From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Thu Dec 18 2003 - 15:24:36 EST
> Rakesh wrote >------------------ > What for example did >Keynes mean by the abolition of interest through the elimination of the >functionless investor? An elimination of the price paid to commercial >banks for creating media of payment/high power money or the elimination of >property income as such? The disappearance of *interest* need not mean the >euthanasia of the rentier of course since the functionless investor would >merely old other assets (e.g. stocks) instead of holding debts (bonds). And >what would it mean for the banks to get no reward for creating media of >payment if this is what Keynes meant by the elimination of the functionless >investor? >--------------------------- >I understood him to be referring not to a zero rate of interest but >to a very low rate of interest, since it comes just after he >has discussed the effect of very low rates on interest on >encouraging capital intensive projects like reclaiming land >from the sea Dutch style. > >I raised this in the context of your previous remarks about the >falling rate of profit. > >By itself the falling rate of profit is no more serious than >under consumption and equally susceptible to reformist >interventions - Keynes proposals to hold down interest rates >below the rate of profit being an example. yes not in all cases will the fall in the rate of profit arrest accumulation; indeed the rate of accumulation may quicken even as the rate of profit falls (Richard Jones, Marx, Hollander), and a reduction in interest rates may accelerate accumulation even further. But even if interest payments are already zero, there can be absolute overaccumulation,i.e. the mass of surplus value does not rise from the further accumulation of capital. This is why even Joan Robinson noted that the Great Depression proved that Marx was not wrong to downplay monetary policy. As for inflationary monetary policy, it may well reignite accumulation as a result of a higher rate of exploitation-- wages lag behind the general price level (see Mattick on Samuelson, 1981). But again a rising rate of exploitation cannot always neutralize FROP from rising OCC. While the absolute poverty of the masses may remain the ultimate cause of general and protracted crisis, its proximate cause is the drop in profitability and governments are forced to take actions on the supply side, e.g. deregulation of the labor market, more unpaid compulsory overtime, increased shift work (see Pietro Basso). In the name of cost cutting, the conditions of prisons are also made worse so as to encourage acceptance of ever higher rates of exploitation and ever more degraded labor conditions (Rusche's point may be simple but its simple truth is far from appreciated today). We also find a more regressive tax structure even if this means that the after tax wage falls below the value of labor power (note the debt load families are forced to assume to make ends meet). We have now lived through the neo liberal revolt against social democracy and the Keynesian welfare state in particular. Given the positivism and inherent vagueness of Keynes' own theory, such a shift can be justified in its terms. Just as Marx thought that the interests of the working class could not be undersood and justified from within even a radicalized Ricardianism, Marxists argue that those interests cannot be understood and justified from within a Keynesian framework, no matter how radicalized by Kalecki. William Thomspon/Thomas Hodgson is to Ricardo as Kalecki is to Keynes. Marx wrote Capital so that workers would not be trapped by its antagonist's terms.
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