth to reduce the government budget deficit, the PMI of 49 shows the opposite trend dominating
The marginally positive US figure at 50.6 turned out higher than had been expected, but still showed the weakest manufacturing activity since July 2009.
Whilst the official measure in
Despite the use of every conventional and several unconventional methods of intervention, the concerted efforts of national governments, central banks, and the International Monetary Fund have failed to bring about a recovery even to the levels of production achieved before the 2007/8 crash.
European banks, in particular, are in dire trouble which partly explains the hysteria over the Coalition’s modest plans to separate retail and investment banking. Central banks and official bodies are reportedly in panic mode.
Other figures from the
Hardly surprising since the share of production costs received by US workers as wages, salaries and benefits was driven down throughout the era of corporate globalisation. In the wake of the 2007/8 credit crisis it plummeted to a historic low of 58% in 2010 even as corporate profits soared. US workers, the so-called “middle-class”, can no longer afford to be the pumped-up credit-enhanced consumers who used to absorb so much of the world’s output.
As Mike Whitney writes in the Market Oracle
Not only is labour getting a smaller and smaller piece of the pie, but, also, financial engineering – spurred-on by low interest rates and deregulation – has given rise to consecutive credit bubbles which have transferred a larger share of pension and retirement fund-wealth to Wall Street speculators. So, working people are not just getting screwed on their labour, the government and central bank are actually helping to facilitate the pilfering of their savings.
Some economists and politicians in the
Whilst these radical measures are dressed up as a necessary precursor to a return to growth, they show that at least some of capitalism’s defenders are beginning to see the light.
But, more significantly, they reflect a growing awareness that the revolutionary wave spreading from the Arab Spring, throughout North Africa and into