Explaining Us Hegemony and Its Decline

INTRODUCTION

One of the most important indicator of wellbeing in a country is GDP per capita. For the year 2006 the GDP per capita in the U.S. is 43,223 dolars. Which is 4th highest worldwide. But does this trendy indicator is enough for us to believe that everything is going well in the U.S. economy, is every firm happy with their profits?, are the workers happy with their wages?....

After the born of capitalism and the industrial revolution, The United States started to gain great power and reasonable place in the world-wide open economies. While 1970's the labor and oil intensive U.S. economy started to struggle with the great effects of oil crisis. Which is we can still see the effects. In this writing i will try to examine the U.S. Hegemony and it's decline through the lights of different articles and my own point of view.

The Falling Rate of Profit and the Economic Crisis in the U.S.

The title is the title of the article that is written by Anwar Shaikh. The article tells us the capitilization of production at the begining, which means lowering the costs. Increasing the productivity of labor to get most out of labor process and reducing unit cost to get the most out of the market is how the profit motive is put into practice. Higher fixed costs are traded off in return for lower variable costs - as long as the overall costs per unit output are reduced. Everything seems to be fine here, the firms lower their costs, low wages, maximum effiecency... But there is a problem here.

Shaik says that; it can be shown that while more heavily capitalized methods of production may benefit individual capitalists by lowering their unit costs of production, the nonetheless also tend to lower the average rate of profit for the economy as a wholw. Thus the same factor which fuels the competetive struggle among individual capitalists also produces a slow but steady downward drift in the economy wide average rate of profit. I said that GDP per capita is a very important indicator but Shaikh says that Capitalism runs on profit, which means profitability and profit rates are other important indicators that we should look at. Shaikh says that the profit rates are falling in the U.S. . And the article prooves this with the empirical evidences.

As a result he thinks that this cruel capitalist system should change. Focusing on maximum profit will cause people nothing but a problem. More racism, more war is just out there, just waiting for someone to light the fires.

The U.S. Economy since 1973

This article is titled by Rodolfo Alejo Gonzalez and Roger Nils Folsom. Even though the article says neither Keynesians nor monetarists have been able to supply a consistent explanation for the macroeconomic behavior of the U.S. economy since the first oil shock in 1973, the writers try to explain these periods in a neo-classical way. The article explains the period after the oil crises in three different strategies; The demand for labor decreased with the fall in its productivity, but real wages did not fall significantly because workers did not expect the oil crisis to last, and therefore they were reluctant to accept real wages lower than those they expected in the future. Instead they accepted unemployment and greater leisure, expecting to increase their labor supply to above-normal levels in the future, when energy supplies and labor productivity had returned to normal. Decreased productivity also reduced the demand for capital, and owners of capital responded in the same general way that workers did. Capital depreciation increases with use, so rather than accept lower