On The Nature and Causes of The
Wealth of Nations, 2007/08
A. Erinç Yeldan
Bilkent University
IDEAs Network
“something significant has changed in
the way capitalism has been working
since about 1970”
David Harvey, 1989
Changes in the Global Environment
• economic limits of Fordist production and
mass consumption have been reached by the
1970s.
• Profit rates in manufacturing in US and
elsewhere started to decline as capital
intensities increased
7
Rate of Profit and Organic Composition of Capital
in the US Economy
0.25
Organic Composition of Capital (Left Axis)
6
Profit Rate (right axis)
0.2
5
0.15
4
3
0.1
2
0.05
1
0
0
Source: Moseley, Monthly Review, 2003
“Symbol tick = ‘MAN’ country ‘TURK” cusip = 56418H100”
isin = ‘TURK56418H1005’ / symbol sign - change = ‘+’ caltype
= ‘percent’ 2.5 / change price value = ’44.52’.”
If you are still reading the above
sentence, you are already too late!
Emerging market economies net external financing
(Billions US Dollars)
1996
2003
2007
2008E
2009F
161.4
236.7
928.6
465.8
165.3
Equity Investment Net
128.6
138.5
296.1
174.1
194.8
Resident Flows, Net1
123.7
-49.0
-384.4
-421.9
-271.7
-90.4
-272.5
-948.7
-444.3
-245.9
Current Account Balance
-83.6
128.5
434.0
387.4
322.8
As % of GDP
Total Foreign Reserves
(excl. gold)
Total External Debt
-1.7
1.9
3.2
2.5
2.2
311.8
1,250.9
3,705.3
4,094.6
4,446.6
2,230.2
3,662.5
3,884.0
3,989.2
External Private Flows, Net
Changes in Reserves ("-"
indicates increase of reserves)
Note:
E: Estimate; F: Forecast
1: Including gold, other monetary lending and errors and omissions.
Source: Institute of International Finance, January 2009.
5,000
Net Private Capital Inflows, External Debt and Gross Reserves in
the Developing Economies (Billion US$)
4,500
Total International Reserves
4,000
Total External Debt
3,500
Net Private Capital Inflows
3,000
2,500
2,000
1,500
1,000
500
0
1996
2003
2004
2005
2006
2007
2008g
2009T
Source: Wolff and Resnick, 2006, Advances in Marxist Theory
USA: Labor Productivity and Real Wages, 2000-2005
120
USA Median real hourly wages
115
USA Labor Productivity - Output per hour in the
business sector
110
105
100
95
90
2000
2001
2002
Source: EconomicPolicy Institute
2003
2004
2005
Turkey: Labor Productivity and Real Wages,
2000-2006
180
Labor Productivity (per hour worked)
160
Real Wage Earnings per Labor Employed (per hour)
140
120
100
80
60
40
2000.I 2000.III 2001.I 2001.III 2002.I 2002.III 2003.I 2003.III 2004.I 2004.III 2005.I 2005.III 2006.I 2006.III
Rate of Depreciation in Selected EMEs
50
40
Argentina
Brazil
Hungary
Korea
Mexico
Poland
Romania
Thailand
Turkey
30
%
20
10
0
-10
-20
-30
Inflation Rate, CPI (2006 Jan=100)
140
130
120
110
100
Argentina
Hungary
Mexico
Romania
Turkey
Brazil
Korea
Poland
Thailand
Industrial Production (2006 Q1=100 )
125
120
Argentina
Hungary
Korea
Mexico
Poland
Romania
Turkey
115
110
105
100
Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008
95
90
Unemployment Rate Selected EMEs
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
Hungary
Korea
Mexico
Poland
Romania
Thailand
Turkey
Argentina
Brazil
Revised Growth Projections
OLD
NEW
2008
2009
2008
2009
IMF, World
3.9
3.0
3.7
2.2
IMF, Turkey
4.0
3.2
3.8?
2.3?
Morgan Stanley, Turkey
2.7
2.5
2.3
1.9
3.3
2.7
CBRT
Revised Growth Projections
2008 January
2008 November
2009 january
2008
2009
2008
2009
2009
IMF, World
4.5
4.0
3.8
2.2
0.5
IMF, Turkey
4.0
3.2
3.8?
2.3?
Morgan Stanley
2.7
2.5
2.3
1.9
3.3
2.7
CBRT
-0.5
Lessons
“ the argument that ‘this time things are
different’ is a statement that can only be
made by fools that fail to take any lessons
from history...”
Kenneth Rogoff, IMF Chief Economist, 2005