Volume 43, Number 171,
October-December 2012

The Long Road to Crisis. Central and Peripheral Countries and Transformations to the Global Economy, Enrique Arceo, Argentina, 2011, Ed. Cara o Ceca and Centro Cultural de la Cooperación, Floreal Gorini.

Arceo’s book proposes the unobjectionable fact that developed countries (central countries) have been unable to emerge from the crisis that began in 2008 due fundamentally to what he calls financial capital, which only imposes contractive policies that accentuate economic stagnation and elevates the risk of a new global recession. He sustains that since the 1980s, the United States has articulated a mode of capital communication supported by absorbing surpluses from peripheral (developing) countries.

Their economic model acted as an accumulation method. This is no longer sustainable. Financial capital is on the offensive from industrialized countries that seek to compensate for the drop in profit rates and generate hegemony to establish conditions for a new phase of expansion. According to Arceo, this new method is damaging to salaried workers in developed countries and results in opening the doors unconditionally to foreign investment in underdeveloped countries. This, according to the author, translates into a growing speculative economy, the development of financial bubbles and the growing role of the debt of salaried workers in absorbing capital surpluses.

In a parallel way, the global capitalist market has undergone tremendous expansion based on the internationalization of productive processes, like the maquiladora industry. In other words, lower salaries in developing countries allow big capital from developed countries to export its processes, achieving a substantial reduction in production costs. These costs would not otherwise be reachable merely through technological innovation. The state policies from countries such as Korea, Taiwan and China also participate in the market, fostering the maquiladoras industry.

According to the author, the 2008 crisis is not only a consequence of the lack of regulation in central countries and excessive liquidity in the international financial system, but is also a result of essential contradictions of the neoliberal project.

The contradictions of the capitalist system are clear. One of its greatest beneficiaries is one of the five richest men in the world, who now has the luxury of openly and publicly criticizing this system. Warren Buffett, from Omaha, Nebraska, is a normal citizen who organized an investment fund forty-seven years ago, worth barely 19 dollars at the time, which today is valued at 116,914 dollars per share. He took a political stand last fall during a sit-down with President Barack Obama, to whom he made the following recommendations:

  1. The United States budget deficit is unsustainable in the long term, independent of whichever party is in the White House.
  2. Everything done up to now has not worked.
  3. It is ridiculous that a man like myself pays an annual percentage income tax rate lower than what my secretary pays, as she is a citizen that represents our large middle class.
  4. Mr. President, my proposal is simple. Raise the personal tax rate on the wealthiest sector of our country.*

He refers to the wealthiest individuals of the United States, people whose annual income is over a million dollars after deductions. This sounds simple but it would be a big change in the fiscal policy of the United States or any other country. In reality, what Buffett is saying is exactly what Arceo proposes in his book, affirming that the current capital accumulation model is unsustainable, particularly with regards to fiscal policy, proposing higher taxes for individuals whose taxable income is over a million dollars a year.

With regards to Mexico in the last year, we cannot deny that Dr. Arceo is completely correct. Our oligopolistic system of different sectors is impregnated by liberalism in the best of cases and in the worst, is a poorly realized mix of rules that are not followed. We have growing capital accumulation in favor of the financial and services sector to the detriment of our country’s salaried masses. This has led us to an immense informal economy, which has been the largest relief for unemployment, generated by the policy Arceo details in his book. Another example? “How is it possible that a dentist pays more percentage tax on his annual income than a corporation.” This was something President Felipe Calderón said in his failed fiscal reform.

Reading Arceo’s book is recommended to learn more about the accumulation mechanisms used by financial capital in today’s world.

Ana Laura Rodríguez
Institute for Economic Research — unam

* Interview with Warren Buffett published in Time magazine, vol. 179, num. 3, January 23, 2012, pp. 18-22.

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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