The world economy at the turn of the millennium toward boom or crisis?

This paper addresses the question of whether the long stagnation that gripped the world economy for a quarter century after 1973 has been transcended. To do so, it offers an account of the long downturn, in terms of the fall and failure of recovery of the profitability, especially in the international manufacturing sector, itself rooted in the rise and persistence of over-capacity and over-production on a system-wide scale, originating in the intensification of international competition between 1965 and 1973. Ln that context, it finds the source of the current boom in the US in a recovery of manufacturing profitability between 1985 and 1995. But, because the US recovery came heavily at the expense of profitability and economic dynamism elsewhere, leaving the underlying problem of international over-capacity and over-production unresolved, it raises the question of the boom's sustainability, especially in light of the fact that the beginnings of manufacturing recovery in Japan and Germany after 1995 led to the East Asian crisis and new profitability problems in the US. Rapid expansion in the US has thus been driven most recently by fast-growing consumption, rooted in the stock market bubble and the associated growth of debt, so its future remains in doubt.