The explosion of debt and speculation: 2
Monopoly-finance capital: 2
The financialization of capitalism: 3
The paper is on the financial crisis that goes around the causes and consequences of market structure within a given locality. The study highlights the approaches used by Foster and Magdoff book to assess the current history of the economy.
Foster and Magdoff book, focused on the existing relationship between the stagnation and the factors influencing the monopoly stagnation tendency. The approaches facilitated the assessment or realization of the current economic history. According to Foster and Magdoff book, the main countering force is financialization. It implies that the expansion of debt and speculation advanced capitalism and represented the ideal ways that enabled the system to avoid collapsing. However, it did not enable it to overpower the fundamental stagnation tendency.
Based upon the Magdoff and Foster perspective, it is certain that the major reason for the U.S financial explosion was the stagnation tendency. Hence, it was prudent to consider the financial explosion as primary cause for thee financial crisis as compared to financialization. Marx argued that the crises resulted from the overproduction of capital.
The household of debt bubble: it is evident that the level of consumption is relatively or directly proportional to the income levels of the people in the working bracket. Therefore, it is consider that people of low income incurs a high percentage in terms of consumption unlike the capitalists class people.
The explosion of debt and speculation: it is significant to note that an active investment together with a high customer demand is needed in order to sustain the economy of an expanding market. Capitalist economy is based on the profit motive and capital accumulation. Hence, problems emerge when their rate of expansion is minimal.
Monopoly-finance capital: according to recent research, it is clear that the argument of monopoly capital states that there was a great transformation undergone by capitalism due to the upcoming of the big corporations at the verge of the twentieth century. It resulted to a situation whereby most industries were controlled by a handful of giant corporations.
The financialization of capitalism: The economy activity is increasingly shifting from production to finances. Changes in capitalism have been described by globalization, neoliberalism and financialization. Financialization has become the dominant force in describing the changes in capitalism.
According to the research, it articulates that stagnation has led to financial crisis. Stagnation does not imply that there is a zero growth. However, it implies that the economy has high levels of unemployment, underemployment, a large proportion of unutilized productive capacity and it performs below its expected potential. Due to stagnation and recession, the low-income citizens are faced with many basic challenges. The challenges include; access to health care, access to education and a basic income for the family.
In conclusion, the economy would go back to a new era having conditions similar to the ones from which it emerged was true. In response to financial crisis, if a massive action is not taken, the rate of growth of the economy will greatly decrease. Financial crisis does not imply to lack of liquidity or money as it was initially understood.