Economía marxista para el Siglo XXI

Awash with cash?


Michael Roberts Blog

In several previous posts
(http://thenextrecession.wordpress.com/2013/12/04/cash-hoarding-profitability-and-debt/
and (http://thenextrecession.wordpress.com/2013/10/19/the-fallacy-of-causation-and-corporate-profits/),
I have looked at the apparent conundrum of rising/record profits in the US and some other major economies, with corporations apparently ‘awash with cash’, but still not investing enough in the ‘real economy’ to achieve a sustained recovery.

Various reasons for this have been presented.  The two main ones that I have argued for are 1) profits are not the same as profitability and in most major economies profitability (as measured against the stock of capital invested) has not returned to levels seen before Great Recession and 2) such was the leveraging of debt by corporations before the crisis started that this is acting as a disincentive to invest and/or borrow more to invest, even for companies with sizeable amounts of cash.  Corporations have used their cash to pay down debt, buy back their shares and boost share prices, or…

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