re 6798 > >Within the Keynesian system the demand for investment goods does not >derive from the demand for consumption goods. Rather both investment >demand and labor demand are derived demands dependent on the level >of *aggregate* demand. > >In solidarity, Jerry What then determines the level of aggregate demand? I think Steve implicitly presents in his interpretation of the Keynesian system the idea that it is determined by the prospects of final consumption. As a side note, Bush/Greenspan are attempting to bolster investment demand not so much by strenghtening final demand via direct military purchases and easy consumer credit (which in the US has led to common complaint by progressive economists that the Republicans are more Keynesian than the Democrats) but rather by brightening the prospects of long term profitability through, for example, lax anti trust law, union busting activity by the National Labor Relations Board, and regressive tax cuts that will require much deeper slashes in the social wage than to which Bush and Greenspan are admitting. Krugman has railed against the massive regressive tax cuts because of the pressure presumably put on the long bond by the prospect of huge future federal government deficits, not because of how such cuts in the social wage by dimming the prospects of future demand for consumption goods reduce demand for investment goods in the present. Bush is in fact attempting to ensure that direct and social wages will not keep pace with productivity gains in his attempt to revive investment demand. Steve's Keynes seems to be an underconsumptionist but underconsumptionism fails to explain the downturn in investment demand--there had been no prior problem in the realization of surplus value--and more importantly the steps that are taken to revive investment demand. Rakesh
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