US capitalism is no longer a progressive force in the development of productive forces. What do I mean? An economy is ‘progressive’ in the sense that it develops more and new things that people can use to improve their living standards and reduce their hours of toil. Capitalism is a social mode of production that has been progressive in that sense. ‘Progressive’ does not mean that the capitalist system is fair, equal or just, just that it has raised the production of things we use and need to new heights.
But US capitalism has now got old and less and less progressive. The US capitalist economy now has more sectors of its economy that act as a parasites on the productive sectors of the economy, living off the value generated there. These parasitic sectors do not produce value but merely usurp or extract that value from the productive sectors, indeed to the point where they seem more profitable. These unproductive sectors include finance, real estate, insurance (called FIRE), wholesale merchanting, advertising and marketing and government. Many of them may be necessary to capitalism in lubricating the system with credit or providing a healthy and educated workforce. But they are at a cost to the productive sectors, like manufacturing, agriculture, mining, utilities, transport and communications.
For US capitalism to be progressive then, these productive sectors must be dominant. They are no longer.
I looked at data going back to 1799 (see the Historical Statistics of the United States 1799-1945, published by the US Bureau of Census). Back in 1799, agriculture was the dominant sector in the US economy with 40% of output followed by transport at 24%. Manufacturing was just 5% of output. Just before the start of the second world war in 1937, manufacturing was the dominant sector peaking at 31% of GDP compared to 12% for agriculture by then (transport was more or less the same share). The US did not become a predominantly industrial capitalist economy until 1900, when manufacturing share’s finally surpassed that of agriculture at around 20% of GDP.
It really took off in the interwar period as the US became the greatest manufacturing nation in the world (which by the way it is still is – China has not quite surpassed it yet in billions of dollars of value, although it is about to) .
But by 1937, the productive sectors of the US economy were predominant, contributing nearly 60% of annual output. The really parasitic parts of the economy (FIRE) were still little more than 10% of annual output.
But that was the peak. After 1945, US manufacturing became less and less the dominant sector in the economy, dropping from 28% in 1950 to just 11% of GDP now. At the same time, FIRE’s share rose from 11% to just under 22% now, a doubling. The services sector, especially government, also grew significantly in size and the productive sectors of the capitalist economy are now in a minority.
The key tipping point was when FIRE’s share of national output exceeded manufacturing in 1985. From then on, US capitalism has become increasingly a rentier economy – more value now comes from interest, rents and dividends than from manufacturing. FIRE’s share of added value has been hived off from the productive sectors (both those within the US and from abroad).
It is well documented that financial sector profits have risen sharply compared with non-financial profits in the US economy, at one point reaching over 40% of all domestic profits. But there has also been an even more significant rise in profits from overseas. That’s nearly quadrupled since 1950, while financial profits have just doubled as a share. US non-financial domestic profits have dropped by one-third. Domestic non-financial profits still constitute the biggest share but we are close to the point when profits from the financial and overseas sectors will contribute more than half of all US corporate profits.
That would make the US truly an imperialist rentier economy. America is no longer the progressive force in the world but a parasite on other capitalist economies.