Comments on: Keynes, debt and the capitalist class

By: An Ominous Announcement From Hague « My Crippled Eagle

An Ominous Announcement From Hague « My Crippled Eagle — Thu, 11 Mar 2010 14:34:39 +0000

[...] of the current financial situation over at Though Cowards Flinch (the comments sections of the two posts on Keynes are particularly [...]

By: paulcockshott

paulcockshott — Tue, 09 Mar 2010 09:19:25 +0000

Well the conservative government cretainly increased the rate of exploitation of labour, but it also destroyed a large part of the capital stock so that the resulting rate of profit involved more surplus labour divided by a smaller capital stock.

I agree about the importance of the external sector to the UK financial flows, I pointed that out in my first blog piece. Hence I think that if a government is serious about tackling the level of government borrowing it will have to address the trade imbalance. That means a shift back to a more export oriented economy, which in social terms is likely to strengthen the labour movement.

By: freethinkingeconomist

freethinkingeconomist — Mon, 08 Mar 2010 21:59:34 +0000

My explanation would be very conventional and add little here. A strong pound, high interest rates, a supply shock. Fiscal stance not particularly accommodative, but inflation so high than trying to make it accommodative would have just sucked resources from somewhere else.

Profit may have been declining, but ever greater taxes and labour power do that. I don’t think one needs Marx for that. Just change the taxes and the laws, which she did.

I mean with China, that the external demand and supply replace a lot of whatever class you still think exists in this country is doing. Capital can choose who to serve worldwide; it is not some neat binary relationship with a solid mass of uK workers.

By: Cockshott

Cockshott — Mon, 08 Mar 2010 20:06:27 +0000

Well it depends on what you mean by a Keynesian slump. I must admit that I last analysed the economic situation of 79-81 some thirty years ago so the details of the sectoral shifts at the time are a little remote. But my recollection is that there had been a 30 year period during which what Marxians call the law of the declining rate of profit had operated. This had so depressed profit rates that the propensity of private capital to invest was hitting the floor.

This meant that unless the state replaced private owners as the main source of investment there was going to be a major slump.

What would your explanation be?

On China, I dont see that that per se negates a class based approach – China is a class society, one moreover with a very uneven income distribution. The current capital exports by China are certainly of no advantage to the working class there.

By: freethinkingeconomist

freethinkingeconomist — Mon, 08 Mar 2010 16:02:26 +0000

Very interesting.

But I am amazed that you think the slump of 1979-81 was a classic Keynesian slump. Where was the deflation?

The characterization of our boom being dependent on debt is also a little off; the debt was built up to buy assets/land, which were artifically constrained by planning laws, NIMBYs etc. Consumption growth was not as fast as in the 1980s or even mid 1990s. Our ‘rentier’ class actually made money on rising assets, not savings. It was the Chinese who saved ….

International facts make this class based stuff seem a bit quain.

But I agree that we need more redistribution to make the structure more stable.